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

                                    FORM 10-K
(MARK  ONE)
X             ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                       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
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

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

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




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

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

          Indicate  by  check  mark  whether  the  registrant  (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  ____
                                                                 ---

          Indicate  by check mark if disclosure of delinquent filers pursuant to
Item  405  of Regulation S-K is not 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-K or any
amendment  to  this  Form  10-K.  [  ]

          Indicate  by check mark whether the registrant is an accelerated filer
(as  defined  in  Exchange  Act  Rule  12-2).  Yes  No  X
                                                        -

          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 the last business day of the
registrant's  most  recently  completed  second fiscal quarter was approximately
$1,059,000.

          The  number of shares of Common Stock of the registrant outstanding as
of  March  25,  2003  was  2,577,433.

                       DOCUMENTS INCORPORATED BY REFERENCE
          None.

<PAGE>

                                      INDEX





                                     PART I

Item  1.     Business

Item  2.     Properties

Item  3.     Legal  Proceedings

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

                                     PART II

Item  5.     Market  for  Registrant's  Common  Equity  and  Related
             Stockholder  Matters

Item  6.     Selected  Financial  Data

Item  7.     Management's  Discussion  and  Analysis  of
             Financial  Condition  and  Results  of  Operations

Item  7A.     Quantitative  and  Qualitative  Disclosures
              About  Market  Risk

Item  8.     Financial  Statements  and  Supplementary  Data

Item  9.     Changes  in  and  Disagreements  with  Accountants
             on  Accounting  and  Financial  Disclosure

                                    PART III

Item  10.     Directors  and  Executive  Officers  of  the  Registrant

Item  11.     Executive  Compensation

Item  12.     Security  Ownership  of  Certain  Beneficial  Owners
              and  Management

Item  13.     Certain  Relationships  and  Related  Transactions

Item  14.     Controls  and  Procedures

                                     PART IV

Item  15.     Exhibits,  Financial  Statement  Schedules,  and
              Reports  on  Form  8-K

<PAGE>




                                     PART I

ITEM  1.          BUSINESS

GENERAL

     N-Viro  International Corporation (the "Company" or "N-Viro"), incorporated
in  Delaware  in  April,  1993, owns and licenses 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."

     In  1979,  Mr.  J.  Patrick  Nicholson  and several investors formed N-Viro
Energy Systems, Limited.  N-Viro Energy Systems' initial strategy was to license
the  N-Viro  Process  to  third  parties  through  independent  agents.  Each
independent  agent  acted  in  its  respective  territory  as  a  marketing  and
distribution  agent  of  N-Viro  Energy  Systems, and retained the marketing and
distribution rights to certain other territories.  In early 1993, as a result of
the  then  pending  implementation of the 40 CFR part 503 Sludge Regulations (as
defined  below) and the market environment, N-Viro Energy Systems concluded that
a  strategy  that  also  included  the  development and operation, on a contract
management  basis,  of N-Viro facilities for third parties, and of Company-owned
and/or co-owned N-Viro facilities, would potentially expand the opportunities to
capitalize  on  the  N-Viro  Process.

     In  order  to  implement  this  strategy,  N-Viro  Energy Systems agreed to
combine with American N-Viro Resources, Inc., National N-Viro Tech, Inc., N-Viro
Midwest,  Inc.,  N-Viro  Soil  South,  Inc.  and  Tennessee-Carolina  N-Viro
(collectively,  the  "Combined  Agents")  to  form the Company.  The Company was
incorporated  in  April  1993  primarily  to  expand  the  opportunities  for
capitalizing  on the N-Viro Process.  The Company assumed N-Viro Energy Systems'
agreements  with  the  remaining agents who were continuing to market the N-Viro
Process  in  their  respective  territories.

     The  Company  became  a  public company on October 12, 1993 with an initial
public  offering  (the  "IPO")  of 2,000,000 shares of Common Stock at $9.50 per
share.  On  October  19,  1993, N-Viro Energy Systems contributed to the Company
all  of its assets (except certain marketable securities and accounts receivable
from  certain  related  parties),  subject  to  all  liabilities (except certain
retained  liabilities),  and the stockholders of the Combined Agents contributed
to the Company all of the outstanding capital stock of such entities in exchange
for  a total of 6,000,000 shares of Common Stock of the Company and organization
notes  totaling  $5,221,709  (including  notes of $276,909 which resulted from a
partial  exercise  of  an  over-allotment  option).  The organization notes were
repaid  out  of  the proceeds from the IPO.  On November 10, 1993, an additional
112,000  shares  were sold pursuant to the exercise by the Underwriters of their
over-allotment  option.

     On  October  30,  1995,  at  a  Special  Meeting  of  the Shareholders, the
shareholders  approved  a  one  for  four  reverse stock split which reduced the
number of issued and outstanding shares of the Common Stock.  This reverse split
did  not  affect  the  Company's  retained  deficit and the stockholders' equity
remained  substantially  unchanged.  This  action  was  deemed  necessary  by
management  of  the  Company  to remain in compliance with the minimum bid price
requirement  of  the  National  Association  of  Securities  Dealers  Automatic
Quotation  System  ("Nasdaq") or the alternative net tangible assets requirement
and  for  continued  listing  of  the Common Stock on Nasdaq.  The reverse split
reduced  the  number  of  issued  and  outstanding shares of the Common Stock to
approximately  2,037,000  (net  of  57,250  treasury  shares).

     In late 1995, the Company's business strategy changed 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,  the  Company's 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.  The Company has also operated
N-Viro  facilities  for third parties on a start-up basis and currently operates
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.  The  Company  estimates 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,  the  Company  has marketed licenses for the use of the N-Viro
Process through its 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  other  parts  of the world, the Company licenses the N-Viro Process
through  agents  (the  "Agents").  Typically,  the  agreements  with  the Agents
provide  for  the  Company 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(TM).  Agents  have  total responsibility and control over the marketing and
contracts  for  N-Viro  technology  subject  only  to  license models or minimum
agreements  with  the  Company.  The  sales  representative  network  is the key
component  of  the  Company's  domestic  sales  strategy.  The  manufacturer's
representatives  network  was  started  by  the Company after acquiring eight of
eleven  domestic  agents.  These representatives receive a commission on certain
revenue.

     The  Toledo,  Ohio  facility  is  managed by the Company through a Contract
Management  Agreement  with  the  City  of  Toledo.  Revenue  generated from and
related  to  the  Toledo operation accounts for about 45% of the Company's total
revenue.  The  Company  processes  a  portion  of Toledo's wastewater sludge and
sells  the  N-Viro  Soil  product.  This  contract  with  the City of Toledo was
renewed  in  October  1999,  to extend through the year 2004;  in 2001, the City
exercised  its option to renew the contract for an additional five years through
2009.  Currently,  the  contract  is  in  its  fifteenth year of operation.  The
relationship  between  the City of Toledo and the Company has been satisfactory.

     In  early  1994  the  Company  purchased  a  site in Fort Meade, Florida to
develop a Company-owned N-Viro processing facility.  Construction was started at
the  site  in  late  1994 and the facility became operational in early 1995.  In
December  1995,  the Company entered into a Memorandum of Understanding with VFL
Technologies,  Inc.  ("VFL") to jointly own, through a limited partnership named
Florida  N-Viro,  LP  ("Florida  N-Viro"),  the  Fort  Meade,  Florida facility,
beginning  January 1, 1996.  On December 31, 1997, the members of Florida N-Viro
Management,  LLC,  the  management  company  of  the  Florida entity, approved a
Settlement Agreement that amended certain provisions and increased the Company's
ownership  percentage  in  Florida  N-Viro  to  50%.

     In  August 2000, a Memorandum of Understanding was entered into between the
Company  and  VFL,  clarifying  decisions,  information and additional operating
requirements  of  Florida  N-Viro.  Later that month, the Company loaned Florida
N-Viro  $120,000  cash  to  help  meet  operating  expenses,  and  was  issued a
promissory  note.  An  additional $50,000 cash was loaned in November 2000 under
similar  circumstances,  and a second promissory note was issued to the Company.
Both  promissory  notes  are  unsecured and are payable on demand, and both bear
interest  at  9.75%.

     In  January  2001,  a  Special Meeting of the Board of Directors of Florida
N-Viro  Management  LLC  was  held.  Among the decisions made were amendments to
both  the Partnership Agreement and the Memorandum of Understanding entered into
in  August  2000.  The  aggregate ownership percentages in the investment of the
Company and VFL in Florida N-Viro were amended to 47.5% and 52.5%, respectively,
effective January 1, 2001.  Also, a decision was made to relieve the requirement
of  the  Company  from funding any additional losses of Florida N-Viro, provided
the  Company  loan an additional total of $180,000 between January and February,
2001,  to be evidenced by a third promissory note.  The third note is unsecured,
due  on demand and bears interest at prime (tied to a local Bank) plus 0.25%, or
the applicable federal rate, whichever is higher.  All loans made by the Company
to  Florida  N-Viro  in  2000  and  2001,  were  made to equalize each partner's
advances  to  the  partnership  at  the time, and were required after additional
monies were advanced by VFL during 2000.  VFL has subsequently loaned additional
monies  to  Florida  N-Viro  to fund operations, totaling approximately $350,000
through  December  31,  2002.  The  Company  has  made no additional loans since
January 2001, and is actively pursuing sale of its investment in Florida N-Viro.
Because Florida N-Viro has not remitted any interest to the Company to date, the
Company  set  up a reserve at December 31, 2002 of approximately $63,000 for the
full  amount  of  the  accrued  interest  on  all  notes.

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  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 Soil(TM), 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.

     The  Company  is a distributor of alkaline admixture and is responsible for
quality  control  of  the  admixture.  The  Company  also works with established
by-product marketers.  The Company generally charges a mark-up over its cost for
alkaline  admixture  sold  directly  by  the  Company.

     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.
The  Company  estimates  that  approximately  five  percent  of  the N-Viro Soil
produced  is  sold  to  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
     Research  and  development  on the N-Viro Process is performed primarily by
BioCheck  Laboratories,  Inc.  ("BioCheck").  In  2002,  the  Company  expended
approximately  $9,300  on  continuous  research  on process improvements through
BioCheck,  and  considers  its  relationship  with  BioCheck to be satisfactory.

     In  2002  the Company expended approximately $71,000 on research and patent
development, including the amount expended to BioCheck. Research and development
on  N-Viro Soil has been, to date, performed primarily by BioCheck and Dr. Terry
J. Logan. Through June 30, 1999, Dr. Logan acted as an independent consultant to
the Company on a part-time basis and was, and continues to be, a director of the
Company.  From July 1, 1999 through May 9, 2002, Dr. Logan was employed with the
Company  as  President  and  Chief Operating Officer, and after that time to the
present  has  been  employed  as  President  and  Chief  Executive  Officer.

     All  participants  on the Company's technology council, including Dr. Logan
and  the  officers  of BioCheck, have contracts with the Company, protecting the
Company's  rights.

     In  addition,  in  2002  alone, grants totaling approximately $179,000 were
secured  from  several  sources  for  process  and product research.  The United
States  Department  of  Agriculture  (USDA)  funded  research  on  the  use  of
bio-mineral  and  compost  technology  to disinfect and immobilize nutrients and
metals  in  animal  manure.  This  research was conducted at USDA's Agricultural
Research  Service  (ARS)  laboratory  at  Beltsville,  MD  and  at  BioCheck.  A
field-scale  test of the Company's animal manure treatment technology was tested
at  a  large poultry operation in the State of Delaware in 2001 in collaboration
with Environmental Technologies of Delaware LLC ("ETD").  ETD holds an exclusive
license  for  the  Company's animal manure treatment technology ("Nuresoil") for
the  States  of Delaware, Maryland and Virginia.  The State of Maryland funded a
study, conducted with the University of Maryland, to utilize bio-mineral treated
poultry  manure  to  reclaim  acidic  landfill  cover. In 1999, two patents were
submitted  to the U.S. Patent and Trademark Office ("USPTO") and to the European
Patent Office for disinfection and for phosphorus and trace metal immobilization
in  animal  manure.  In  late  2000,  the USPTO declared the manure disinfection
technology  to  be  patentable  and  this patent was issued in 2001.  The second
manure  patent,  for  phosphorus and trace metal immobilization, was declared by
the  USPTO  to  be  patentable  in  2001  and  that  patent was awarded in 2002.
International  patents  have  also  been  applied for.  The Company continues 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 new 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, the Company has developed a
dryer  system  which  reduces  processing  time  while  continuing to permit the
survival  of  beneficial  microflora.  Licensees  of the Company began operating
dryer  facilities  in Phillipsburg, New Jersey and Leamington, Ontario Canada in
1995.  A  new  facility  in Sarnia, Ontario, Canada came on line in March, 2001.
The  Company's "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.

     In  2000,  the  Department  of  Agri-Food  Canada,  filed Canadian and U.S.
patents  on  the  use  of N-Viro Soil to suppress soybean cyst nematode (SCN), a
soil pathogen which can severely reduce soybean yields and for which there is no
effective  control.  Those  patents  were  awarded  in  2002.  SCN  damage  is a
widespread  problem  throughout  soybean growing areas.  Research in Canada, and
confirmed  in  Ohio,  show  that  there is potential for N-Viro Soil to increase
soybean yields in areas with heavy infestations of SCN.  N-Viro is the exclusive
licensee  for  the  use  patent in the U.S. and internationally.  In Canada, the
license  is  held  by  N-Viro  Systems Canada, Inc.  The USDA funded research in
2001-2002  on  the effects of N-Viro Soil and Nuresoil on the control of certain
soil  nematodes  in  soybeans  and  other  crops.

     In  2001,  the  Company  filed  two  patents  with the USPTO that deal with
controlled  heating,  drying  and combustion of organic wastes, including sewage
sludges,  animal manures, and pulp and paper wastes.  One of the patents teaches
the  ability  of  mineral  by-products,  such as coal combustion by-products, to
control  the  burning  of  organic  wastes in a coal-fired power plant as a coal
substitute.  The  patent also teaches the generation of ammonia from the organic
waste for NOx control at the power plant, and the utilization of waste heat from
the power plant to dry the organic wastes.  The original submission was declared
to  be  patentable  by  the USPTO in late 2001, and amended claims filed in 2001
were  also  declared to be patentable in early 2002.  International patents have
also  been  applied  for.  The  Company is currently in discussions with several
fuel  users  and  marketers  to  develop  this  technology.

     Because  of  the joint development of early N-Viro patents with the Medical
College  of Ohio ("MCO"), in 1995, the Company and MCO agreed that the rights of
MCO  to  any  intellectual  property  of  value  to  the Company in development,
patentable  or  patented  would  generate royalties to MCO.  The Company and MCO
have  also  agreed  that  future  claims  to the N-Viro Soil process is 0.25% 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, 2002 is $56,556.

ORGANIZATION
     Day-to-day  operations, including management of the Toledo, Ohio processing
facility,  and  support  functions,  is  directed by the Company's President and
Chief  Executive  Officer.  Support  functions  include  alkaline  admixture
procurement and sales, product market development and sales, regulatory affairs,
and  licensee  support.  Domestic sales and marketing and project development is
directed  by the Company's Chief Operating Officer and Executive Vice-President,
who  coordinates internal staff, a network of manufacturers representatives, and
consultants.  International  sales  and marketing, legal affairs and stockholder
relations  are directed by the Company's Chief Executive Officer.  The company's
Chief  Financial  Officer  has  responsibility  for  all  finance and accounting
functions  and  reporting,  filings with the Securities and Exchange Commission,
and  serves  as  Corporate  Treasurer  and  Secretary  of  the  Board.

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

                                 _____________
                                   The Agents
                                   ----------
          Agent                                   Territory
          -----                                   ---------
     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

     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 the Company
for  the  rights  to  market  or  use  the  N-Viro  Process  in their respective
territories.  Typically,  the agreements with the Agents provide for the Company
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.

INDUSTRY  OVERVIEW

     Sludge  Management  Practices  and  the 40 CFR part 503 Sludge Regulations.
Historically,  sludge  management  has  involved either disposal, principally by
landfilling,  incineration,  ocean  dumping  and  surface  disposal,  or  land
application  for beneficial use.  On February 19, 1993, the EPA published the 40
CFR  part  503 Sludge Regulations ("part 503 Regs") under the Clean Water Act of
1987  implementing the EPA's "exceptional quality" sludge program.  The part 503
Regs  establish  sludge  use  and disposal standards applicable to approximately
35,000  publicly  and  privately-owned wastewater treatment plants in the United
States,  including  primary  publicly-owned treatment works ("POTWs"), secondary
and  advanced  treatment POTWs, privately-owned treatment works, federally-owned
treatment  works and domestic septage haulers.  The EPA currently estimates that
the 13,000 to 15,000 POTWs generate 110 to 150 million wet metric tons of sewage
sludge  per  year.  Under  the  part  503  Regs,  sludge  may  be disposed of in
municipal  solid  waste  landfills  approved  under  Subtitle  D of the Resource
Conservation  and Recovery Act ("RCRA"), or may be surface disposed, incinerated
or  land  applied  for  beneficial  use  in  accordance  with  the  requirements
established  by  the  part  503  Regs.

     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

     The  Company  is  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 the Company.  There can be no
assurance  that  the  Company will be able to maintain a competitive position in
the  sludge  treatment  industry.

     A  1988  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 was banned in December 1992, 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 the
Company cannot predict whether any of such competing treatment processes will be
more  or  less  successful  than  the  N-Viro  Process.  In  2000  the  primary
competition  to  N-Viro  technology  was  the  dumping  of  raw sewage sludge in
landfills.  While  such  practices  are  prohibited  in some states (e.g., North
Carolina  and  New  Jersey),  the  practice  is  accepted  by  the  USEPA.

ENVIRONMENTAL  REGULATION

     Various  environmental protection laws have been enacted and amended during
recent  decades  in  response  to  public  concern  over  the  environment.  The
Company's  operations  and  those of its licensees are subject to these evolving
laws  and  the  implementing  regulations.  The United States environmental laws
which  the Company believes are, or may be, applicable to the N-Viro Process and
the  land  application of N-Viro Soil include Resource Conservation and Recovery
Act  ("RCRA"),  as  amended  by the Hazardous and Solid Waste Amendments of 1984
("HSWA"),  the  Federal  Water  Pollution  Control Act of 1972 (the "Clean Water
Act"),  the  Clean  Air  Act  of  1970,  as  amended  (the "Clean Air Act"), the
Comprehensive  Environmental  Response,  Compensation,  and  Liability  Act
("CERCLA"),  the  Pollution  Prevention Act of 1990 and the Federal Insecticide,
Fungicide and Rodenticide Act ("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. 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 wastewater treatment plants in the
United States, including approximately 13,000 to 15,000 publicly owned treatment
works  ("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, the Company reviews
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, the Company does 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, the Company has 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,  the  Company  has  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,  the  Company  believes  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, the Company has 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
itself  and  its  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 (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,  the  Company  does  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 Amendments.  However, the Company or its
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.

     The Company believes 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), the Company has
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.  The Company believes 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,  the  Company  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.

EMPLOYEES

     As  of  December  31,  2002,  the Company had 17 employees in the following
capacities:  7  engaged in sales and marketing; 3 in finance and administration;
and 7 in operations.  The Company considers its relationships with its employees
to  be  satisfactory.

     The  Company  is  a  party to a collective bargaining agreement (the "Labor
Agreement")  covering  certain  employees  of  National  N-Viro  Tech,  Inc.,  a
wholly-owned  subsidiary  of the Company.  The employees that are covered by the
Labor  Agreement  work  at the Toledo, Ohio N-Viro facility which is operated by
the  Company  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 the Company considers its
relationships  with  the organization to be satisfactory.  At present, the Labor
Agreement  expires  October  31,  2004.

N-VIRO  FACILITIES

     To  date,  the  Company  principally  has  licensed  the  N-Viro Process to
municipalities  for  use  in  municipally-owned wastewater treatment plants. The
Company  has also operated, generally on a start-up basis, N-Viro facilities for
municipalities and currently operates one municipally-owned N-Viro facility on a
contract  management  basis.  In  most  cases, however, municipal licensees have
elected  to  design,  construct  and  operate  N-Viro  facilities independently.

     As  of  December  31,  2002,  there  were  more  than  40 N-Viro facilities
operating  throughout  the  world.  The  sludge  processing  capacity  of  these
facilities ranges from one to 200 dry tons per day.  Based upon reports received
from  N-Viro  facilities,  the  Company estimates they are processing wastewater
sludge at an annualized rate of over 140,000 dry tons per year.  The chart below
summarizes  the current annualized sludge processing volume for each of the five
largest  N-Viro  facilities  through  December  31,  2002.

<TABLE>
<CAPTION>


Facility Location              Approximate Sludge Processing
                               Volume (dry tons/year)
<S>                            <C>
Middlesex County, New Jersey   56,600
Wilmington, Delaware           12,900
Syracuse, New York             11,900
Toledo, Ohio                    9,300
Parker Ag Services - Colorado   8,900
</TABLE>


     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  the  Company  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.  Such a
facility  can  be  completed  in  approximately  six  months,  but  could  take
substantially longer, depending on the size and complexity of the facility.  The
N-Viro  Process  produces  ammonia  in  various concentrations, depending on the
characteristics  of  the sludge.  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.
     The Company had 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 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 the
Company  and  the  Company  does  not  actively  market the use of this process.

SEGMENT  INFORMATION

     EARNINGS  VARIATION  DUE  TO  BUSINESS  CYCLES  AND  SEASONAL FACTORS.  The
Company's operating results can experience quarterly or annual variations due to
business cycles, seasonality and other factors.  The market price for its common
stock  may decrease if its operating results do not meet the expectations of the
market.

     Currently,  approximately  45%  of the Company's revenue is from management
operations, 51% from other domestic operations, 3% 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 the
Company's  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  8  hereof.

     COMPETITION.  The  Company  competes  against  companies  in  a  highly
competitive  market  and  has fewer resources than most of those companies.  Its
business  competes within and outside the United States principally on the basis
of  the  following  factors:

<TABLE>
<CAPTION>


SEGMENT         Management         Other Domestic        Foreign               Research &
                Operations           Operations        Operations             Development
              --------------      ----------------     -------------          ------------
<S>           <C>                 <C>                <C>                  <C>
COMPETITIVE
  FACTORS       Price                Price             Price                  Innovative
                                                                             Technologies

              Reliability           Reputation       Product quality and    Technical support
                                                      Specifications

              Product quality     Product quality    Custom design            Reputation
              and specifications  and specifications

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

              Technical support     Custom design     Technical support      Custom design

                Reputation        Equipment financing   Reputation         Equipment financing
                                    assistance                                assistance

</TABLE>


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

     RISKS  OF DOING BUSINESS IN OTHER COUNTRIES.  The Company conducts business
in  markets  outside  the  United  States, and expects 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.  The Company has not entered
into any currency swap agreements which may reduce these risks.  The Company may
enter  into  such  agreements  in the future if it is deemed necessary to do so.

     Current  economic  and  political conditions in the Asia Pacific and Middle
East regions have affected the Company outlook for potential revenue there.  The
Company  cannot  predict  the  full  impact of this economic instability, but it
could  have  a  material  adverse  effect  on  revenues  and  profits.


ITEM  2.          PROPERTIES

     The  Company's  executive and administrative offices are located in Toledo,
Ohio,  under  a lease that was renewed in January 2003. The Company believes its
relationship  with  its  lessor  is  satisfactory.  The  total  minimum  rental
commitment  for the years ending December 31, 2003 through 2006 is approximately
$56,000  each  year.  The  total  rental  expense  included in the statements of
operations  for  the  years  ended  December  31, 2002 and 2001 is approximately
$64,600  and $63,300, respectively. The Company also leases various equipment on
a  month-to-month  basis.


ITEM  3.          LEGAL  PROCEEDINGS.

     Prior  to  May  9,  2002, the Company's shares of voting, common stock were
traded  on the SmallCap Market of the National Association of Securities Dealers
Automated  Quotation  System  ("NASDAQ").  On  May 9, 2002, the Company received
notice  from the NASD that the Company's shares of voting, common stock would be
de-listed effective with the open of business on May 10, 2002. In July, 2002 the
Company  decided  not to pursue further appeal of the NASD's decision to de-list
its  voting  common  stock.  Currently, the Company's shares of common stock are
traded on the Over-The-Counter ("OTC") market. The Company does not believe that
the  delisting  of  its common stock from the Nasdaq SmallCap Market has or will
have  a  material  adverse  effect  on  the  financial  condition  or results of
operations  of  the  Company.  The  delisting of the Company's common stock from
NASDAQ,  however, may have a material adverse effect on the marketability of the
Company's  shares, as shares traded on the OTC market generally experience lower
trading  value  than  those  traded  on  the  organized  exchange.


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

     None.
<PAGE>

                                     PART II

ITEM  5.          MARKET  FOR  REGISTRANT'S  COMMON  EQUITY
               AND  RELATED  STOCKHOLDER  MATTERS

MARKET  INFORMATION

     The  Company's  shares  of  Common Stock are traded on the Over The Counter
Bulletin  Board under the symbol "NVIC.OB".  The price range of the Common Stock
since  January  1,  2001,  was  as  follows:

<TABLE>
<CAPTION>




Quarter             High    Low
                    ----    ----
<S>                 <C>     <C>
  First 2001        2.75    1.75
  Second 2001       2.18    1.54
  Third 2001        1.80    1.04
  Fourth 2001       1.15    0.80
  First 2002        1.25    0.75
  Second 2002       1.14    0.64
  Third 2002        0.88    0.40
  Fourth 2002       1.85    0.30
</TABLE>


The  Company's  stock  price  closed  at  $0.80  per  share  on  March 25, 2003.

HOLDERS

     As  of  March  25,  2003,  the number of holders of record of the Company's
Common  Stock  was  approximately  1,250.

DIVIDENDS

     The  Company  has  never  paid  dividends with respect to its Common Stock.

UNREGISTERED  SALES  OF  SECURITIES

     None.

ANNUAL  MEETING

     On  March  19,  2003,  the Company filed a Form 8-K that announced the 2003
Annual  Stockholders Meeting will be held on August 14, 2003, as approved by the
Board of Directors at a meeting on March 4, 2003.  This date is approximately 95
days later than the 2003 meeting date referenced in the Company's 2002 Notice of
Annual  Meeting  and  Proxy Statement dated April 5, 2002.  The reasons cited by
the  Board  for  delaying  the  annual  meeting  include the following:  (1) the
Company  is  planning on amending its 1998 Stock Option Plan, which is scheduled
to  expire in May 2003, and additional time is necessary to finalize the form of
the  amendment  prior  to  submitting  it to stockholders for approval;  (2) the
Company's  directors have had preliminary discussions on a possible amendment to
the  Company's  Certificate of Incorporation and By-Laws to change the number of
directors  on  its Board, and a special committee has been established to review
this  issue  and  issue a report to the Board in the next thirty (30) days, and,
any  actions  approved  by  the  Board  with  respect  to amending the Company's
Certificate  of  Incorporation  would need to be approved by the stockholders at
the  annual meeting in order to be effective; and  (3) the Company believes that
by  delaying the annual meeting it will realize cost savings through an enhanced
ability  to  rely  upon  internal  resources to prepare and administer the proxy
documents  and  other  public  filings, as compared to solely relying on outside
legal  counsel  to  prepare  such  items.


ITEM  6.          SELECTED  FINANCIAL  DATA

     The  following  selected  consolidated statement of operations data for the
years  ended  December 31, 1998, 1999, 2000, 2001 and 2002; and the consolidated
balance sheet data set forth below as of December 31, 1998, 1999, 2000, 2001 and
2002  respectively,  have  been  derived  from  the  financial statements of the
Company which have been audited by McGladrey & Pullen, LLP, independent auditors
for  the  year  ending December 31, 1998, and Hausser + Taylor, LLP, independent
auditors  for  the  years  ended December 31, 1999, 2000, 2001 and 2002.  In the
opinion  of  management,  the  financial  data  presented  below  reflect  all
adjustments (which are of a normal recurring nature) necessary to present fairly
the  Company's financial position and results of operations.  The data presented
below  should  be read in conjunction with "Management's Discussion and Analysis
of  Financial  Condition and Results of Operations" and the Financial Statements
and  Supplementary  Data  appearing  elsewhere  in  this  Form  10-K.

STATEMENT  OF  OPERATIONS  DATA  (IN  THOUSANDS,  EXCEPT  PER  SHARE  DATA):

<TABLE>
<CAPTION>




                               12/31/02    12/31/01    12/31/00   12/31/99    12/31/98
<S>                           <C>         <C>         <C>         <C>        <C>
Revenues                      $   5,238   $   4,383   $   4,166   $   4,749  $   3,929
Net income (loss)                   (96)     (1,267)       (845)        471       (373)
Net income (loss) per share   $   (0.04)  $   (0.48)  $   (0.32)  $    0.18  $   (0.15)
</TABLE>


BALANCE  SHEET  DATA  (IN  THOUSANDS):

<TABLE>
<CAPTION>



                                  12/31/02   12/31/01   12/31/00   12/31/99   12/31/98
                                  ---------  ---------  ---------  ---------  ---------
<S>                               <C>        <C>        <C>        <C>        <C>
Total assets                      $   4,028  $   4,133  $   4,752  $   4,772  $   3,783
Notes and line of credit payable  $   1,475  $   1,402  $     649  $     352  $     161
Shareholder Advance               $      24  $      24  $      22  $      49  $      47
</TABLE>



ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  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-K.  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,
                        2002    2001    2000
                       ------  ------  ------
<S>                    <C>     <C>     <C>
Technology fees         13.1%   19.4%   24.0%
Facility management     35.7%   37.3%   36.5%
Products and services   51.2%   43.3%   39.5%
Totals                 100.0%  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 the Company to fund ongoing site-specific research utilizing
the  N-Viro  technology.

     Facility  management  revenues  are  recognized  under  contracts where the
Company  itself  manages the N-Viro Process 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  the  Company  and  the Agents to N-Viro facilities;
service  fee  revenue  for the management of alkaline admixture, which represent
fees  charged by the Company 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 the Company;  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.

     The Company's policy is to record fully revenues payable pursuant to agency
and  license agreements when the Company has fulfilled its obligations under the
relevant  contract,  except  when  the  license  agreement pertains to a foreign
contract.  In  this  case revenue is recorded when cash is received and when the
Company  has  fulfilled  its  obligations  under  the  relevant  contract.

RECENT  DEVELOPMENTS
     None.


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>




(Dollars in thousands)                   Year Ended     Period to     Year Ended     Period to     Year Ended
                                        December 31,     Period      December 31,     Period      December 31,
                                            2002       Percentage        2001       Percentage        2000
                                                         Change                       Change
-------------------------------------  --------------  -----------  --------------  -----------  --------------
COMBINED STATEMENT OF
OPERATIONS DATA:
<S>                                    <C>             <C>          <C>             <C>          <C>
Revenues                               $       5,238         19.5%  $       4,383          5.2%  $       4,166

Cost of revenues                               3,381         21.0%          2,795         14.7%          2,437

Gross profit                                   1,857         16.9%          1,588        (8.2%)          1,729

Operating expenses                             1,878       (30.9%)          2,717         12.8%          2,408

Operating loss                                   (21)           *          (1,129)           *            (679)

Non-operating income (expense)                   (75)           *            (138)           *             146

Loss before income tax expense                   (96)           *          (1,267)           *            (533)
Federal and state income tax expense               0            *               0            *             312

Net loss                               $         (96)           *   $      (1,267)           *   $        (845)
<FN>


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

</TABLE>





<TABLE>
<CAPTION>

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

Cost of revenues                         64.6                  63.8                   58.5

Gross profit                             35.4                  36.2                   41.5

Operating expenses                       35.8                  62.0                   57.8

Operating loss                           (0.4)                (25.8)                 (16.3)

Non-operating income (expense)           (1.4)                 (3.1)                   3.5

Income (loss) before income tax expense  (1.8)                (28.9)                 (12.8)

Federal and state income tax expense      0.0                   0.0                    7.5

Net loss                                 (1.8%)              (28.9%)                 (20.3%)
</TABLE>


COMPARISON  OF  YEAR  ENDED  DECEMBER 31, 2002 WITH YEAR ENDED DECEMBER 31, 2001

     Revenues  increased  $855,000,  or  19.5%, to $5,238,000 for the year ended
December  31,  2002  from  $4,383,000 for the year ended December 31, 2001.  The
increase  in  revenue was due to the following:  revenues from one-time domestic
license  or  international territory fees increased $59,000, to $92,000 for 2002
from  $33,000  for  2001;  revenues  from  existing on-line facilities increased
$942,000  to $5,146,000 from $4,204,000 for 2001.  This increase in revenue from
existing on-line facilities was primarily from:  the recognition of a new source
of  revenue  for 2002, fees derived from the management of alkaline admixture of
$520,000,  an  increase  in  facility  management fee operations of $235,000, an
increase  in  alkaline admixture revenue of $373,000, an increase in commission,
product  and  consulting  revenue  totaling  $46,000,  offset  by  decreases  in
royalties  of  $182,000, research and development project revenue of $42,000 and
leased  equipment  revenue  of $10,000.  An additional decrease in gross revenue
was  the  $144,000 in equipment sales in 2001 to an existing licensee who is not
yet  on-line.  There  were  no equipment sales in 2002.  The mix of revenues for
2002  continued  to change from previous years, in that the Company continues to
move  towards  a  higher  amount  of  revenues  derived  from ongoing licensees.

     Gross Profit increased $269,000, or 16.9%, to $1,857,000 for the year ended
December  31,  2002  from  $1,588,000 for the year ended December 31, 2001.  The
increase in gross profit was primarily due to the increased revenue derived from
the  management  of alkaline admixture, facility management and sale of alkaline
admixture,  and  offset  primarily  by a decrease in royalty and equipment sales
revenue.  The  Company's  largest  increase in revenue in 2002 was from the fees
received  on  the  management  of  alkaline admixture, which was a new source of
revenue  for 2002.  The Company is paid a fee by certain customers to manage the
mineral  by-product used in the N-Viro process.  The overall gross profit margin
decreased  slightly  to  35%  in  2002  from  36%  for  2001.

     Operating  expenses decreased $839,000, or 30.9% to $1,878,000 for the year
ended  December  31,  2002 from $2,717,000 for the year ended December 31, 2001.
The  primary reason for the decrease in operating expenses was the settlement in
late  2001  by  the Company for the defense of its patents and licensing rights,
which  was  approximately $549,000 less in 2002 than 2001.  Selling, general and
administrative  expenses also decreased by $290,000, which was primarily due to:
a  decrease  of  $141,000  in  legal  fees,  a  decrease of $93,000 in salaries,
employee  benefits  and  consultants  and  a  decrease  in penalties of $68,000.

     Nonoperating  expense  decreased  by  $63,000 to expense of $75,000 for the
year  ended  December  31,  2002  from  expense  of  $138,000 for the year ended
December  31,  2001.  The  decrease  was primarily due to the Company's share of
decrease in losses of Florida N-Viro, LP by $102,000 from 2001, partially offset
by decreases in interest income of $21,000 and the loss on the sale of assets of
$16,000.

     The  Company recorded a net loss of $96,000 for the year ended December 31,
2002  compared to a net loss of $1,267,000 for the year ended December 31, 2001.

     The  Company  incurred  a  loss  of  approximately  $35,000 on its share of
Florida  N-Viro, LP in 2002, a decreased loss of $102,000 from 2001. The Company
anticipates  this operation to continue to be marginally profitable in 2003. The
Company  is  actively  pursuing sale of its interest in this investment. See the
discussion  in Liquidity and Capital Resources section later in this Item 7. The
audited financial statements of Florida N-Viro, LP are included in this document
after  the Company's financial statements as Item 15(d), Financial Statements of
Subsidiaries  not  Consolidated.

COMPARISON  OF  YEAR  ENDED  DECEMBER 31, 2001 WITH YEAR ENDED DECEMBER 31, 2000

     Revenues  increased  $217,000,  or  5%,  to  $4,383,000  for the year ended
December  31,  2001  from  $4,166,000 for the year ended December 31, 2000.  The
increase  in  revenue was due to the following:  revenues from one-time domestic
license  or  international territory fees decreased $202,000 to $34,000 for 2001
from  $236,000  for  2000;  revenues  from existing on-line facilities increased
$419,000  to  $4,349,000 from $3,930,000 for 2000, primarily from an increase in
royalties  of  $81,000, an increase in management fee operations of $116,000, an
increase  in  alkaline  admixture revenue of $86,000, an increase in product and
consulting  revenue  totaling  $43,000,  offset  by  decreases  in  research and
development  project revenue of $28,000 and testing revenue (now billed directly
from an outside laboratory) of $25,000.  In 2001 the Company realized a new type
of  revenue  when  it recorded $144,000 in cash received from a foreign licensee
from  the  sale  of equipment for the start-up of operations.  Also, in 2001 the
Company  recorded  no  gross  royalty revenue from its former European licensee,
N-Viro  Worldwide,  Ltd.,  a  decrease  of  $25,000  from  2000.

     Gross  Profit  decreased  $141,000, or 8%, to $1,588,000 for the year ended
December  31,  2001  from  $1,729,000 for the year ended December 31, 2000.  The
decrease  in  gross profit was primarily due to the increased revenue from sales
of  equipment,  facility  management  and alkaline admixture revenue which has a
higher associated cost of revenue than other types, and to the decreased revenue
from  licensing  which  has  a  lower associated cost of revenue.  The Company's
largest  increase in revenue in 2001 was from the sale of equipment, which has a
lower gross profit margin than the Company's overall profit margin.  The overall
gross  profit  margin decreased to 36% in 2001 from 42% for 2000.  This decrease
in  gross  profit  margin  was  primarily  due  to  the decrease in one-time fee
revenue,  and  furthered  by  the  increase  in revenue from sales of equipment,
facility  management  operations  and  alkaline  admixture revenue, which are at
higher  and  lower  gross  profit  margins,  respectively.  One  of  the factors
contributing to the higher cost of revenue and lower margins was that management
operations  saw  increases in product distribution costs for the N-Viro Soil(TM)
product, which costs were primarily affected by the weather.  Another factor was
the  cost  increase to the Company in 2001 for the alkaline additive used in the
process.  This  increase was primarily due to higher transportation costs, which
themselves were driven partially by increases in fuel prices.  However, in early
2002,  the  Company  secured  a  major source of lower cost alkaline additive in
early  2002,  which  will  generate  revenue from the management of the alkaline
additive.  This  source  should  increase  the  gross  profit  margin  for these
locations.  The  gross  profit  margin from existing on-line facilities remained
the  same  from  the  previous  year  at  39%.

     Operating  expenses  increased  $309,000, or 13% to $2,717,000 for the year
ended  December  31,  2001 from $2,408,000 for the year ended December 31, 2000.
The  main  reason  for  this  increase  was  that  the Company incurred fees and
expenses  of  approximately  $650,000 in 2001 for the defense of its patents and
licensing  rights,  which  was  approximately  $520,000 more than in 2000.  This
increase  was  partially  offset  by a total of approximately $210,000 primarily
for:  a  decrease  of  $200,000 in salaries and employee benefits, a decrease in
shareholder  relations expense of $80,000,  a $58,000 writedown of the Company's
allowance for bad debts, and an increase of $130,000 in legal fees, interest and
penalties  in  connection  with  the  resolution  of issues related to sales tax
audits  in  North  Carolina  and  South  Carolina.  Because  certain significant
litigation  involving the Company was concluded in 2001, the Company anticipates
lower  operating  expenses  for  current  ongoing  operations  for  2002.

     Nonoperating  income (expense) decreased by $284,000 to expense of $138,000
for  the year ended December 31, 2001 from income of $146,000 for the year ended
December  31,  2000.  The  increase was primarily due to the recovery in 2000 of
$275,000  of a bad debt previously written off.  The bad debt previously written
off was a note receivable from a Canadian licensee, which was fully reserved for
in  allowance  for  bad  debts.

     In  1997,  the  Company  recorded  a deferred tax asset and a corresponding
income  tax  benefit  of  $312,000  to recognize the benefit of $800,000 in loss
carryforwards  expected  to  be  realized.  The Company believed that sufficient
taxable  income  would be generated in the near term, as the Company had changed
its  strategic  focus  to its profitable core business.  Based on the results of
the  Company's  2000  operating  performance,  the  Company  believed  that  the
recording  of a deferred tax asset for the tax benefit of its net operating loss
carryforward  was  no  longer  appropriate.  As  a  result, in 2000, the Company
provided  an  additional  valuation allowance against the tax benefit associated
with  the  net  operating  loss and recognized expense of $312,000 to reduce the
recorded  tax  benefit  of  the  net  operating  loss  carryforwards  to  zero.

     The  Company  recorded a net loss of $1,267,000 for the year ended December
31,  2001  compared  to  a  net loss of $845,000 for the year ended December 31,
2000.

     The  Company  incurred  a  loss  of  approximately $137,000 on its share of
Florida  N-Viro,  LP in 2001, an increased loss of $8,000 from 2000. The audited
financial  statements  of Florida N-Viro, LP are included in this document after
the  Company's  financial  statements  as  Item  15(d),  Financial Statements of
Subsidiaries  not  Consolidated.

LIQUIDITY  AND  CAPITAL  RESOURCES

     The  Company  had  a working capital deficit of approximately $1,040,000 at
December  31,  2002  compared  to  a deficit of $955,000 at December 31, 2001, a
decrease of approximately $85,000.  Current assets at December 31, 2002 included
cash of $405,000 (including restricted cash of $400,000), which is a decrease of
about  $41,000  from  December  31,  2001.  The  decrease in working capital was
principally  due  to  the  net  loss  for  the  year.

     In 2002 the Company's cash flow generated from operations was approximately
$175,000,  an  improvement  of approximately $541,000 from 2001. No unusual cash
transactions  were  recorded  in  2002.

     During the year, the Company had available a $750,000 line-of-credit with a
bank  which  was  scheduled  to expire January 31, 2003.  Borrowings against the
line  bore interest at prime plus 1% on borrowings up to $400,000 and prime plus
3%  for borrowings above $400,000.  Borrowings, which were collateralized by all
of  the  Company's assets including accounts receivable, inventories, equipment,
assignment  of  a  $400,000  certificate  of  deposit  and assignment of certain
contracts,  were  due on demand.  At December 31, 2002, the Company had borrowed
$656,087  against the line.  In February, 2003, this line of credit was paid off
with the redemption of the certificate of deposit and additional debt secured by
another  local  bank,  discussed  in  the  following  section.

     In  February  2003 the Company closed on an $845,000 credit facility with a
local  bank.  This  senior  debt credit facility is 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 assets of the Company.  The Company will use
the  funds  to  refinance  existing  debt  and  to  provide  working  capital.
Previously,  the  Company  had  a $750,000 line of credit with another financial
institution,  secured  by a $400,000 restricted Certificate of Deposit, required
and  held by this financial institution.  Effectively, the former line of credit
provided only $350,000 of additional working capital.  The effective increase in
the  line will provide the Company with additional working capital, and the debt
refinance will provide lower cost and longer term debt, improving cash flow.  To
secure  the  credit  facility,  the  Company  was  required  by  the  financial
institution  to  obtain  Additional  Collateral  of  $100,000 from a real estate
mortgage  from a third party.  Messrs. J. Patrick Nicholson, the Chairman of the
Board  and  Consultant to the Company; Michael G. Nicholson, the Company's Chief
Operating  Officer  and a Director; Robert F. Nicholson, a Company employee, and
Timothy  J.  Nicholson,  a  Company  employee,  ("the  Nicholsons") collectively
provided  the $100,000 Additional Collateral.  In exchange for their commitment,
the  Company  has  agreed to provide the Nicholsons the following: (1) an annual
fee  in  an  amount  equal  to  two  percent  (2%) of the aggregate value of the
Mortgage  or  Mortgages  encumbering  the  Additional  Collateral,  which  fee
originally  shall  be $2,000.00 per annum;  (2) interest at an annual rate of 5%
of  the  aggregate value of the Mortgage or Mortgages encumbering the Additional
Collateral  beginning on the first anniversary date of the closing of the Credit
Facility,  and (3) grant, jointly, a warrant to acquire in the aggregate, 50,000
shares  of  the  Company's  voting common stock at a purchase price of $0.90 per
share,  which  was the closing market price of the Company's common stock on the
prior  business  day  to  the  closing of the Credit Facility.  In addition, the
Company  granted  to  the  Nicholsons  a  lien  upon the Company's inventory and
accounts  receivable.  This  lien  is subordinated to both existing liens on the
Company's  assets and all liens granted by the Company in favor of the financial
institution  providing  the  Credit  Facility.

     The  normal  collection  period  for  accounts receivable are approximately
45-60 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.  The Company lowered its reserve for bad
debts  during  2002  by  $47,500 as a result of both a decrease in the amount of
outstanding trade receivables and the collection on accounts previously reserved
for.

     In  early  1994  the  Company  purchased  a  site in Fort Meade, Florida to
develop a Company-owned N-Viro processing facility.  Construction was started at
the  site  in  late  1994 and the facility became operational in early 1995.  In
December  1995,  the Company entered into a Memorandum of Understanding with VFL
Technologies,  Inc.  ("VFL") to jointly own, through a limited partnership named
Florida  N-Viro,  LP  ("Florida  N-Viro"),  the  Fort  Meade,  Florida facility,
beginning  January 1, 1996.  On December 31, 1997, the members of Florida N-Viro
Management,  LLC,  the  management  company  of  the  Florida entity, approved a
Settlement Agreement that amended certain provisions and increased the Company's
ownership  percentage  in  Florida  N-Viro  to  50%.

     In  August 2000, a Memorandum of Understanding was entered into between the
Company  and  VFL,  clarifying  decisions,  information and additional operating
requirements  of  Florida  N-Viro.  Later that month, the Company loaned Florida
N-Viro  $120,000  cash  to  help  meet  operating  expenses,  and  was  issued a
promissory  note.  An  additional $50,000 cash was loaned in November 2000 under
similar  circumstances,  and a second promissory note was issued to the Company.
Both  promissory  notes  are  unsecured and are payable on demand, and both bear
interest  at  9.75%.

     In  January  2001,  a  Special Meeting of the Board of Directors of Florida
N-Viro  Management  LLC  was  held.  Among the decisions made were amendments to
both  the Partnership Agreement and the Memorandum of Understanding entered into
in  August  2000.  The  aggregate ownership percentages in the investment of the
Company and VFL in Florida N-Viro were amended to 47.5% and 52.5%, respectively,
effective January 1, 2001.  Also, a decision was made to relieve the requirement
of  the  Company  from funding any additional losses of Florida N-Viro, provided
the  Company  loan an additional total of $180,000 between January and February,
2001,  to be evidenced by a third promissory note.  The third note is unsecured,
due  on demand and bears interest at prime (tied to a local Bank) plus 0.25%, or
the applicable federal rate, whichever is higher.  All loans made by the Company
to  Florida  N-Viro  in  2000  and  2001,  were  made to equalize each partner's
advances  to  the  partnership  at  the time, and were required after additional
monies were advanced by VFL during 2000.  VFL has subsequently loaned additional
monies  to  Florida  N-Viro  to fund operations, totaling approximately $300,000
through  December  31,  2002.  The  Company  has  made no additional loans since
January  2001.  Because  Florida  N-Viro  has  not  remitted any interest to the
Company  to  date,  the  Company  set  up  a  reserve  at  December  31, 2002 of
approximately  $63,000 for the full amount of the accrued interest on all notes.

     The  Company  is  currently  actively  pursuing  sale  of its investment in
Florida N-Viro, LP, 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.

     The  Company paid certain amounts due to Hydropress Environmental Services,
Inc.  ("Hydropress")  under  a  Settlement Agreement dated December 14, 2001 and
pursuant  to  the  terms  of  a  promissory  note  (the "Hydropress Note").  The
original  principal amount of the Hydropress Note was $204,587, was non-interest
bearing  and matured on October 15, 2002 with a balloon payment of $144,587.  At
September 30, 2002, the outstanding principal balance on the Hydropress Note was
$144,587,  which was paid in full to Hydropress in October 2002.  In conjunction
with  the  final  discharge  of  the  Hydropress  Note,  the Company arranged an
unsecured  loan  from a third-party licensee for $144,587, with monthly payments
of $13,966 due for one year through October 15, 2003.  At December 31, 2002, the
outstanding  principal  balance  on  the  note  was  $123,196.

     The Company is currently working with the investment banking firm of Laux &
Company  of  Medina,  Ohio,  with  respect  to  a proposal to obtain up to $1.25
million  in equity financing.  The Company hopes to sell up to 500,000 shares of
preferred  stock  at  a  price  per  share  of  $2.50.  The  specific  terms and
conditions  applicable  to  the  preferred shares will be determined once Laux &
Company  has  identified  a potential purchaser.  There can be no assurance that
the  Company will be successful in finding a buyer for the preferred stock or in
selling  these  shares.  If  the shares are sold, the proceeds from the offering
will  be  used  to  supplement  the  Company's  working  capital.

     Also, the Company has gone forward on contracts with two investment banking
firms  with  respect  to  a  proposal to obtain up to $800,000 of mezzanine debt
financing.  The  specific  terms  and  conditions applicable to the debt will be
determined  once either firm has identified a potential debtor.  There can be no
assurance  that  the  Company  will  be  successful  in finding a lender for the
financing.  If the financing is obtained, the proceeds from the offering will be
used  to  supplement  the  Company's  working  capital.

     The  Company  is  currently  in  discussions  with several companies in the
cement  and  fuel  industries  for  the development and commercialization of the
patented  N-Viro  fuel  technology.  Because  these  discussions  are  still  in
progress,  there  can  be  no  assurance  they  will  be  successful.

     The  Company  continues  to  focus on the development of regional biosolids
processing  facilities.  Currently  the  Company is in negotiations with several
privatization  firms  to  permit  and  develop independent, regional facilities.

     The Company expects continued improvements in operating results for 2003 as
a  result  of  maintaining  lower  administrative costs, along with realized and
expected  new sources of revenue.  Additionally, market developments and ongoing
discussions  with  companies in the cement, fuel and wastewater industries could
provide  enhanced  liquidity  and  positively  impact  2003  operations.

     Current  market trends and Company business development provide significant
basis  for  the  Company's optimistic outlook for 2003 and beyond.  The national
public attack on Class B levels of sludge treatment is rapidly moving the market
to  Class  A  technologies, of which the Company's patented N-Viro processes are
very  cost  competitive,  and  well  established  in  the  market  place.  The
development  and  patenting  of  new  technologies  for animal manure treatment,
bio-fuel and nematode control have the potential to expand the Company's revenue
base  over  the  next  five  years  and  beyond.

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:

     The  accompanying financial statements have been prepared assuming that the
Company  will continue as a going concern. The Company has in the past sustained
substantial  net  and  operating  losses.  In  addition,  the  Company  has used
substantial  amounts  of working capital in its operations which has reduced the
Company's  liquidity to a low level. These matters raise substantial doubt about
the  Company's  ability to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability and classification
of  recorded  assets  or  the amounts and classification of liabilities that may
result  from  the  outcome  of  these  uncertainties

     Non-domestic  license  and  territory fees - The Company does 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  -  The  Company  estimates  losses  for
uncollectible  accounts  based  on  the aging of the accounts receivable and the
evaluation  and  the  likelihood  of  success  in  collecting  the  receivable.

     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.

     Equity  Method  Investment  -  The  Company accounts for its investments in
joint  ventures  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,  2002.

     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.  As  required  under  current accounting standards, the
Company  tests  for  impairment  when events and circumstances indicate that the
assets  might  be  impaired  and  the  carrying value of those assets may not be
recoverable.

     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  the  Company having the same or similar terms and maturities.

     Income  Taxes  -  The Company assumes the deductibility of certain costs in
income  tax  filings  and  estimates the recovery of deferred income tax assets.

     New Accounting Standards - In June 2001, the Financial Accounting Standards
Board  ("FASB")  issued  SFAS  No.  142, "Goodwill and Other Intangible Assets."
Under  SFAS  No.  142,  goodwill and intangible assets deemed to have indefinite
lives  are  no  longer  amortized  but are subject to periodic impairment tests.
Other  intangible  assets continue to be amortized over their useful lives. SFAS
No.  142  was  adopted  by  the  Company  in  2002.

     In  August  2001,  the  FASB  issued  SFAS  No.  143, "Accounting for Asset
Retirement  Obligations,"  which  is  effective the first quarter of fiscal year
2003.  SFAS  143  addresses  financial  accounting and reporting for obligations
associated  with the retirement of tangible long-lived assets and the associated
asset  retirement  cost.

     In  October  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting for the
Impairment  or  Disposal of Long-lived Assets," which was adopted by the Company
in  2002.  SFAS  No.  144  supercedes  SFAS No. 121 and modifies and expands the
financial  accounting and reporting for the impairment or disposal of long-lived
assets  other  than  goodwill.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  Provisions  of  SFAS  No.  145 become effective in 2002 and 2003.
Under  SFAS  No. 145, gains and losses from the extinguishment of debt should be
classified  as  extraordinary items only if they meet the criteria of Accounting
Principles  Board  Opinion  No.  30.  SFAS  No.  145  also  addresses  financial
accounting  and  reporting for capital leases that are modified in such a way as
to  give  rise  to  a  new  agreement  classified  as  an  operating  lease.

     In  June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for Costs
Associated  with  Exit  or  Disposal Activities," which is effective for exit or
disposal  activities  initiated after December 31, 2002.  SFAS No. 146 nullifies
Emerging  Issues  Task  Force Issue No. 94-3, "Liability Recognition for Certain
Employee  Termination  Benefits  and  Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)."  Under SFAS No. 146, a liability is
required  to  be recognized for costs, including certain lease termination costs
and  employee termination benefits, associated with an exit or disposal activity
when  the  liability is incurred.  SFAS No. 146 applies to costs associated with
an  exit  activity  that does not involve an entity newly acquired in a business
combination  or  with a retirement or disposal activity covered by SFAS Nos. 143
and  144.

     In  November  2002, the FASB issued FIN 45, which expands previously issued
accounting  guidance and disclosure requirements for certain guarantees.  FIN 45
requires  the  recognition  of  an  initial  liability  for the fair value of an
obligation  assumed  by  issuing  a  guarantee.  The  provision  for  initial
recognition  and  measurement  of the liability will be applied on a prospective
basis  to  guarantees  issued  or  modified  after  December  31,  2002.

     In  December  2002,  the  FASB  issued  SFAS  No.  148,  "Accounting  for
Stock-Based,  Compensation  -  Transition  and Disclosure," that amends SFAS No.
123,  "Accounting  for Stock-Based Compensation," to provide alternative methods
of  transition  to  the fair value method of accounting for stock-based employee
compensation.  SFAS  No.  148  also amends the disclosure provisions of SFAS No.
123 and APB Opinion No. 28, "Interim Financial Reporting," to require disclosure
in  the summary of significant accounting policies of the effects of an entity's
accounting  policy with respect to stock-based employee compensation on reported
net  income  and  earnings per share in annual and interim financial statements.
The  Statement  does  not amend SFAS No. 123 to require companies to account for
employee  stock options using the fair value method.  The Statement is effective
for  fiscal  years  beginning  after  December  15,  2002.

     The  adoption  of  the  new  standards  did  not,  or  is  not expected to,
materially  affect  the  Company's financial position and results of operations.

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

RISK  FACTORS

THE  COMPANY'S  LICENSEES  ARE  SUBJECT  TO  EXTENSIVE  AND  INCREASINGLY STRICT
FEDERAL,  STATE  AND  LOCAL  ENVIRONMENTAL  REGULATION  AND  PERMITTING

     The  Company's  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  licensee  has  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 licensee's costs of its operations that in
turn  could  have  a  material  and adverse effect on the Company's business and
financial  condition.

THE  ABILITY  TO  GROW  MAY  BE  LIMITED  BY  COMPETITION
     The  Company  provides a variety of technology and services relating to the
treatment  of  wastewater  residuals.  The  Company  is  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.  Some  of  these
competitors  are  larger  and  have  greater  capital  resources.

     The Company derives a substantial portion of revenue from services provided
under municipal contracts, and many of these are subject to competitive bidding.
The  Company also intends to bid on additional municipal contracts, however, and
may not be the successful bidder. In addition, some of its contracts will expire
in  the  future  and those contracts may be renewed on less attractive terms. If
the  Company  is  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  its  business,  financial  condition  and  results  of
operation.

THE  COMPANY'S  CUSTOMER  CONTRACTS MAY BE TERMINATED PRIOR TO THE EXPIRATION OF
THEIR  TERM.

     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 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  and  financial  condition.

A  SIGNIFICANT  AMOUNT  OF THE COMPANY'S 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.

     The Company's 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,
2002,  our single largest customer accounted for approximately 45 percent of our
revenues and our top two customers accounted for approximately 62 percent of our
revenues.

THE  COMPANY  IS  AFFECTED  BY  UNUSUALLY  ADVERSE  WEATHER  CONDITIONS

     The  Company's 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  the  Company's  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  to  run  the trucks that purchase 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.  The  Company  is 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.

THE  COMPANY  IS  DEPENDENT  ON  THE  MEMBERS  OF  ITS  MANAGEMENT  TEAM

     The Company is highly dependent on the services of its management team, the
loss  of  any  of  whom  may  have a material adverse effect on its business and
financial  condition.

     The  Company has entered into employment agreements with certain members of
its management team, which contain non-compete and other provisions. The laws of
each  state  differ concerning the enforceability of non-competition agreements.
The  Company 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 its key executive officers were to leave and the courts
refused  to  enforce  the  non-compete covenant, the Company might be subject to
increased  competition,  which  could  have a material and adverse effect on its
business  and  financial  condition.

THE  COMPANY'S INTELLECTUAL PROPERTY MAY BE MISAPPROPRIATED OR SUBJECT TO CLAIMS
OF  INFRINGEMENT

     The  Company attempts to protect our intellectual property rights through a
combination  of  patent,  trademark, and trade secret laws, as well as licensing
agreements.  The  Company's 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.

     The  Company's  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 the Company's ability to
offer  services.  The Company has not conducted an independent review of patents
issued  to  third  parties.

     The  Company  also  relies  on  unpatented  proprietary  technology.  It is
possible  that  others will independently develop the same or similar technology
or  otherwise  obtain  access  to  its  unpatented technology. If the Company is
unable  to  maintain  the  proprietary  nature  of our technologies, it could be
materially  adversely  affected.

     The  Company  cautions  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.
Some,  but  not  all,  of  the  factors  that  could  cause actual results to be
different  than  those  anticipated  or predicted by the Company include:  (i) a
deterioration  in economic conditions in general;  (ii) a decrease in demand for
the Company's products or services in particular;  (iii) the Company's 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 the
Company's  products  or  services;  (v)  increases  in  the  Company's 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 customers of the Company.
For  example,  while the Company anticipates obtaining the permits and approvals
necessary  for  the  Bio-Fuel pilot program to commence operations in 2003, such
program may not begin until 2004 or ever.  Delay or cancellation with respect to
this  project could result from  (1) a failure to achieve acceptable air quality
levels  in  preliminary  testing,  (2) costs associated with the use of Bio-Fuel
significantly  exceeding  current  estimates,  or  (3)  competing  technologies
rendering  the  Bio-Fuel  process  less  attractive.

INFLATION

     The  Company  believes that inflation has not had a material impact to date
on  the  Company's  operations.


ITEM  7A.          QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES
                   ABOUT  MARKET  RISK

     As  of  December  31,  2002,  the Company held $400,000 in a certificate of
deposit  with  its bank. Market risk is considered to be low, with the potential
for  loss of earnings, value or other changes in interest rates to be immaterial
to the Company. On February 26, 2003, this certificate of deposit was liquidated
and  the  proceeds  were  used to pay down the Company's line of credit with its
bank.

<PAGE>

ITEM  8.          FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA






                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE










REPORT  OF  INDEPENDENT  PUBLIC  ACCOUNTANTS

FINANCIAL  STATEMENTS
    Consolidated  balance  sheets
    Consolidated  statements  of  operations
    Consolidated  statements  of  stockholders'  equity
    Consolidated  statements  of  cash  flows
    Notes  to  consolidated  financial  statements

REPORT  OF  INDEPENDENT  PUBLIC  ACCOUNTANTS  ON
    ACCOMPANYING  INFORMATION

ACCOMPANYING  INFORMATION
    Schedule  II  -  Valuation  and  qualifying  accounts  and reserves
<PAGE>


                    Report of Independent Public Accountants
                  --------------------------------------------


To  the  Board  of  Directors
N-Viro  International  Corporation
Toledo,  Ohio


     We  have  audited  the  accompanying  consolidated balance sheets of N-Viro
International Corporation and subsidiaries as of December 31, 2002 and 2001, and
the related consolidated statements of operations, stockholders' equity and cash
flows  for each of the three years in the period ended December 31, 2002.  These
financial  statements  are  the responsibility of the Company's management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

     We  did  not  audit  the  financial  statements  of Florida N-Viro, L.P., a
limited  partnership,  the  investment in which is reflected in the accompanying
financial  statements  using  the equity method of accounting. The investment in
this  partnership represents 12% and 13% of total assets as of December 31, 2002
and  2001, respectively. The Company's share of the net loss of this partnership
represents  36%,  11% and 15% of the net loss of the Company for the three years
in the period ended December 31, 2002, respectively. The financial statements of
this partnership were audited by other auditors, whose report has been furnished
to  us,  and  our  opinion,  insofar  as  it  relates to amounts and information
relating  to  this  partnership,  is  based  solely  on the reports of the other
auditors.

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

     In  our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the  consolidated  financial  position  of  N-Viro International Corporation and
subsidiaries  as  of December 31, 2002 and 2001, and the consolidated results of
their  operations and their cash flows for each of the three years in the period
ended  December  31,  2002,  in  conformity with accounting principles generally
accepted  in  the  United  States  of  America.
<PAGE>

     The  accompanying financial statements have been prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed in Note 1D to the
financial  statements,  the Company has in the past and continues to sustain net
and  operating  losses. In addition, the Company has used substantial amounts of
working capital in its operations which has reduced the Company's liquidity to a
low  level.  At  December 31, 2002, current liabilities exceed current assets by
$1,040,210.  Additionally,  the  Company  has  been notified by the Nasdaq Stock
Market  that  it is in violation of the Market's listing standards for continued
listing  on  the Nasdaq SmallCap Market, which might further limit the Company's
ability  In  May  2002,  the  Company was removed from listing its shares on the
NASDAQ SmallCap Market, which might further limit the Company's ability to raise
equity  capital.  These  matters  raise  substantial  doubt  about the Company's
ability  to continue as a going concern. The financial statements do not include
any  adjustments  relating  to the recoverability and classification of recorded
assets or the amounts and classification of liabilities that may result from the
outcome  of  these  uncertainties.


                                             /s/  Hausser  +  Taylor  LLP
                                             ----------------------------
                                             HAUSSER  +  TAYLOR  LLP



Cleveland,  Ohio
March  19,  2003

<PAGE>

<TABLE>
<CAPTION>

                        N-VIRO INTERNATIONAL CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                           December 31, 2002 and 2001
                           --------------------------


                                                           2002        2001
                                                        ----------  ----------
ASSETS
------------------------------------------------------
<S>                                                     <C>         <C>
CURRENT ASSETS
Cash and cash equivalents:
  Unrestricted                                          $    4,935  $   45,427
  Restricted                                               400,000     400,000
Receivables:
Trade, net of allowance of $40,000 in 2002 and $87,501
in 2001                                                    659,932     854,011
Notes and other                                             16,358      22,000
Related parties                                                  -      24,461
Prepaid expenses and other assets                          137,257      51,158
Inventory, stated at lower of cost or market value         117,440           -
                                                        ----------  ----------
Total current assets                                     1,335,922   1,397,057

PROPERTY AND EQUIPMENT                                     559,095     479,541

INVESTMENT IN FLORIDA N-VIRO, L.P.                         490,583     525,086

INTANGIBLE AND OTHER ASSETS                              1,641,990   1,731,647
                                                        ----------  ----------



                                                        $4,027,590  $4,133,331
                                                        ==========  ==========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                              N-VIRO INTERNATIONAL CORPORATION

                                 CONSOLIDATED BALANCE SHEETS

                                 December 31, 2002 and 2001
                                 --------------------------



                                                                    2002           2001
                                                                -------------  -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------
<S>                                                             <C>            <C>
CURRENT LIABILITIES
Current maturities of long-term debt                            $    392,078   $    438,534
Line-of-credit                                                       656,087        503,613
Accounts payable                                                     957,716        991,344
Accrued liabilities                                                  370,251        418,926
                                                                -------------  -------------
Total current liabilities                                          2,376,132      2,352,417

LONG-TERM DEBT, LESS CURRENT MATURITIES                              426,738        460,342

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock, $.01 par value
  Authorized - 7,000,000 shares
  Issued - 2,700,933 shares                                           27,010         27,010
Additional paid-in capital                                        13,495,602     13,495,602
Retained earnings (deficit)                                      (11,613,002)   (11,517,150)
                                                                -------------  -------------
                                                                   1,909,610      2,005,462

Less treasury stock, at cost                                         684,890        684,890
                                                                -------------  -------------
Total stockholders' equity                                         1,224,720      1,320,572
                                                                -------------  -------------

                                                                $  4,027,590   $  4,133,331
                                                                =============  =============
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                           N-VIRO INTERNATIONAL CORPORATION

                        CONSOLIDATED STATEMENTS OF OPERATIONS

                     Years Ended December 31, 2002, 2001 and 2000
                     --------------------------------------------



                                                  2002          2001         2000
                                               -----------  ------------  -----------
<S>                                            <C>          <C>           <C>
REVENUES                                       $5,238,004   $ 4,382,664   $4,166,435

COST OF REVENUES                                3,381,413     2,794,950    2,436,942
                                               -----------  ------------  -----------

GROSS PROFIT                                    1,856,591     1,587,714    1,729,493

OPERATING EXPENSES
Selling, general and administrative             1,876,601     2,167,308    2,272,978
Patent litigation expense                             545       549,852      135,272
                                               -----------  ------------  -----------
                                                1,877,146     2,717,160    2,408,250
                                               -----------  ------------  -----------
OPERATING LOSS                                    (20,555)   (1,129,446)    (678,757)

NONOPERATING INCOME (EXPENSE)
Interest and dividend income                       42,914        63,739       29,509
Interest expense                                  (62,282)      (59,626)     (29,559)
Recovery of bad debt allowance                          -             -      275,000
Loss on sale of assets                            (21,426)       (5,005)           -
Loss from equity investment in joint venture      (34,503)     (136,880)    (128,701)
                                               -----------  ------------  -----------
                                                  (75,297)     (137,772)     146,249
                                               -----------  ------------  -----------

LOSS BEFORE INCOME TAXES                          (95,852)   (1,267,218)    (532,508)

Federal and state income taxes                          -             -      312,000
                                               -----------  ------------  -----------

NET LOSS                                       $  (95,852)  $(1,267,218)  $ (844,508)
                                               ===========  ============  ===========


Basic and diluted loss per share               $    (0.04)  $     (0.48)  $    (0.32)
                                               ===========  ============  ===========

Weighted average common shares outstanding      2,577,433     2,635,334    2,635,475
                                               ===========  ============  ===========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                    N-VIRO INTERNATIONAL CORPORATION

                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                              Years Ended December 31, 2002, 2001 and 2000
                              --------------------------------------------


                                     Additional     Retained
                                       Common       Paid-in       Earnings      Treasury
                                        Stock       Capital       (Deficit)      Stock        Total
                                     -----------  ------------  -------------  ----------  ------------
<S>                                  <C>          <C>           <C>            <C>         <C>
BALANCE JANUARY 1, 2000              $    26,882  $13,382,093   $ (9,405,424)  $(617,977)  $ 3,385,574

Net loss                                       -            -       (844,508)          -      (844,508)
Exercise of qualified stock options           24        3,726              -           -         3,750
Issuance of common stock for
fees and services                            104       28,014              -           -        28,118
Other                                          -       84,769              -           -        84,769
                                     -----------  ------------  -------------  ----------  ------------

BALANCE DECEMBER 31, 2000                 27,010   13,498,602    (10,249,932)   (617,977)    2,657,703

Net loss                                       -            -     (1,267,218)          -    (1,267,218)
Purchase of treasury stock                     -            -              -     (66,913)      (66,913)
Other                                          -       (3,000)             -           -        (3,000)
                                     -----------  ------------  -------------  ----------  ------------

BALANCE DECEMBER 31, 2001                 27,010   13,495,602    (11,517,150)   (684,890)    1,320,572

Net loss                                       -            -        (95,852)          -       (95,852)
                                     -----------  ------------  -------------  ----------  ------------

BALANCE DECEMBER 31, 2002            $    27,010  $13,495,602   $(11,613,002)  $(684,890)  $ 1,224,720
                                     ===========  ============  =============  ==========  ============
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                             N-VIRO INTERNATIONAL CORPORATION

                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                       Years Ended December 31, 2002, 2001 and 2000
                       --------------------------------------------


                                                        2002         2001         2000
                                                     ----------  ------------  ----------
<S>                                                  <C>         <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                             $ (95,852)  $(1,267,218)  $(844,508)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
  Depreciation and amortization                        253,373       263,861     188,398
  Provision (credit) for bad debts                      15,731       (57,063)   (315,016)
  Deferred income taxes                                      -             -     312,000
  Loss on the sale of fixed assets                      21,426         5,005         755
  Issuance of common stock and options for fees and
  services                                                   -             -     112,887
  Other                                                 34,503       136,880     155,031
  Decrease (increase) in trade receivables             241,580       554,153    (214,442)
  Decrease (increase) in prepaid expenses              (86,099)       33,812     (11,309)
  Increase in inventory                               (117,440)            -           -
  (Decrease) increase in accounts payable and accrued
  liabilities                                          (82,304)      (35,274)    411,480
                                                     ----------  ------------  ----------
Net cash (used in) provided by operating activities    184,918      (365,844)   (204,724)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in restricted cash and cash equivalents           -             -    (417,666)
Reductions to restricted cash and cash equivalents           -        17,666           -
Purchases of property and equipment                    (25,969)      (43,681)    (49,147)
Proceeds from sale of equipment                              -             -       6,000
Collections from (advances to) related parties            (145)       (2,549)     26,687
Increase in notes receivable                           (35,748)     (212,873)   (174,611)
Collections on notes receivable                         22,288        20,777     371,415
Expenditures for intangible and other assets           (79,408)      (42,726)   (233,585)
                                                     ----------  ------------  ----------
Net cash used in investing activities                 (118,982)     (263,386)   (470,907)

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on line-of-credit                       152,474       203,613     300,000
Borrowings under long-term obligations                 261,398       523,472      77,162
Principal payments on long-term obligations           (520,300)     (177,913)   (129,642)
Other                                                        -        (3,000)      3,750
                                                     ----------  ------------  ----------
Net cash (used in) provided by financing activities   (106,428)      546,172     251,270
                                                     ----------  ------------  ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS              (40,492)      (83,058)   (424,361)

CASH AND CASH EQUIVALENTS BEGINNING                     45,427       128,485     552,846
                                                     ----------  ------------  ----------

CASH AND CASH EQUIVALENTS ENDING                     $   4,935   $    45,427   $ 128,485
                                                     ==========  ============  ==========
</TABLE>
<PAGE>

                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

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.

     The Company accounts for its investments in joint ventures 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,  2002.

D.     Going  Concern - The accompanying financial statements have been prepared
assuming  that the Company will continue as a going concern.  The Company has in
the  past  and  continues to sustain net and operating losses.  In addition, the
Company  has used substantial amounts of working capital in its operations which
has  reduced  the  Company's  liquidity  to  a low level.  At December 31, 2002,
current  liabilities  exceed  current  assets  by  $1,040,210.  In May 2002, the
Company was removed from listing its shares on the NASDAQ SmallCap Market, which
might  further  limit  the  Company's  ability  to  raise equity capital.  These
matters  raise  substantial  doubt  about the Company's ability to continue as a
going concern.  The financial statements do not include any adjustments relating
to  the  recoverability and classification of recorded assets or the amounts and
classification  of  liabilities  that  may  result  from  the  outcome  of these
uncertainties.

     As  discussed  in  Note  3,  in  February  2003,  management of the Company
obtained  additional debt financing which, in management's opinion, will provide
additional  cash  flows  required  to  assist  the  Company  in meeting its 2003
operating  and  liquidity  requirements.  Management of the Company also expects
continued  improvements in operating results for 2003 as a result of maintaining
lower  administrative  costs,  along  with  realized and expected new sources of
revenue.  Additionally,  market  developments  and  ongoing  discussions  with
companies  in  both the utility and wastewater industries could provide enhanced
liquidity and positively impact 2003 operations.  There can be no assurance that
these  developments  will  create  sufficient  funds  to  finance  the Company's
operations.

     The Company is currently working with the investment banking firm of Laux &
Company  of  Medina,  Ohio,  with  respect  to  a proposal to obtain up to $1.25
million  in equity financing.  The Company hopes to sell up to 500,000 shares of
preferred  stock  at  a  price  per  share  of  $2.50.  The  specific  terms and
conditions  applicable  to  the  preferred shares will be determined once Laux &
Company  has  identified  a potential purchaser.  There can be no assurance that
the  Company will be successful in finding a buyer for the preferred stock or in
selling  these  shares.  If  the shares are sold, the proceeds from the offering
will  be  used  to  supplement  the  Company's  working  capital.


<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
(CONTINUED)

     Also, the Company has gone forward on contracts with two investment banking
firms  with  respect  to  a  proposal to obtain up to $800,000 of mezzanine debt
financing.  The  specific  terms  and  conditions applicable to the debt will be
determined  once either firm has identified a potential debtor.  There can be no
assurance  that  the  Company  will  be  successful  in finding a lender for the
financing.  If the financing is obtained, the proceeds from the offering will be
used  to  supplement  the  Company's  working  capital.

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 the balance sheet date.
This  certificate  of  deposit was used to pay the Company's line-of-credit with
its  former  lending  institution  in  February  2003.

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  $93,064  and  $259,556  of net
receivables  for  the  years  ended  December  31,  2002 and 2001, respectively.

Management  estimates  an allowance for doubtful accounts, which was $40,000 and
$87,501  as  of December 31, 2002 and 2001, respectively.  The estimate is based
upon  management's  review  of  delinquent  accounts  and  an  assessment of the
Company's  historical  evidence  of collections.  Bad debt expense (recovery) of
$8,864  and  $(41,824)  was recognized for the years ended December 31, 2002 and
2001, respectively, as a result of this estimate.  Specific accounts are charged
directly  to  the  reserve  when  management  obtains  evidence  of a customer's
insolvency  or  otherwise  determines  that  the  account  is  uncollectible.
Charge-offs  of specific accounts for the years ended December 31, 2002 and 2001
totaled  $56,251  and  $-0-,  respectively.

H.     Prepaid  Expenses  and  Other  Assets  - Included in prepaid expenses and
other  assets  are  costs of $90,946 associated with a potential stock offering.
Should the preferred stock offering not go forward, these costs will be expensed
in  2003.

I.     Inventory  -  Inventory at December 31, 2002 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.

J.     Property  and Equipment - 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.  Depreciation  expense amounted to
$119,730,  $140,331  and  $106,231  in  2002,  2001  and  2000,  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.

<PAGE>

                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
(CONTINUED)

K.     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  twelve  to  seventeen  years;  weighted-average
amortization  periods  for patents/related intangibles and territory rights were
15.2 and 13.2 years, respectively, at December 31, 2002.).  Amortization expense
amounted to $133,643, $123,530 and $82,167 in 2002, 2001 and 2000, respectively;
estimated amortization expense, based on intangible assets at December 31, 2002,
for  each of the ensuing five years is as follows:  2003-2005 - $138,000; 2006 -
$131,000;  2007  -  $117,000.  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.

L.     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.

M.     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, 2002, 2001 and 2000, the
effects  of  the  stock  options granted are excluded from the diluted per share
calculation  because  they  would  be  antidilutive.

N.     New  Accounting  Standards  -  In  June  2001,  the  Financial Accounting
Standards  Board  ("FASB")  issued  SFAS No. 142, "Goodwill and Other Intangible
Assets."  Under  SFAS  No.  142,  goodwill  and intangible assets deemed to have
indefinite  lives are no longer amortized but are subject to periodic impairment
tests.  Other  intangible  assets  continue  to  be  amortized over their useful
lives.  SFAS  No.  142  was  adopted  by  the  Company  in  2002.

     In  August  2001,  the  FASB  issued  SFAS  No.  143, "Accounting for Asset
Retirement  Obligations,"  which  is  effective the first quarter of fiscal year
2003.  SFAS  143  addresses  financial  accounting and reporting for obligations
associated  with the retirement of tangible long-lived assets and the associated
asset  retirement  cost.

     In  October  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting for the
Impairment  or  Disposal of Long-lived Assets," which was adopted by the Company
in  2002.  SFAS  No.  144  supercedes  SFAS No. 121 and modifies and expands the
financial  accounting and reporting for the impairment or disposal of long-lived
assets  other  than  goodwill.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.     OPERATIONS  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
(CONTINUED)

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  Provisions  of  SFAS  No.  145 become effective in 2002 and 2003.
Under  SFAS  No. 145, gains and losses from the extinguishment of debt should be
classified  as  extraordinary items only if they meet the criteria of Accounting
Principles  Board  Opinion  No.  30.  SFAS  No.  145  also  addresses  financial
accounting  and  reporting for capital leases that are modified in such a way as
to  give  rise  to  a  new  agreement  classified  as  an  operating  lease.

     In  June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for Costs
Associated  with  Exit  or  Disposal Activities," which is effective for exit or
disposal  activities  initiated after December 31, 2002.  SFAS No. 146 nullifies
Emerging  Issues  Task  Force Issue No. 94-3, "Liability Recognition for Certain
Employee  Termination  Benefits  and  Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)."  Under SFAS No. 146, a liability is
required  to  be recognized for costs, including certain lease termination costs
and  employee termination benefits, associated with an exit or disposal activity
when  the  liability is incurred.  SFAS No. 146 applies to costs associated with
an  exit  activity  that does not involve an entity newly acquired in a business
combination  or  with a retirement or disposal activity covered by SFAS Nos. 143
and  144.

     In  November  2002, the FASB issued FIN 45, which expands previously issued
accounting  guidance and disclosure requirements for certain guarantees.  FIN 45
requires  the  recognition  of  an  initial  liability  for the fair value of an
obligation  assumed  by  issuing  a  guarantee.  The  provision  for  initial
recognition  and  measurement  of the liability will be applied on a prospective
basis  to  guarantees  issued  or  modified  after  December  31,  2002.

     In  December  2002,  the  FASB  issued  SFAS  No.  148,  "Accounting  for
Stock-Based,  Compensation  -  Transition  and Disclosure," that amends SFAS No.
123,  "Accounting  for Stock-Based Compensation," to provide alternative methods
of  transition  to  the fair value method of accounting for stock-based employee
compensation.  SFAS  No.  148  also amends the disclosure provisions of SFAS No.
123 and APB Opinion No. 28, "Interim Financial Reporting," to require disclosure
in  the summary of significant accounting policies of the effects of an entity's
accounting  policy with respect to stock-based employee compensation on reported
net  income  and  earnings per share in annual and interim financial statements.
The  Statement  does  not amend SFAS No. 123 to require companies to account for
employee  stock options using the fair value method.  The Statement is effective
for  fiscal  years  beginning  after  December  15,  2002.

     The  adoption  of  the  new  standards  did  not,  or  is  not expected to,
materially  affect  the  Company's financial position and results of operations.

O.     Reclassifications  -  Certain  amounts  from  the  prior  year  financial
statements have been reclassified to conform with the current year presentation.

NOTE  2.     BALANCE  SHEET  DATA

TRADE  RECEIVABLES:

Trade  receivables  in  the accompanying balance sheets at December 31, 2002 and
2001  are  stated  net  of  an  allowance  for  doubtful accounts of $40,000 and
$87,501,  respectively.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.     BALANCE SHEET DATA (CONTINUED)

NOTES  AND  OTHER  RECEIVABLES:

At December 31, 2002, unsecured, 9.75% demand notes receivable totaling $207,330
(including  accrued interest of $37,330) and unsecured, prime (stated by a local
bank)  plus  %  demand  note  receivable  totaling  $205,902  (including accrued
interest  of  $25,902)  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  $25,748  in  2002.  During  2002, the Company set up an allowance of
$63,232  for  the  interest  portion  of  the  note  receivable.

The Company has an unsecured receivable from a related party totaling $24,606 in
2002  and  $24,461  in 2001.  During 2002, the amount due from the related party
has  been  deemed  to  be  noncurrent  by management in the accompanying balance
sheets.

PROPERTY  AND  EQUIPMENT  (AT  COST):



<TABLE>
<CAPTION>


                                                     2002        2001
                                                  ----------  ----------
<S>                                               <C>         <C>
  Land and leasehold improvements                 $   43,903  $   44,911
  Equipment                                        1,215,893   1,141,408
  Furniture and fixtures                             160,706     195,318
                                                  ----------  ----------
                                                   1,420,502   1,381,637
  Less accumulated depreciation and amortization     861,407     902,096
                                                  ----------  ----------

                                                  $  559,095  $  479,541
                                                  ==========  ==========
</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  its  investment  under  the  equity  method.

The  Company  is  currently  actively pursuing sale of its investment in Florida
N-Viro,  LP,  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.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2.     BALANCE  SHEET  DATA  (CONTINUED)

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

Condensed  financial  information of the partnership as of December 31, 2002 and
2001  is  as  follows:


<TABLE>
<CAPTION>


                            2002        2001
                         ----------  ----------

<S>                      <C>         <C>
  Current assets         $  624,843  $  633,019
  Long-term assets        1,928,495   2,113,032
                         ----------  ----------

                         $2,553,338  $2,746,051
                         ==========  ==========

  Current liabilities    $1,537,744  $1,610,090
  Long-term liabilities      62,467     110,198
  Partners' equity          953,127   1,025,763
                         ----------  ----------

                         $2,553,338  $2,746,051
                         ==========  ==========
</TABLE>

<TABLE>
<CAPTION>

                   Year Ended December 31,
                   ------------------------
                2002         2001         2000
             -----------  -----------  -----------

<S>          <C>          <C>          <C>
  Net sales  $3,135,465   $2,930,294   $2,777,606
  Net loss      (72,636)    (288,168)    (257,402)
</TABLE>


During  2002,  2001  and  2000, the Partnership's largest customer accounted for
29%, 19% and 17%, respectively, of its revenue.  Additionally, during 2002, 2001
and  2000,  the  Partnership's  largest  customers  accounted  for  60%  (three
customers),  59%  (four  customers)  and  77% (four customers) of total revenue,
respectively.

INTANGIBLE  AND  OTHER  ASSETS:


<TABLE>
<CAPTION>


                                                       2002       2001
-------------------------------------------------    --------   --------
<S>                                                <C>          <C>
  Patents and related intangibles, less accumulated
  amortization
  2002 - $399,300; 2001 - $325,000                 $  774,324   $772,124

  Territory rights, less accumulated amortization
2002 - $202,800; 2001 - $145,000                      483,060    555,393

  Notes receivable - Florida N-Viro, L.P. net
   of allowance of $63,232 in 2002                    350,000    387,484

  Notes receivable - Related party                     24,606         -

  Other                                               10,000      16,646
                                                    ----------  --------

                                                  $1,641,990  $1,731,647
                                                  ==========  ==========
</TABLE>

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2.     BALANCE  SHEET  DATA  (CONTINUED)

INTANGIBLE  AND  OTHER  ASSETS (CONTINUED):

During the year ended December 31, 2001, the Company repurchased, as part of the
settlement  of  a  lawsuit  (see  Note  6),  the exclusive license and territory
rights,  valued  at  approximately  $287,000,  for portions of the Northeast and
Mid-Atlantic  United  States  from  an  unrelated  party.

During the year ended December 31, 2000, the Company purchased from the Canadian
government  the  right  to  market  and sell licenses promoting a patent-pending
technology  that  inhibits the growth of soybean cyst nematodes, in exchange for
the  forgiveness  of a portion of a note receivable for $250,000 due the Company
from  an unrelated licensee.  This portion of the note had previously been fully
reserved for in the allowance for bad debts and the Company recognized income in
2000  on  the  recovery  of  this  note.  In  2000,  the  Company  purchased  a
non-exclusive  license  to  use  a  patent-pending  technology and Internet site
address  from  an  unrelated  party  in  exchange  for  a total of approximately
$205,500.  Additionally, in 2000, the Company repurchased the territory covering
nine  midwestern and western states of the United States from an unrelated party
in  exchange  for  $10,000  cash.


ACCRUED  LIABILITIES:

<TABLE>
<CAPTION>



                       2002      2001
                     --------  --------
<S>                  <C>       <C>
  Employee benefits  $137,313  $ 56,116
  Sales tax payable   175,661   168,274
  Other payable        57,277   194,536
                     --------  --------

                     $370,251  $418,926
                     ========  ========
</TABLE>


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

During the year, the Company had available a $750,000 line-of-credit with a bank
which  was  scheduled  to  expire  on  January 31, 2003.  Borrowings against the
line-of-credit  bore  interest at prime plus 1% on borrowings up to $400,000 and
prime  plus  3%  for  borrowings  above  $400,000.  Borrowings,  which  were
collateralized  by  all  of  the Company's assets including accounts receivable,
inventories,  equipment,  assignment  of  a  $400,000 certificate of deposit and
assignment  of certain contracts, were due on demand.  At December 31, 2002, the
Company  had  borrowed  $656,087  against  the  line.


<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In  February  2003,  the  Company closed on an $845,000 credit facility ("Credit
Facility")  with a local bank.  This senior debt Credit Facility is 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 1/2% and secured by a first lien on all assets of the Company.  The
Company  will  use  the  funds to refinance existing debt and to provide working
capital.  To  secure  the  Credit  Facility,  the  Company  was  required by the
financial  institution  to  obtain additional collateral of $100,000 from a real
estate  mortgage from a third party.  Messrs. J. Patrick Nicholson, the Chairman
of  the Board and Consultant to the Company, Michael G. Nicholson, the Company's
Chief Operating Officer and a Director, Robert F. Nicholson, a Company employee,
and  Timothy  J.  Nicholson, a Company employee (the "Nicholsons"), collectively
provided  the $100,000 additional collateral.  In exchange for their commitment,
the  Company  has agreed to provide the Nicholsons the following:  (1) an annual
fee  in  an  amount  equal  to  two  percent  (2%) of the aggregate value of the
mortgage  or  mortgages  encumbering  the  additional  collateral,  which  fee
originally  shall  be  $2,000 per annum; (2) interest at an annual rate of 5% of
the  aggregate  value  of  the  mortgage or mortgages encumbering the additional
collateral  beginning on the first anniversary date of the closing of the Credit
Facility  and (3) grant, jointly, a warrant to acquire, in the aggregate, 50,000
shares  of  the  Company's  voting common stock at a purchase price of $0.90 per
share,  which  was the closing market price of the Company's common stock on the
prior  business  day  to  the  closing of the Credit Facility.  In addition, the
Company  granted  to  the  Nicholsons  a  lien  upon the Company's inventory and
accounts  receivable.  This  lien  is  subordinated  to  existing  liens  on the
Company's  assets and all liens granted by the Company in favor of the financial
institution  providing  the  Credit  Facility.

Long-term  debt  at  December  31,  2002  and  2001  is  as  follows:


<TABLE>
<CAPTION>


                             2002      2001
                           --------  --------

<S>                        <C>       <C>
  Notes payable            $818,816  $898,876
  Less current maturities   392,078   438,534
                           --------  --------

                           $426,738  $460,342
                           ========  ========
</TABLE>

The  notes  payable  are  notes  signed  for  amounts  owed to vendors and other
parties.  The  notes bear interest ranging from 5.99% to 28.17% (with a weighted
average  interest  rate of 10.3% as of December 31, 2002) and are due at varying
dates  through March 2007.  Included in notes payable is $219,003 in installment
notes  secured  by  equipment  and $489,509 secured by the general assets of the
Company.  The  remainder  of  the  notes are unsecured.  Aggregate maturities of
long-term debt for the years ending December 31 are as follows: 2003 - $392,078;
2004  - $154,433; 2005 - $146,377; 2006 - $103,605 and 2007 - $22,323.  Interest
paid was approximately $54,000, $55,300 and $31,000 for the years ended December
31,  2002,  2001  and  2000,  respectively.

NOTE  4.     EQUITY  TRANSACTIONS

The  Company  has  authorized  2,000,000 shares of preferred stock, par value of
$.01  per  share,  of  which no shares were outstanding at December 31, 2002 and
2001.

The  Company  has a stock option plan for directors and key officers under which
600,000 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.  Options have been granted
at  the  approximate  market  value  of  the  stock  at  date  of  grant.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  4.     EQUITY  TRANSACTIONS  (CONTINUED)

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,
2002,  2001  and 2000 and the number outstanding and exercisable at those dates:


<TABLE>
<CAPTION>

                                                2002                   2001                2000
                                        --------------------   ----------------   --------------------
                                                    Weighted              Weighted            Weighted
                                                    Average               Average             Average
                                                    Exercise              Exercise            Exercise
                                         Shares      Price      Shares      Price    Shares   Price
                                        ---------  ----------  ---------  ---------  -------  ------
<S>                                     <C>        <C>         <C>        <C>        <C>      <C>
  Outstanding, beginning of year          567,525  $    2.49     516,325  $   2.69   454,325  $ 2.62
  Granted                                   6,300       0.91      93,200      1.50    95,500    3.37
  Expired during the year                       -                (42,000)     2.72   (33,500)   3.72
                                        ---------  -           ---------             ---------
  Outstanding, end of year                573,825       2.47     567,525      2.49   516,325    2.69
                                        =========              =========             =======

  Eligible for exercise at end of year    495,025                403,425             316,125
                                        =========              ==========          =========

  Weighted average fair value per
  option for options granted
  during the year                                  $    1.07              $    1.50        $    3.29
                                                   =========             ==========        =========
</TABLE>



A  further  summary  of  stock  options  follows:

<TABLE>
<CAPTION>

                                     Options Outstanding            Options Exercisable
                              ----------------------------------   ---------------------
                                           Weighted
                                            Average     Weighted                Weighted
                                           Remaining     Average                 Average
                               Number     Contractual   Exercise     Number     Exercise
                             Outstanding     Life        Price    Exercisable    Price
                             -----------  -----------  ---------  -----------  ---------
                                            2002
----------------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>        <C>          <C>
Range of exercise prices:
  $0.91 to $2.43                 464,900         6.41  $    1.99      408,000  $    2.06

  $4.00 to $5.00                 108,925         3.77       4.52       87,025       4.40

                                            2001
----------------------------------------------------------------------------------------
Range of exercise prices:
  $1.50 to $2.43                 458,600         7.37  $    2.01      324,100  $    2.09

  $4.00 to $5.00                 108,925         4.77       4.52       79,325       4.35

                                            2000
----------------------------------------------------------------------------------------
Range of exercise prices:
  $1.56 to $2.43                 398,400         7.74  $    2.14      240,700  $    2.15

  $4.00 to $5.00                 117,925         5.94       4.55       75,425       4.30
</TABLE>

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,  2002, 2001 and 2000.  The Company follows the disclosure provisions of SFAS
Statement No. 123 which prescribes 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.

Had  compensation  cost  been  determined  based  upon  the  fair  value  method
prescribed  in  SFAS  Statement  No.  123,  reported  net  loss  would have been
$(312,001),  $(1,513,440)  and  $(1,064,278) and basic loss per share would have
been  $(.12),  $(.57) and $(.40) for the years ended December 31, 2002, 2001 and
2000,  respectively.

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 2002, 2001 and
2000,  respectively: no assumed dividend rates for all years; risk-free interest
rates  of  4.5%,  5.0% and 6.0%, respectively, on expected lives of 10 years for
all  years;  and expected price volatility of 109%, 113% and 135%, respectively.

NOTE  5.     REVENUE  AND  MAJOR  CUSTOMERS

Revenues  for  the  years  ended December 31, 2002, 2001 and 2000 consist of the
following:

<TABLE>
<CAPTION>



                            2002        2001        2000
                         ----------  ----------  ----------
<S>                      <C>         <C>         <C>

  Facility Management    $1,872,722  $1,637,243  $1,520,830
-----------------------  ----------  ----------  ----------
  Technology Fees           685,757     849,086     999,345
-----------------------  ----------  ----------  ----------
  Products and Services   2,679,525   1,896,335   1,646,260
-----------------------  ----------  ----------  ----------

                         $5,238,004  $4,382,664  $4,166,435
                         ----------  ----------  ----------
</TABLE>
<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  5.     REVENUE  AND  MAJOR  CUSTOMERS (CONTINUED)

Cost of revenues for the years ended December 31, 2002, 2001 and 2000 consist of
the  following:

<TABLE>
<CAPTION>



                            2002        2001        2000
                         ----------  ----------  ----------
<S>                      <C>         <C>         <C>

  Facility Management    $1,527,754  $1,272,566  $1,138,071
-----------------------  ----------  ----------  ----------
  Technology Fees           143,628     183,294     219,852
-----------------------  ----------  ----------  ----------
  Products and Services   1,710,031   1,339,090   1,079,019
-----------------------  ----------  ----------  ----------

                         $3,381,413  $2,794,950  $2,436,942
                         ----------  ----------  ----------
</TABLE>


Revenues  for  the years ended December 31, 2002, 2001 and 2000 include revenues
from  one  major  customer,  the  City of Toledo, Ohio (included in the facility
management  and  products  and  services  classifications),  which  represented
approximately  45%,  39% and 38%, respectively, of total revenues.  In addition,
the  Company had another major customer, WeCare Environmental Services, totaling
approximately 17%, 12% and 5% of total revenues (which is included mainly in the
products  and  services  classification)  for the years ended December 31, 2002,
2001 and 2000, respectively.  The accounts receivable balances due (all of which
are  unsecured)  from  these  customers  at  December  31,  2002  and  2001 were
approximately  $281,000  and  $252,000,  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>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  6.     COMMITMENTS  AND  CONTINGENCIES

In  November  2001,  and  as  filed  under Form 8-K dated December 14, 2001, the
Company  and  Hydropress  Environmental  Services,  Inc. ("Hydropress") signed a
settlement  agreement  (the  "Settlement  Agreement")  of  a lawsuit between the
parties  related  to  alleged price guarantees on shares of the Company's common
stock  and to alleged breaches of a license agreement between the parties.  Each
party  dismissed  its  claims  against the other with prejudice and entered into
general  releases  in  favor  of  the other party.  Pursuant to the terms of the
Settlement  Agreement,  among  other things, N-Viro purchased back 66,250 N-Viro
shares held by Hydropress at the market price as of November 15, 2001, which was
$1.01  per  share,  for  a  total  of  $66,913.  Also pursuant to the Settlement
Agreement, the Company purchased back three patent license agreements (including
territory  rights)  from Hydropress valued at approximately $287,000.  The first
license  concerned  the exclusive right to sell and use the N-Viro technology in
Massachusetts,  Vermont  and  New  Hampshire.  The  second license concerned the
non-exclusive  right  to  sell  and  use  the  N-Viro  technology in New Jersey,
Delaware,  Maryland  and  Eastern  Pennsylvania.  The  third  license  concerned
amendments  to the two prior-mentioned agreements and the exclusive right to use
the  N-Viro  technology  at  Hydropress'  facility  in Phillipsburg, New Jersey.
N-Viro  and  Hydropress  entered  into  a  new patent license agreement granting
Hydropress  the non-exclusive right to use the N-Viro technology at its facility
in Phillipsburg, New Jersey.  The Company paid certain amounts due to Hydropress
under  the  Settlement Agreement pursuant to the terms of a promissory note (the
"Note").  The  original  principal  amount  of  the  Note  was  $204,587,  was
non-interest  bearing  and matured on October 15, 2002 with a balloon payment of
$144,587.  In  conjunction  with the final discharge of the Hydropress Note, the
Company  arranged  an unsecured loan from WeCare Environmental Services, Inc., a
third-party  licensee,  for $144,587, with monthly payments of $13,966 including
interest  at  28.17%  through  October  15,  2003.  At  December  31,  2002, the
outstanding  principal  balance  on  the  Note was $123,196.  This obligation is
included  in  long-term  debt  disclosed  in  Note  3.

The  Company  has voluntarily approached state tax authorities in South Carolina
and  acknowledged  failing  to  file  sales  tax returns within that state.  The
Company  has  collected  and  accrued  approximately  $173,000 in sales tax from
customers  in  South  Carolina  that has not been remitted to South Carolina tax
authorities.  The Company believes that the sales at issue are exempt from sales
tax.  The  Company  has  retained  counsel  in  South  Carolina  to assist it in
negotiating  a  settlement  of  this  matter.  The  Company  is  currently  in
negotiations and believes it will arrange for a long-term installment payment of
all  tax  due.

Prior  to  May 9, 2002, the Company's shares of voting, common stock were traded
on  the  SmallCap  Market  of  the  National  Association  of Securities Dealers
Automated  Quotation  System  ("NASDAQ").  On  May 9, 2002, the Company received
notice  from the NASD that the Company's shares of voting, common stock would be
de-listed  effective  with  the open of business on May 10, 2002.  In July 2002,
the  Company  decided  not  to  pursue  further appeal of the NASD's decision to
de-list  its  voting  common  stock.  Currently,  the Company's shares of common
stock  are  traded on the Over-The-Counter ("OTC") market.  The Company does not
believe  that the de-listing of its common stock from the NASDAQ SmallCap Market
has or will have a material adverse effect on the financial condition or results
of operations of the Company.  The de-listing of the Company's common stock from
NASDAQ,  however, may have a material adverse effect on the marketability of the
Company's  shares, as shares traded on the OTC market generally experience lower
trading  value  than  those  traded  on  the  organized  exchanges.

<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  6.     COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

The  Company  leases  its  executive and administrative offices in Toledo, Ohio.
The  total  minimum  rental  commitment  for  the years ending December 31, 2003
through  2006  is  approximately  $56,000  each  year.  The total rental expense
included  in the statements of operations for the years ended December 31, 2002,
2001  and 2000 is approximately $64,600, $63,300 and $59,000, respectively.  The
Company  also  leases  various  equipment  on  a  month-to-month  basis.

During  1999, the Company entered into employment and consulting agreements with
two  officers of the Company.  One employment agreement expired in July 2002 and
the  other  will  expire  in  June  2004.  Future compensation amounts are to be
determined  annually  by the Board.  In addition, one of the agreements provides
for  payment  of  life  insurance premiums and the provision of health insurance
coverage  to  the  officer and his spouse for their lives.  The present value of
estimated  costs  related  to  the  provisions  of  this  agreement  totalled
approximately  $137,300  at December 31, 2002.  The cost was recognized over the
term  of the employment agreement.  The Company charged $40,644 to operations in
2002  related  to  this  agreement.  Future payments will be offset against this
liability.  The  consulting  agreements begin upon termination of the respective
employment  agreements and extend through July 2015 and June 2014, respectively.
The  agreements  require  the  officers to provide minimum future services to be
eligible  for  compensation.

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.  The Company's ability
to  expand  and  diversify  its  operations is also dependent upon the Company's
ability  to obtain the necessary capital through operating cash flow, additional
borrowings  or  additional  equity  funds  (also see Note 1.D. - Going Concern).
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>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  7.     INCOME  TAX  MATTERS

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.

The  composition of the deferred tax assets and liabilities at December 31, 2002
and  2001  is  as  follows:


<TABLE>
<CAPTION>


                                                 2002          2001
                                             ------------  ------------
<S>                                          <C>           <C>
  Gross deferred tax liability, accelerated
    depreciation                             $      (700)  $   (25,000)
  Gross deferred tax assets:
    Loss carryforwards                         4,492,700     4,481,000
    Patent costs                                 284,100       361,000
    Allowance for doubtful accounts               16,000        35,000
    Allowance for notes receivable                25,300             -
    Property and equipment basis difference        7,000         9,000
    Other                                         16,700         9,000
                                             ------------  ------------
                                               4,841,800     4,895,000

  Less valuation allowance                    (4,841,100)   (4,870,000)
                                             ------------  ------------

                                             $         -   $         -
                                             ============  ============
</TABLE>
<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  7.     INCOME  TAX  MATTERS (CONTINUED)

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, 2002, 2001 and 2000 and are as
follows:


<TABLE>
<CAPTION>


                                                    2002        2001        2000
                                                  ---------  ----------  ----------
<S>                                               <C>        <C>         <C>
  Computed "expected" tax (credits)               $(32,600)  $(431,000)  $(181,000)
  State taxes, net of federal tax benefit           (2,900)    (38,000)    (16,000)
  (Decrease) increase in income taxes resulting
  from:
    Change in valuation allowance                  (28,900)    455,000     480,000
    Other                                           64,400      14,000      29,000
                                                  ---------  ----------  ----------

                                                  $      -   $       -   $ 312,000
                                                  =========  ==========  ==========
</TABLE>


The net operating losses available at December 31, 2002 to offset future taxable
income  total  approximately  $11,200,000 and expire principally in years 2009 -
2022.

In  1997,  the  Company recorded a deferred tax asset and a corresponding income
tax  benefit  of  $312,000  to  recognize  the  benefit  of  $800,000  in  loss
carryforwards  expected  to  be  realized.  The Company believed that sufficient
taxable  income  would be generated in the near term, as the Company had changed
its  strategic  focus  to  its profitable core business.  Based on the Company's
operating performance, the Company believes that the recording of a deferred tax
asset  for  the  tax benefit of its net operating loss carryforward is no longer
appropriate.  As  a  result,  in  2000,  the  Company has provided an additional
valuation  allowance  against  the tax benefit associated with the net operating
loss  and  recognized  expense of $312,000 to reduce the recorded tax benefit of
the  net  operating  loss  carryforwards  to  $-0-.

NOTE  8.     CASH  FLOWS  INFORMATION

Information relative to the statements of cash flows not disclosed elsewhere for
the  year  ended  December  31,  2002  follows:


<TABLE>
<CAPTION>

  Supplemental schedule of noncash investing and
    financing activities:
<S>                    <C>
  Equipment purchases financed with notes payable $            178,842
                                                               =======
</TABLE>
<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2002, 2001 and 2000 (dollars in
thousands).


<TABLE>
<CAPTION>

                                      Other
                       Management    Domestic     Foreign     Research &
                       Operations   Operations   Operations   Development   Total
                       -----------  -----------  -----------  ------------  ------
                                              2002
--------------------------------------------------------------------------------
<S>                    <C>          <C>          <C>          <C>           <C>
  Revenues             $     2,340  $     2,669  $        50  $        179  $5,238
  Cost of revenues           1,528        1,732            2           119   3,381
  Segment profits              812          937           48            60   1,857
  Identifiable assets          340          108            -            44     492
  Depreciation                  41           44            -             6      91

                                              2001
--------------------------------------------------------------------------------
  Revenues             $     1,727  $     2,213  $       222  $        221  $4,383
  Cost of revenues           1,273        1,206          132           184   2,795
  Segment profits              454        1,007           90            37   1,588
  Identifiable assets          184           87            -            51     322
  Depreciation                  31           71            -             7     109

                                              2000
--------------------------------------------------------------------------------
  Revenues             $     1,582  $     2,265  $        70  $        249  $4,166
  Cost of revenues           1,138        1,115            -           184   2,437
  Segment profits              444        1,150           70            65   1,729
  Identifiable assets          205           74            -            58     337
  Depreciation                  25           45            -             3      73
</TABLE>
<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,  2002, 2001 and 2000 follows (dollars in thousands):


<TABLE>
<CAPTION>


                                                    2002      2001      2000
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Segment profits:
  Segment profits for reportable segments         $ 1,857   $ 1,588   $ 1,729
  Corporate selling, general and administrative
  expenses and research and development costs      (1,877)   (2,717)   (2,408)
  Other income (expense)                              (75)     (138)      146
                                                  --------  --------  --------
  Consolidated earnings before taxes              $   (95)  $(1,267)  $  (533)
                                                  ========  ========  ========

Identifiable assets:
  Identifiable assets for reportable segments     $   492   $   322   $   337
  Corporate property and equipment                     67       158       244
  Current assets not allocated to segments          1,336     1,397     2,176
  Intangible and other assets not allocated to
  segments                                          2,357     2,491     2,229
  Consolidated eliminations                          (234)     (234)     (234)
                                                  --------  --------  --------
  Consolidated assets                             $ 4,028   $ 4,134   $ 4,752
                                                  ========  ========  ========

Depreciation and amortization:
  Depreciation for reportable segments            $    91   $   109   $    73
  Corporate depreciation and amortization             162       155       115
                                                  --------  --------  --------
  Consolidated depreciation and amortization      $   253   $   264   $   188
                                                  ========  ========  ========
</TABLE>


NOTE  10.     SELECTED  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)

The  following  is  a summary of selected quarterly financial data for the years
ended  December  31,  2002  and  2001:

<TABLE>
<CAPTION>

                                            Quarters Ended
                              -----------------------------------------------------
                              March 31      June 30    September 30    December 31
                             -----------  -----------  -------------  -------------
<S>                          <C>          <C>          <C>            <C>
2002
----
  Revenues                   $1,417,779   $1,240,414   $   1,485,610  $  1,094,201
  Operating income (loss)          (382)    (149,892)        133,971       ( 4,253)
  Net income (loss)              24,054     (126,373)        106,120       (99,653)
  Basic and diluted income
  (loss) per share           $     0.01   $    (0.05)  $        0.04  $      (0.04)
</TABLE>
<PAGE>
                        N-VIRO INTERNATIONAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  10.     SELECTED  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)  (CONTINUED)

<TABLE>
<CAPTION>

                                       Quarters Ended
                          -------------------------------------------------------
                           March 31      June 30     September 30    December 31
                          -----------  -----------  --------------  -------------
<S>                       <C>          <C>          <C>             <C>
2001
----
  Revenues                $1,162,764   $1,115,478   $   1,175,057   $    929,365
  Operating loss            (208,626)    (157,866)       (280,933)      (482,021)
  Net loss                  (219,735)    (203,158)       (356,858)      (487,467)
  Basic and diluted loss
  per share               $    (0.08)  $    (0.08)  $       (0.13)  $      (0.19)
</TABLE>


<PAGE>


                    Report of Independent Public Accountants
                    ----------------------------------------



To  the  Board  of  Directors
N-Viro  International  Corporation
Toledo,  Ohio


     Our audits of the consolidated financial statements of N-Viro International
Corporation and subsidiaries included Schedule II, contained herein, for each of
the  three  years  in  the  period  ended  December  31, 2002.  Such schedule is
presented  for  purposes  of  complying  with  the  Securities  and  Exchange
Commission's rule and is not a required part of the basic consolidated financial
statements.  In  our  opinion, such schedule presents fairly the information set
forth  therein,  in  conformity with accounting principles generally accepted in
the  United  States  of  America.



                                   HAUSSER  +  TAYLOR  LLP



Cleveland,  Ohio
March  19,  2003

<PAGE>



<TABLE>
<CAPTION>

                                     N-VIRO INTERNATIONAL CORPORATION

                                               SCHEDULE II
                              VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                     December 31, 2002, 2001 and 2000
                                     --------------------------------





                                             Balance at   Deductions   Balance at
                                              Beginning   Charged to      From         Close
                                              of Period   Operations    Reserves     of Period
                                             -----------  -----------  -----------  -----------
Allowance for doubtful accounts - deducted
from trade receivables and notes receivable
in the balance sheets:
<S>                                          <C>          <C>          <C>              <C>
2002                                         $    87,501  $    15,700  $        -       $ 103,200 (3)
                                             ===========  ===========  ===========      =========

2001                                         $   144,564  $         -  $    57,500 (2)  $ 87,500
                                             ===========  ===========  ===========      ========

2000                                         $   460,000  $    16,000  $   331,000 (1)  $145,000
                                             ===========  ===========  ===========      ========


<FN>

(1)  The  2000  deduction  from  reserves  was the result of a transaction which
     included  the  Company acquiring technology from the Canadian government in
     exchange  for  the  forgiveness of a portion of a note receivable (see Note
     2).

(2)  The  2001  deduction from reserves was the result of the Company collecting
     amounts  due  from  certain  customers  that  were previously reserved for.

(3)  This  includes  $40,000 related to trade receivables and $63,200 related to
     accrued  interest  on  notes  receivable.
</TABLE>
<PAGE>

ITEM  9.          CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
                         ACCOUNTING  AND  FINANCIAL  DISCLOSURES

     None.


                                    PART III


ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

                            DIRECTORS OF THE COMPANY

DANIEL J. HASLINGER, AGE 47.  Mr. Haslinger is presently Chief Executive Officer
and  Owner of Micro Macro Integrated Technologies, a Nevada company specializing
in  industrial automation integration.  Mr. Haslinger is also Chairman and Chief
Executive  Officer  of  WJZE  97.3FM  RASP  Broadcast Enterprises, Inc., a local
broadcast  company.  Mr.  Haslinger  is  a  member  of  N-Viro  Filipino, LLC, a
licensee  of  the  Company,  and  is  also  a  member of DJH Holdings, LLC.  Mr.
Haslinger has served as a Director of the Company since May 1999 and is a member
of  the  Board's  Audit  and  Compensation  Committees.

R.  FRANCIS DIPRETE, AGE 48.  Mr. DiPrete is a lawyer and is presently President
and  Board Chairman of Worldtech Waste Management, Inc., a Virginia thermal soil
remediation  facility,  specialty  waste  handler and a licensee of the Company.
Mr.  DiPrete  is  also  an  officer, consultant to, and Chairman of the Board of
Symbiat,  Inc.  (formerly Computone), which is a provider of computer technology
support  and service.  Mr. DiPrete has served as a Director of the Company since
May  2000.

BOBBY  B.  CARROLL,  AGE  69.  Mr.  Carroll  was  formerly  the President, Chief
Executive  Officer  and owner of Pozzolanic Contracting & Supply Co., a supplier
of  roadway construction materials in the Southeast U.S.  Mr. Carroll also acted
as  a consultant and sales representative to the Company with respect to various
matters  until  the  end  of  2002.  Mr. Carroll has served as a Director of the
Company  since  May 1997 and is a member of the Board's Compensation, Nominating
and  Finance  Committees.

J. PATRICK NICHOLSON, AGE 66.  Mr. Nicholson became Chairman and Chief Executive
Officer  of  the  Company  in May 1993 until his retirement as an officer in May
2002.  Mr.  Nicholson presently serves as a consultant to the Company.  In 1979,
he  founded N-Viro Energy Systems, Limited, a limited partnership and one of the
predecessor  entities  that combined to form the Company in October 1993, and is
the  controlling  stockholder  of N-Viro Energy Systems, Inc.  Mr. Nicholson has
served as a Chairman of the Board of the Company since May 1993, and is a member
of  the  Finance  Committee.

B.K. WESLEY COPELAND, AGE 69.  Mr. Copeland, a physical chemist, was the Founder
of  the International Science and Technology Institute, Inc., as well as Founder
and  Chief  Executive  Officer  of the Foundation for Economic Development.  Mr.
Copeland  is  associated  with  N-Viro  Africa, which holds rights to the N-Viro
technology  in  all of Africa except North Africa.  Mr. Copeland has served as a
Director of the Company since May 1997, is a member of the Board's Compensation,
Audit  and  Nominating  Committees.

TERRY  J. LOGAN, PH.D., AGE 60.  Dr. Logan served as Chief Operating Officer and
President  of  the  Company  since  joining  the  Company  in July 1999, and was
appointed  Chief  Executive Officer in May 2002.  From 1971 until July 1999, Dr.
Logan  was  a  professor  of  Agronomy  at The Ohio State University.  Dr. Logan
served as President of Pan-American N-Viro Inc. (subsidiary of the Company) from
1994  through  1995  and  is  the  President  of  Logan  Environmental,  Inc.
(environmental  consulting  firm).  Dr.  Logan  has  served as a Director of the
Company  since  May  1993.

MICHAEL  G.  NICHOLSON,  AGE  36.  Mr.  Nicholson  was appointed Chief Operating
Officer in May 2002, and has served as the Vice-President of Sales and Marketing
of  the  Company  since  December 1996 and Senior Vice-President after May 2000.
Prior  to  December  1996,  Mr.  Nicholson  served the Company and N-Viro Energy
Systems  Ltd. in various management positions in sales since his hiring in 1990.
Mr.  Nicholson  is the son of J. Patrick Nicholson, and has served as a Director
of  the  Company  since  February  1998.

PHILLIP  LEVIN,  AGE  63.  Mr.  Levin is the President of both Levin Development
Company  and  MGM  Consulting  Services, a real estate development and financial
consulting company, respectively, located in Troy, Michigan.  Mr. Levin holds an
MBA  in  both  Accounting  and  Finance,  and  was  a  partner-in-charge  of
PriceWaterhouseCoopers' consulting division in Michigan for 16 years.  Mr. Levin
has  served  as a Director of the Company since November 2002 and is a member of
the  Audit,  Nominating  and  Finance  Committees.


                        EXECUTIVE OFFICERS OF THE COMPANY

TERRY  J. LOGAN, PH.D., AGE 60.  Dr. Logan served as Chief Operating Officer and
President  of  the  Company  since  joining  the  Company  in July 1999, and was
appointed  Chief  Executive Officer in May 2002.  From 1971 until July 1999, Dr.
Logan  was  a  professor  of  Agronomy  at The Ohio State University.  Dr. Logan
served as President of Pan-American N-Viro Inc. (subsidiary of the Company) from
1994  through  1995  and  is  the  President  of  Logan  Environmental,  Inc.
(environmental  consulting  firm).  Dr.  Logan  has  served as a Director of the
Company  since  May  1993.

MICHAEL  G.  NICHOLSON,  AGE  36.  Mr.  Nicholson  was appointed Chief Operating
Officer in May 2002, and has served as the Vice-President of Sales and Marketing
of  the  Company  since  December 1996 and Senior Vice-President after May 2000.
Prior  to  December  1996,  Mr.  Nicholson  served the Company and N-Viro Energy
Systems  Ltd. in various management positions in sales since his hiring in 1990.
Mr.  Nicholson  is the son of J. Patrick Nicholson, and has served as a Director
of  the  Company  since  February  1998.

JAMES  K.  MCHUGH,  AGE  44.  Mr.  McHugh has served as Chief Financial Officer,
Secretary  and Treasurer of the Company since January 1997.  Prior to that date,
Mr.  McHugh  served  the  Company  and  N-Viro  Energy  Systems  Ltd. in various
financial  positions  since  his  hiring  in  April  1992.


ITEM  11.     EXECUTIVE  COMPENSATION

COMPENSATION  OF  EXECUTIVE  OFFICERS

     The  following table presents the total compensation awarded to, earned by,
or  paid to, the Chief Executive Officer during 2000, 2001 and 2002.  There were
no  other  Executive Officers of the Company who were serving at the end of 2002
and  whose  total  annual  salary  and  bonus,  if  any,  exceeded  $100,000.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                            Long-Term
                                                                           Compensation
                                                  Annual Compensation       Securities       All Other
                                               ------------------------     Underlying      Compensation
Name and Principal Position             Year    Salary ($)     Bonus ($)    Options(#)(1)       ($)
-------------------------------------  ------  -----------     ---------  --------------   --------------
<S>                                    <C>      <C>            <C>           <C>             <C>
CURRENT MANAGEMENT
Terry J. Logan                          2002     $120,000       $  250            -0-         $ 1,488 (2)
President and Chief Executive Officer   2001     $120,000       $  300         20,000         $ 1,782
                                        2000     $120,000       $7,125         12,500         $   -0-
FORMER MANAGEMENT
J. Patrick Nicholson                    2002     $76,563        $  250            -0-         $72,289 (4)
Chief Executive Officer (3)             2001     $131,250       $14,300           -0-         $27,146
                                        2000     $131,250       $ 7,125        12,500         $27,146
<FN>

(1)  The  numbers shown represent the number of shares of common stock for which
     options  were  granted  to  the  Named Executive Officers in 2000, 2001 and
     2002.

(2)  Dr.  Logan  received  term  life  insurance  premium payment benefits for a
     $250,000  term  policy  with  his  spouse  named  as  beneficiary.

(3)  Mr.  Nicholson  retired  as Chief Executive Officer effective May 2002, and
     received  salary  through  July  2002,  per  his  employment  agreement.

(4)  In  2002,  Mr.  Nicholson received fees beginning in August 2002 of $54,000
     for  consulting  services,  the  benefit of premium payments of $17,303 for
     both a $100,000 and $612,000 whole-life insurance policy and the benefit of
     term  life  insurance  premium payments of $986 for a $250,000 term policy,
     pursuant  to  the  terms  of his Employment and Consulting Agreements dated
     December  2,  1999.  Mr.  Nicholson  receives full rights of cash surrender
     value  and death benefits on the whole-life policies, and his spouse is the
     named  beneficiary  on  all  life  insurance  policies  noted.

</TABLE>


EMPLOYMENT  AGREEMENTS

     On  June  14, 1999, Dr. Logan entered into a five-year employment agreement
with  the Company at a minimum annual salary of $144,000, reviewable annually at
January  1  during  the  employment term.  Such agreement also provides that Dr.
Logan  shall  be  entitled to (i) bonuses to be payable at the discretion of the
Board  of  Directors, (ii) other benefits, including insurance and pension plan,
as  are  provided  to  other  Executive Officers of the Company, and (iii) stock
options to purchase 50,000 shares of the Company's common stock.  Effective July
1,  1999,  Dr.  Logan  voluntarily agreed to reduce his minimum annual salary to
$120,000  for  the  years  ended  December  31,  2000,  2001  and  2002.

     On  December  2,  1999,  Mr.  J.  Patrick  Nicholson entered into a two and
one-half-year  employment  agreement with the Company at a minimum annual salary
of  $144,000, reviewable annually at January 1 during the employment term.  Such
agreement  also  provides that Mr. Nicholson shall be entitled to (i) bonuses to
be  payable  at  the discretion of the Board of Directors, (ii) such medical and
other  benefits,  including insurance and pension plan, as are provided to other
Executive  Officers  of  the Company, and (iii) stock options to purchase 50,000
shares of the Company's common stock.  Effective December 2, 1999, Mr. Nicholson
voluntarily agreed to reduce his minimum annual salary to $131,250 for the years
ended  December  31,  1999,  2000  and  2001.

                        OPTION GRANTS IN LAST FISCAL YEAR

     No  option  grants  were  made  by the Company in fiscal year 2002 to named
     executive  officers  of  the  Company.


    AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
                                     VALUES

<TABLE>
<CAPTION>


                          Shares                                                   Value of Unexercised In-The-
                         Acquired       Value         Number of Unexercised       Money Options at Fiscal Year
Name                    On Exercise  Realized ($)  Options at Fiscal Year End (1)           End ($) (2)
--------------------    -----------  ------------  ------------------------------  -----------------------------
                                                   Exercisable    Unexercisable    Exercisable     Unexercisable
                        -----------  -----------   -----------    -------------    -----------     -------------
<S>                     <C>          <C>           <C>            <C>              <C>             <C>
CURRENT MANAGEMENT
Terry J. Logan             -0-         $-0-          89,650         17,000           $17,050         $21,700
President and Chief
Executive Officer

FORMER MANAGEMENT
J. Patrick Nicholson       -0-         $-0-          87,500          5,000           $ 4,650         $ 3,100
Chief Executive Officer
<FN>

(1)  All  options granted prior to November 1995 have been adjusted to reflect a
     one-for-four  reverse  stock  split  effective  October  31,  1995.

(2)  Options  are  "in-the-money" only if the closing market price of the common
     stock  on  December  31,  2002  exceeded the exercise price of the options.
     There  were 14,000 options "in-the-money" that were held by Named Executive
     Officers  of  the  Company  on December 31, 2002 at $1.55 per share closing
     price.
</TABLE>


COMPENSATION  OF  DIRECTORS

     Directors  who  are  employees  of  the  Company  do not receive additional
compensation for serving as Directors. Effective December 15, 2000, non-employee
directors  receive,  as  of the date of the Annual Stockholders Meeting, a stock
option  grant  of 700 shares of Common Stock of the Company per meeting attended
for the previous year, as approved by the Compensation Committee on December 14,
2000.  The  Directors  of  the Company are reimbursed for out-of-pocket expenses
incurred  in  attending  meetings  of  the  Board of Directors or any committees
thereof.

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

     During  the  2002  fiscal  year,  the members of the Compensation Committee
consisted  of Mr. Carroll, Mr. Haslinger and Mr. Wallace G. (Jack) Irmscher, who
retired  from the Board in February 2003 and was replaced by Mr. Copeland on the
Committee,  each  of  whom  is  a  non-employee  Director  of  the Company.  Mr.
Haslinger  is  a  member  of  N-Viro Filipino, a licensee of the Company for the
territory  of  the  Philippine Islands, but has not received any fees or revenue
from  the  Company  other  than  the  reimbursement of travel expenses for costs
directly related to this territory.  Mr. Copeland is an Agent of the Company for
the  territory  of  all  of Africa except North Africa, but has not received any
fees or revenue from the Company other than the reimbursement of travel expenses
for  costs  directly  related  to this territory.  Mr. Carroll, a consultant and
sales  representative  to  the  Company,  received  fees  of $60,000 in 2002 for
consulting  and  sales  assistance with the operations of the Company facilities
located  in Tennessee, North Carolina and South Carolina.  Mr. Carroll was under
contract  with  the  Company,  which  ended  December  31,  2002.

SECTION  16(A)  COMPLIANCE

     Section  16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors and Executive Officers, and persons who own beneficially
more  than  ten  percent  (10%) of the shares of common stock of the Company, to
file  reports  of  ownership  and  changes  of ownership with the Securities and
Exchange  Commission.  Copies  of all filed reports are required to be furnished
to  the Company pursuant to Section 16(a).  Based solely on the reports received
by  the  Company  and  on  written  representations  from reporting persons, the
Company  believes  that  the  Directors and Executive Officers complied with all
applicable  filing  requirements during the fiscal year ended December 31, 2002.


ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

     The  Company  had  outstanding  2,577,433  shares of common stock, $.01 par
value per share (the "shares of common stock"), on March 25, 2003.  These shares
of  common  stock  constitute the only class of outstanding voting securities of
the  Company.

     At March 25, 2003, the following were the only persons known to the Company
to  own  beneficially  more  than  5% of the outstanding shares of common stock:


<TABLE>
<CAPTION>


                                         Shares of Common Stock   Percentage of Outstanding
Name and Address of Beneficial Owner       Beneficially Owned        Shares of Common Stock
------------------------------------     ----------------------   -------------------------
<S>                                      <C>                       <C>

J. Patrick Nicholson (1)
2025 Richmond Rd.
Toledo, Ohio  43607                             558,538                     21.67%

N-Viro Energy Systems, Inc. (2)
3450 West Central Avenue, Suite 328
Toledo, Ohio  43606                             336,769                     13.07%

R. Francis DiPrete (3)
255 Ide Road
Scituate, RI 02857                              464,372                     18.02%

Worldtech Waste Management, Inc. (4)
272 Allison Gap Rd.
Saltville, VA  24370                            454,472                     17.63%
<FN>

(1)  The  shares  attributed  to  Mr. Nicholson include the 336,769 shares owned
     beneficially  by N-Viro Energy Systems, Inc., of which Mr. Nicholson is the
     majority  owner  of  the  voting  shares.

(2)  N-Viro  Energy  Systems, Inc. was formerly the corporate general partner of
     N-Viro  Energy  Systems, Limited, a limited partnership that was terminated
     as  of  December  31,  2001  and  was  one of the predecessor entities that
     combined  to  form  the  Company  in  October 1993. The general partners of
     N-Viro  Energy  Systems,  Limited  were J. Patrick Nicholson, N-Viro Energy
     Systems,  Inc.,  a  corporation  of  which Mr. Nicholson is the controlling
     stockholder, and four trusts established for the benefit of Mr. Nicholson's
     children.

(3)  Mr.  DiPrete's  shares  include:  5,000  shares  owned directly and 454,472
     shares owned by Worldtech Waste Management, Inc., which may be deemed to be
     beneficially  owned  by  Mr.  DiPrete as a result of the positions he holds
     with  Worldtech.  Mr. DiPrete disclaims beneficial ownership of the 454,472
     Company  shares  held by Worldtech because he is paid a salary by Worldtech
     for  his  services as an employee and otherwise has no economic interest in
     Worldtech  except  to  the  extent  of  his personal ownership of Worldtech
     shares.

(4)  R.  Francis DiPrete, a Director of the Company, is President and a Director
     of  Worldtech.


</TABLE>


     The  following  table  sets  forth,  as of March 25, 2003, unless otherwise
specified,  certain  information with respect to the beneficial ownership of the
Company's  shares  of  common  stock  by  each  person  who is a Director of the
Company,  a  nominee for the Board, each of the Named Executive Officers, and by
the  Directors  and  Executive  Officers  of  the  Company  as  a group.  Unless
otherwise  noted,  each  person has voting and investment power, with respect to
all  such  shares,  based  on  2,577,433  shares  of  Common  Stock outstanding.
Pursuant  to the rules of the Securities and Exchange Commission, certain shares
of  Common  Stock  which a person has the right to acquire within 60 days of the
date  hereof  pursuant  to  the  exercise  of  stock  options  are  deemed to be
outstanding for the purpose of computing the percentage ownership of such person
but  are  not  deemed  outstanding  for  the purpose of computing the percentage
ownership  of  any  other  person.

<TABLE>
<CAPTION>


                                                Beneficial Ownership of
Name of Beneficial Owner                              Common Stock        Percent of Class
------------------------------------------      -----------------------   ----------------
<S>                                                   <C>                  <C>
Bobby B. Carroll                                       88,200 (1)             3.42%
B.K. Wesley Copeland                                   13,600 (2)              .53%
R. Francis DiPrete                                    464,372 (3)            18.02%
Daniel Haslinger                                       17,900 (4)              .69%
Phillip Levin                                             -0- (5)              -0-
Terry J. Logan                                         90,462 (6)             3.51%
James K. McHugh                                        45,521 (7)             1.77%
J. Patrick Nicholson                                  558,538 (8)            21.67%
Michael G. Nicholson                                   72,734 (9)             2.82%
                                                   ----------                ------
All Directors and Executive Officers as a
  group (9 persons)                                 1,351,327                52.43%
<FN>

(1)  Represents  81,600 shares of Common Stock owned by Mr. Carroll, and a total
     of  6,600  shares  issuable  upon  exercise  of options which are currently
     exercisable  at  prices  ranging  from  $0.91  to  $5.19  per  share.

(2)  Represents  6,100 shares of Common Stock owned by Mr. Copeland, and a total
     of  7,500  shares  issuable  upon  exercise  of options which are currently
     exercisable  at  prices  ranging  from  $0.91  to  $2.50  per  share.

(3)  Represents  5,000  shares  of  Common  Stock  owned by Mr. DiPrete, 454,472
     shares  owned by Worldtech Waste Management, Inc., a privately-held company
     of  which may be deemed to be beneficially owned by Mr. DiPrete as a result
     of  the positions he holds with Worldtech. Mr. DiPrete disclaims beneficial
     ownership  of  the  454,472  Company shares held by Worldtech because he is
     paid  a  salary  by Worldtech for his services as an employee and otherwise
     has  no economic interest in Worldtech except to the extent of his personal
     ownership  of  Worldtech  shares.  Also included is a total of 4,900 shares
     issuable upon exercise of options which are currently exercisable at prices
     ranging  from  $0.91  to  $1.50  per  share.

(4)  Represents  11,500  shares  of  Common  Stock owned by Mr. Haslinger, and a
     total of 6,400 shares issuable upon exercise of options which are currently
     exercisable  at  prices  ranging  from  $0.91  to  $5.19  per  share.

(5)  Represents  812  shares  of Common Stock owned by Dr. Logan, and a total of
     89,650  shares  issuable  upon  exercise  of  options  which  are currently
     exercisable  at  prices  ranging  from  $1.50  to  $5.00  per  share.

(6)  Represents  796  shares of Common Stock owned by Mr. McHugh, and a total of
     44,725  shares  issuable  upon  exercise  of  options  which  are currently
     exercisable  at  prices  ranging  from  $1.50  to  $5.00  per  share.

(7)  Represents  133,554  shares  of  Common  Stock  owned by Mr. Nicholson, 715
     shares  owned by his spouse, 336,769 shares owned by N-Viro Energy Systems,
     Inc.,  a corporation of which Mr. Nicholson is the controlling shareholder,
     and  a  total  of 87,500 shares issuable upon exercise of options which are
     currently  exercisable  at  prices  ranging  from $1.50 to $5.00 per share.

(8)  Represents  12,884  shares  of  Common  Stock owned by Mr. Nicholson, and a
     total  of  59,850  shares  issuable  upon  exercise  of  options  which are
     currently  exercisable  at  prices  ranging  from $1.50 to $5.00 per share.

(9)  Represents  252,246  shares  of  Common  Stock  owned  by the Directors and
     Officers,  791,956  shares  owned  indirectly and a total of 307,125 shares
     issuable upon exercise of options which are currently exercisable at prices
     ranging  from  $0.91  to  $5.19  per  share.


</TABLE>

                      EQUITY COMPENSATION PLAN INFORMATION


<TABLE>
<CAPTION>


                                       Number of securities                              Number of securities remaining
                                          to be issued upon     Weighted-average        available for future issuance under
                                            exercise of         exercise price of          equity compensation plans
                                        outstanding options,   outstanding options,     (excluding securities reflected in
Plan category                           warrants and rights    warrants and rights                column (a))
-----------------------------------    --------------------    --------------------     ----------------------------------
<S>                                    <C>                     <C>                      <C>
Equity compensation plans approved
  by security holders                     573,825                   $2.47                        26,175

Equity compensation plans not
  approved by security holders                -0-                     -0-                           -0-
                                          -------                   -----
Total                                     573,825  $                $2.47                        26,175

</TABLE>


ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     J.  Patrick  Nicholson,  a consultant and Director of the Company, received
fees  of  $54,000  in  2002 for consulting services pursuant to the terms of his
Consulting  Agreement  dated  December  2,  1999.  Mr.  Nicholson  also received
benefits  of approximately $23,000 in 2002, including life insurance and medical
benefit  payments,  pursuant  to  the  terms  of  his  Employment and Consulting
Agreements  dated  December  2,  1999.  In  addition, loans totaling $1,700 were
advanced to N-Viro Energy Systems, Inc., a corporation of which Mr. Nicholson is
the controlling stockholder, increasing the balance owed the Company to $24,606,
as  disclosed  in  Note  2  in  Notes  to  Consolidated  Financial  Statements.

     Bobby  B. Carroll, a consultant and sales representative to and Director of
the  Company,  received  fees  of  $60,000  in  2002  for  consulting  and sales
assistance  with  the operations of the Company facilities located in Tennessee,
North  Carolina  and  South  Carolina.  Mr.  Carroll was under contract with the
Company,  which  ended  December  31,  2002.

     Michael Nicholson, the Chief Operating Officer and Director of the Company,
was  paid  $90,430  and  $90,480  in  salary  and  bonuses,  for  2002 and 2001,
respectively.  Mr.  Nicholson  is  the son of J. Patrick Nicholson, Chairman and
former  Chief  Executive  Officer  of  the  Company.

     In  February  2003 the Company closed on an $845,000 credit facility with a
local  bank.  This  senior  debt credit facility is 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 assets of the Company.  The Company will use
the  funds  to  refinance  existing  debt  and  to  provide  working  capital.
Previously,  the  Company  had  a $750,000 line of credit with another financial
institution,  secured  by a $400,000 restricted Certificate of Deposit, required
and  held by this financial institution.  Effectively, the former line of credit
provided only $350,000 of additional working capital.  The effective increase in
the  line will provide the Company with additional working capital, and the debt
refinance will provide lower cost and longer term debt, improving cash flow.  To
secure  the  credit  facility,  the  Company  was  required  by  the  financial
institution  to  obtain  Additional  Collateral  of  $100,000 from a real estate
mortgage  from a third party.  Messrs. J. Patrick Nicholson, the Chairman of the
Board  and  Consultant to the Company; Michael G. Nicholson, the Company's Chief
Operating  Officer  and a Director; Robert F. Nicholson, a Company employee, and
Timothy  J.  Nicholson,  a  Company  employee,  ("the  Nicholsons") collectively
provided  the $100,000 Additional Collateral.  In exchange for their commitment,
the  Company  has  agreed to provide the Nicholsons the following: (1) an annual
fee  in  an  amount  equal  to  two  percent  (2%) of the aggregate value of the
Mortgage  or  Mortgages  encumbering  the  Additional  Collateral,  which  fee
originally  shall  be $2,000.00 per annum;  (2) interest at an annual rate of 5%
of  the  aggregate value of the Mortgage or Mortgages encumbering the Additional
Collateral  beginning on the first anniversary date of the closing of the Credit
Facility,  and (3) grant, jointly, a warrant to acquire in the aggregate, 50,000
shares  of  the  Company's  voting common stock at a purchase price of $0.90 per
share,  which  was the closing market price of the Company's common stock on the
prior  business  day  to  the  closing of the Credit Facility.  In addition, the
Company  granted  to  the  Nicholsons  a  lien  upon the Company's inventory and
accounts  receivable.  This  lien  is subordinated to both existing liens on the
Company's  assets and all liens granted by the Company in favor of the financial
institution  providing  the  Credit  Facility.


ITEM  14.     CONTROLS  AND  PROCEDURES

     Within 90 days prior to the date of filing this Annual Report on Form 10-K,
an  evaluation was performed under the supervision and with the participation of
our  management,  including  the  chief  executive  officer  and chief financial
officer,  of  the  effectiveness  of  the design and operation of our disclosure
controls  and procedures.  Based on that evaluation, our chief executive officer
and  chief  financial  officer  concluded  that  our  disclosure  controls  and
procedures  were  effective  as  of  December 31, 2002, and the evaluation date.
There  have  been  no  significant  changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of  our  evaluation.


                                     PART IV

ITEM  15.     EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)1.  THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS ARE INCLUDED IN PART II,
       ITEM 8:

         Report  of  Independent  Auditors
         Consolidated  balance  sheets
         Consolidated  statements  of  operations
         Consolidated  statements  of  stockholders'  equity
         Consolidated  statements  of  cash  flows
         Notes  to  consolidated  financial  statements

(A)2.  THE FOLLOWING FINANCIAL STATEMENTS ARE INCLUDED IN ITEM 15 (D):

               Financial  Statements  of  Subsidiaries  not  Consolidated.

               All other schedules for which provision is made in the applicable
          accounting regulation of the Securities and Exchange Commission are
          not required under the related instructions or are inapplicable and
          therefore have been omitted.


(A)3.  EXHIBITS

       Exhibit
        Number   Description
        ------   -----------

          3.1  Certificate  of  Incorporation  of  the  Company (incorporated by
               reference  to  Exhibit  3.1  to the Registration Statement of the
               Registrant  on  Form  S-1  (Reg. No. 33-62766) (the "Registration
               Statement").)
          3.2  By-Laws  of the Company (incorporated by reference to Exhibit 3.2
               to  the  Registration  Statement).
          10.1 The  Amended  and Restated N-Viro International Corporation Stock
               Option  Plan  (incorporated by reference to Form S-8 filed May 9,
               2000).
          10.2 Employment  Agreement,  dated  December  2,  1999, between N-Viro
               International  Corporation and J. Patrick Nicholson (incorporated
               by  reference  to  Exhibit  1  to  the Form 8-K dated December 2,
               1999).
          10.3 Transitional Consulting and Sales Representative Agreement, dated
               September  2,  1993,  and amended January 1, 1994, between N-Viro
               International  Corporation  and Bobby B. Carroll (incorporated by
               reference  to  Exhibit  10.102  to  Amendment  No.  1  to  the
               Registration  Statement).
          10.4 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 dated June 30, 1999)
               Certifications
          21.1 List  of  subsidiaries  of  the  Company.#
          24.1 Powers  of  Attorney.#
          99.1 Certifications  Pursuant to Section 906 of the Sarbanes-Oxley Act
               of  2002.

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

(B)     REPORTS  ON  FORM  8-K

          None.

(C)  The  exhibits  listed in Item 15(a)(3) are either filed with this Form 10-K
     or incorporated by reference in accordance with Rule 12b-32 of the Exchange
     Act.

<PAGE>

(D)     FINANCIAL  STATEMENTS  OF  SUBSIDIARIES  NOT  CONSOLIDATED




                              FLORIDA N-VIRO, L.P.
                             ----------------------
                                Table of Contents
                              -------------------

<TABLE>
<CAPTION>




------------------------------------------------
<S>                                                <C>
Independent Auditor's Report

Balance Sheets

Statement of Income (Loss) and Partners' Capital

Statement of Cash Flows

Notes to Financial Statements
</TABLE>
<PAGE>

      Joseph M. Cahill, Ltd. - Certified Public Accountant





                                   February  18,  2003


     INDEPENDENT  AUDITOR'S  REPORT


To  the  Partners
Florida  N-Viro,  L.P.
West  Chester,  Pennsylvania


I  have  audited  the  accompanying  balance  sheets of Florida N-Viro, L.P., (a
Limited  Partnership),  as  of  December  31,  2002  and  2001,  and the related
statements  of income (loss) and partners' capital, and cash flows for the years
then  ended.  These  financial  statements  are  the  responsibility  of  the
Partnership's  management.  My  responsibility is to express an opinion on these
financial  statements  based  on  my  audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Florida N-Viro, L.P. as of December
31,  2002  and  2001, and the results of operations and cash flows for the years
then  ended  in  conformity with accounting principles generally accepted in the
United  States  of  America.



JMC/rb







                                        /s/  Joseph  M.  Cahill,  Ltd.








         189 W. Lancaster Avenue Paoli, Pennsylvania 19301 610 889 3300
                                Fax 610 889 3303
<PAGE>


                              FLORIDA N-VIRO, L.P.
                              --------------------

                                 Balance Sheets
                                 --------------

                           December 31, 2002 and 2001
                           --------------------------

                                     ASSETS
                                     ------

<TABLE>
<CAPTION>



                                                                                   2002        2001
                                                                                ----------  ----------
Current Assets:
<S>                                                                             <C>         <C>
    Cash                                                                        $  149,155  $    5,056
    Accounts Receivable (less reserve for
    doubtful accounts of $7,500 in 2002)                                           433,744     468,058
    Prepaid Expenses                                                                41,944     159,905
                                                                                ----------  ----------
    Total Current Assets                                                           624,843     633,019

  Property and Equipment
    Land                                                                           147,163     147,163
    Site improvements                                                              282,007     312,517
    Building                                                                     1,189,682   1,183,169
    Operating equipment                                                          1,244,595   1,242,795
    Furniture and fixtures                                                          12,565      13,215
                                                                                ----------  ----------
                                                                                 2,876,012   2,898,859

    Less Accumulated Depreciation                                                  947,517     785,827
                                                                                ----------  ----------
    Total Property and Equipment                                                 1,928,495   2,113,032
                                                                                ----------  ----------
Total Assets                                                                    $2,553,338  $2,746,051
                                                                                ==========  ==========
</TABLE>









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

<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                                 Balance Sheets
                                 --------------

                           December 31, 2002 and 2001
                           --------------------------

                        LIABILITIES AND PARTNERS' CAPITAL
                        ---------------------------------

<TABLE>
<CAPTION>


                                            2002        2001
                                         ----------  ----------
<S>                                      <C>         <C>
  Current Liabilities:

    Payables:
      Trade                              $   93,472  $  337,800
    Notes payable - current                  47,731      64,199
    Notes payable - related party         1,182,539   1,008,672
    Accrued expenses                        214,002     199,419
                                         ----------  ----------
  Total Current Liabilities               1,537,744   1,610,090

  Long-term Liabilities:
    Notes Payable                            62,467     110,198
                                         ----------  ----------
    Total Liabilities                     1,600,211   1,720,288

  Partners' Capital                         953,127   1,025,763
                                         ----------  ----------
Total Liabilities and Partners' Capital  $2,553,338  $2,746,051
                                         ==========  ==========
</TABLE>





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


                              FLORIDA N-VIRO, L.P.
                              --------------------

                Statements of Income(Loss) and Partners' Capital
                ------------------------------------------------

                 For the years ended December 31, 2002 and 2001
                 ----------------------------------------------

<TABLE>
<CAPTION>


                                         2002         2001
                                      -----------  -----------
<S>                                   <C>          <C>
Revenues                              $3,135,465   $2,930,294

Cost of sales                          2,774,725    2,839,116
                                      -----------  -----------
  Gross profit (loss)                    360,740       91,178

Selling, general and administrative      335,363      300,118
                                      -----------  -----------
Income (loss) from operations             25,377     (208,940)

Other income (expense):
  Interest income                            122            5
  Gain (loss) on sale of assets           (8,335)      (2,860)
  Interest expense                       (89,800)     (76,343)
                                      -----------  -----------
Total other income (expense)             (98,013)     (79,228)
                                      -----------  -----------
Net Income (loss)                        (72,636)    (288,168)

Beginning partners' capital            1,025,763    1,313,931

Ending partners' capital              $  953,127   $1,025,763
                                      ==========   ==========
</TABLE>


<PAGE>






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



                              FLORIDA N-VIRO, L.P.
                              --------------------

                            Statements of Cash Flows
                            ------------------------

                 For the years ended December 31, 2002 and 2001
                 ----------------------------------------------

<TABLE>
<CAPTION>



                                                          2002        2001
                                                       ----------  ----------
Cash flows from operating activities
<S>                                                    <C>         <C>
  Net income (loss)                                    $ (72,636)  $(288,168)
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
      Depreciation                                       175,192     183,891
      (Gain) loss on sale of assets                        8,335       2,890
  (Increase) decrease in:
    Accounts receivable-trade                             34,314    (112,963)
    Prepaid expenses                                     117,961    (134,118)

  Increase (decrease) in:
    Accounts payable-trade                              (244,328)    (16,855)
    Accounts payable-related party                             -     108,599
    Accrued expenses                                      14,584      35,174
                                                       ---------   ---------
Net cash provided (used) by
    operating activities                                  33,422    (221,550)

Cash flows from investing activities:
  Proceeds from the sale of assets                         9,322       8,367
  Purchase of property and equipment                      (8,313)    (37,356)
                                                       ---------   ---------
Net cash provided (used) by
    investing activities                                   1,009     (28,989)

Cash flows from financing activities:
  Proceeds from new borrowings                           173,867     360,000
  Payments on long-term debt                             (64,199)   (111,174)
                                                       ---------   ---------
Net cash provided (used) by
  financing activities                                   109,668     248,826
                                                       ---------   ---------
Net increase (decrease) in cash and cash equivalents     144,099      (1,713)

Cash and cash equivalents at beginning of year             5,056       6,769
                                                       ---------   ---------
Cash and cash equivalents at end of year               $ 149,155   $   5,056
                                                       =========   =========
Supplemental disclosure for cash flows
  Interest Paid                                        $  14,146   $  20,220
                                                       =========   =========
</TABLE>


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

<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                          Notes to Financial Statements
                          -----------------------------

                           December 31, 2002 and 2001
                           --------------------------


Note  A  -  Background
----------------------

     Business  Activities - Florida N-Viro, L.P. was formed January 1, 1996 as a
     Delaware Limited Partnership under the Delaware Revised Limited Partnership
     Act.  The  Partnership  has  entered into a patent and technology agreement
     with  N-Viro International Corporation for the exclusive, royalty free, use
     in  Florida  of certain systems/processes for the treatment and remediation
     of  wastewater  sludge.  The  Partnership  operates  from its Ft. Meade and
     Volusia,  Florida  facilities.

     The  Partnership  consists  of  one general partner, Florida N-Viro Limited
     Liability  Corporation,  a  Delaware limited liability corporation, and two
     limited  partners:  VFL  Technology  Corporation  and  N-Viro International
     Corporation.  The  general  partner is a limited liability corporation that
     has  limited  resources  and  is  responsible  for  the  liabilities of the
     partnership  beyond  the  capital  contributed  by  the  limited  partners.

     The  Partnership  agreement  terminates  on  December  31,  2026.


Note  B  -  Summary  of  Accounting  Principles
-----------------------------------------------

1.   Method  of  Accounting  and Use of Estimates - The financial statements are
     prepared  using  the  accrual  basis  of  accounting.  Generally  accepted
     accounting principles requires management to make estimates and assumptions
     that  affect  the reported amounts of assets and liabilities at the date of
     the financial statements, and the reported amounts of revenues and expenses
     during the reporting period. Actual results could defer from the estimates.

2.   Cash  and  Cash  Equivalents  -  The  Partnership  considers all short-term
     investments  with  an  original maturity of three months or less to be cash
     equivalents.

3.   Property  and  Equipment  -  Property  and  equipment, carried at cost, are
     depreciated  over  the  estimated  useful  life  of  the  related  assets.
     Depreciation  is  computed  principally  by  the  straight-line method. The
     estimated  useful  lives  used  in computing depreciation are summarized as
     follows:
<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                    Notes to Financial Statements (continued)
                    -----------------------------------------

<TABLE>
<CAPTION>


                              Years of Useful Life
<S>                           <C>
  Operating equipment                 5-10
  Furniture and fixtures               5-7
  Site improvements                     15
  Buildings                             39
</TABLE>



     Depreciation  amounted  to  $175,192  and  $183,891  for  2002  and  2001,
     respectively.


     Maintenance,  repairs  and  expenditures  for  renewals and betterments not
     determined  to  extend  the  useful  life  or  to  increase  materially the
     productivity  of  the  properties  to which they are applied are charged to
     income  as  incurred.  Other  renewals  and  betterments  are  capitalized.

     It  is  the  policy  of  the  Partnership  generally  to eliminate from the
     accounts  the  cost  and  related allowances for depreciation applicable to
     assets  retired  or  otherwise disposed of, charging or crediting to income
     the  differences  between  depreciation  cost  and  the proceeds of sale or
     salvage.

4.   Income Taxes - No provision for income taxes is required since the partners
     report  their  proportionate share of partnership taxable income or loss on
     their  respective  income  tax  returns.  Such  income  or  losses  are
     proportionately  allocated  to  the  partners  based  upon  their ownership
     interests.

5.   Advertising  -  The Partnership follows the policy of charging the costs of
     advertising  to  expense  as  incurred.

     Advertising  expense  is $6,076 and $9,837 for 2002 and 2001, respectively.


Note  C  -  Related  Parties
----------------------------

     The  Partnership had sales to a partner of $483,837 and $36,879 in 2002 and
     2001,  respectively.

     The  Partnership  has  a revolving credit loan agreement with a partner and
     the  note  balances  were $482,539 and $308,672 as of December 31, 2002 and
     2001.  The  interest  rate charged on the outstanding balance is prime plus
     0.25%.  The  Partnership  also  has  on demand notes payable to partners of
     $240,000  at  an interest rate of 9.75% and $460,000 of notes payable at an
     interest  rate  of  prime  plus  0.25%.
<PAGE>


                              FLORIDA N-VIRO, L.P.
                              --------------------

                    Notes to Financial Statements (continued)
                    -----------------------------------------


     The  Partnership rents equipment and personnel from a partner in the normal
     course  of business. In 2002 and 2001, the equipment and personnel expenses
     were  $204,462  and  $162,055.



Note  D  -  Concentration  of  Credit  Risk
-------------------------------------------

     In  the  normal  course  of  business,  the  Partnership  extends credit to
     customers  principally  in  the  State  of  Florida. The Partnership has an
     allowance  for  doubtful  accounts  of  $7,500  for  the  year  2002.

     The  Partnership  conducts  a  major  portion  of its business with several
     customers.  For the year ended December 31, 2002, three customers accounted
     for  60%  of  total  revenue. For 2001, four customers accounted for 59% of
     revenue.

     The  Partnership maintains its operating checking account at a bank located
     in  Southeastern  Pennsylvania.  The  balance  in this account may at times
     exceed  the  federally  insured  limit  of  $100,000.


NOTE  E  -  LONG-TERM  NOTES  PAYABLE
-------------------------------------

Long-term  notes  payable  consist  of  the  following:

<TABLE>
<CAPTION>


                                                                      2002        2001
                                                                    --------    --------
<S>                                                                 <C>         <C>
     9.25% Note payable to bank, monthly payments
        of $2,245, including interest, secured by
        equipment, due August 2002                                       -       17,355

     10.007% Note payable to bank, monthly
        payments of $2,445, including interest,
        secured by equipment, due June 2005                          64,661      88,341


     10.257% Note payable to bank, monthly payments
        of $2,279, including interest, secured by
        equipment, due October 2004                                  45,537      68,701
                                                                    -------     -------

Total Long Term Debt                                               $110,198    $174,397
Less current maturities                                              47,731      64,199
                                                                    -------     -------
                                                                   $ 62,467    $110,198
                                                                   ========    ========
</TABLE>



Maturities  of  Long  Term  Debt  are  as  follows:

                                              2003                   47,731
                                              2004                   48,216
                                              2005                   14,251
                                                                 ----------
                                                                 $  110,198
                                                                 ==========

<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                    Notes to Financial Statements (continued)
                    -----------------------------------------


Note  F  -  Lease  Commitments
------------------------------

The  Partnership  leases various equipment under operating leases that expire at
various  times  through  the  year  2006.

The  following  is  a  schedule  detailing  future  minimum  lease  payments:

               Year  Ended  December  31
               -------------------------
                                    2003                  32,214
                                    2004                  23,198
                                    2005                  19,680
                                    2006                   3,280
                                                      ----------
                                                      $   78,372
                                                      ==========

Note  G  -  Working  Capital  Deficiency
----------------------------------------

The  Partnership's financial statements have been presented on the basis that it
is  a  going  concern,  which  contemplates  the  realization  of assets and the
satisfaction  of  liabilities  in the normal course of business. The Partnership
has  incurred losses over the past years and has working capital deficiencies as
of  December  31,  2002  and  2001.

Management  believes  that  actions presently being taken to expand the customer
base  and  revenues  and  for the partners to provide additional working capital
when  needed,  will provide the opportunity for the Partnership to continue as a
going  concern.


Note  H  -  Reclassifications
-----------------------------

Reclassifications  occurred  to  certain  prior year amounts in order to conform
with  the current year classifications.  The reclassifications have no effect on
reported  net  income.










<PAGE>



                              FLORIDA N-VIRO, L.P.
                             ----------------------

                                Table of Contents
                              -------------------

<TABLE>
<CAPTION>


------------------------------------------------
<S>                                                     <C>
Independent Auditor's Report

Balance Sheets

Statement of Income (Loss) and Partners' Capital

Statement of Cash Flows

Notes to Financial Statements
</TABLE>


                                        February  6,  2002
<PAGE>


     INDEPENDENT  AUDITOR'S  REPORT


To  the  Partners
Florida  N-Viro,  L.P.
West  Chester,  Pennsylvania


I  have  audited  the  accompanying  balance  sheets of Florida N-Viro, L.P., (a
Limited  Partnership),  as  of  December  31,  2001  and  2000,  and the related
statements  of income (loss) and partners' capital, and cash flows for the years
then  ended.  These  financial  statements  are  the  responsibility  of  the
Partnership's  management.  My  responsibility is to express an opinion on these
financial  statements  based  on  my  audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Florida N-Viro, L.P. as of December
31,  2001  and  2000, and the results of operations and cash flows for the years
then  ended  in  conformity  with  generally  accepted  accounting  principles.



JMC/rb




                                        /s/  Joseph  M.  Cahill,  Ltd.




         189 W. Lancaster Avenue Paoli, Pennsylvania 19301 610 889 3300
                                Fax 610 889 3303
<PAGE>




                              FLORIDA N-VIRO, L.P.
                              --------------------

                                 Balance Sheets
                                 --------------

                           December 31, 2001 and 2000
                           --------------------------

                                     ASSETS
                                     ------

<TABLE>
<CAPTION>



                                      2001        2000
                                   ----------  ----------
Current Assets:
<S>                                <C>         <C>
    Cash                           $    5,056  $    6,769
    Accounts Receivable               468,058     355,095
    Prepaid Expenses                  159,905      25,787
                                   ----------  ----------
    Total Current Assets              633,019     387,651

  Property and Equipment
    Land                              147,163     147,163
    Site improvements                 312,517     285,519
    Building                        1,183,169   1,183,169
    Operating equipment             1,242,795   1,262,387
    Furniture and fixtures             13,215      13,215
                                   ----------  ----------
                                    2,898,859   2,891,453
                                   ----------  ----------

    Less Accumulated Depreciation     785,827     620,629
                                   ----------  ----------
    Total Property and Equipment    2,113,032   2,270,824
                                   ----------  ----------
Total Assets                       $2,746,051  $2,658,475
                                   ==========  ==========
</TABLE>










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

<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                                 Balance Sheets
                                 --------------

                           December 31, 2001 and 2000
                           --------------------------

                        LIABILITIES AND PARTNERS' CAPITAL
                        ---------------------------------

<TABLE>
<CAPTION>


                                            2001        2000
                                         ----------  ----------
Current Liabilities:
<S>                                      <C>         <C>
    Payables:
      Trade                              $  337,800  $  354,655
      Related party                         308,672     200,073
    Notes payable - current                  64,199     111,942
    Notes payable - related party           700,000     340,000
    Accrued expenses                        199,419     164,245
                                          ---------   ---------
  Total Current Liabilities               1,610,090   1,170,915

  Long-term Liabilities:
  Notes Payable                             110,198     173,629
                                          ---------   ---------
  Total Liabilities                       1,720,288   1,344,544

  Partners' Capital                       1,025,763   1,313,931
                                          ---------   ---------
Total Liabilities and Partners' Capital  $2,746,051  $2,658,475
                                         ==========  ==========
</TABLE>







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


                              FLORIDA N-VIRO, L.P.
                              --------------------

                Statements of Income(Loss) and Partners' Capital
                ------------------------------------------------

                 For the years ended December 31, 2001 and 2000
                 ----------------------------------------------

<TABLE>
<CAPTION>


                                         2001         2000
                                      -----------  -----------
<S>                                   <C>          <C>
Revenues                              $2,930,294   $2,777,606

Cost of sales                          2,839,116    2,802,843
                                      -----------  -----------
  Gross profit (loss)                     91,178      (25,237)

Selling, general and administrative      300,118      200,750
                                      -----------  -----------
Income (loss) from operations           (208,940)    (225,987)

Other income (expense):
  Interest income                              5          428
  Gain (loss) on sale of assets           (2,860)
  Interest expense                       (76,343)     (31,843)
                                      -----------  -----------
    Total other income (expense)         (79,228)     (31,415)
                                      -----------  -----------
Net Income (loss)                       (288,168)    (257,402)
                                      -----------  -----------

Beginning partners' capital            1,313,931    1,571,333

Ending partners' capital              $1,025,763   $1,313,931
                                      ==========   ==========
</TABLE>






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


                              FLORIDA N-VIRO, L.P.
                              --------------------

                            Statements of Cash Flows
                            ------------------------

                 For the years ended December 31, 2001 and 2000
                 ----------------------------------------------

<TABLE>
<CAPTION>



                                                          2001        2000
                                                       ----------  ----------
<S>                                                    <C>         <C>
Cash flows from operating activities
    Net income (loss)                                  $(288,168)  $(257,402)
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
      Depreciation                                       183,891     201,971
      (Gain) loss on sale of assets                        2,890
    (Increase) decrease in:
      Accounts receivable-trade                         (112,963)   (128,193)
      Accounts receivable-related party                        -      14,387
      Prepaid expenses                                  (134,118)      4,524

  Increase (decrease) in:
    Accounts payable-trade                               (16,855)   (150,947)
    Accounts payable-related party                       108,599     195,073
    Accrued expenses                                      35,174     (16,443)
                                                       ----------  ----------
Net cash provided (used) by
    operating activities                                (221,550)   (137,030)

Cash flows from investing activities:
  Proceeds from the sale of assets                         8,367           -
  Acquisition of property and equipment                  (37,356)   (467,365)
                                                       ----------  ----------

Net cash provided (used) by
    investing activities                                 (28,989)   (467,365)

Cash flows from financing activities:
  Proceeds from new borrowings                           360,000     571,260
  Proceeds from contributed capital                            -           -
  Payments on long-term debt                            (111,174)    (81,634)
                                                       ----------  ----------

Net cash provided (used) by
  financing activities                                   248,826     489,626
                                                       ----------  ----------

Net increase (decrease) in cash and cash equivalents      (1,713)   (114,769)

Cash and cash equivalents at beginning of year             6,769     121,538
                                                       ----------  ----------

Cash and cash equivalents at end of year               $   5,056   $   6,769
                                                       =========   =========

Supplemental disclosure for cash flows
Interest Paid                                          $  20,220   $  31,843
                                                       =========   =========
</TABLE>


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

<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                          Notes to Financial Statements
                          -----------------------------

                           December 31, 2001 and 2000
                           --------------------------


Note  A  -  Background
----------------------

     Business  Activities - Florida N-Viro, L.P. was formed January 1, 1996 as a
     Delaware Limited Partnership under the Delaware Revised Limited Partnership
     Act.  The  Partnership  has  entered into a patent and technology agreement
     with  N-Viro International Corporation for the exclusive, royalty free, use
     in  Florida  of certain systems/processes for the treatment and remediation
     of  wastewater  sludge.  The  Partnership  operates  from its Ft. Meade and
     Volusia,  Florida  facilities.

     The  Partnership  consists  of  one general partner, Florida N-Viro Limited
     Liability  Corporation,  a  Delaware limited liability corporation, and two
     limited  partners:  VFL  Technology  Corporation  and  N-Viro International
     Corporation.  The  general  partner is a limited liability corporation that
     has  limited  resources  and  is  responsible  for  the  liabilities of the
     partnership  beyond  the  capital  contributed  by  the  limited  partners.


     The  Partnership  agreement  terminates  on  December  31,  2026.


Note  B  -  Summary  of  Accounting  Principles
-----------------------------------------------

1.   Method  of  Accounting  and Use of Estimates - The financial statements are
     prepared  using  the  accrual  basis  of  accounting.  Generally  accepted
     accounting principles requires management to make estimates and assumptions
     that  affect  the reported amounts of assets and liabilities at the date of
     the financial statements, and the reported amounts of revenues and expenses
     during  the  reporting  period.  Actual  results  could  differ  from  the
     estimates.

2.   Cash  and  Cash  Equivalents  -  The  Partnership  considers all short-term
     investments  with  an  original maturity of three months or less to be cash
     equivalents.

3.   Property  and  Equipment  -  Property  and  equipment, carried at cost, are
     depreciated  over  the  estimated  useful  life  of  the  related  assets.
     Depreciation  is  computed  principally  by  the  straight-line method. The
     estimated  useful  lives  used  in computing depreciation are summarized as
     follows:
<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                    Notes to Financial Statements (continued)
                    -----------------------------------------

                                                Years of Useful Life

                         Operating equipment           5-10
                         Furniture and fixtures         5-7
                         Site improvements               15
                         Buildings                       39


     Depreciation  amounted  to  $183,891  and  $201,971  for  2001  and  2000,
     respectively
..

     Maintenance,  repairs  and  expenditures  for  renewals and betterments not
     determined  to  extend  the  useful  life  or  to  increase  materially the
     productivity  of  the  properties  to which they are applied are charged to
     income  as  incurred.  Other  renewals  and  betterments  are  capitalized.

     It  is  the  policy  of  the  Partnership  generally  to eliminate from the
     accounts  the  cost  and  related allowances for depreciation applicable to
     assets  retired  or  otherwise disposed of, charging or crediting to income
     the  differences  between  depreciation  cost  and  the proceeds of sale or
     salvage.

4.   Income Taxes - No provision for income taxes is required since the partners
     report  their  proportionate share of partnership taxable income or loss on
     their  respective  income  tax  returns.  Such  income  or  losses  are
     proportionately  allocated  to  the  partners  based  upon  their ownership
     interests.

5.   Advertising  -  The Partnership follows the policy of charging the costs of
     advertising  to  expense  as  incurred.

     Advertising  expense  is $9,837 and $6,359 for 2001 and 2000, respectively.

6.   Reclassifications  -  Certain  reclassifications  were  made  to  the  1999
     financial statements presentation in order to conform to the 2000 financial
     statements  presentation.


Note  C  -  Related  Parties
----------------------------

     VFL  Technology  Corporation  charged  the  Partnership $40,570 in 2001 and
     $23,556  in  2000  for  certain  operating  and  engineering  services.

     The  Partnership  has  a  fee sharing arrangement with N-Viro International
     Corporation  for  services  provided  to  certain  customers. The agreement
     terminated  during  2000.  The  Partnership's  share  of  these  fees  was
     approximately  $34,269  for  2000.

<PAGE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                    Notes to Financial Statements (continued)
                    -----------------------------------------


     The  Partnership  had  payable balances due the general partner and limited
     partners  as  of  December  31,  2001  and  2000  of  $308,672 and $200,073
     respectively.

     As  of  December  31,  2001  and 2000, the Partnership had notes due to the
     limited  partners,  payable on demand and bearing interest of 9.75% accrued
     monthly.


Note  D  -  Concentration  of  Credit  Risk
-------------------------------------------

     In  the  normal  course  of  business,  the  Partnership  extends credit to
     customers  principally  in  the  State of Florida. The Partnership does not
     provide  an allowance for doubtful accounts since it expects to collect all
     of  its  accounts  receivable.

     The  Partnership  conducts  a  major  portion  of its business with several
     customers.  For  the year ended December 31, 2001, four customers accounted
     for  59%  of  total  revenue.  For 2000, six customers accounted for 77% of
     revenue.

     The  Partnership maintains its operating checking account at a bank located
     in  Southeastern  Pennsylvania.  The  balance  in this account may at times
     exceed  the  federally  insured  limit  of  $100,000.


NOTE  E  -  LONG-TERM  NOTES  PAYABLE
-------------------------------------

Long-term  notes  payable  consist  of  the  following:

<TABLE>
<CAPTION>


                                              2001      2000
                                            --------  --------
<S>                                         <C>       <C>
  9.25% Note payable to bank, monthly
   payments of $2,245, including interest,
   secured by equipment, due August 2002      17,355    41,468

  10.007% Note payable to bank, monthly
  payments of $2,445, including interest,
   secured by equipment, due June 2005        88,341   105,965

  8.97% Note payable to bank, monthly
  payments of $745, including interest,
   secured by automobile, due May 2002             -    11,193

  10.037% Note payable to bank, monthly
  payments of $2,353, including interest,
  secured by equipment, due July 2001              -    13,711

  9.54% Note payable to bank, monthly
  payments of $2,550, including interest,
  secured by equipment, due October 2001           -    26,837


  10.257% Note payable to bank, monthly
  payments of $2,279, including interest,
  secured by equipment, due October 2004      68,701    86,397
                                            --------  --------

  Total Long Term Debt                      $174,397  $285,571
  Less current maturities                     64,199   111,942
                                            --------  --------
                                            $110,198  $173,629
                                            ========  ========

</TABLE>

                              FLORIDA N-VIRO, L.P.
                              --------------------

                    Notes to Financial Statements (continued)
                    -----------------------------------------


Maturities  of  Long  Term  Debt  are  as  follows:

                                              2002        $    64,199
                                              2003             47,731
                                              2004             48,216
                                              2005             14,251
                                                          -----------
                                                           $  174,397
                                                          ===========

Note  F  -  Lease  Commitments
------------------------------

The  Partnership  leases various equipment under operating leases that expire at
various  times  through  the  year  2006.

The  following  is  a  schedule  detailing  future  minimum  lease  payments:

               Year  Ended  December  31
               -------------------------
                            2002                          $   25,295
                            2003                              21,663
                            2004                              19,847
                            2005                              19,847
                            2006                               3,308
                                                          ----------
                                                          $   89,960
                                                          ==========


Note  G  -  Working  Capital  Deficiency
----------------------------------------

The  Partnership's financial statements have been presented on the basis that it
is  a  going  concern,  which  contemplates  the  realization  of assets and the
satisfaction  of  liabilities  in the normal course of business. The Partnership
has  incurred  losses  over  the  past  several  years  and  has working capital
deficiencies  as  of  December  31,  2001  and  2000.

Management  believes  that  actions presently being taken to expand the customer
base  and  revenues  and  for the partners to provide additional working capital
when  needed,  will provide the opportunity for the Partnership to continue as a
going  concern.

<PAGE>


                                   SIGNATURES


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.

                                                N-VIRO INTERNATIONAL CORPORATION
Dated:  May  12,  2003

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


     Pursuant  to  the requirements of the Securities Exchange Act of 1934, 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:  May  12,  2003

/s/  Terry  J.  Logan,  Ph.D.*              /s/  J.  Patrick  Nicholson*
------------------------------              ----------------------------
Terry  J.  Logan,  Ph.D.,                   J.  Patrick Nicholson
Chief  Executive  Officer, ,                Chairman  of  the  Board
President  and  Director
(Principal  Executive  Officer)


/s/  Michael  G.  Nicholson*                /s/  James  K.  McHugh
----------------------------                ----------------------
Michael G. Nicholson, ,                     Chief Financial Officer,
Chief Operating Officer                     Secretary  and  Treasurer
Senior  Vice-President and Director         (Principal Financial and Accounting
Officer)


/s/  Phillip  Levin*                        /s/  R.  Francis  DiPrete*
--------------------                        --------------------------
Phillip  Levin,  Director                   R.  Francis  DiPrete,  Director


/s/  B.K.  Wesley  Copeland*                /s/  Bobby  B.  Carroll*
----------------------------                ------------------------
B.K.  Wesley  Copeland,  Director           Bobby  B.  Carroll,  Director


/s/  Daniel  J.  Haslinger*
---------------------------
Daniel  J.  Haslinger,  Director


*By:  /s/  James  K.  McHugh
----------------------------
James  K.  McHugh,  Attorney-in-Fact

<PAGE>


                        N-Viro International Corporation
                                 Certifications


I,  Terry  J.  Logan,  President  and  Chief  Executive  Officer,  certify that:

1.   I  have  reviewed  this  annual report on Form 10-K of N-Viro International
Corporation;

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

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

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a.  designed  such  disclosure  controls  and  procedures  to  ensure  that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

     b.  evaluated the effectiveness of the registrant's disclosure controls and
procedures  as  of  a  date  within the 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");

     c.  presented in this annual report our conclusions about the effectiveness
of  the  disclosure  controls  and  procedures based on our evaluation as of the
Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
function);

     a.  all  significant  deficiencies  in  the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b.  any  fraud,  whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to  date  of  their  evaluation, including any corrective actions with regard to
significant  deficiencies  and  material  weaknesses.



Date:   May  12,  2003                 /s/  Terry  J.  Logan
                                       ------------------------------------
                                       President  and  Chief  Executive  Officer
<PAGE>

                        N-Viro International Corporation
                                 Certifications


I,  James  K.  McHugh,  Chief  Financial  Officer,  certify  that:

1.   I  have  reviewed  this  annual report on Form 10-K of N-Viro International
Corporation;

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

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

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

     a.  designed  such  disclosure  controls  and  procedures  to  ensure  that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

     b.  evaluated the effectiveness of the registrant's disclosure controls and
procedures  as  of  a  date  within the 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");

     c.  presented in this annual report our conclusions about the effectiveness
of  the  disclosure  controls  and  procedures based on our evaluation as of the
Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
function);

     a.  all  significant  deficiencies  in  the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b.  any  fraud,  whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to  date  of  their  evaluation, including any corrective actions with regard to
significant  deficiencies  and  material  weaknesses.



Date:   May  12,  2003                         /s/  James  K.  McHugh
                                               ----------------------
                                               Chief  Financial  Officer