<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>mfri8k033105.txt
<DESCRIPTION>FORM 8K 033105
<TEXT>
                                  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)
                                 March 28, 2005

                                   MFRI, INC.
             (Exact name of registrant as specified in its charter)

Delaware                         0-18370                     36-3922969
(State or Other                  (Commission                 (IRS Employer
Jurisdiction of                  File Number)                Identification No.)
Incorporation)

7720 Lehigh Avenue, Niles, Illinois                          60714
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code: 847-966-1000

                                 Not Applicable
         (Former name or former address, if changed since last report.)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)

[ ] Soliciting  material  pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))

<PAGE>

Item 1.01 Entry into a Material Definitive Agreement

     On March 28, 2005, the Company's secured loan and security agreement with a
financial  institution  ("Loan Agreement") was amended to (1) add a term loan of
$4,300,000 ("Term Loan") and (2) amend certain covenants. (the "Amendment"). The
total that can be borrowed under the Loan Agreement is unchanged at $27,000,000,
subject to borrowing base and other requirements.  Interest rates under the Term
Loan are based on options  selected by the  Company as follows:  (a) a margin in
effect plus a prime rate;  or (b) a margin in effect plus the LIBOR rate for the
corresponding  interest  period.  At March 28, 2005 the prime rate was 5.75% and
the  margins  added to the prime rate and the LIBOR rate,  which are  determined
each quarter based on the applicable  financial  statement ratio,  were 1.25 and
3.5 percentage points, respectively. The Company is scheduled to pay $215,000 of
principal  on the first days of March,  June,  September,  and  December in each
year,  commencing  on June 1, 2005 and ending on September  30,  2007,  with the
remaining  unpaid  principal  payable on November 30,  2007.  As a result of the
covenant amendments,  borrowings  outstanding under the Loan Agreement no longer
meet the  definitions  of  Emerging  Issues  Task  Force  95-22  "Balance  Sheet
Classification of Borrowings  Outstanding under Revolving Credit Agreements That
Include both a Subjective  Acceleration Clause and a Lock-Box Arrangement" (EITF
95-22),  which had  previously  required  such  borrowings  to be  classified as
current  maturities of long-term  debt.  Accordingly,  such  borrowings  will be
classified as long-term debt so long as they qualify under accounting principles
other than EITF 95-22.  January 31, 2005 borrowings under the Loan Agreement and
those that were refinanced under the Amendment will be so classified.

     The  proceeds of the Term Loan were used to repay the  outstanding  balance
due under the Company's Note Purchase Agreements  ($3,125,000) and to reduce the
Company's revolving debt under the Loan Agreement  ($1,175,000).  Interest rates
under the Note Purchase Agreements had been 10% per annum.


Item 1.02 Termination of a Material Definitive Agreement

See Item 1.01 above.

Item 2.03 Creation of a Direct  Financial  Obligation or an Obligation  under an
Off-Balance Sheet Arrangement of a Registrant.

See Item 1.01 above.
<PAGE>

SIGNATURES

     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                              MFRI, INC.
                                              (Registrant)



Date:  March 31, 2005                     By: /s/ Michael D. Bennett
                                              ----------------------------------
                                              Michael D. Bennett
                                              Vice President

</TEXT>
</DOCUMENT>
