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SECURITIES AND EXCHANGE COMMISSION

FORM 10-KSB

| | (Mark One)                                                                                                                                          
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | [X] Annual report under
    Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal
    year ended June 30, 2006                  
| | [ ]   Transition report under Section
    13 or 15(d) of the Securities Exchange Act of 1934 For the transition period
    from ________ to ________

Commission File Number 33-17598-NY

The Tirex Corporation

|Delaware                                 | 22-3282985          
|---------------------------------------- | --------------------
|(State
    or Other Jurisdiction of      | (I.R.S.
    Employer
|Incorporation or Organization)           | Identification No.) 
|                                         |                     
|P.O. Box 1000, Stratford Postal Store    |                     
|411
    Barnum Ave. Cutoff               |                     
|Stratford CT                             | H3Z
    3J8         
|(Address of Principal Executive Offices) | (Zip
    Code)      

(203) 522-3247(Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

|                    | Name
    of Each Exchange
|------------------- | -------------------------
|Title of Each Class | on
    Which Registered  
|                    |                          
|NONE                | NONE                     

Securities registered under Section 12(g) of the Exchange Act:

NONE

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

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and if no disclosure will be
contained, to the best of the Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

$nil 
------- 
(Issuer's revenues for its most recent fiscal year)

$zero (as of June 30, 2006) 
-----------------------------------
(Aggregate market value of the voting stock held by non-affiliates of the
Issuer)

249,895,892 (as of September 30, 2006) 
-------------------------------------------------- 
(Number of shares outstanding of each of the Issuer's classes of common stock)

Transitional Small Business Disclosure Format (check
one) Yes [ ]         No [X]

DOCUMENTS INCORPORATED BY REFERENCE 
into Part I

> Annual Report of the Company on Form 10-KSB for the year ended June 30,
>   2006
>   Quarterly Reports of the Company on Form 10-QSB for the quarters ended
>   September 30, 2005, December 31, 2005, and March 31, 2006
>   Current Reports on Forms 8-K of the Company
>   February 15, 2006 - Change of Certifying Accountant 
>   March 6, 2006 - Change of Certifying Accountant (modified) and change of
>   address. 
>   April 4, 2006 - Death of a Director

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ITEM 1. DESCRIPTION OF BUSINESS

The Company

The Tirex Corporation (hereinafter
referred to as "we", "us" or the "Company") is engaged in the business of
developing for sale, license or lease an environmentally safe patented "turn
key" cryogenic tire recycling system, known as the "TCS System" The TCS System
was designed and developed by us and separates tires into clean and saleable
rubber crumb, steel wire, and fiber. The Company was incorporated in Delaware on
August 19, 1987 under the name "Concord Enterprises, Inc." The Company's name
was changed to "Stopwatch Inc." on June 20, 1989 and to "Tirex America Inc." on
March 10, 1993. On July 11, 1997, the Company's name was changed to "The Tirex
Corporation". Since 1993, our core business has been to develop and to initiate
marketing efforts by sale or license of an environmentally friendly cryogenic
tire recycling system, which we intend to sell to recycling companies and
governmental agencies to enable them to recycle tires. We have devoted the bulk
of our efforts to completing the design and development of our first production
model and raising the financing required to do so. The Company has generated
only very limited revenues from operations and is still in the development
stage.

The TCS-System

Our TCS-System comprises a complete,
turn-key, environmentally safe, semi-cryogenic tire recycling system designed
to: (i) disintegrate scrap tires, using less energy than is required by existing
ambient methods (which shred and/or chop tires at "ambient" or normal room
temperatures) or other currently available cryogenic methods (which reduce the
temperature of the materials through the use of liquid nitrogen), and (ii)
produce commercially exploitable, high quality, clean rubber crumb and shredded
steel and fiber. Disregarding configuration variations related to tire feedstock
preparation and possible

The freezing chamber of the TCS-1
Production Model, previously located in Montreal, was a large tank through which
the tire parts were circulated having temperatures of approximately 170 degrees
below zero, Fahrenheit. The first commercial version of the TCS has been
re-designed to run approximately 20 degrees colder to ensure that no pieces of
rubber can warm up to the "glass point" before being entirely processed by our
patented fracturing mill. Frozen tire parts are passed through a fracturing mill
that separates the component parts of all tires, including rubber powder, clean
steel wire and twine. The mesh is then physically separated from the metal and
twine and is finally subjected to other steps to achieve the desired mesh size.
Auxiliary grinding equipment can be added to attain mesh sizes smaller than what
the TCS will initially accomplish in significant volume, up to 30 mesh (0.0232
inches or 0.595 millimeters).

The functions and mechanisms of the
TCS-System have been designed for the exclusive purpose of disintegrating
automobile tires, although relatively minor modifications could be introduced to
accept other kinds of tires as well.

The TCS System has been designed to
operate continuously (with minimum amounts of scheduled downtime for
maintenance) and to require less energy than is used, to the best of the
Company's knowledge, by other presently existing tire recycling equipment.

Step-by-Step Operations

The step-by step operations of the
TCS-System comprise the following:

Tire Feedstock Preparation

The TCS System is not designed to
accept whole tires; whole tires must undergo preliminary preparation to produce
pieces of tire having a dimension which permits their introduction into the
patented fracturing mill. Feedstock preparation can be accomplished in a number
of ways including chipping, shredding and removal of sidewalls followed by
diecutting. None of these techniques form part of the TCS System technology and
the technique ultimately chosen by the tire recycling entrepreneur will revolve
around issues of capital and operating costs as well as possible issues of
transportation costs respecting whole tires.

Freezing the Tire Pieces

The prepared tire pieces are
deposited on a conveyor belt which brings a continuous stream of tire pieces to
a freezing chamber. Supercooled air, produced on-site by an Air Plant, is
continuously blown into the freezing chamber, and this cold air freezes the tire
pieces moving through the chamber to the point where these pieces can be made to
shatter like glass when subjected to forces such as pressure and bending. After
approximately thirty minutes in the Freezing Chamber the frozen pieces exit the
Freezing Chamber and enter our patented disintegrators ("Fracturing Mills").

Size Reduction and Materials Separation in the Fracturing
Mill

The frozen tire pieces pass through
our patented disintegrators ("Fracturing Mills") where the pieces are reduced to
three separate output materials, these being rubber crumb of varying degrees of
fineness, intact pieces of steel and intact pieces of fiber. This operation does
not involve any chopping, shredding, or hammer-milling. Therefore, the steel
wires are neither cut nor broken. The fiber threads retain their basic shapes
and characteristics. No steel powder or fiber fluff is produced.

Elimination of the Steel from the Fracturing Mill Output

Upon completion of processing in the
Fracturing Mill, the output is conveyed to a magnetic separation system where
the intact steel wires are magnetically removed from the remaining output of the
Fracturing Mill, this being the rubber crumb and the fiber. The steel can then
be baled for either disposal or sale.

Fiber Removal

The fiber and rubber crumb is then
passed through screens to separate the crumb from the fiber threads. The fiber
threads are then conveyed out of the machine. The fiber can then be baled or put
into a container for either disposal or sale.

Rubber Crumb Finishing

Rubber crumb finishing operations are
dictated by the output requirements of the entrepreneur and his or her
customers. The TCS System has been configured to produce rubber crumb in mesh
sizes ranging from 10 mesh to 30 mesh at the option of the entrepreneur (limited
quantities of even finer mesh rubber are also produced), in such proportions of
mesh sizes as the entrepreneur decides, according to his market requirements.
Market considerations might incite the recycling entrepreneur to request even
finer mesh sizes of rubber crumb than a TCS System is designed to produce. This
requires auxiliary grinding, which takes place after the steel and fiber have
been removed, and would affect the configuration of the post Fracturing Mill
operations. Auxiliary processing equipment does not form part of the TCS System
technology.

It is possible that some very small
pieces of steel and fiber can be trapped in the larger pieces of rubber coming
out of the Fracturing Mill. These small amounts of steel and fiber are released
during auxiliary processing and can be separated during the auxiliary processing
operation, magnetically for the steel and by an air separation system for the
residual fiber. The rubber crumb is then passed through a series of screens to
sort the rubber crumb by mesh size, which is thence packaged for customer
requirements.

Manufacturing

Our activities to date focused
primarily on the design and development of the original TCS-1 First Production
Model, and, more recently, on the design of a second generation version of this
technology. In connection with these activities, we have been dependent upon
arrangements with subcontractors for the manufacture and assembly of the
principal components incorporated into a TCS System Plant. Pursuant to our
signing of the exclusive manufacturing license agreement with Simpro, S.p.A.,
with the exception of those systems which Simpro might choose to refuse to
accept a contract from any particular potential customer, all manufacturing
activities of our company will now be undertaken by this Italian company. In the
seemingly unlikely scenario where Simpro would refuse a contract which we
believe should be accepted, we would have the right to go to alternate sources
to have such systems manufactured and installed. . Management believes that
numerous alternative sources of supply for all such systems are readily
available.

We have licensed the manufacturing
respecting our technology to our Manufacturing Partner, Simpro S.p.A. of Turin,
Italy. Simpro is a designer and manufacturer of high-technology production
systems, historically primarily for the automobile industry, and is active
internationally. Simpro has its ISO 9001, ISO 14001 and EMAS certifications.

The Tirex R&D License

Tirex R&D held an exclusive, ten year
license from the Company, which expired on July 2, 2005. This license, which was
modified in June of 2002, permitted Tirex R&D to design, develop, and
manufacture the TCS-Systems on a worldwide basis (the "Primary License"). To the
extent necessary to ensure that

Canadian Government and Government Sponsored Financial Assistance

Our May 1995 transfer of our research
and development and manufacturing activities to Tirex R&D (then referred to as "Tirex
Canada") made us eligible for various Canadian and Quebec government programs
which provide loans, grants, and tax incentives, as well as government
guarantees for loans from private lending institutions, for eligible investment,
research and development, and employee-training activities.

Tax Incentives

Canadian and Quebec tax incentives
take the form of deductions and tax credits with respect to eligible research
and development expenditures previously incurred by Tirex R&D. Certain tax
credits are called "refundable" because, to the extent that the amount of the
tax credit exceeds the taxes otherwise payable, they are paid over or "refunded"
to the taxpayer. Thus, these credits function effectively as monetary grants. To
qualify for such tax credits, research and development activities must comprise
investigation or systematic technological or scientific research conducted
through pure or applied research, undertaken to advance science and develop new
processes, materials, products or devices or to enhance existing processes,
materials, products, or devices. As previously reported, we have benefited
substantially for such research and development tax credits but the Company has
not produced any tax credit claims following its Fiscal 2002 year. In the event
that the Company would envision restarting its R&D efforts, it would either
re-activate Tirex Canada R&D Inc. or create a new Canadian subsidiary eligible
for such tax credits.

Canadian Government, and Government Sponsored Loans and
Grants

We have in the past also received
financial assistance by way of loans and grants from Canadian and Quebec
governmental agencies for the design and development of the TCS-1 Plant and for
export market development. All of the activities for which these loans were
approved have been completed and we have received the funds approved.
Approximately 80% of the loans previously received have been repaid. Of the
remaining approximately CA$150,000 (approximately US$123,000 using a $0.82
exchange rate) US$66,500 will be forgiven if the Company does not realize any
sales in Spain and Portugal prior to June 30, 2004 and a further approximately
US$14,800 will also be forgiven if there are no sales in Spain and / or Portugal
prior to June 30, 2007.

Patent Protection

We were issued a United States patent
on our Cryogenic Tire Disintegration Process and Apparatus on April 7, 1998
(Patent No. 5,735,471). The duration of the patent is 20 years from the date the
original application was filed. In November 1998, we filed our patent, for
review, with the Canadian Patent Office. Canadian patent number 2193334 was
granted on August 17, 2004. Canadian patents have a duration of seventeen (17)
years. Prior to the issuance of our US patent, we relied solely on trade
secrets, proprietary know-how and technological innovation to develop our
technology and the designs and specifications for the TCS-1 demonstration unit.
The Company's patents are free of liens. We do not presently hold any patents
for our products or systems outside of the United States and Canada. We have
lacked the financial resources to apply for a process patent on an international
basis, but the Company intends to file for additional patent protection, in
accordance with our Agreement with Simpro S.p.A. of Turin, Italy, once
sufficient financial resources will become available.

We have entered into confidentiality
and invention assignment agreements with certain employees and consultants,
which limit access to, and disclosure or use of, our technology. There can be no
assurance, however, that the steps we have taken to deter misappropriation of
our intellectual property or third party

Employees

As of October 2006, we have four
persons employed either directly or under consulting contracts including its
three executive officers. Three of the foregoing persons devote their full time
to our business and affairs, as required. At times, we also utilize the services
of part-time consultants to assist us with market research and development and
other matters. We intend to hire additional personnel, as needed, and as
financial resources permit.

Potential Markets

We believe that the potential markets
for our TCS System will be directly affected by the level of demand for
economical, high quality rubber crumb derived from the recycling of scrap tires.
The following discussion of the potential markets for rubber crumb assumes that
the TCS System will actually be capable of economically producing high quality
recycled rubber crumb and in a variety of sizes, and capable of being used in
wide range of products. It should be noted, however, that because of the limited
operating history of our heretofore TCS-1 Production Model Plant, we cannot,
give any assurance that our TCS Systems will in fact perform as expected under
continuous, commercial operating conditions. However, our Manufacturing
Licensee, Simpro S.p.A. of Turin, Italy, is prepared to offer limited
performance guarantees, backed by insurance policies. Moreover, even if the
demand for rubber crumb should increase in accordance with our expectations,
there can be no assurance that a demand for TCS Systems will likewise develop.

Rubber is a valuable raw material and
we believe that recycling this valuable resource from scrap tires is an ideal
way to recover that value. Recycled scrap tire rubber is already used in a great
variety of products, promoting longevity by adding it to asphalt pavement,
adding bulk and providing drainage as a soil additive, providing durability as a
carpet underpadding, increasing resiliency in running track surfaces and
gymnasium floors, absorbing shock and lessening the potential for injuries as a
ground cover for playgrounds and other recreational areas, and as a significant
component added to plastic resins for making extruded or injection molded
products. We are aware of significant recent developments in making finished
products from crumb rubber compounded with plastic resins, particularly
polypropylene. We believe that the potential for crumb rubber to substitute for
either virgin or recycled plastic resins is very significant, given the relative
market price for crumb rubber versus the commodity prices for such plastic
resins. We believe that TCS operators could realize very attractive profits at
prices even less than US$0.20 per pound. As of August 8, 2005, virgin general
purpose injection grade polypropylene was selling for approximately US$0.65 per
pound for high-volume users (20 million pounds per year or more). Recycled
polypropylene was selling for between US$0.27 (for clean regrind or flake)and
US$0.39 (for pellets) per pound, depending on its form.

Marketing Activities

To a large extent, we have, in the
past, concentrated our efforts on completing the design, development, and
construction of our heretofore TCS-First Production Model 1 and raising adequate
financing to support such efforts. Our long-term objective, however, is to
market TCS Systems worldwide, through national and international sales
representatives, licensees or strategic partners. Pursuant to an extensive
technical audit, our heretofore First Production Model permitted our company to
be certified as an Accredited Tire Recycler by Recyc-Québec, a
quasi-governmental agency of the Quebec Government. Users of the TCS technology
in Quebec could have access to tipping fees paid by Recyc-Québec, which
currently work out to approximately US$0..90 per tire. Management believes that
this accreditation will be beneficial to our marketing efforts respecting our
technology, not only in Quebec but elsewhere, given its independent status.

We can make no assurances with
respect to the success of our marketing and distribution strategy of our TCS
Systems. Furthermore, we have limited resources to achieve the distribution of
our TCS Systems and to date we have made no sales, leases or licenses. We
believe that we will need additional financing, which may not be available, to
achieve our long-term objectives.

Government Regulation

Insofar as the Company is not
actually a tire recycler, government regulations have little direct effect on
our activities. Of greater importance is the possible effect on our customers
for the TCS technology. The TCS-System is a "closed loop" system which does not
use any chemicals, solvents, gases or other substances which could result in
noxious emissions of any kind from the operation of the Plant. To the best of
the Company's knowledge, operation of a TCS-System will not result in the
emission of any pollutants, the disposal of combustion residues, the storage of
hazardous substances, or the production of any significant amounts of solid
waste which would have to be landfilled. Our Manufacturing Licensee, Simpro
S.p.A., has undertaken a formal environmental assessment of our technology, the
results of which confirms our assertions. However, the operation of a TCS System
will involve, to varying degrees and for varying periods of time, the storage of
scrap tires or tire pieces representing the feedstock to the System, and limited
storage of crumb rubber prior to shipment to customers. Rubber, regardless of
its physical dimensions or form, is widely defined as being a fire hazard by
fire protection services in most industrially-advanced countries.

As a result, many US states and
Canadian provinces have either passed or have pending legislation regarding
discarded tires including legislation limiting the storage of used tires to
specifically designated areas. Operators of TCS Systems will therefore be
subject to various local, state, and federal laws and regulations including,
without limitation, regulations promulgated by federal and state environmental,
health, and labor agencies. Establishing and operating a TCS System for tire
recycling will require numerous permits and compliance with environmental and
other government regulations, on the part of our customers, both in the United
States and Canada and in most other foreign countries. The process of obtaining
required regulatory approvals may be lengthy and expensive for customers of our
TCS Systems. Moreover, regulatory approvals, if granted, may include significant
limitations on operations. The US-EPA and comparable US state and local
regulatory agencies, and similar government bodies in Canada and in other
jurisdictions where TCS Systems will be marketed actively enforce environmental
regulations and conduct periodic inspections to determine compliance with
government regulations. Failure to comply with applicable regulatory
requirements can result in, among other things, fines, suspension of approvals,
seizure or recall of products, operating restrictions, and criminal
prosecutions.

We believe that existing government
regulations, while extensive, will not result in the disenabling of its TCS
System customers to operate profitably and in compliance with such regulations.
While these regulations are usually stringent, the huge scrap tire problem must
also be dealt with on a daily basis and the need for economic and
environmentally friendly recycling operations is critical. The burden of
compliance with laws and regulations governing the installation and/or operation
of TCS Systems could, nonetheless, discourage potential customers from
purchasing a TCS System. This would adversely affect our business, prospects,
results, and financial condition. As a result, our business could be directly
and indirectly affected by government regulations.

ITEM 2. DESCRIPTION OF PROPERTY

Our corporate headquarters is located
at Stratford, Connecticut. We have occupied offices at this address since
September 2006. Prior to moving to these premises, during Fiscal 2006, the
Company occupied premises in a residential and office complex in west-end
Montreal. Prior to its west-end location, Tirex occupied an industrial building
on St. Patrick Street in Montreal, where the TCS Prototype was located. After
having accumulated very substantial arrearages in rent and property taxes for
which we were financially responsible, our former landlord instructed us to
vacate these premises such that he could rent the space out to another company.
As part of the settlement agreement with this former landlord, we agreed to pay
to this former landlord the sum of US$540,000 out of the proceeds of the first
four sales of TCS Systems, at the rate of US$140,000 per system sold. .

ITEM 3. LEGAL PROCEEDINGS

> We are presently a party in the following legal proceedings:
>   IM2 Merchandising and Manufacturing, Inc and David B. Sinclair v. The Tirex
>   Corporation, Tirex Corporation Canada, Inc., et al.

The Plaintiffs, a Canadian resident and a Canadian
corporation sued in the Delaware, U.S. Federal District Court claiming fraud,
breach of contract, unjust enrichment and other allegations, that the alleged
Defendants, which include Tirex Corporation Canada and The Tirex Corporation,
jointly conspired to profit from their failure to comply with terms of a
manufacturing agreement. The monetary demand of this complaint was unspecified.
We were prepared to move to dismiss Plaintiffs' Complaint, but after
consultations with the Plaintiffs' Attorneys, the Plaintiffs' withdrew this
complaint voluntarily. Plaintiffs later filed a second action in the Chancery
Court of Delaware alleging certain of the same allegations; fraud, breach of
contract, unjust enrichment, breach of fiduciary duty and misrepresentation, but
eliminated other counts including the securities fraud allegations. The
Defendants in the State Court action are the same named in the Federal Court
action, and again the monetary damages are unspecified. We moved to dismiss the
State Court Chancery case alleging defective service of process and asserting
that the Court had no jurisdiction over the Defendants in Delaware and for
removal of the case to Canada based on forum non convenience and other
considerations. Our motion was granted and the case dismissed.

Subsequently, on or about April 25, 2001, the
Plaintiffs instituted a lawsuit in Superior Court, judicial district of Montreal
alleging breach of contract and claims damages of Canadian$794,690
(approximately US$715,600) representing expenses and an additional
Canadian$5,411,158 (approximately US$4,870,000) in loss of profits. Unlike the
suit filed in the US Federal District Court in Delaware, there was no accusation
of fraud. We have filed a detailed answer denying all liability, stating further
that Plaintiffs failed to comply with their obligations. We believe we have
meritorious defenses to all of the Plaintiffs' claims. The action is still
pending.

Surgent v. The Tirex Corporation

An action was brought by the Plaintiff against us,
alleging that we had agreed to issue 1,000,000 shares of our Common Stock to the
Plaintiff in consideration for expenses allegedly paid by the Plaintiff on our
behalf in the amount of approximately $150,000. These expenses allegedly were
incurred in relation to the rental of certain office space and performance of
administrative services. The Plaintiff's complaint sought to impose an equitable
trust or lien on 1,000,000 of our unissued common shares, demanded the issuance
of the 1,000,000 shares and alleged breach of contract and claimed damages of
$1,400,000.

We moved to dismiss the case on various procedural
grounds and in September 2000 the Court granted our motion based upon the lack
of venue in Union County, New Jersey. A new action was instituted by Plaintiff
in the Superior Court of New Jersey, Bergen County in April 2001 alleging
similar claims as set forth in the previous action (Docket L-08060-00). We
denied all of plaintiff's allegations. On July 24, 2002, The Superior Court of
New Jersey, Bergen County, dismissed, with prejudice, the plaintiff's complaint
for "Lack of Prosecution". Plaintiff was granted right to appeal, which was
undertaken. However, Plaintiff's appeal was rejected by the Appellate Court.
Subsequently, plaintiff was convicted of fraud and is currently incarcerated in
a US prison.

Lefebvre Freres Limited v. The Tirex Corporation

Lefebvre Frères Limited instituted an action against
us on August 13, 2001 in the Superior Court, judicial district of Montreal
claiming Canadian $98,513 (approximately US$89,000 at current exchange rates) is
due and owing for the manufacture and delivery of car tire disintegrators. We
have prepared a defense and cross claim against Plaintiff as the product
delivered was defective and we believe we are entitled to a reimbursement of
sums paid. Insofar as plaintiff has not actually gone to court, his claim will
soon be legally proscribed. In the meantime, the action is still pending.

Tri-Steel Industries Inc. v. The Tirex Corporation

Our landlord Tri-Steel Industries
Inc. instituted an action against us, and our subsidiaries Tirex Canada and
Tirex Canada R & D Inc., on or about June 22, 2001 for arrears of rent in the
amount of Canadian $177,973.62 Subsequent to the Plaintiff's instituting this
action, we continued to accumulate very substantial arrearages for rent and
property taxes for which we were financially responsible. Subsequent to our
vacating the premises which had been the object of the lease, we settled with
our former landlord for a total amount of US$560,000, to be paid at the rate of
$140,000 from each of our first four TCS System sales.

No director, officer, or affiliate of
the Company, or any associate of any of them, is a party to or has a material
interest in any proceeding adverse to us.

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

During the fiscal year ended June 30,
2006, no matters were submitted to a vote of the shareholders of the Company.

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PART II

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

The Company's common stock, is traded
on a limited basis in the over-the-counter market and, since January 2003, has
been listed on the "Gray Sheets". We are currently awaiting the completion of
our first unconditional sales contract before attempting to have our stock
re-quoted on the OTC Electronic Bulletin Board, maintained by the National
Association of Securities Dealers, Inc. (the "OTC Bulletin Board"). The
following table sets forth representative high and low bid prices by calendar
quarters as reported in the OTC Bulletin Board during the last two fiscal years.
The level of trading in the Company's common stock has been limited and the bid
prices reported may not be indicative of the value of the common stock or the
existence of an active market. The OTC market quotations reflect inter-dealer
prices without retail markup, mark-down, or other fees or commissions, and may
not necessarily represent actual transactions.

|                                     |                        |       
|------------------------------------ | ---------------------- | ------
|                                     | Bid Prices            
|Period                               | Common Stock          
|Fiscal Year Ending June 30,
    2002 | High                   | Low   
|September 29, 2001                   | $ 0.08                 | $ 0.02
|December 29, 2001                    | 0.03                   | 0.01  
|March 30, 2002                       | 0.02                   | 0.01  
|June 29, 2002                        | 0.03                   | 0.01  
|                                     |                        |       
|Fiscal Year Ending June 30,
    2002 | High                   | Low   
|September 30, 2002                   | $ 0.01                 | $ 0.01
|December 30, 2002                    | 0.01                   | 0.01  
|March 31, 2003                       | See
    note following
|June 30, 2003                        | See
    note following
|                                     |                       
|Fiscal Year 2004                     | See
    note following
|                                     |                       
|Fiscal Year 2005                     | See
    note following
|                                     |                       
|Fiscal Year 2006                     | See
    note following

Since being relegated to the Gray Sheets, bid prices are not posted.

Shareholders

As of September 30, 2006, the number
of holders of record of the Company's common stock, $.001 par value, was less
than 500, which does not include shares held by persons or companies in street
or nominee name.

Dividends

The Company has paid no cash
dividends and has no present plan to pay cash dividends, intending instead to
reinvest its earnings, if any. Payment of future cash dividends will be
determined from time to time by its Board of Directors, based upon its future
earnings (if any), financial condition, capital requirements and other factors,
the company is not presently subject to any contractual or similar restriction
on its present or future ability to pay such dividends.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's Discussion and Analysis of Financial Condition
and Results of Operations

The following discussion of our
financial condition and results of operations should be read in conjunction with
the financial statements and notes thereto included elsewhere in this Report.
This document contains certain forward-looking statements including, among
others, anticipated trends in our financial condition and results of operations
and our business strategy. These forward-looking statements are based largely on
our current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from these forward-looking statements.
Important factors to consider in evaluating such forward-looking statements
include (i) changes in external competitive market factors or in our internal
budgeting process which might impact trends in the our results of operations;
(ii) unanticipated working capital or other cash requirements; (iii) changes in
the our business strategy or an inability to execute its strategy due to
unanticipated changes in the industries in which we operates; and (iv) various
competitive factors that may prevent the us from competing successfully in the
marketplace.

Tirex's primary objective is to sell
it's patented and proprietary tire recycling process, called the TCS System, to
tire recyclers throughout the world (www.tirex-tcs.com). In March 2000, we
announced that our TCS technology prototype was ready for replication and
commercialization. The intellectual property owned by Tirex comprises both the
patented "fracturing mill" (both US and Canadian patents) plus the proprietary
freezing process of using super-cooled air (rather than the competitions' liquid
nitrogen process, which represents expensive "overkill" in terms of what is
required to freeze tire chips) to freeze the tire chips to the "glass point"
which permits the effective separation and disintegration of the tire components
by our patented "fracturing mill", producing a semi-cryogenic crumb rubber at a
significant cost saving. The intellectual property of our TCS System process is
recognized in the Manufacturing License Agreement (2003) we have with Simpro
S.p.A. of Torino, Italy www.simpro.it . Simpro has a semi-exclusive
manufacturing license to manufacture the TCS System. Our patent renewals and
continuation for both the USA and Canada were documented in 2005.

In 2001 Tirex's TCS tire recycling
prototype was accredited by Recyc-Québec, the provincial recycling agency in
Montreal, Quebec, Canada, as an economically viable and environmentally-friendly
process that produced quality recycled rubber. During the year 2000 and 2001, we
demonstrated our technology to numerous groups from Asia, Europe, North and
South America and the Caribbean, as well as to some shareholders and potential
strategic alliance partners. While numerous Letters of Intent were signed during
this stage, none materialized into firm purchase contracts. Management
attributed these failures to acquire sales contracts to the lack of a commercial
history for the TCS technology, or alternatively, to the Company's

Tirex
has continued with its marketing structure consisting primarily of Tirex's
President, John L. Threshie Jr., assisted financially by CFO Michael Ash,
combined with Simpro's significant marketing and sales efforts, as well as
independent representatives. Simpro also has a non-exclusive marketing agreement
applicable on a worldwide basis. Tirex continues to entertain requests for
marketing agreements on several continents, but adheres to its policy of
offering commissions out of sales proceeds only and not providing exclusivities
in the absence of prior-established results.

Over
the last year, Tirex developed a strategic alliance with The Platinum Group (TPG)
www.tpgusa.org, a Washington D. C. based organization strongly involved in
international business development and is represented as having high-level
contacts with financial decision makers in the Middle East, India and Northern
Africa. TPG management has been concentrating considerable efforts of late to
secure adequate funding for several projects involving TCS Systems in those
markets.

The
lack of a significant track record relative to the operation and output of the
TCS System has proven to be a difficult hurdle to overcome in acquiring TCS
System sales. The installed cost of a TCS-1 System to a recycler, depending on
the system configuration, the condition of the feedstock and the output
requirements and excluding building and infrastructure costs, is in the vicinity
of Euros 4,300,000 (approximately US$5.43 million at prevailing exchange rates).
For a TCS-2, the comparable cost to the recycler is in the vicinity of Euros
5,500,000. This represents a substantial investment for a start-up company.
Simpro has been able to obtain insurance backing to support their offer of
limited performance guarantees, and such potential is expected to assist the
marketing effort. Simpro is now offering limited Performance Guarantees on a
case by case basis. Management is of the opinion that, insofar as the systems
are normally priced in Euros, the continuing strength of the Euro against the US
dollar is having a negative on the sales efforts.

Market
and sales efforts of the TCS System continues to evolve and has attracted
qualified and capable companies over the past year. During Fiscal 2006, the
Company and Simpro have entertained numerous potential TCS System customers. Out
of these developments, several opportunities have presented themselves that
merit the expenditure of considerable effort to close a Purchase and Sales
Agreement. Of the most recent opportunities, it has been represented to us that
some partial and some complete project financing has been offered in Morocco,
the Middle East, the UK and Malaysia and yet contracts remain pending. Our
listing on the Internet Recycling Exchange and our web site www.tirex-tcs.com
continues to generate inquiries from all over the world. This interest confirms
the need for new technology in the industry. These opportunities may not
conclude, however, until there is a commercial system in operation and
regardless of Management's optimism there can be no assurance that these
opportunities will actually result in unconditional sales contracts.

The
finalizing of the License Agreement with Simpro means that the gross revenues
from sales will be recorded on Simpro's books, not in the books of Tirex. The
amount remitted back to Tirex will take the form of a royalty and will be
accounted for as such. Regardless of the contract structure and the accounting
effects which result, generally accepted accounting principles in effect in the
USA have the effect that the revenues to Tirex resulting from such transactions
will not be recognizable until the systems will have been accepted by the
customers. Given the time line required to manufacture, install and have
accepted these systems, it is clearly impossible that any revenues would become
recognizable during our fiscal year which will end June 30, 2007. While the
Company will benefit from the periodic cash inflows resulting from progress
payments during the next approximately ten months, the royalty will, in fact,
not have been earned until the systems are accepted by the customers.

In February of 2001, we concluded a
private financing with an investor group. Under the terms of the Agreement, we
had the contractual right to require the Investor to purchase up to US$5,000,000
of put notes. We drew down US$750,000 of this amount and used the proceeds of
this financing toward legal and consulting fees due, normal operating expenses
such as payroll, rent and taxes and the acquisition of equipment for our
prototype TCS-1 Plant. In July of 2001, the Company entered into a technical
default with respect to the Agreement by not having an SB-2 Registration
Statement declared effective by the SEC. After several months of negotiations,
the Company entered into a Settlement Agreement with the Investor Group which
provided for a cash pay down of the amount owed, including interest and
penalties over a period of approximately two years starting with the date the
Settlement Agreement was signed, the right of the Investor Group to continue to
be able to sell up to 600,000 collateral and Rule 144 shares per month and the
issuance of three series of warrants, 500,000 each, exercisable at prices of one
cent, five cents and ten cents over a three year period. This Settlement
Agreement was announced in April of 2002, and details of the terms of the
Agreement are filed as an Exhibit to this Report. The Company, in the absence of
having completed its first sales of TCS Systems according to our expectations,
was unable to generate the cash flow necessary to pay down the Convertible Note
in accordance with the terms of the Settlement Agreement. Thus, the Company once
again finds itself in a position of default. Numerous recourses are available to
the holders of the Convertible Notes, but to date, these recourses have not been
exercised. Such recourses can be exercised at any time and the fact that they
have not been exercised so far does not preclude their being exercised now or in
the future. The Company has kept the Convertible Note holders apprised of its
efforts to sell TCS Systems and thus restart the repayments on the Convertible
Notes.

As a result of this period preceding
the commencement of commercial operations, we have had to cover our overhead
costs from sources other than from commercial revenues. We expect that some
portion of our future overhead costs, which may be significant, will continue to
be covered from sources other than commercial revenues. Since March of 2003, our
monthly our-of-pocket cash costs have been reduced to inconsequential amounts,
and thus our requirement to find financial resources to fund operations is
minimal. Our greatest expense, from an accounting standpoint, is for salaries.
These salaries have not been paid for over four years, but rather set up as
payables. Our cash flow deficit condition will continue until such time as the
Company will start generating revenues from the sale of TCS Systems. Until we
can succeed in securing an unconditional sales contract for the sale of one or
more systems employing our technology, the company will not be engaging any
significant financial commitments and will not be engaging in any significant
research and development activities nor increasing employment.

Over the last twelve months, the
expenses of our company have been funded by a series of loans made by a
significant number of individuals investing modest amounts totaling
approximately US$60,000 each through Tirex President, John L. Threshie Jr.
Insofar as Tirex does not have shares to issue at this time, these investors,
fully cognizant of our situation and so documented in writing, have accepted
that their investment is being made via Mr. Threshie and represents a
convertible debt, the conversion of which can occur once Tirex will have shares
available for issuance. To June 30, 2006, approximately 13 million shares are
involved, this number being before any adjustments to our share authorization
structure which would cause a proportionate adjustment to the number of shares
actually issuable. We will require a modification to our share authorization.
This convertible debt is priced at fixed prices rather than as a discount to
market. Insofar as the funds were lent to Mr. Threshie rather than to Tirex
directly, with Mr. Threshie then paying personally the expenses of Tirex, which
expenses have been duly recorded in our accounts offset by a liability to Mr.
Threshie, the liability on our books is still listed as being toward Mr.
Threshie. Thus no direct liability toward these investors is on our books.
However, once shares will become available for issuance, the amounts due to Mr.
Threshie will be transferred by him to these investors and the shares issued
accordingly.

Since August 2005, the office rent of
Tirex has been assumed by Mr. Threshie. This amount is CA$1,500 per month. This
amount has been accrued as a liability to Mr. Threshie on our books since last
August.

While we continue to market TCS
Systems and have in place a License Agreement, as of June 30, 2006, no
unconditional sales orders for TCS Systems had been received and manufacturing
of TCS Systems has not been initiated. We anticipate that we will begin selling
or licensing out the sale of TCS Systems and thus initiating the manufacturing
of these systems on a commercial basis inevitably as long as there is a demand
for new recycling technology. Until we successfully develop and commence TCS
System manufacturing and sales operations on a full-scale commercial level,
however, we will not generate significant revenues from operations. Accordingly,
we would be obligated to attempt to seek non-commercial sources of revenues to
support operations until TCS Systems sales and manufacturing operations would
become a reality. In the event of such a circumstance, there can further be no
assurance that such non-commercial revenue funding would be available at all or
on terms acceptable to management. Except for activities related to the recycled
crumb rubber industry, as noted above and in previous filings, we have never
engaged in any other significant business activities.

During the first quarter of Fiscal
2007, Tirex completed the negotiation of the employment agreements with respect
to Tirex CEO and President, John L. Threshie Jr., Tirex Vice President
Engineering and Research and Development, Louis V. Muro and Tirex
Secretary-Treasurer and Chief Financial Officer, Michael Ash, although the final
versions have not yet been ratified. Under the terms of these agreements, Mr.
Threshie's salary would be augmented to US$150,000 retroactive to July 1, 2002
while Mr. Muro's salary would be reduced retroactively to July 1, 2002 to
US$75,000. The salary of Mr. Ash would remain unchanged at US$100,000. Also
under the terms of the agreements, Mr. Threshie would receive an option to
acquire 3,000,000 shares of the corporation at the beginning of each year of his
three-year agreement, the effective inception date being July 1 2004. Similarly,
Mr. Muro would receive options to purchase 1,000,000 shares per year. Mr. Muro's
employment would also be effective July 1, 2004. Other than for the number of
shares involved, Mr. Muro's options proposed agreement would be identical to
that of Mr. Threshie. As for Mr. Ash, his three-year employment agreement would
be effective January 1, 2004 and would provide for him to acquire 2,000,000
shares of Tirex in each of the three years of his contract. In all cases, the
exercise window is three years. These options could be exercised on a cashless
basis and are described in more detail elsewhere in this report Tirex does not
currently have an adequate share authorization to satisfy any exercises under
these options, and, in fact, is in arrears with respect to options exercised by
Mr. Ash under the previous version of his employment agreement. The exercised
options will result in share issuances once Tirex will have an adequate number
of shares available for issuance. Any such issuances will be subject to any
corporate actions regarding stock splits, reverse splits or stock dividends on a
proportional basis.

Liquidity and Capital Resources

As of June 30, 2006, the Company had
total assets of $233,297 as compared to $233,297 at June 30, 2005 reflecting no
change, and also no change versus total assets at June 30, 2004. There were no
changes in the value of individual assets, representing Notes Receivable,
Inventory, Property and Equipment and an Investment, from June 30, 2005 to June
30, 2006.

As of June 30, 2006, the Company had
total liabilities of $5,416,713 as compared to $5,034,195 at June 30, 2005,
reflecting an increase in liabilities of $382,518. Total liabilities at June 30,
2006 had reflected a previous increase of $706,485 over $4,327,710 in total
liabilities at June 30, 2005. The increase in total liabilities from June 30,
2005 to June 30, 2006 is primarily attributable to: (i) an increase in Accounts
Payable and Accrued Liabilities and Current Portion of Long-Term Debt in the
amount of $340,018 from $2,431,115 as of June 30, 2005 to $2,771,133 as of June
30, 2006, (ii) an increase in Convertible Loans in the amount of $32,500 from
$1,800,635 as of June 30, 2005 to $1,833,135 as of June 30, 2006, and (iii) an
increase in Convertible Notes in the amount of $10,000 from $584,945 as of June
30, 2005 to $594,945 as of June 30, 2006.

Reflecting the foregoing, the
financial statements indicate that as at June 30, 2006, the Company had a
working capital deficit (current assets minus current liabilities) of $2,677,336
and that as at June 30, 2005, the Company had a working capital deficit of
$2,337,318, a working capital deficit increase of $340,018. There were no
changes in current assets, as noted above, while there were additions to current
liabilities due to third parties represented by Accounts Payable and Accrued
Liabilities.

The financial statements which are
included in this report reflect total operations and other expenses of $220,572
for the year ended June 30, 2006, which reflects a decrease of $356,194 over the
year ended June 30, 2005 when total operations and other expenses were $576,766.
The Company has ceased Research and Development activities thereby resulting in
a significant decrease in personnel expenses and other Research and Development
expenses compared with prior periods.

The success of the tire recycling
manufacturing business and the ability to continue as a going concern will be
dependent upon the ability of the Company to obtain adequate financing to
commence profitable, commercial manufacturing and sales activities and the TCS
Systems' ability to meet anticipated performance specifications on a continuous,
long term commercial basis.

The Company believes that the amounts
accrued to date in respect of the shares issued to compensate the executive
officers and consultants reflect the fair value of the services rendered, and
that the recipients of such shares received such shares at an appropriate and
reasonable discount from the then current public market price. The Company
believes that the discount is warranted due to the fact that there are often
restrictions on the transfer of said shares arising out of the absence of
registration, and the uncertainty respecting our ability to continue as a going
concern.

From inception (July 15, 1987)
through June 30, 2006, the Company has incurred a cumulative net loss of
$30,308,620. Approximately $1,057,356 of such cumulative net loss was incurred
prior to the inception of the Company's present business plan, in connection
with the Company's discontinued proposed health care business and was due
primarily to the expending of costs associated with the unsuccessful attempt to
establish such health care business. The Company never commenced the proposed
health care operations and therefore, generated no revenues therefrom.

ITEM 7. FINANCIAL STATEMENTS

Our financial statements required to
be included in this Report pursuant to Item 310(a) of Regulation S-B, are set
forth below.

ITEM 8. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

Following the end of Fiscal 2004, our
independent certifying accountant informed us that he was abandoning all
SEC-oriented work. Thus, we have no choice but to attempt to change our
certifying accountant effective with the annual financial statements for the
year ended June 30, 2004. The resignation of our former certifying accountant
was not related in any way to any disputes respecting the Company's accounting
or its financial disclosures to shareholders or other interested parties. We
have been attempting to engage new certifying accountants but our financial
condition has not permitted us to find one as of yet. Once our financial
condition will have improved, we will engage independent certifying accountants
and will file amended reports with their certifications.

---

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS;

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors, Executive Officers and Significant Employees

The following sets forth, as of June
30, 2005 the names and ages of all directors, executive officers, and other
significant employees of the Company; and all positions and offices in the
Company held by each, and the terms of said offices. Each director will hold
office until the next annual meeting of shareholders and until his or her
successor has been elected and qualified:

|                      |     | Offices                      | Term of                     
|--------------------- | --- | ---------------------------- | ----------------------------
|Name                  | Age | Held                         | Office                      
|John L. Threshie, Jr. | 52  | Chairman of the Board        | November 1999 -             
|                      |     | of Directors, President, and | present                     
|                      |     | Chief Executive Officer      |                             
|                      |     | Director                     | June 1995 -                 
|                      |     |                              | February 1999               
|                      |     | Vice President               | June 1995-                  
|                      |     |                              | November 1999               
|                      |     |                              | Secretary                   
|                      |     |                              | December 1996               
|                      |     |                              | February 1999               
|                      |     |                              |                             
|Louis V. Muro         | 74  | Vice President               | January 1996 -              
|                      |     | of Engineering               | present                     
|                      |     | and Director                 |                             
|                      |     | President                    | March 1994 -                
|                      |     |                              | January 1995                
|                      |     | Director                     | December 1992 -             
|                      |     |                              | Present                     
|                      |     |                              |                             
|Henry Meier           | 50  | Director                     | Feb. 11, 1999 to
    present
|                      |     |                              |                             
|Michael D.A. Ash      | 57  | Secretary, Treasurer,        | February 1999-              
|                      |     | and Chief Financial          | present                     
|                      |     | and Accounting Officer       |                             

The Board of Directors has no standing committees.

Family Relationships

No family relationships exist between any director or
executive officer of Company or any person contemplated to become such.

Business Experience

The following summarizes the occupation and business
experience during the past five years for each director, executive officer and
significant employee of the Company. A significant employee is a person who is
not an executive officer of the Company but who is expected to make a
significant contribution to the business of the Company.

JOHN L. THRESHIE, JR. Mr. Threshie has served as President and Chief
Executive Officer of the Company since November of 1999. Prior to that time he
served as a Vice President of the Company since June 1995. He was appointed
Assistant Secretary of the Company on February 11, 1999. From December 1996
until February 11, 1999, Mr. Threshie held the position of Secretary, and from
June 1995 until February 11, 1999, as a Director, of the Company. He also served
as a Director for The Tirex Corporation Canada Inc. and Tirex Canada R&D Inc.
from June 1998 and June 1995, respectively, until February 11, 1999. He has more
than fourteen years of experience in the areas of management, marketing and
sales primarily in the field of advertising. Mr. Threshie holds a Bachelor's
Degree in Political Science from the University of North Carolina. He was
employed as an insurance and financial broker by Primerica Financial Services
from 1991 through 1994. From 1988 to 1990, Mr. Threshie was an advertising
account supervisor for Ammirati & Puris Inc., an advertising firm in New York.
From 1983 to 1988 Mr. Threshie was employed as a senior account executive at the
advertising firm of Saatchi and Saatchi, Inc. From 1979 to 1983 Mr. Threshie was
employed by Milliken & Co. as a sales representative.

LOUIS V. MURO. Mr. Muro acted as an engineering consultant to the Company
from January 18, 1995 until January 1, 1996 when he was appointed as a Director
and as Vice President in charge of engineering. Mr. Muro served as a Director of
the Company from December 29, 1992 until January 18, 1995. He also served as the
Company's Secretary from December 29, 1992 until March 1994 when he was
appointed President of the Company, a position he held until January 18, 1995.
He has also served as the Vice President in charge of engineering and as a
director of The Tirex Corporation Canada Inc. and Tirex Canada R&D Inc. since
June 1998 and May 1995 respectively. Mr. Muro received a B.S. degree in Chemical
Engineering from Newark College of Engineering in 1954, since which time he has
continually been employed as a chemical engineer. From 1974 to 1993 Mr. Muro has
been the sole proprietor of Ace Refiners Corp. of New Jersey, a precious metals
refinery. From 1971 to 1974, he worked as an independent consultant and from
1964 until 1971, he was director of research and development for Vulcan
Materials Corporation in Pittsburgh, Pa., a public company engaged in the
business of recovering useable tin and clean steel from scrap tin plate. From
1960 to 1964, Mr. Muro was the sole proprietor of Space Metals Refining Co. in
Woodbridge, NJ, a company involved in the purification of scrap germanium to
transistor grade metal. From 1959 to 1960 he was employed by Chemical
Construction Co., of New Brunswick, NJ, where he developed a process for the
waste-free production of urea from ammonia, carbon dioxide and water. From 1954
to 1959, Mr. Muro worked in the research and development department at U.S.
Metals Refining Co. in Carteret, NJ where he was involved with the refinement of
precious metals.

MICHAEL D.A. ASH. Mr. Ash joined the Company on January 11, 1999. On
February 11, 1999, Mr. Ash was appointed Secretary, Treasurer, and Chief
Financial and Accounting Officer of the Company. Mr. Ash graduated with a
Bachelor's Degree in Business Administration, Magna Cum Laude, from Bishop's
University in Quebec in 1970, and with an MBA, With Distinction, from Harvard
Business School in 1975. Mr. Ash received his Chartered Accountant
certification, (Canadian equivalent to a CPA) in 1972 while employed by Coopers
& Lybrand (now PriceWaterhouseCoopers). Since graduation from Harvard, Mr. Ash
has spent most of his career with the Government of Canada, until 1999, first
with the Office of the Comptroller General in Ottawa and, for the subsequent
eighteen years, with a federal regional economic and industrial development
agency in Montreal where he gained exposure to a very large number of companies

Compliance With Section 16(a) of the Exchange Act.

None of the securities have been registered pursuant
to Section 12 of the Exchange Act of 1934, as amended (the "Exchange Act").
Therefore, Section 16(a) of the Exchange Act is not applicable.

ITEM 10. EXECUTIVE COMPENSATION

Current Remuneration

The following table sets forth information concerning
the annual compensation received or accrued for services provided in all
capacities for the fiscal years ended June 30, 2004, 2005 and 2006 by our chief
executive and all our executive officers serving as such as at June 30, 2005 or
at any time during the year ended June 30, 2006. Future announcements concerning
us, our competitors, results of testing, technological innovations or new
commercial products may have a significant impact on the market price of our
common stock. We believe that, as of the dates when such shares were issued, the
actual market value of such shares was, and as of the date hereof remains,
highly contingent upon, and subject to, extremely high risks.

SUMMARY COMPENSATION TABLE:

|ANNUAL
    COMPENSATION (See note below) |     
|---------------------------------------- | ----
|Name and Principal Position              | Year
|                                         |     
|John L. Threshie Jr.                     | 2006
|President                                | 2005
|                                         | 2004
|                                         |     
|Louis V. Muro                            | 2006
|Vice President - Engineering             | 2005
|                                         | 2004
|                                         |     
|Michael D.A. Ash                         | 2006
|Secretary-Treasurer & CFO                | 2005
|                                         | 2004

The salaries noted above are those
provided for in proposed employment agreements based on negotiations, which
agreements, as of the date of this report, have not been ratified.

The employment agreements of all of
the above persons were re-negotiated and drafts thereof were received during the
second quarter of Fiscal 2007. These drafts have not yet been ratified. The
primary focus of the negotiations was on salary and options in all three cases.
In the case of Mr. Threshie, his salary would be increased from US$125,000 to
US$150,000 retroactive to July 1, 2002. In the case of Mr. Muro, his salary
would be reduced from US$150,000 to US$75,000 also effective July 1, 2002. Mr.
Ash's salary would remain unchanged at US$100,000. Under the terms of these
three employment agreements, all three persons would receive options with
three-year exercise windows to acquire Tirex shares, with the possibility of a
cashless exercise. These annual options for Mr. Threshie, Mr. Ash and Mr. Muro
imply 3,000,00 shares, 2,000,000 and 1,000,000 shares respectively. All
exercises are subject to share structure modifications such as stock splits and
reverse splits on a proportional basis. Tirex does not currently have an
adequate share authorization to satisfy these potential exercises or even the
previous exercises by Mr. Ash under his previous employment agreement. Under the
previous employment agreement with Mr. Ash, who gave notice of exercise on a
cashless basis, 1,500,000 shares are owed to Mr. Ash.

In 1999, Mr. Ash abrogated his then
existing Employment Agreement. This was replaced by a Consulting Agreement for a
period of sixteen (16) months to the end of Calendar 2000. Under this consulting
agreement, Mr. Ash received 2,000,000 shares of the common stock of the Company.
A new employment Agreement with an effective date of January 2001 was put into
effect and the prior Consulting Agreement was allowed to lapse. Under that
Employment Agreement, Mr. Ash earned a salary of $100,000 and Mr. Ash also had
options to purchase stock of the company at the lesser of 20(cent) for the first
year option, 40(cent) for the second year option and 50(cent) for the third year
option, or 50% of market applicable to each series. The options were exercisable
on a cashless basis.. Prorating the stock issuance over the sixteen month term
of the prior Consulting Agreement, in Fiscal 2000, Mr. Ash was entitled to
1,250,000 shares of stock. There was no cash salary in Fiscal 2000 for Mr. Ash.
For Fiscal 2001, Mr. Ash received the balance of his stock entitlement, i.e.
750,000 shares, and was entitled to receive $50,000 in cash. For Fiscal 2002 and
2003, Mr. Ash was entitled to receive $100,000 annually. Mr. Ash exercised the
stock options available to him under the Employment Agreement which terminated
December 31, 2003. Mr. Ash's Employment Agreement was recently negotiated for a
three-year period starting January 1, 2004, but the final version has not been
signed.

(1) No compensation was paid either in cash or in shares to
Messrs. Threshie, Muro and Ash during Fiscal 2005 and 2006. The amounts due have
been recorded as liabilities of the Company.

Executive Stock Options

As discussed elsewhere in this Report, the following
is a summary of those options and warrants outstanding with respect to the
purchase of the common stock of the Company:

|Beneficiary           | Issuable                 | Exercise Window            | Price                     
|--------------------- | ------------------------ | -------------------------- | --------------------------
|                      |                          |                            |                           
|John L. Threshie Jr.  | 3,000,000 share options  | Three (3) years from       | Series 1: lesser of 20    
|                      | at the beginning of each | date of issue              | cents or 50% of market    
|                      | of Fiscal Years 2003,    |                            | Series 2: lesser of 40    
|                      | 20043 and 2005           |                            | cents or 50% of market    
|                      |                          |                            | Series 3: lesser of 50    
|                      |                          |                            | cents or 50% of market    
|Michael Ash           | 2,000,000 share options  | Three (3) years from       | Series 1: lesser of 20    
|                      | at the beginning of each | date of issue              | cents or 50% of market    
|                      | of Calendar Years 2004,  |                            | Series 2: lesser of 40    
|                      | 2005 and 2006            |                            | cents or 50% of market    
|                      |                          |                            | Series 3: lesser of 50    
|                      |                          |                            | cents or 50% of market    
|Louis V. Muro         | 1,000,000 share options  | Three (3) years from       | Series 1: lesser of 20    
|                      | at the beginning of each | date of issue              | cents or 50% of market    
|                      | of Fiscal Years 2003,    |                            | Series 2: lesser of 40    
|                      | 2004 and 2005            |                            | cents or 50% of market    
|                      |                          |                            | Series 3: lesser of 50    
|                      |                          |                            | cents or 50% of market    
|Convertible Debenture | 1,500,000 in three       | Series 1: At any time      | Series 1 at one (1) cent  
|                      | series of 500,000 each   | during the 3-year period   | each                      
|                      |                          | following the date of the  | Series 2 at five (5) cents
|                      |                          | Settlement Agreement,      | each                      
|                      |                          | to wit, April 26, 2002     | Series 3 at ten (10)      
|                      |                          | Series 2: During the       | cents each                
|                      |                          | second and third years     |                           
|                      |                          | following April 26, 2002   |                           
|                      |                          | Series 3: During the       |                           
|                      |                          | third year following April |                           
|                      |                          | 26, 2002                   |                           

Mr. Ash has exercised the options
which had been granted to him with respect to the options granted under the
Employment Agreement which terminated December 31, 2003. This was done on a
cashless basis, resulting in 1,500,000 shares being issuable to Mr. Ash. These
shares will be issued, subject to adjustments for stock splits and stock
dividends, if any, occurring prior to the issuance to Mr. Ash, at such time when
the Company will have an adequate number of shares available for issue.

Compensation of Directors

The Directors of the Company were not
compensated for their services as such in fiscal 2006

Employment Agreements

We seek to maintain employment
agreements with all of our executive officers (the "Executive Agreements"). We
currently have a proposed employment agreement with Mr. Threshie that provides
for an annual salary of $150,000 and is in effect until June 30, 2007. Mr.
Threshie also has options , as noted above, to purchase shares of the Company.
Mr. Threshie would be granted options to purchase 3,000,000 shares at each
anniversary date of his Employment Agreement for the three years following the
effective date of his employment contract, and, for each series of options,
would have a three-year period to exercise that option. The options are
exercisable at the lesser of 50% of market and 20(cent) for the first series,
40(cent) for the second series and 50(cent) for the third series. We currently
employ Mr. Muro on a month-to-month basis, based on a projected revised annual
salary of $75,000, retroactive to July 1 , 2002. Mr. Muro would also have share
options which, other than for the number of shares implicated, are identical to
the options of Mr. Threshie. In Mr. Muro's case the number of shares would be
1,000,000 shares annually. During fiscal 2000 Mr. Ash voluntarily abrogated his
Executive Agreement with us and entered into a new agreement under which his
compensation was in the form of shares. Under this new agreement, Mr. Ash
continued to act as Secretary-Treasurer and Chief Financial Officer on a
consulting basis. Under the terms of the original Executive Agreement, Mr. Ash's
annual compensation was US$125,000. The consulting agreement extended to
December 31, 2000 and was renewable by mutual consent of the Company and Mr.
Ash. Mr. Ash's compensation for the sixteen-month period ended December 31, 2000
was 2,000,000 common shares, subject to prorated adjustment in the event of a
stock split. At the beginning of Calendar 2001, Mr. Ash's consulting agreement
was converted back to an Employment Agreement under which Mr. Ash earned an
annual salary of $100,000 and had options, as noted above, to purchase company
stock on terms identical to the options granted to Mr. Threshie. As of the date
of this Report, Mr. Ash had exercised all of his options under the previous
agreement on a cashless basis, thus resulting in 1,500,000 shares being issuable
to Mr. Ash. Under the terms of his proposed renewed agreement, Mr. Ash would
have the option to acquire 2,000,000 shares of Tirex in each calendar year
starting January 1, 2004. If the proposed employment agreement is ratified, Mr.
Ash has indicated that he would give notice of exercise with respect to
calendars 2004, 2005 and 2006, with the result that the Corporation currently
owes Mr. Ash 3,000,000 shares, issued on a cashless basis, in addition to the
shares previously issuable under the previous employment agreement, for a total
of 4,500,000 shares.. The Company currently has less than 105,000 shares
available for issue. Thus, the shares issuable to Mr. Ash would remain as such
until the Company would have adequate shares to satisfy this transaction. Any
shares ultimately issuable to Mr. Ash would be automatically adjusted for stock
splits and stock dividends, if any, occurring prior to the issuance of shares to
Mr. Ash. To the extent that Mr. Threshie and Mr. Muro exercise their options,
the Corporation's liability to issue shares will remain a Note entry.

All of the above agreements provide for the payment
of bonuses at the sole discretion of the Board of Directors based upon an
evaluation of the executive's performance, with payment of any such bonuses to
be reviewed annually. The Executive Agreements also provide for the
participation by each of the foregoing persons in any pension plan,
profit-sharing plan, life insurance, hospitalization or surgical program, or
insurance program hereafter adopted by us, reimbursement of business related
expenses, the nondisclosure of information which we deem to be confidential to
it, non-competition by the executive with us for the one-year period following
termination of employment with us and for various other terms and conditions of
employment.

The Executive Agreements with Messrs. Threshie, Muro
and Ash also include severance provisions which provide, among other things, for
severance compensation in the event that the employment of the executive is
terminated by us other than for cause, or by the executive for "good reason", as
that term is defined in the Executive Agreements, or pursuant to a change in
control of the Company. The various Executive Agreements provide for severance
compensation, as follows:

In the case of Messrs. Threshie, Muro and Ash, 200%
of the amount of the base salary for a period of twelve months, except in the
case of a termination following a hostile takeover of the Corporation, in which
case the termination is 300%; In addition, the amount of severance compensation
for termination other than for cause, or by the executive for "good reason", as
that term is defined in the Executive Agreements, or pursuant to a change in
control of the Company, amounts to the compensation as described above plus two
months of base salary for each year of service, either under an employment
agreement or under a consulting agreement.

Because of the early stage of our development, our
lack of operations and insignificant cash flow, since January 18, 1995, we have
not had the resources to meet fully our financial obligations under the
Executive Agreements. As a result, the major portion of compensation which has
been available to our executive officers has consisted of shares of our common
stock, which such individuals accepted, in lieu of cash compensation, for a
substantial portion of salary and/or consulting fees due to them.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of
October 1, 2004, with respect to the persons known to the Company to be the
beneficial owners of more than 5% of the common stock, $.001 par value of the
Company and of more than 5% of the Class A Common Stock of the Company's
subsidiary, Tirex R&D and of all Officers and Directors of the Company as that
term is defined in Item 402(a)(2) of Regulation S-B. Neither the Company nor
Tirex R&D have any shares of any other class issued or outstanding.

|            | Name and                           | Amount and      |                 
|----------- | ---------------------------------- | --------------- | ----------------
|Title       | Address of                         | Nature of       |                 
|of          | Beneficial                         | Percent         | Percent         
|Class       | Owner                              | Ownership       | of Class
    (1)
|            |                                    |                 |                 
|Common      | John L. Threshie, Jr.              | 2,000,000(2)    | 0.8%            
|The Tirex   | P.O. Box 1000                      |                 |                 
|Corporation | Stratford Postal Store             |                 |                 
|            | 411 Barnum Avenue Cutoff           |                 |                 
|            | Stratford CT 06614-9991            |                 |                 
|Class A     |                                    |                 |                 
|Common      |                                    | 34 (5)          | 34%             
|Tirex       |                                    |                 |                 
|R&D         |                                    |                 |                 
|            |                                    |                 |                 
|Common      | Louis V. Muro                      | 5,978,957(2)(3) | 2.39%           
|The Tirex   | 2063 Desjardins Avenue, Apt
    #2 |                 |                 
|Corporation | Montreal, Quebec                   |                 |                 
|            | Canada H1V 2H1                     |                 |                 
|Class A     |                                    |                 |                 
|Common      |                                    | 17(5)           | 17%             
|Tirex       |                                    |                 |                 
|R&D         |                                    |                 |                 
|            |                                    |                 |                 
|Common      | Henry P. Meier                     | 335,000 (6)     | 0.13%           
|The Tirex   | P.O. Box 895                       |                 |                 
|Corporation | Lakehurst NJ 07755                 |                 |                 
|            |                                    |                 |                 
|            |                                    |                 |                 
|Common      | Estate of Louis A. Sanzaro         | 16,281,088(2)   | 6.52%           
|The Tirex   | 1497 Lakewood Road                 |                 |                 
|Corporation | Toms River, NJ 08755               |                 |                 
|            |                                    |                 |                 
|Common      | Michael Ash                        | 2,980,000 (4)   | 1.19%           
|The Tirex   | 310 Montée Sabourin                |                 |                 
|Corporation | St. Bruno, Quebec                  |                 |                 
|            | Canada, J3V 4P6                    |                 |                 
|            |                                    |                 |                 
|Common      | All directors and                  | 11,293,957      | 4.52%           
|The Tirex   | officers as a group                |                 |                 
|Corporation | (4 persons)                        |                 |                 
|            |                                    |                 |                 
|Class A     | All directors and                  | 51              | 51.0%           
|Common      | officers as a group                |                 |                 
|            |                                    |                 |                 
|Tirex  R&D  | (2 persons)                        |                 |                 

-------------------------

(1) The percentages listed in the table is calculated on the
basis of 249,895,892 shares of the common stock, $.001 par value, of the Company
outstanding as at October 1, 2006. The significant drop in the collective
ownership of shares by officers and directors versus June 30, 2005 is
attributable to the death of former Tirex director, Louis A. Sanzaro.

(2) Our executive officers, directors and principal
shareholders pledged an aggregate of 11,986,315 (approximately 6% of our then
outstanding shares) of their personal shareholdings in the Company as a security
interest for our issuance of $750,000 of 8% convertible notes, pursuant to a
Subscription Agreement and Security Agreement dated February 26, 2001.
Specifically, John L. Threshie, Jr. pledged 1,891,204 shares, Louis Muro pledged
1,723,514 shares and Louis Sanzaro pledged 8,371597 shares of our common stock.
The Company was unable to respect its financial obligations under the terms of a
Settlement Agreement and negotiations with respect to a new settlement have not
been started. Under the terms of the first settlement agreement, the investors
acquired a right to dispose of the collateral shares in their possession.
According to a confirmation received from the investors with respect to the
convertible note, as of June 30, 2005, they were in possession of 4,000,000
conversion shares, issued in 2003, but the collateral shares have been sold.
Thus, the shares pledged by Messrs. Threshie, Muro and Sanzaro (now Mr.
Sanzaro`s estate) now represent a liability of the Corporation. These shares
will be replaced once the Corporation will have enough shares available for
issuance, subject to adjustments for stock splits, reverse splits and stock
dividends, if any, which occur prior to any such issuance. These 4 million
conversion shares represent approximately 1.6% of our current outstanding stock.

(3) Includes: (i) 5,244,957 shares held of record by Mr. Muro
as of October 1, 2004; and (ii) 734,000 shares held of record by Mr. Muro's
wife, Nina Aviles Muro. There have been no subsequent changes.

(4) Includes: (i) 2,750,000 shares held of record by Mr. Ash
as of September 30, 2004; and (ii) 230,000 shares held of record in the name of
Loryta Investments Limited an entity beneficially owned by the family of Mr.
Ash. Does not include the 1,500,000 shares issuable to Mr. Ash as a result of
his having exercised stock options, and for which an inadequate number of
issuable shares exist s to satisfy this option. There have been no changes
subsequent to September 30, 2004.

(5) Messrs. Threshie and Muro hold all shares of Tirex R&D
Class A Common Stock pursuant to the terms of a Shareholders agreement among
them and the Company (the "Tirex R&D Shareholders Agreement"), pursuant to which
they will be obligated to transfer all such shares to the Company, for no
consideration, on May 2, 2001, unless the term of such Agreement is unilaterally
extended by the Company. The Company does not intend to take any actions of any
kind with respect to such shares which would be in violation of any Canadian
government regulations governing tax and other financial incentives which may be
available to Tirex R&D. Tirex Canada R&D Inc. was dissolved by the Quebec
government for lack of filing of annual returns. The company can be
re-established through the filing of appropriate documentation and the payment
of required government fees.

(6) Includes 50,000 shares owned in the name of Mr. Meier's
two children.

Changes in Control

On February 26, 2001 we issued
$750,000 worth of convertible notes at an annual rate of eight percent (8%) to
certain investors. Interest payable on these notes is payable quarterly
commencing June 30, 2001. In addition, all principal and unpaid interest due on
the outstanding notes is immediately due and payable on February 26, 2003, or
earlier in the event of a default. One of the conditions of this transaction was
that we would file with the Securities and Exchange Commission a Registration
Statement on Form SB-2 to register various securities issuable upon the
conversion of notes by a date certain and that the Registration Statement would
be effective by August 15, 2001. We failed to meet these deadlines and the
investors served a notice of default on us on July 19, 2001. Negotiations were
undertaken throughout the remainder of Calendar 2001 and into 2002 until a
Settlement Agreement was reached on April 26, 2002. Under the terms of the
Agreement, a copy of which was previously filed, the Company is obligated to pay
down the amount owed to the Investor Group, including interest and penalties,
over a period of approximately two years. During the time when an amount
continues to be owed to the Investor Group, the Investor Group had the right to
sell up to 600,000 collateral or Rule 144 shares per month and apply the
proceeds to interest due, fees and finally to reduction of the principle amount
outstanding. As of June 30, 2005, all of the collateral shares had been sold.
The Investor Group was also given three series of warrants for 500,000 shares
each, exercisable at prices of $0.01, $0.05 and $0.10 respectively and
exercisable within pre-defined time windows over a three year period starting
with the date of signature of the Settlement Agreement. . As of June 30, 2005,
the Investor Group had 4,000,000 conversion shares, issued in 2003, in their
possession.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following is a description of transactions during the
last two fiscal years or any presently proposed transactions to which the
Company was or is to be a party, in which the amount involved in such
transaction (or series of transactions) was $60,000 or more and which any of the
following persons had or is to have a direct or indirect material interest: (i)
any director or executive officer of the Company; (ii) any person who owns or
has the right to acquire 5% or more of the issued and outstanding common stock
of the Company; and (iii) any member of the immediate family of any such
persons.

Pursuant to a Subscription Agreement dated February 26, 2001
we issued $750,000 of 8% convertible notes, due February 26, 2003 to three
investors. Under the Subscription Agreement, we had the option, subject to
conditions, to require the investors to purchase additional convertible put
notes up to $4,250,000. Interest only payments were due quarterly commencing
June 30, 2001, and the principal was due in one lump sum on February 26, 2003,
or upon certain events of default. The number of shares of common stock issuable
upon conversion of the convertible notes is 15,000,000, based on a conversion
price of $0.05 per share. One of the conditions of this transaction was that we
would file with the Securities and Exchange Commission a Registration Statement
on Form SB-2 to register various securities issuable upon the conversion of the
notes by a date certain and that the Registration Statement would be effective
by August 15, 2001. We failed to meet these deadlines and the investors served a
notice of default on us on July 19, 2001. The conversion price for the
convertible notes is the lesser of (i) 80% of the average of the three lowest
closing bid prices of the common stock for the twenty-two (22) trading days
prior to the closing date, or (ii) 80% of the average of the five lowest closing
bid prices of the common stock for the sixty (60) trading days prior to the
conversion date, as defined in the convertible note. The maximum number of
shares of common stock that any subscriber or group of affiliated subscribers
may own after conversion at any given time is 4.99%.

During the years ended June 30, 2004, 2005 and 2006, the
Company's executive officers and certain consultants to the Company have waived
cash payment of all of their salaries, fees and/or unreimbursed expenses made by
them on behalf of, and for the account of, the Company, and, in 2003, have
accepted shares of the Company's common stock in partial payment in lieu
thereof, with the remaining amounts payable still being listed as liabilities of
the Company. No cash payments nor payments in common stock were made to such
persons during Fiscal 2004, 2005 and 2006. Eventually, these unpaid salaries and
expenses will have to be paid by the Company, either in cash, shares or some
combination thereof, as a function of available resources, to be determined at a
later date. The liabilities for these amounts are recorded in the current
liabilities of the Company.

ITEM 13. EXHIBITS

FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

Financial Statements

The financial statements filed as a part of this report are
as follows:

Consolidated Balance Sheet - June 30, 2006

Consolidated Statements of Operations for the years
ended June 30, 2005 and 2006, and cumulative for the period from inception (July
15, 1987) to June 30, 2006

Consolidated Statements of Owners' Equity (Deficit)
as at July 15, 1987 and June 30, 2001 - 2006

Consolidated Statements of Cash Flows for the years
ended June 30, 2005 and 2006 and cumulative for the period from inception (July
15,1987) to June 30, 2006

Reports filed on Form 8-K

February 15, 2006 - Change of Certifying Accountant 
March 6, 2006 - Change of Certifying Accountant (modified) and change of
address. 
April 4, 2006 - Death of a Director 
Post year-end - September 21, 2006 - Change of address from Montreal to
Connecticut

Financial Statement Schedules

Financial statements schedules have been omitted for
the reason that they are not required or are not applicable, or the required
information is shown in the financial statements or notes thereto.

Exhibits

The exhibits filed as a part of this Report or
incorporated herein by reference are as follows:

Exhibits Incorporated 
Herein By Reference, 
Exhibit No. As Filed 
With Document 
Indicated

|3.     (a) Certificate of Incorporation filed August 19, 1987                                                                            | 3(a)
|---------------------------------------------------------------------------------------------------------------------------------------- | ----
|(b) Certificate of Amendment filed June 20, 1989                                                                                         | 3(b)
|(c) Certificate of Amendment filed March 10, 1993                                                                                        | 3   
|(d) Certificate of Amendment filed December 5,
    1995                                                                                  | 3(e)
|(e) By-Laws                                                                                                                              | 3(b)
|(f) Certificate of Amendment filed August 11,
    1997                                                                                   |     
|(g) Certificate of Amendment filed February 3,
    1998                                                                                  | 3   
|(h) Certificate of Incorporation of Tirex
    Acquisition Corp., filed with the Secretary of State of Delaware on December
    15, 1997  | 3(h)
|(k) Certificate of Amendment to the Certificate
    of Incorporation, filed with the Secretary of State of Delaware on July 10,
    1998 | 3   

Reports on 8-K

February 15, 2006 - Certifying Accountant 
March 6, 2006 - Certifying Accountant, revised 
April 4, 2006 - Death of a Director

---

SIGNATURES
In accordance with Section 15(d) of the Exchange Act
of 1934, the Company has caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       | THE TIREX CORPORATION                     
|---------------------- | ------------------------------------------
|                       |                                           
|                       | By /s/ JOHN L. THRESHIE, JR.              
|                       |                                           
|Date: October 12, 2006 | John L. Threshie, Jr.                     
|                       | Chairman of the Board of
    Directors and
|                       | Chief Executive Officer                   

In accordance with Section 15(d) of
the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Company in the capacities and on the dates
indicated.

|SIGNATURES                                      | TITLE                   | DATE            
|----------------------------------------------- | ----------------------- | ----------------
|                                                |                         |                 
|Principal Executive Officer:                    |                         |                 
|                                                |                         |                 
|/s/ JOHN L. THRESHIE, JR                        | Chairman of the Board   | October 12, 2006
|John L. Threshie, Jr                            | of Directors and Chief  |                 
|                                                | Executive Officer       |                 
|                                                |                         |                 
|Principal
    Financial and Accounting Officer: |                        
|                                                |                         |                 
|/s/ MICHAEL D.A. ASH                            | Secretary, Treasurer,   | October 12, 2006
|Michael D.A. Ash                                | and Chief Financial and |                 
|                                                | Accounting Officer      |                 
|                                                |                         |                 
|A Majority of the
    Board of Directors:       |                        
|                                                |                         |                 
|/s/ JOHN L. THRESHIE, JR.                       | Chairman of the Board   | October 12, 2006
|John L. Threshie, Jr.                           | of Directors            |                 
|                                                |                         |                 
|/s/ Henry Meier                                 | Director                | October 12, 2006
|Henry Meier                                     |                         |                 
|                                                |                         |                 
|/s/ LOUIS V. MURO                               | Director                | October 12, 2006
|Louis V. Muro                                   |                         |                 

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH 
REPORTS FILED PURSUANT TO SECTION 15(D) OF THE 
EXCHANGE ACT BY NON-REPORTING ISSUERS

No annual report or proxy materials
have been sent to security-holders during the fiscal year ended June 30, 2006 or
the subsequent interim period. As at the date hereof, the Company plans to
furnish proxy materials relating to its annual meeting, which is presently
intended to be held during the current fiscal year. All such materials will be
furnished to the Commission at the same time as they are sent to securities
holders.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2006

|                                                                                                                                                     |   | UNAUDITED   
|---------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------
|                                                                                                                                                     |   |             
|                                                                                                                                                     |   | June 30,    
|                                                                                                                                                     |   | 2006        
|                                                                                                                                                     |   |             
|ASSETS                                                                                                                                              
|                                                                                                                                                     |   |             
|Current Assets                                                                                                                                       |   |             
|Cash and cash equivalents                                                                                                                            | $ | -           
|Accounts receivable                                                                                                                                  |   | -           
|Notes receivable                                                                                                                                     |   | 20,475      
|Inventory                                                                                                                                            |   | 73,322      
|Research and
    Experimental Development tax credits receivable                                                                                     |   | -           
|                                                                                                                                                     |   | 93,797      
|                                                                                                                                                     |   |             
|Property and equipment,
    salvage value                                                                                                            |   | 50,000      
|                                                                                                                                                     |   |             
|Other assets                                                                                                                                         |   |             
|Investment, at cost                                                                                                                                  |   | 89,500      
|                                                                                                                                                     |   | 89,500      
|                                                                                                                                                     |   |             
|                                                                                                                                                     | $ | 233,297     
|                                                                                                                                                     |   |             
|LIABILITIES
    AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                  
|                                                                                                                                                     |   |             
|Current Liabilities                                                                                                                                  |   |             
|Accounts
    payable and accrued liabilties                                                                                                          | $ | 2,693,042   
|Current
    portion of long-term debt                                                                                                                |   | 78,091      
|                                                                                                                                                     |   | 2,771,133   
|                                                                                                                                                     |   |             
|Other liabilities                                                                                                                                    |   |             
|Long-term deposits and
    notes                                                                                                                     |   | 217,500     
|Government
    loans (net of current)                                                                                                                |   | -           
|Capital lease
    obligations (net of current)                                                                                                       |   | -           
|Convertible notes                                                                                                                                    |   | 399,389     
|Convertible notes                                                                                                                                    |   | 195,556     
|Convertible loans                                                                                                                                    |   | 1,833,135   
|                                                                                                                                                     |   | 2,645,580   
|                                                                                                                                                     |   |             
|                                                                                                                                                     |   | 5,416,713   
|Stockholders' Equity (Deficit)                                                                                                                       |   |             
|Common stock,
    $.001 par value, authorized 250,000,000 shares, issued and outstanding
    249,895,892 shares (June 30, 2005 - 249,895,892 shares) |   | 249,896     
|Additional paid-in capital                                                                                                                           |   | 25,222,219  
|Deficit
    accumulated during the development stage                                                                                                 |   | (29,962,736)
|Unrealized
    gain (loss) on foreign exchange                                                                                                       |   | (692,795)   
|                                                                                                                                                     |   | (5,183,416) 
|                                                                                                                                                     |   |             
|                                                                                                                                                     | $ | 233,297     

---

THE TIREX CORPORATION AND SUBSIDIARIES 
(A Developmental Stage Company)

Consolidated Statements of Stockholders' Equity (Deficit)

|                                                  |              |   |          |   |               |   | Deficit     |   |            |   |          
|------------------------------------------------- | ------------ | - | -------- | - | ------------- | - | ----------- | - | ---------- | - | ---------
|                                                  |              |   |          |   |               |   | Accumulated |   |            |   |          
|                                                  |              |   |          |   | Additional    |   | During      |   | Unrealized |   |          
|                                                  | Common Stock |   | Paid-in  |   | Developmental |   | Foreign     |  
|                                                  | Shares       |   | Amount   |   | Capital       |   | Stage       |   | Exchange   |   | Total    
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Balance at June 30, 1992                          | 3,383,020    | $ | 3,383    | $ | 194,980       | $ | (1,057,356) | $ | -          | $ | (858,993)
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Stock issued for reorganization                   | 18,650,000   |   | 18,650   |   | 76,155        |   | -           |   | -          |   | 94,805   
|Stock issued for services                         | 100,000      |   | 100      |   | (100)         |   | -           |   | -          |   | -        
|Stock issued in exchange for
    Warrants         | 363,656      |   | 364      |   | (364)         |   | -           |   | -          |   | -        
|Forgiveness of debt                               | -            |   | -        |   | 728,023       |   | -           |   | -          |   | 728,023  
|Net loss and comprehensive loss for the year      | -            |   | -        |   | -             |   | (165,296)   |   | -          |   | (165,296)
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Balance at June 30, 1993                          | 22,496,676   |   | 22,497   |   | 998,694       |   | (1,222,652) |   | -          |   | (201,461)
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Stock issued                                      | 2,000        |   | 2        |   | (2)           |   | -           |   | -          |   | -        
|Exchange for debt                                 | -            |   | -        |   | 149,170       |   | -           |   | -          |   | 149,170  
|Payments received for stock
    previously issued | -            |   | -        |   | 237,430       |   | -           |   | -          |   | 237,430  
|Net loss and comprehensive loss for the year      | -            |   | -        |   | -             |   | (179,296)   |   | -          |   | (179,296)
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Balance at June 30, 1994                          | 22,498,676   |   | 22,499   |   | 1,385,292     |   | (1,401,948) |   | -          |   | 5,843    
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Revision of common stock                          | (11,900,000) |   | (11,900) |   | 11,900        |   | -           |   | -          |   | -        
|Stock issued for services                         | 5,592,857    |   | 5,592    |   | 513,908       |   | -           |   | -          |   | 519,500  
|Shares issued in exchange
    for debt            | 200,000      |   | 200      |   | 24,300        |   | -           |   | -          |   | 24,500   
|Issuance of common stock                          | 402,857      |   | 401      |   | 21,915        |   | -           |   | -          |   | 22,316   
|Net loss and comprehensive loss for the year      | -            |   | -        |   | -             |   | (575,771)   |   | -          |   | (575,771)
|                                                  |              |   |          |   |               |   |             |   |            |   |          
|Balance at June 30, 1995                          | 16,794,390   | $ | 16,792   | $ | 1,957,315     | $ | (1,977,719) | $ | -          | $ | (3,612)  

See Notes to Consolidated Financial Statements

---

THE TIREX CORPORATION AND SUBSIDIARIES 
(A Developmental Stage Company)

Consolidated Statements of Stockholders' Equity (Deficit)

|                                             |              |   |         |   |               |   | Deficit      |            |          |   |            
|-------------------------------------------- | ------------ | - | ------- | - | ------------- | - | ------------ | ---------- | -------- | - | -----------
|                                             |              |   |         |   |               |   | Accumulated  |            |          |   |            
|                                             |              |   |         |   | Additional    |   | During       | Unrealized |          |  
|                                             | Common Stock |   | Paid-in |   | Developmental |   | Foreign      |            |         
|                                             | Shares       |   | Amount  |   | Capital       |   | Stage        |            | Exchange |   | Total      
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Balance at June 30, 1995                     | 16,794,390   | $ | 16,792  | $ | 1,957,315     | $ | (1,977,719)  | $          | -        | $ | (3,612)    
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Stock issued                                 | 3,975,662    |   | 5,090   |   | 846,612       |   | -            |            | -        |   | 851,702    
|Shares issued in exchange for debt           | 391,857      |   | 392     |   | 29,008        |   | -            |            | -        |   | 29,400     
|Issuance of common stock                     | 710,833      |   | 710     |   | 80,161        |   | -            |            | -        |   | 80,871     
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (1,127,044)  |            | -        |   | (1,127,044)
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Balance at June 30, 1996                     | 21,872,742   |   | 22,984  |   | 2,913,096     |   | (3,104,763)  |            | -        |   | (168,683)  
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Stock issued for options                     | -            |   | -       |   | 912,838       |   | -            |            | -        |   | 912,838    
|Stock issued for services                    | 5,067,912    |   | 3,955   |   | 690,234       |   | -            |            | -        |   | 694,189    
|Shares issued in exchange for debt           | 251,382      |   | 252     |   | 43,965        |   | -            |            | -        |   | 44,217     
|Issuance of common stock                     | 10,257,936   |   | 10,259  |   | 335,132       |   | -            |            | -        |   | 345,391    
|Grants issued                                | -            |   | -       |   | 408,597       |   | -            |            | -        |   | 408,597    
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (2,376,279)  |            | -        |   | (2,376,279)
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Balance at June 30, 1997                     | 37,449,972   |   | 37,450  |   | 5,303,862     |   | (5,481,042)  |            | -        |   | (139,730)  
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Stock issued for services                    | 4,396,466    |   | 4,396   |   | 922,180       |   | -            |            | -        |   | 926,576    
|Stock issued for options                     | -            |   | -       |   | 948,500       |   | -            |            | -        |   | 948,500    
|Issuance of common stock                     | 21,795,000   |   | 21,796  |   | 1,176,755     |   | -            |            | -        |   | 1,198,551  
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |            | 183,785  |   | 183,785    
|Stock options issued and outstanding         | -            |   | -       |   | 1,236,913     |   | -            |            | -        |   | 1,236,913  
|Grants issued                                | -            |   | -       |   | 669,906       |   | -            |            | -        |   | 669,906    
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (4,570,441)  |            | -        |   | (4,570,441)
|                                             |              |   |         |   |               |   |              |            |          |   |            
|Balance at June 30, 1998                     | 63,641,438   | $ | 63,642  | $ | 10,258,116    | $ | (10,051,483) | $          | 183,785  | $ | 454,060    

See Notes to Consolidated Financial Statements

---

THE TIREX CORPORATION AND SUBSIDIARIES 
(A Developmental Stage Company)

Consolidated Statements of Stockholders' Equity (Deficit)

|                                             |              |   |         |   |               |   | Deficit      |            |           |   |            
|-------------------------------------------- | ------------ | - | ------- | - | ------------- | - | ------------ | ---------- | --------- | - | -----------
|                                             |              |   |         |   |               |   | Accumulated  |            |           |   |            
|                                             |              |   |         |   | Additional    |   | During       | Unrealized |           |  
|                                             | Common Stock |   | Paid-in |   | Developmental |   | Foreign      |            |          
|                                             | Shares       |   | Amount  |   | Capital       |   | Stage        |            | Exchange  |   | Total      
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Balance at June 30, 1998                     | 63,641,438   | $ | 63,642  | $ | 10,258,116    | $ | (10,051,483) | $          | 183,785   | $ | 454,060    
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Stock issued for services                    | 24,200,439   |   | 24,200  |   | 2,735,544     |   | -            |            | -         |   | 2,759,744  
|Stock issued for options                     | 2,234,567    |   | 2,235   |   | 38,765        |   | -            |            | -         |   | 41,000     
|Shares issued in exchange for debt           | 3,787,947    |   | 3,788   |   | 340,164       |   | -            |            | -         |   | 343,952    
|Conversion of debentures                     | 2,816,966    |   | 2,817   |   | 290,102       |   | -            |            | -         |   | 292,919    
|Issuance of common stock                     | 677,966      |   | 678     |   | 49,322        |   | -            |            | -         |   | 50,000     
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |            | (29,142)  |   | (29,142)   
|Stock options issued and outstanding         | -            |   | -       |   | 385,600       |   | -            |            | -         |   | 385,600    
|Grants issued                                | -            |   | -       |   | 1,057,742     |   | -            |            | -         |   | 1,057,742  
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (4,909,879)  |            | -         |   | (4,909,879)
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Balance at June 30, 1999                     | 97,359,353   |   | 97,360  |   | 15,155,355    |   | (14,961,362) |            | 154,643   |   | 445,996    
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Stock issued for services                    | 28,873,210   |   | 28,873  |   | 2,217,758     |   | -            |            | -         |   | 2,246,631  
|Stock issued for options                     | 5,327,486    |   | 5,327   |   | 381,600       |   | -            |            | -         |   | 386,927    
|Shares issued in exchange for debt           | 7,342,055    |   | 7,342   |   | 382,556       |   | -            |            | -         |   | 389,898    
|Conversion of debentures                     | 12,010,073   |   | 12,010  |   | 815,796       |   | -            |            | -         |   | 827,806    
|Issuance of common stock                     | 221,000      |   | 221     |   | 16,039        |   | -            |            | -         |   | 16,260     
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |            | 5,789     |   | 5,789      
|Grants issued                                | -            |   | -       |   | 395,683       |   | -            |            | -         |   | 395,683    
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (5,548,829)  |            | -         |   | (5,548,829)
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Balance at June 30, 2000                     | 151,133,177  |   | 151,133 |   | 19,364,787    |   | (20,510,191) |            | 160,432   |   | (833,839)  
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Stock issued for services                    | 10,142,903   |   | 10,143  |   | 1,023,512     |   | -            |            | -         |   | 1,033,655  
|Stock issued for options                     | -            |   | -       |   | -             |   | -            |            | -         |   | -          
|Shares issued in exchange for debt           | 14,236,399   |   | 14,236  |   | 1,891,602     |   | -            |            | -         |   | 1,905,838  
|Conversion of debentures                     | 121,000      |   | 121     |   | 24,079        |   | -            |            | -         |   | 24,200     
|Issuance of common stock                     | 732,929      |   | 733     |   | 39,427        |   | -            |            | -         |   | 40,160     
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |            | (340,661) |   | (340,661)  
|Grants issued                                | -            |   | -       |   | 249,294       |   | -            |            | -         |   | 249,294    
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (3,112,138)  |            | -         |   | (3,112,138)
|                                             |              |   |         |   |               |   |              |            |           |   |            
|Balance at June 30, 2001                     | 176,366,408  | $ | 176,366 | $ | 22,592,701    | $ | (23,622,329) | $          | (180,229) | $ | (1,033,491)

See Notes to Consolidated Financial Statements

---

THE TIREX CORPORATION AND SUBSIDIARIES 
(A Developmental Stage Company)

Consolidated Statements of Stockholders' Equity (Deficit)

|                                             |              |   |         |   |               |   | Deficit      |   |            |   |            
|-------------------------------------------- | ------------ | - | ------- | - | ------------- | - | ------------ | - | ---------- | - | -----------
|                                             |              |   |         |   |               |   | Accumulated  |   |            |   |            
|                                             |              |   |         |   | Additional    |   | During       |   | Unrealized |   |            
|                                             | Common Stock |   | Paid-in |   | Developmental |   | Foreign      |   |           
|                                             | Shares       |   | Amount  |   | Capital       |   | Stage        |   | Exchange   |   | Total      
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Balance at June 30, 2001                     | 176,366,408  | $ | 176,366 | $ | 22,592,701    | $ | (23,622,329) | $ | (180,229)  | $ | (1,033,491)
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Stock issued for services                    | 18,466,162   |   | 18,466  |   | 314,859       |   | -            |   | -          |   | 333,325    
|Stock issued for options                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Shares issued in exchange for debt           | 24,075,502   |   | 24,076  |   | 1,649,442     |   | -            |   | -          |   | 1,673,518  
|Conversion of debentures                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Issuance of common stock                     | 5,849,487    |   | 5,850   |   | 61,897        |   | -            |   | -          |   | 67,747     
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |   | (19,940)   |   | (19,940)   
|Grants issued                                | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (3,421,460)  |   | -          |   | (3,767,344)
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Balance at June 30, 2002                     | 224,757,559  | $ | 224,758 | $ | 24,618,899    | $ | (27,043,789) | $ | (200,169)  | $ | (2,746,185)
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Stock issued for services                    | 5,455,000    |   | 5,455   |   | 130,920       |   | -            |   | -          |   | 136,375    
|Stock issued for options                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Shares issued in exchange for debt           | 15,400,000   |   | 15,400  |   | 441,183       |   | -            |   | -          |   | 456,583    
|Conversion of debentures                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Issuance of common stock                     | 4,283,333    |   | 4,283   |   | 31,217        |   | -            |   | -          |   | 35,500     
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |   | (182,365)  |   | (182,365)  
|Grants issued                                | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (1,561,375)  |   | -          |   | (1,561,375)
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Balance at June 30, 2003                     | 249,895,892  | $ | 249,896 | $ | 25,222,219    | $ | (28,605,164) | $ | (382,534)  | $ | (3,515,583)
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Stock issued for services                    | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Stock issued for options                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Shares issued in exchange for debt           | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Conversion of debentures                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Issuance of common stock                     | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Unrealized foreign exchange                  | -            |   | -       |   | -             |   | -            |   | (18,597)   |   | (18,597)   
|Grants issued                                | -            |   | -       |   | -             |   | -            |   | -          |   | -          
|Net loss and comprehensive loss for the year | -            |   | -       |   | -             |   | (560,234)    |   | -          |   | (560,234)  
|                                             |              |   |         |   |               |   |              |   |            |   |            
|Balance at June 30, 2004                     | 249,895,892  | $ | 249,896 | $ | 25,222,219    | $ | (29,165,398) | $ | (401,131)  | $ | (4,094,414)

|                                             |             |   |         |   |            |   |              |   |           |   |            
|-------------------------------------------- | ----------- | - | ------- | - | ---------- | - | ------------ | - | --------- | - | -----------
|Stock issued for services                    | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Stock issued for options                     | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Shares issued in exchange for debt           | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Conversion of debentures                     | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Issuance of common stock                     | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Unrealized foreign exchange                  | -           |   | -       |   | -          |   | -            |   | (129,718) |   | (129,718)  
|Grants issued                                | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Net loss and comprehensive loss for the year | -           |   | -       |   | -          |   | (576,766)    |   | -         |   | (576,766)  
|                                             |             |   |         |   |            |   |              |   |           |   |            
|Balance at June 30, 2005                     | 249,895,892 | $ | 249,896 | $ | 25,222,219 | $ | (29,742,164) | $ | (530,849) | $ | (4,800,898)
|                                             |             |   |         |   |            |   |              |   |           |   |            
|Stock issued for services                    | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Stock issued for options                     | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Shares issued in exchange for debt           | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Conversion of debentures                     | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Issuance of common stock                     | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Unrealized foreign exchange                  | -           |   | -       |   | -          |   | -            |   | (161,946) |   | (161,946)  
|Grants issued                                | -           |   | -       |   | -          |   | -            |   | -         |   | -          
|Net loss and comprehensive loss for the year | -           |   | -       |   | -          |   | (220,572)    |   | -         |   | (220,572)  
|                                             |             |   |         |   |            |   |              |   |           |   |            
|Balance at June 30, 2006                     | 249,895,892 | $ | 249,896 | $ | 25,222,219 | $ | (29,962,736) | $ | (692,795) | $ | (5,183,416)

See Notes to Consolidated Financial Statements



---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

|                                                                       |   | Twelve months
    ended |        | Cumulative from  
|---------------------------------------------------------------------- | - | ----------------------- | ------ | -----------------
|                                                                       |   | June 30                 |        | March 26, 1993 to
|Revenues                                                               |   | 2006                    |        | 2005             
|                                                                       |   |                         |        |                  
|Cost of Sales                                                          | $ | -                       | $      | -                
|                                                                       |   |                         |        |                  
|                                                                       |   | -                       |        | -                
|Gross profit                                                           |   |                         |        |                  
|                                                                       |   |                         |        |                  
|Operations                                                             |   | -                       |        | -                
|General and administrative                                             |   |                         |        |                  
|Depreciation
    and amortization                                      |   |                         |        |                  
|Research and development                                               |   | 173,778                 |        | 524,146          
|                                                                       |   | -                       |        | -                
|Total Expense                                                          |   | -                       |        | -                
|                                                                       |   |                         |        |                  
|Income (loss) before other expenses                                    |   | 173,778                 |        | 524,146          
|                                                                       |   |                         |        |                  
|Other expenses (income)                                                |   | (173,778)               |        | (524,146)        
|Interest expense                                                       |   |                         |        |                  
|Interest income                                                        |   |                         |        |                  
|Income from stock options                                              |   | 46,794                  | 52,620 |                  
|Loss on disposal of
    equipment                                      |   | -                       |        | -                
|                                                                       |   | -                       |        | -                
|                                                                       |   | -                       |        | -                
|                                                                       |   |                         |        |                  
|Net income (loss)                                                      |   | 46,794                  |        | 52,620           
|                                                                       |   |                         |        |                  
|Other comprehensive loss                                               |   | (220,572)               |        | (576,766)        
|                                                                       |   |                         |        |                  
|Loss (gain) on foreign
    exchange                                    |   | -                       |        | -                
|                                                                       |   |                         |        |                  
|Net income (loss) and comprehensive loss                               |   |                         |        |                  
|                                                                       |   |                         |        |                  
|Basic and Diluted net loss and comprehensive
    loss per common share | $ | (220,572)               | $      | (576,766)        
|                                                                       |   |                         |        |                  
|Weighted average shares of common
    stock outstanding                | $ | (0.00)                  | $      | (0.00)           
|                                                                       |   |                         |        |                  

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                                                |   | Unaudited           |                       |          
|------------------------------------------------------------------------------- | - | ------------------- | --------------------- | ---------
|                                                                                |   |                     |                       |          
|                                                                                |   | Twelve months ended | Cumulative from      
|                                                                                |   | June 30             | March 26, 1993
    to
|                                                                                |   | 2006                |                       | 2005     
|                                                                                |   |                     |                       |          
|Cash flows from operating activities:                                           |   |                     |                       |          
|                                                                                |   |                     |                       |          
|Net income (loss)                                                               | $ | (220,572)           | $                     | (576,766)
|                                                                                |   |                     |                       |          
|Adjustments to reconcile
    net loss to net cash used in operating activities: |   |                     |                       |          
|Depreciation and
    amortization                                               |   | -                   |                       | -        
|(Gain) loss on disposal
    and abandonment of assets                           |   | -                   |                       | -        
|Stock issued in exchange
    for interest                                       |   | -                   |                       | -        
|Stock issued in exchange
    for services and expenses                          |   | -                   |                       | -        
|Stock options issued in
    exchange for services                               |   | -                   |                       | -        
|Unrealized (loss) gain on
    foreign exchange                                  |   | (161,946)           |                       | (129,718)
|Other non-cash items                                                            |   | 170,000             |                       | 442,500  
|                                                                                |   |                     |                       |          
|Changes in assets and liabilities:                                              |   |                     |                       |          
|(Increase) decrease in:                                                         |   |                     |                       |          
|Account receivable                                                              |   | -                   |                       | -        
|Inventory                                                                       |   | -                   |                       | -        
|Sales tax receivable                                                            |   | -                   |                       | -        
|Research and experimental
    development tax credits receivable                |   | -                   |                       | -        
|Other assets                                                                    |   | -                   |                       | -        
|(Decrease) increase in :                                                        |   |                     |                       |          
|Accounts payables and
    accrued liabilities                                   |   | 340,018             |                       | 51,484   
|Accrued salaries                                                                |   | (137,500)           |                       | 212,500  
|Due to stockholders                                                             |   | -                   |                       | -        
|                                                                                |   |                     |                       |          
|Net cash used in operating activities                                           |   | (10,000)            |                       | -        
|                                                                                |   |                     |                       |          
|Cash flow from investing activities:                                            |   |                     |                       |          
|Increase in notes
    receivable                                                |   | -                   |                       | -        
|Reduction in notes
    receivable                                               |   | -                   |                       | -        
|Investment                                                                      |   | -                   |                       | -        
|Equipment                                                                       |   | -                   |                       | -        
|Equipment assembly costs                                                        |   | -                   |                       | -        
|Organization cost                                                               |   | -                   |                       | -        
|Reduction in security
    deposit                                               |   | -                   |                       | -        
|                                                                                |   |                     |                       |          
|Net cash used in investing activities                                           |   | -                   |                       | -        
|                                                                                |   |                     |                       |          
|Cash flow from financing activities:                                            |   |                     |                       |          
|Loans from related parties                                                      |   | -                   |                       | -        
|Deferred financing costs                                                        |   | -                   |                       | -        
|Proceeds from deposits                                                          |   | -                   |                       | -        
|Payments on notes payable                                                       |   | -                   |                       | -        
|Proceeds from convertible
    notes                                             |   | -                   |                       | -        
|Proceeds from notes
    payable                                                 |   | 10,000              |                       | -        
|Payments on lease
    obligations                                               |   | -                   |                       | -        
|Proceeds from issuance of
    convertible subordinated debentures               |   | -                   |                       | -        
|Proceeds from loan payable                                                      |   | -                   |                       | -        
|Payments on loan payable                                                        |   | -                   |                       | -        
|Proceeds from issuance of
    stock options                                     |   | -                   |                       | -        
|Proceeds from grants                                                            |   | -                   |                       | -        
|Proceeds from issuance of
    common stock                                      |   | -                   |                       | -        
|Proceeds from additional
    paid-in capital                                    |   | -                   |                       | -        
|                                                                                |   |                     |                       |          
|Net cash provided by financing activities                                       |   | 10,000              |                       | -        
|                                                                                |   |                     |                       |          
|Net (decrease) increase in cash and cash
    equivalents                        |   | -                   |                       | -        
|                                                                                |   |                     |                       |          
|Cash and cash equivalents - beginning of
    period                             |   | -                   |                       | -        
|                                                                                |   |                     |                       |          
|Cash and cash equivalents - end of period                                       | $ | -                   | $                     | -        

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                                                               |   | Three months ended |   | Twelve months ended | Cumulative from  
|---------------------------------------------------------------------------------------------- | - | ------------------ | - | ------------------- | -----------------
|                                                                                               |   | June 30            |   | June 30             | March 26, 1993 to
|                                                                                               |   | 2006               |   | 2005                |                  
|                                                                                               |   |                    |   |                     |                  
|Supplemental
    Disclosure of Non-Cash Activities:                                            |   |                    |   |                     |                  
|During the year ended June 30, 2006, the Company did not issue common stock
    in recognition |  
|of the payment of debt. During the year ended June 30, 2005, the Company did
    not           |  
|issue common stock in recognition of the payment of debt.                                      |  
|                                                                                               |   |                    |   |                     |                  
|During the year ended June 30, 2006, the Company did not issue common stock
    in exchange    |  
|for services performed and expenses. During the year ended June 30, 2005,
    the Company      |  
|did not issue common stock in exchange for services performed and expenses.                    |  
|                                                                                               |   |                    |   |                     |                  
|Supplemental
    Disclosure of Cash Flow Information:                                          |   |                    |   |                    
|                                                                                               |   |                    |   |                     |                  
|Interest
    paid                                                                              | $ | -                  | $ | -                   | $                
|                                                                                               |   |                    |   |                     |                  
|Income
    taxes paid                                                                          | $ | -                  | $ | -                   | $                

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006

Note 1 SUMMARY OF ACCOUNTING POLICIESCHANGE OF NAME 
On July 11, 1997, the Company changed its name from Tirex America, Inc. to The
Tirex Corporation.

NATURE OF BUSINESS 
The Tirex Corporation (the "Company") was incorporated under the laws of the
State of Delaware on August 19, 1987. The Company was originally organized to
provide comprehensive health care services, but due to its inability to raise
sufficient capital, was unable to implement its business plan. The Company
became inactive in November 1990.

REORGANIZATION 
On March 26, 1993, the Company entered into an acquisition agreement (the
"Acquisition Agreement") with Louis V. Muro, currently an officer and a director
of the Company, and former Officers and Directors of the Company (collectively
the "Seller"), for the purchase of certain technology owned and developed by the
Seller (the "Technology") to be used to design, develop and construct a
prototype machine and thereafter a production quality machine for the cryogenic
disintegration of used tires. The Technology was conceptually developed by the
Seller prior to their affiliation or association with the Company.

DEVELOPMENTAL STAGE 
At June 30, 2006, the Company is still in the development stage. The operations
consist mainly of raising capital, obtaining financing, developing equipment,
obtaining customers and supplies, installing and testing equipment and
administrative activities.

BASIS OF CONSOLIDATION 
The consolidated financial statements include the consolidated accounts of The
Tirex Corporation, Tirex Canada R&D Inc., The Tirex Corporation Canada Inc.,
Tirex Advanced Products Quebec Inc. and Tirex Acquisition Corp. Tirex Canada R&D
Inc. is held 51% by certain shareholders of the Company. The shares owned by
these shareholders are held in escrow by the Company's attorney and are
restricted from transfer thereby allowing for a full consolidation of this
Company. The Tirex Corporation Canada Inc., Tirex Advanced Products Quebec Inc.
and Tirex Acquisition Corp. are 100% held by the Company. All subsidiary
companies except Tirex Canada R&D Inc. are dormant. All inter-company
transactions and accounts have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS 
For purposes of the statement of cash flows, all highly liquid debt instruments
purchased with a maturity of three months or less, were deemed to be cash
equivalents.

INVENTORY 
The Company values inventory, which consists of finished goods and equipment
held for resale, at the lower of cost (first-in, first-out method) or market.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006

PROPERTY AND EQUIPMENT 
Property and equipment are recorded at cost less accumulated depreciation and
provisions for write-downs. Depreciation is computed using the straight-line
method over the estimated useful lives of five years. No depreciation is
recorded for equipment written down to salvage value.

Repairs and maintenance costs are expensed as incurred while
additions and betterments are capitalized. The cost and related accumulated
depreciation of assets sold or retired are eliminated from the accounts and any
gains or losses are reflected in earnings.

INVESTMENT 
An investment made by the Company, in which the Company owns less than a 20%
interest, is stated at cost value. The cost value approximates the fair market
value of the investment.

ESTIMATES 
Preparation of financial statements in conformity with 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 may differ from those estimates.

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123 
In 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-Based Compensation. SFAS 123 encourages, but does
not require, companies to record stock-based Compensation and other costs paid
by the issuance of stock at fair value. The Company has chosen to account for
stock-based compensation, stock issued for non-employee services and stock
issued to obtain assets or in exchange for liabilities using the fair value
method prescribed in SFAS 123. Accordingly, compensation cost for stock options
is measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee must pay to acquire
the stock.

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128 
In 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 128, Earnings per Share. SFAS 128 changes the standards for computing and
presenting earnings per share (EPS) and supersedes Accounting Principles Board
Opinion No. 15, Earnings per Share. SFAS 128 replaces the presentation of
Primary EPS with a presentation of Basic EPS and replaces the presentation of
Fully Diluted EPS with a presentation of Diluted EPS. It also requires dual
presentation of Basic and Diluted EPS on the face of the income statement for
all entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the Basic EPS computation to the numerator and
denominator of the Diluted EPS computation. SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. SFAS 128 also requires restatement of all prior-period EPS data
presented.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006

As it relates to the Company, the principal differences
between the provisions of SFAS 128 and previous authoritative pronouncements are
the exclusion of common stock equivalents in the determination of Basic Earnings
Per Share and the market price at which common stock equivalents are calculated
in the Determination of Diluted Earnings Per Share.

A Basic Earnings per Share is computed using the weighted
average number of shares of common stock outstanding for the period. Diluted
Earnings per Share is computed using the weighted average number of shares of
common stock and dilutive common equivalent shares related to stock options and
warrants outstanding during the period.

The adoption of SFAS 128 had no effect on previously reported
loss per share amounts for the year ended June 30, 1997. For the years ended
June 30, 2005 and June 30, 2004, Primary Loss per Share was the same as Basic
Loss per Share and Fully Diluted Loss per Share was the same as Diluted Loss per
Share. A net loss was reported in 2004 and 2003, and accordingly, in those
years, the denominator for the Basic EPS calculation was equal to the weighted
average of outstanding shares with no consideration for outstanding options and
warrants to purchase shares of the Company's common stock because to do so would
have been anti-dilutive.

FAIR VALUE OF FINANCIAL INSTRUMENTS 
The carrying amount of the Company's financial instruments, which principally
include cash, note receivable, accounts payable and accrued expenses,
approximates fair value due to the relatively short maturity of such
instruments.

The fair values of the Company's debt instruments are based
on the amount of future cash flows associated with each instrument discounted
using the Company's borrowing rate. At June 30, 2006 and June 30, 2005,
respectively, the carrying value of all financial instruments was not materially
different from fair value.

INCOME TAXES 
The Company has net operating loss carryovers of approximately $30.3 million as
of June 30, 2006, expiring through 2026. However, based upon present Internal
Revenue Service regulations governing the utilization of net operating loss
carryovers where the corporation has issued substantial additional stock and
there has been a change in control as defined by the Internal Revenue Service
regulations, a substantial portion of this loss carryover may not be available
to the Company.

The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, Accounting for Income Taxes, effective July 1993.
SFAS No. 109 requires the establishment of a deferred tax asset for all
deductible temporary differences and operating loss carryforwards. Because of
the uncertainties discussed in Note 2, however, any deferred tax asset
established for utilization of the Company's tax loss carryforwards would
correspondingly require a valuation allowance of the same amount pursuant to
SFAS No. 109. Accordingly, no deferred tax asset is reflected in these financial
statements.

The Company does not currently have research and experimental
development tax credits receivable from the Canadian Federal government and the
Quebec Provincial government as at June 30, 2006.

FOREIGN CURRENCY TRANSLATION 
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency
environment are translated to U.S. dollars at exchange rates in effect at the
balance sheet date for monetary items and historical rates of exchange for
non-monetary items with the resulting translation adjustment recorded directly
to a separate component of shareholders' equity. Income and expense accounts are translated at average exchange rates during the year.
Currency transaction gains or losses are recognized in current operations.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006

REVENUE RECOGNITION 
Revenue from the sale of TCS Systems will be recognized when the installed
product is accepted by the Customer. All other revenue from other products will
be recognized when shipped to the customer.

Note 2 GOING CONCERN As reported in the accompanying financial statements, the Company incurred a
net loss of $220,572 for the year ended June 30, 2006 and a net loss of $576,766
for the year ended June 30, 2005.

In March 1993, the Company had begun its developmental stage
with a new business plan. As of March 2000, the Company had developed a
production quality prototype of its patented system for the disintegration of
scrap tires, but nonetheless continued its research and development efforts to
improve the machine's performance and to permit greater flexibility in design
for specific customer applications. Due to the Company's lack of working capital
during the year ended June 30, 2002, all rubber crumb production was suspended
and research and development efforts have been hampered. Pending receipt of
funding from operations, government assistance, loans or equity financing, crumb
rubber production and previous research and development efforts will not be
resumed. While the Company has engaged the process of marketing the TCS System
to numerous potential clients since the beginning of the fiscal year commencing
July 1, 2000, as of June 30, 2006, the Company had not yet consummated an
unconditional purchase order for a TCS System.

The Company is dependent on the success of its marketing of
its TCS Systems, and/or raising funds through equity sales, bank or investor
loans, governmental grants or a combination of these, to continue as a going
concern. The Company's uncertainty as to its ability to generate revenue and its
ability to raise sufficient capital, raise substantial doubt about the entity's
ability to continue as a going concern. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.

Note 3 PROPERTY AND EQUIPMENT As at June 30, 2006, plant and equipment
consisted of the following:

|Furniture, fixtures and equipment                   | $149,516
|--------------------------------------------------- | --------
|Manufacturing equipment                             | 62,400  
|Subtotal                                            | 211,916 
|                                                    |         
|Less: Accumulated depreciation and
    amortization | 161,916 
|                                                    |         
|Total                                               | $ 50,000

Depreciation and amortization expense charged to operations
for the year ended June 30, 2006 was zero. Depreciation and amortization expense
charged to operations for the year ended June 30, 2005 was zero.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006

Note 4 GOVERNMENT LOANS Canada Economic Development

Loans payable under the Program for the Development of Quebec
SMEs based on 50% of approved eligible costs for the preparation of market
development studies in certain regions. Loans are unsecured and non-interest
bearing. (If the Company defaults, the loans become interest bearing at the rate
of 8%)



|Loan repayable over five years commencing June 30, 2000 and
    ending June 30, 2004 |  | $ 34,300
|------------------------------------------------------------------------------------ |  | --------
|Loan repayable over five years commencing June 30, 2001 and
    ending June 30, 2005 |  | 43,791  
|                                                                                     |  | 78,091  
|Less: Current portion                                                                |  | 78,091  
|Long-term portion                                                                    |  | $ NIL   
|                                                                                    
|Principal repayments are as follows:                                                
|June 30                                                                              |  | Amount  
|                                                                                    
|2006                                                                                 |  | $78,091 



Note 5 CAPITAL LEASE OBLIGATIONS The Company leases certain manufacturing
equipment under agreements classified as capital leases. The cost and the
accumulated amortization for such equipment as of June 30, 2006 and June 30,
2005 was $62,400 and $62,400, respectively. The Company is in arrears on payment
of these leases but default has not been declared. The lease expired on June 30,
2004. The leased equipment is not part of the Company's TCS System prototype.

Note 6 CONVERTIBLE SUBORDINATED DEBENTURES The Company issued Type B Convertible
Subordinated Debentures between December 1997 and February 1998. These
debentures bore interest at 10% and were convertible into common shares of the
Company at $0.20 per share. The conversion privilege on the remaining $55,000 of
these debentures expired and the amount is now included on the Balance Sheet in
Long term deposits and notes.

Note 7 CONVERTIBLE NOTES The Convertible Notes appearing on the
balance sheet consisted of an investment arrangement with a group of
institutional investors involving a multi-stage financing under which the
Company had access to, at its option, up to $5,000,000. A first tranche of
$750,000 was completed but no further draw downs were made. The terms of the
convertible note were:



|                         |                                                    
|------------------------ | ---------------------------------------------------
|Balance at June 30, 2006 | $399,389                                           
|                         |                                                    
|Interest rate            | 8%, payable quarterly, commencing
    June 30, 2001
|                         |                                                    
|Issue date               | February 26, 2001                                  
|                         |                                                    
|Maturity date            | February 26, 2003                                  
|                        



---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006



|                      |                                                                                                                                                                                                                                                                                           
|--------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Redemption rights     | If not converted, the holder may require the Company to
    redeem at any time after maturity for the principal amount pus interest.                                                                                                                                                      
|                      |                                                                                                                                                                                                                                                                                           
|Conversion ratio      | Lower of (i) - 80% of the average of the three lowest
    closing bid prices for the thirty trading days prior to the issue date,
    which equals $.073, or (ii) - 80% of the average of the three lowest closing
    bid prices for the sixty trading days prior to the conversion date.
|                      |                                                                                                                                                                                                                                                                                           
|Common stock warrants | The Convertible Notes carried an option to purchase Common
    stock warrants at the rate of one Warrant for each $1.25 of purchase price.
    The exercise price on the first tranche of$ 750,000 is $ .077 per share.                                                                   



Certain current and previous Directors and Officers of the
Company have pledged approximately 12,000,000 of their personal shares of Common
Stock of the Company as security for the Convertible Notes until such time as
the Company files with the Securities and Exchange Commission a Registration
Statement on Form SB-2, to register common stock and warrants issuable upon the
conversion of the notes, no later than 150 days after the issue date of the
Convertible Notes. This deadline was not met and, as such, the investors served
a notice of default to the Company on July 19, 2001. The Registration Statement
was never declared effective by the Securities and Exchange Commission and was
eventually withdrawn. Thus, the Convertible Notes cannot be converted to Common
Stock nor may the Common Stock warrants be exercised. On April 24, 2002 the
Company entered into a Settlement Agreement with the Note holders. The Company
was forced to default on this Settlement Agreement.. Accordingly, the terms of
the Convertible Notes have become effective once again. Approximately two-thirds
of the collateral shares provided to the investors were the property of former
Tirex Director, Louis A, Sanzaro, now deceased. While we have not confirmed the
disposition of the liabilities of our company toward the estate of Mr. Sanzaro,
the company intends to act in accordance with the testament of Mr. Sanzaro.

Note 8 CONVERTIBLE NOTES A convertible note, under a private
arrangement, consists of the following:



|                         |                                                                                                                                                                                                                              
|------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Balance at June 30, 2006 | $ 185,556                                                                                                                                                                                                                    
|                         |                                                                                                                                                                                                                              
|Interest rate            | 8%                                                                                                                                                                                                                           
|                         |                                                                                                                                                                                                                              
|Issue date               | July 19th,
    2000                                                                                                                                                                                                          
|                         |                                                                                                                                                                                                                              
|Maturity date            | January 19th,
    2002                                                                                                                                                                                                       
|                         |                                                                                                                                                                                                                              
|Redemption rights        | If not converted, the holder may require the Company to
    redeem at any time after maturity for the principal amount plus interest.                                                                                        
|                         |                                                                                                                                                                                                                              
|Conversion ratio         | Not convertible prior to July 19PthP,
    2001, at 20% discount to market between July 19PthP,
    2001 and January 19PthP,
    2002 or at 25% to market if held to maturity, to a maximum of not more than 2,500,000 shares.



---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006







During Fiscal 2006, the Company completed indirect private
placements with approximately twelve investors having a total aggregate value of
US$60,200. Insofar as the Company does not have enough common shares available
for issuance, the investors agreed to accept that the investment would be in the
form of non-interest-bearing convertible debt made out in the name of Tirex
President, John L. Threshie Jr. The amount was used to pay Tirex operating
expenses and is recorded as a liability to Mr. Threshie. When an adequate number
of common shares become available, these investors Mr. Threshie will acquire
approximately 13,040,000 shares which will then be transferred to these
investors. Any share issuance would be proportionally adjusted in the event of
stock splits or reverse splits.

Note 9 RELATED PARTY TRANSACTIONS Convertible loans include amounts primarily due to Directors,
Officers and employees. Historically, such amounts due have been repaid through
the issuance of stock. At June 30, 2006 and June 30, 2005, the balances owing to
Directors and Officers was $1,959,429 and $1,926,929, respectively. These
amounts are without interest or terms of repayment.

Long-term deposits and notes included an amount of $118,500
at June 30, 2006, which is payable to Ocean Tire Recycling & Processing Co.,
Inc., a company previously owned by a former Director of the Company, Louis A.
Sanzaro, recently deceased. We expect that the Executor of the estate of Mr.
Sanzaro will contact us with respect to the disposition of our liabilities
toward the estate of Mr. Sanzaro.

Note 10 COMMON STOCK During the year ended June 30, 2006 and the year ended June 30, 2005,
the Company did not issue any common stock in exchange for services performed.

During the year ended June 30, 2004, an Officer of the
Company exercised stock options pursuant to a services agreement. The exercise
of these stock options entitled the Officer to 1,500,000 common shares of the
Company on a cash-less basis. The Company does not have sufficient authorized
and unissued shares available at September 30, 2006 for issuance of this stock
and as such, the amount attributable to these shares has been recorded as part
of the balances owing to Directors and Officers included in Convertible loans.

On January 31, 2001, the Company's stockholders approved an
amendment to the Articles of Incorporation of the Company to increase the number
of authorized shares of common stock, par value $0.001, from 165,000,000 shares
to 250,000,000 shares.

As at June 30, 2006, the Company had 249,895,892 Common
shares issued and outstanding, versus its authorization of 250,000,000 shares.

Note 11 CONVERTIBLE DEBT In the event that holders of convertible rights of option exercise
such rights of conversion, the Company does not have sufficient number of
authorized shares conversion stock to fulfill such obligations and a shareholder
meeting would be required to approve the additional authorized number of shares.
There is no assurance that the shareholders would approve the increase to the
number of authorized shares of stock to meet the conversion obligations under
the various conversion agreements or options.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2006

Note 12 GOVERNMENT ASSISTANCE The Company is eligible for and has made
claims for tax credits related to scientific research and experimental
development expenditures made in Canada. These amounts, under Canadian Federal
and Provincial tax law in conjunction with its annual tax return filings, need
not be offset against taxes otherwise payable to become refundable to the
Company at the end of its fiscal year. As such, during the year ended June 30,
2003, the Company received approximately $246,970, which was recorded as an
increase in stockholders' equity paid-in capital. During the years ended June
30, 2005 and June 30, 2006 and the three month period ended September 30, 2006,
the Company did not make any additional claims for tax credits as it was not
eligible to do so and, as such, the Company did not record any additional tax
credits receivable. The previous receivable balance in respect of tax credits
from these governments went from $246,970 as of June 30, 2002 to zero as of June
30, 2003 and remained as such as of June 30, 2004, June 30, 2005 and June 30,
2006.

Note 13 COMMITMENTS Rental expense for the year ended June 30,
2006 was paid personally by John L. Threshie Jr. Until the relocation of the
office to Connecticut in September 2006, the monthly amount charged as a
liability to Mr. Threshie on the books of Tirex was CA$1,500, approximately
US$1,350.

At June 30, 2006, the Company was in arrears of rent,
including interest and related charges, in the approximate amount of $560,000
with respect to its former premises on St. Patrick Street in Montreal, Canada. A
settlement agreement with the former landlord is in place under the terms of
which the Company would pay to the former landlord the sum of $140,000 from the
proceeds to the Company of revenues from each of the first four sales of TCS
Systems.

Note 14 LITIGATION An action was instituted by Plaintiffs, an
individual and a corporation, in a Canadian court alleging a breach of contract
and claims damages of approximately $508,600 representing expenses and an
additional approximate amount of $1,874,000 in loss of profits. The current
action follows two similar actions taken in United States courts, the first of
which was withdrawn and the second of which was dismissed based on forum non
convenience and other considerations. A detailed answer has been filed by the
Company denying all liability, stating further that Plaintiffs failed to comply
with their obligations. Counsel for the Company believes that the Company has
meritorious defenses to all of the Plaintiff's claims. The action is still
pending.

A Plaintiff instituted an action, a corporation, in August
2001 in a Canadian court claiming approximately $63,000 is due and owing for the
manufacture and delivery of tire disintegrators. The Company has prepared its
defense and a cross claim against the Plaintiff as the product delivered was
defective and the Company believes it is entitled to a reimbursement of sums
paid. The action is still pending.

An action was instituted by a Plaintiff, the Company's
landlord, against the Company in June 2001 for arrears of rent in the amount of
approximately $113,900. Subsequent additions to arrearages with respect to rent
and property taxes raised the amount due to approximately $560,000. A settlement
agreement with the former landlord is in place, under the terms of which the
Company would pay to the former landlord the sum of $140,000 from the proceeds
to the Company of revenues from the first four sales of TCS Systems.

Note 15 ACCUMULATED OTHER COMPREHENSIVE INCOME The deficit accumulated during the
development stage included accumulated comprehensive other income totaling
$103,396.

---