UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 26, 2003
N-VIRO INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-21802 34-1741211
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
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
ITEM 5. OTHER EVENTS
On February 26, 2003 N-Viro International Corporation (the "Company") closed on
an $845,000 Credit Facility with Monroe Bank & Trust. The loan agreement and
Notes pertaining to the Credit Facility are attached as Exhibits 99.1 and 99.2,
respectively. 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. 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 in the form of a real
estate mortgage on property belonging to 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") provided the $100,000 Additional Collateral. In exchange
for the provision of the Mortgage or Mortgages to secure the Company's debt to
Monroe Bank & Trust, 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 property owned by
the Nicholsons, which fee originally will 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 Nicholsons' property beginning on the first anniversary date
of the closing of the Credit Facility, and (3) grant, jointly to the
Nicholsons, a warrant (the "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 lien secures the
obligation of the Company to indemnify the Nicholsons against any economic loss
they may incur if the Company defaults on its obligations under the Credit
Facility. The Additional Collateral Agreement and Warrant are attached as
Exhibits 99.3 and 99.4, respectively.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
N-VIRO INTERNATIONAL CORPORATION
Dated: March 3, 2003 By: /s/ James K. McHugh
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James K. McHugh
Chief Financial Officer