U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]     Quarterly report under Section 13 or 15(d) of the Securities Exchange
        Act of 1934 For the quarterly period ended December 31, 2000

[ ]     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
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                  Delaware                                  22-2824362
         (State or other jurisdiction of                 (I.R.S. Employer
         Incorporation or Organization)                 Identification No.)


                   3828 ST. PATRICK, MONTREAL, QUEBEC H4E 1A4
                    (Address of Principal executive offices)

                                 (514) 933-2518
                (Issuer's telephone number, including area code)


         (Former Name, Former Address and Former Fiscal Year, if Changed
                                Since Last Report

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of January 31, 2000: 164,991,687 shares

         Transitional Small Business Disclosure Format (check one):
Yes [ ]   No  [X]
<PAGE>

                              THE TIREX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)


                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL INFORMATION (unaudited)                                  Page


         The Tirex Corporation and Subsidiaries
           Consolidated Balance Sheets as of
             December 31, 2000 and June 30, 2000............................  2

         Consolidated Statements of Operations
           for the three month period
             ended December 31, 2000 and 1999...............................  3

         Consolidated Statements of Cash Flows
           for the three and six month periods
             ended December 31, 2000 and 1999...............................  4

         Notes to Financial Statements (unaudited)..........................  5

ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF

           FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 13

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings.................................................. 18
Item 2 - Changes in Securities and Use of Proceeds.......................... 18
Item 3 - Defaults Upon Senior Securities.................................... 19
Item 4 - Submission of Matters
            to a Vote of Security Holders................................... 20
Item 6 - Exhibits and Reports on Form 8-K................................... 20

         The financial statements are unaudited. Management of registrant
believes that all necessary adjustments, including normal recurring adjustments,
have been reflected to present fairly the financial position of registrant at
December 31, 2000 and the results of its operations and changes in its financial
position for the three month and six month periods ended December 31, 2000 and
1999 and for the period from inception (July 15, 1987).

                                       i
<PAGE>
<TABLE>
<CAPTION>
                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                           CONSOLIDATED BALANCE SHEET
                             AS AT DECEMBER 31, 2000
                    -----------------------------------------

                                                                  (UNAUDITED)      (AUDITED)
                                                                  DECEMBER 31,      JUNE 30,
                                                                     2000            2000
                                                                  ------------    ------------

                                     ASSETS
<S>                                                               <C>             <C>
Current Assets
  Cash and cash equivalents                                       $     11,455    $      2,793
  Accounts receivable and notes receivable                              11,498         129,431
  Sales taxes receivable                                                26,900          19,288
  Inventory                                                            105,829         109,961
  Research and Development tax credit receivable                       640,242         475,221
  Prepaid expenses and deposits                                        113,865         106,384
                                                                  ------------    ------------
                                                                       909,789         843,078

Property and equipment, at cost, net of
  accumulated depreciation of $158,136                               2,190,422       2,223,798
                                                                  ------------    ------------

Other assets

  Prepaid expenses and deposits                                        197,000         220,508
                                                                  ------------    ------------


                                                                  $  3,297,211    $  3,287,384
                                                                  ============    ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
  Accounts payable and accrued liabilities                        $    999,144    $  1,187,711
  Current portion of long-term debt                                    197,131         227,516
                                                                  ------------    ------------
                                                                     1,196,275       1,415,227

Other liabilities
  Long-term deposits and notes                                         198,500         143,500
  Long-term debt (net of current portion)                              379,044         393,542
  Convertible subordinated debentures                                       --          75,000
  Convertible loans                                                  1,658,522       2,093,954
                                                                  ------------    ------------
                                                                     2,236,066       2,705,996
                                                                  ------------    ------------

                                                                     3,432,341       4,121,223
                                                                  ------------    ------------
Stockholders' Equity (Deficit)
  Common stock,  $.001 par value, authorized
   165,000,000 shares, issued and outstanding
   164,991,687 shares                                                  164,992         151,133
  Class A stock; .001 par value, authorized 5,000,000
   shares; issued and outstanding 0 shares
  Additional paid-in capital                                        21,493,324      19,364,787
  Deficit accumulated during the development stage                 (21,937,438)    (20,510,191)
  Unrealized gain on foreign exchange                                  143,992         160,432
                                                                  ------------    ------------
                                                                      (135,130)       (833,839)
                                                                  ------------    ------------

                                                                  $  3,297,211    $  3,287,384
                                                                  ============    ============
</TABLE>

                                       2
<PAGE>
<TABLE>
<CAPTION>
                                                THE TIREX CORPORATION
                                             A DEVELOPMENT STAGE COMPANY
                                        CONSOLIDATED STATEMENT OF OPERATIONS
                                    --------------------------------------------
                                                     (UNAUDITED)

                                      THREE MONTHS ENDED                SIX MONTHS ENDED
                                         DECEMBER 31                      DECEMBER 31              CUMULATIVE FROM
                                ------------------------------    -----------------------------   MARCH 26, 1993 TO
                                    2000             1999             2000              1999      DECEMBER 31, 2000
                                -------------    -------------    -------------    -------------  -----------------
<S>                             <C>              <C>              <C>              <C>              <C>
Revenues                        $          --    $          --    $          --    $          --    $   1,325,573

Cost of Sales                              --               --               --               --        1,018,094

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

Gross profit                               --               --               --               --          307,479
                                -------------    -------------    -------------    -------------    -------------

Operations

  General and administrative          409,242          434,989          840,199          770,643        8,295,940
  Depreciation and amortization        15,111          149,060           32,358          292,158          172,149
  Research and development            190,149          247,335          433,205          425,357       12,275,323
                                -------------    -------------    -------------    -------------    -------------

Total Expense                         614,502          831,384        1,305,762        1,488,158       20,743,412
                                -------------    -------------    -------------    -------------    -------------

Loss before other
  expenses (income)                  (614,502)        (831,384)      (1,305,762)      (1,488,158)     (20,435,933)
                                -------------    -------------    -------------    -------------    -------------

Other expenses (income)
  Interest expense                      5,794           17,754           41,533           43,144          314,859
  Interest income                                                            --                           (45,443)
  Income from stock options                                                  --                           (10,855)
  Loss on disposal of equipment         2,309                             2,309                             4,549
  Loss (gain) on
   foreign exchange                   (21,471)         (72,791)          77,643          (69,529)         181,039
                                -------------    -------------    -------------    -------------    -------------

                                      (13,368)         (55,037)         121,485          (26,385)         444,149
                                -------------    -------------    -------------    -------------    -------------

Net loss                        $    (601,134)   $    (776,347)   $  (1,427,247)   $  (1,461,773)   $ (20,880,082)
                                =============    =============    =============    =============    =============

Net loss per common share       $       (0.01)   $       (0.01)   $       (0.01)   $       (0.02)   $       (0.64)
                                =============    =============    =============    =============    =============

Weighted average of common
  shares outstanding              114,911,911       87,453,671      114,911,911       87,453,671       32,863,816
                                =============    =============    =============    =============    =============
</TABLE>
                                       3
<PAGE>
<TABLE>
<CAPTION>
                                                        THE TIREX CORPORATION
                                                     A DEVELOPMENT STAGE COMPANY
                                                CONSOLIDATED STATEMENT OF CASH FLOWS
                                          ------------------------------------------------
                                                             (UNAUDITED)

                                                      THREE MONTHS ENDED               SIX MONTHS ENDED
                                                         DECEMBER 31                      DECEMBER 31           CUMULATIVE FROM
                                                  ----------------------------    ----------------------------  MARCH 26, 1993 TO
                                                      2000           1999            2000             1999     DECEMBER 31, 2000
                                                  ------------    ------------    ------------    ------------ ------------------
<S>                                               <C>             <C>             <C>             <C>             <C>
Operating activities

Net  loss                                         $   (601,134)   $   (776,347)   $ (1,427,247)   $ (1,461,773)   $(20,880,082)
                                                  ------------    ------------    ------------    ------------    ------------

Adjustments to net loss for non-cash items-
     Depreciation and amortization                      15,111         149,060          32,358         292,158         170,907
     Loss on disposal or abandonment of assets           2,309           2,309          24,648          22,339
     Stock issued in lieu of payment                    96,609         335,865         379,408      13,723,224      13,626,615
     Unrealized gain (loss) on foreign exchange        (25,431)         22,926         (16,440)         19,062         143,992
     Other non-cash items                               12,000              --              --              --          12,000

Changes in current assets and liabilities-
(Increase) decrease in:
     Account receivable and notes receivable               (52)          4,093        (117,933)        (14,685)       (247,468)
     Inventory                                           2,147        (227,391)          4,132        (227,391)       (107,814)
     Sales tax receivable                                 (291)         22,480          (7,612)         60,562         (12,258)
     R & D investment tax credit receivable            (80,536)        672,236        (165,021)        545,315        (640,242)
     Other assets                                       25,209          15,954          (7,481)       (125,593)       (328,606)
(Decrease) increase in:
     Accounts payables and accrued liabilities         (31,794)       (529,199)       (188,566)       (986,181)      1,774,717
     Current portion of long-term debt                 (66,968)        (37,893)        (55,723)        (39,097)        (66,968)
                                                  ------------    ------------    ------------    ------------    ------------

Net cash used in operating activities                 (652,821)       (684,081)     (1,611,359)     (1,558,215)     (6,433,950)
                                                  ------------    ------------    ------------    ------------    ------------

Investing activities

Cash flow from investing activities-
     Proceeds from sale of equipment                    25,000         167,567           1,018              --          25,000
     Acquisition of equipment                          (23,305)             --              --         (69,449)     (2,257,244)
     Other assets                                           --          23,926          23,508        (189,709)         (1,542)
                                                  ------------    ------------    ------------    ------------    ------------

Net cash used in investing activities                    1,695         191,493          24,526        (259,158)     (2,233,786)
                                                  ------------    ------------    ------------    ------------    ------------

Financing activities

Cash flow from financing activities-
     Convertible loans                                 413,565         539,999        (435,432)        967,562       1,991,675
     Long-term debt                                     21,294        (205,156)         10,841          29,466         573,154
     Long-term deposits and notes                       55,000         198,500         143,500
     Convertible debentures                            (55,000)        (20,000)       (210,000)        980,000       1,035,000
     Issuance of common stock                            1,548           1,510          13,859          22,156          96,264
     Additional paid-in capital                        213,011         147,754       2,026,227         859,710       4,839,341
                                                  ------------    ------------    ------------    ------------    ------------

Net cash provided by financing activities              649,418         484,107       1,595,495       1,668,894       8,678,934
                                                  ------------    ------------    ------------    ------------    ------------

Net (decrease) increase in cash                         (1,708)         (8,481)          8,662        (148,479)         11,198

Cash, beginning of period                               13,163          37,258           2,793         177,256             257
                                                  ------------    ------------    ------------    ------------    ------------

Cash, end of period                               $     11,455    $     28,777    $     11,455    $     28,777    $     11,455
                                                  ============    ============    ============    ============    ============

Supplemental Disclosure of
 Cash Flow Information:

           Interest paid                          $      4,893    $      3,839    $     12,349    $     10,230    $     76,285
                                                  ============    ============    ============    ============    ============

           Income taxes paid                      $         --    $         --    $         --    $         --    $         --
                                                  ============    ============    ============    ============    ============
</TABLE>

                                       4
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
                                   (UNAUDITED)

NOTE 1 -        SUMMARY OF ACCOUNTING POLICIES

                CHANGE OF NAME
                In June 1998, the Company changed its name from Tirex America,
                Inc. to The Tirex Corporation.

                NATURE OF BUSINESS
                The Tirex Corporation and Subsidiaries (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 a director of the Company, and former officers and
                directors (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 developed by the Seller prior to their affiliation or
                association with the Company.

                Currently, the Company's Board of Directors has three members,
                John L. Threshie, Jr., Louis V. Muro and Louis A. Sanzaro.

                DEVELOPMENTAL STAGE
                At September 30, 2000, 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 and its subsidiaries and Tirex
                Canada R&D, Inc. Tirex Canada R&D, Inc. is held 49% by the
                Company and 51% by certain shareholders of the Company. The
                shares owned by the shareholders are held in escrow by the
                Company's attorney and are restricted from transfer. 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 at the lower cost (first-in,
                first-out method) or market.

                PROPERTY AND EQUIPMENT
                Property and equipment are recorded at cost less accumulated
                depreciation. Depreciation is computed using the straight-line
                method over the estimated useful lives of five years.

                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.

                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 No. 123, "Accounting for Stock-Based Compensation"
                ("SFAS 123"). SFAS 123 encourages, but does not require
                companies to record at fair value compensation cost for


                                       5
<PAGE>
                stock-based compensation plans. The Company has chosen to
                account for stock-based compensation using the intrinsic value
                method prescribed in Accounting Principles Board Opinion No. 25,
                "Accounting for Stock Issued to Employees" and related
                interpretations. 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. The difference
                between the fair value method of SFAS-123 and APB 25 is
                immaterial.

                ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128
                In February 1997, the Financial Accounting Standards Board
                (FASB) issued Statement of Financial Accounting Standards No.
                128, "Earnings per Share" (SFAS 128). 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. It also requires
                dual presentation of basic and diluted EPS on the face of 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. This Statement requires restatement
                of all prior-period EPS data presented.

                As it relates to the Company, the principal differences between
                the provisions of SFAS 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 common share is computed using the weighted
                average number of shares of common stock outstanding for the
                period. Diluted earnings per common 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, 2000 and 1999, 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 2000 and 1999, and accordingly, in those years, the
                denominator 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. Stock options
                for the purchase of 13,212,673 shares at June 30, 1999 and
                warrants for the purchase of 1,000,000 shares at June 30, 1999
                and options to purchase 2,852,591 shares, issued under the
                Company's Stock Option Plan during the six month period ended
                December 31, 2000, were not included in loss per share
                calculations because to do so would have been anti-dilutive.
                Further, 6,500,000 shares of common stock issued subsequent to
                the year end, to an employee of Ocean Tire Recycling &
                Processing Co., Inc., were not included in loss per share
                calculations 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, 2000
                and December 31, 2000, 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
                $21.8 million as of December 31, 2000, expiring in the years
                2004 through 2016. However, based upon present Internal Revenue
                regulations governing the utilization of net operating loss
                carryovers where the corporation has issued substantial
                additional stock, most 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
                                       6

<PAGE>
                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 has research and development investment tax credits
                receivable from Canada and the Province of Quebec amounting to
                $640,242 at December 31, 2000 compared to $475,221 as of June
                30, 2000 which are the result of reimbursements for research and
                development expenditures and are not contingent upon any offset
                against income tax liabilities.

                FOREIGN EXCHANGE
                Assets and liabilities of the Company, which are denominated in
                foreign currencies, are translated at exchange rates prevailing
                at the balance sheet date. Revenues and expenses are translated
                at average rates throughout the year.

                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 shown in the accompanying financial statements, the Company
                incurred a net loss of $5,548,829 during the year ended June 30,
                2000 and an additional net loss for the six-month period ended
                December 31, 2000 in the amount of $1,427,247.

                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. While the Company has engaged
                the process of marketing the TCS System to numerous potential
                clients since the beginning of the new fiscal year commencing
                July 1, 2000, as of December 31, 2000, the Company had not yet
                consumated an unconditional purchase order for a TCS System.
                Until such an unconditional purchase order will have been
                received, Management considers the Company to still be in its
                developmental stage.

                The ability of the Company to continue as a going concern is
                dependent on the success of its marketing of its TCS Plants,
                and/or raising funds through equity sales, bank loans,
                governmental grants or a combination of these. 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 -        FINANCING COSTS
                During the year ended June 30, 1999 the Company incurred costs
                of $158,255 in connection with debt financing. These costs have
                been capitalized in other assets and are being amortized over
                the terms of the financing. Amortization of financing costs for
                the year ended June 30, 2000 was $125,291, reducing this account
                balance to zero. Thus there were no deferred financing costs to
                amortize during the six month period ended December 31, 2000.

NOTE 4 -        PROPERTY AND EQUIPMENT
                As of December 31, 2000, plant and equipment consisted of the
                following:

                Furniture, fixtures and equipment                     $  175,833

                Leasehold improvements                                   172,725

                Construction in progress - equipment                   2,000,000
                                                                     -----------

                                                                       2,348,558

                Less: Accumulated depreciation and amortization          158,136
                                                                     -----------

                                                                     $ 2,190,422
                                                                     ===========

                Depreciation and amortization expense charged to operations was
                $67,717 for the year ended June 30, 2000. For the three month
                and six month periods ended December 31, 2000, depreciation and
                amortization amounted to $15,111 and $32,358, respectively.

                                       7
<PAGE>

NOTE 5 -        LONG-TERM DEBT
                Canada Economic Development

                -  Loan payable under the Industrial Recovery
                   Program amounting to 20% of certain eligible
                   costs incurred (maximum loan $333,300)
                   repayable in annual installments over a
                   forty-eight month period commencing March 31,
                   1999, due March 31, 2003, unsecured and
                   non-interest bearing. (If the Company
                   defaults, the loans become interest bearing)        $ 297,291

                -  Loans payable under the Program for the
                   Development of Quebec SME's 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)

                      -Loan repayable over five years commencing
                       June 30, 2000, due June 30, 2004                   59,104
                      -Loan repayable over five years commencing
                       June 30, 2001, due June 30, 2005                   58,794

                -  Loan repayable in amounts equal to 1% of
                   annual sales in Spain and Portugal through
                   June 30, 2007                                          13,332

                -  Loan repayable in amounts equal to 11/2% of
                   annual sales in Spain and Portugal through
                   June 30, 2004                                          63,328
                                                                       ---------

                                                                         491,849

                Less: Current portion                                    176,334
                                                                       ---------

                                                                       $ 315,515
                                                                       =========

                Principal repayments are as follows:

                                  June 30,                               Amount
                              ---------------                          ---------

                                   2001                                $ 176,334
                                   2002                                  153,824
                                   2003                                   28,647
                                   2004                                  100,114
                                   2005                                   19,598
                                   2007                                   13,332
                                                                       ---------
                                                                       $ 491,849
                                                                       =========

NOTE 6 -        CAPITAL LEASE OBLIGATIONS
                The Company leases certain equipment under agreements classified
                as capital leases. The cost and the accumulated amortization for
                such equipment as of June 30, 2000 was $108,966 and $18,733,
                respectively. The cost and accumulated amortization for such
                equipment as of December 31, 2000 was $108,966 and $31,138,
                respectively.

                                       8
<PAGE>
                The following is the future minimum lease payments under
                equipment capital leases together with the obligations under
                capital leases (present value of future minimum rentals) as at
                December 31, 2000:

                                 June 30,                                Amount
                              ---------------                          ---------
                                   2001                                 $ 13,827
                                   2002                                   27,651
                                   2003                                   27,651
                                   2004                                   24,617
                                                                        --------
                              Total minimum lease payments                93,746
                              Less: Amount representing interest           9,419
                                                                        --------
                              Total obligations under capital lease       84,327
                              Less: Current portion of obligations
                                  under capital leases                    20,796
                                                                        --------
                              Long-term obligation portion of under
                                  capital leases, with interest
                                  rate of 9.3%                          $ 63,531
                                                                        ========

NOTE 7 -        CONVERTIBLE SUBORDINATED DEBENTURES
                Convertible subordinated debentures consist
                of the following:

                Balance at June 30, 2000                            $ 75,000

                Interest rate                                             10%

                Maturity                Earlier of (i) -two years from the issue
                                        date or (ii) -the completion of a
                                        public offering of its securities by the
                                        Maker. These debentures are subordi-
                                        nated to all current and future bank
                                        debt.

                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        $.20 per share.

                During the year ended June 30, 2000, $305,000 of convertible
                debentures were converted into common stock. During the three
                months ended September 30, 2000, $20,000 of convertible
                debentures were converted into common stock. At December 31,
                2000, $55,000 of convertible debentures had matured and were not
                converted into common stock and have been included in long term
                deposits and notes.

                                       9
<PAGE>

NOTE 8 -        RELATED PARTY TRANSACTIONS
                The Company entered into various employment agreements with
                former executive officers and General Counsel whereby the
                Company was obligated to pay a total of $565,000 a year plus
                benefits. All of the employment agreements called for terms
                ranging from 3 - 8 years. In addition to the employment
                services, the officers agreed not to compete with the Company
                for a two year period following the termination of employment.
                If an officer is terminated other than for cause or for "good
                reason", the terminated officer will be paid twice the amount of
                their base salary for twelve months. During the year ended June
                30, 1999, two employees were terminated and received severance
                pay totaling $500,000 which was paid in shares of the Company's
                common stock. The employees also received options to buy
                4,000,000 shares of stock for par value or $4,000. The options
                were exercised July 31, 1999. The value of the options were
                recorded as paid in capital at June 30, 1999 for 50% of the
                average price of the stock or $381,600.

                Convertible loans include amounts due to certain officers and
                directors totalling $1,300,643 at December 31, 2000. In the
                past, such loans have been repaid through the issuance of stock.

                Various Notes Receivable from officers, separately reported on
                the audited Balance Sheet of June 30, 2000, plus accrued
                interest thereon, were offset against amounts due to these
                officers as of December 31, 2000.

                Long-term and deposits and notes included an amount of $118,500
                at December 31, 2000 which is payable to companies owned by a
                director of the Company.

                Subsequent to June 30, 2000, the Company modified its agreement
                with Ocean Tire Recycling & Processing Co., Inc. ("OTRP") to
                clarify various terms of the parties prior agreements and to
                obtain a commitment by OTRP to pay, when necessary, future lease
                payments on the prototype system. The Company also partially
                exchanged its debt obligation to OTRP for 6,500,000 shares of
                its Common Stock, which was issued, pursuant to OTRP's request,
                to its principal shareholder and President.

NOTE 9 -        EXCHANGE OF DEBT FOR COMMON STOCK
                During the six month period ended December 31, 2000, the Company
                recorded an increase in common stock and additional paid-in
                capital of $1,351,908 representing issuances of stock in lieu of
                cash payments for debts owed. During the year ended June 30,
                2000, the Company recorded increases in common stock and paid-in
                capital of $389,898, which was in recognition for the exchange
                of common stock for debts owed.

NOTE 10 -       COMMON STOCK
                During the six month period ended December 31, 2000, the Company
                issued common stock to individuals in exchange for services
                performed totalling $581,091. During the year ended June 30,
                2000, the Company issued common stock to individuals in exchange
                for services performed totaling $2,246,631. Included in this
                amount are payments to officers of the Company and to present
                and former counsel in exchange for salary and consulting in the
                amount of $1,115,784. The dollar amounts assigned to such
                transactions have been recorded at the fair value of the
                services received, because the fair value of the services
                received was more evident than the fair value of the stock
                surrendered.

NOTE 11 -       STOCK OPTIONS
                On May 19, 1995, the Company sold to a director of the Company
                an option to purchase 20,000 shares of Cumulative Convertible
                Preferred Stock at an exercise price of $10 per share,
                exercisable during the two year period beginning May 19, 1995
                and ending May 18, 1997. The director paid $20,000 for the
                option. The terms of the Preferred Stock, purchasable under the
                option, call for cumulative cash dividends at a rate of $1.20

                                       10
<PAGE>
                per share and conversion into 2,000,000 or more shares of common
                stock. The conversion to common stock ratio varies depending on
                when the conversion is made. At May 29, 1997, the exercise
                period was extended until May 18, 1999. During the year ended
                June 30, 1999, the director exercised the option to buy
                1,234,567 shares of common stock for $40,000. The balance of
                these options expired during the year ended June 30, 2000.

                COMPENSATORY COMMON STOCK OPTIONS-
<TABLE>
<CAPTION>
                                                                               Compensation cost
                                                            Number of         for the year ended
                                                             Shares              June 30, 2000
                                                           ----------------------------------------

                <S>                                         <C>                    <C>
                Balance at July 1, 1999                     13,212,673             $        -

                Stock options expired during the year
                   ended June 30, 2000                      (7,885,187)            $        -

                Stock options exercised during the year
                   ended June 30, 2000                      (5,327,486)            $        -
                                                           ----------------------------------------

                Balance at June 30, 2000                       Nil                 $        -
                                                           ========================================
</TABLE>

                A new Employee Stock Option, Awards and Grants Plan was adopted
                in June of 2000. In the six month period ended December 31,
                2000, the Company issued stock options to purchase an aggregate
                amount of 2,852,591 shares for an aggregate of $525,563. In
                addition, the Company issued 7,000,000 shares of Common Stock in
                the form of grants for an aggregate of $712,343. No amount of
                stock for awards has been issued to date.

NOTE 12 -       ACQUISITION BY MERGER OF RPM INCORPORATED
                During November 1997, the Company entered into a merger
                agreement with RPM Incorporated ("RPM"). The Company acquired
                all of the assets and liabilities of RPM by acquiring all of the
                outstanding common stock of RPM in exchange for common stock in
                the Company on a unit for unit basis. RPM ceased to exist
                following the exchange.

                The assets and liabilities acquired by the Company from RPM
                consisted of the proceeds from the sale of debentures of
                $535,000. The financing fees on the issuance of the debentures,
                totaling $61,755, were included in the statement of operations
                for the year ended June 30, 1998. A total of 535,000 shares were
                issued as a result of the merger valued at $16,050. A total of
                $16,050 was received for this stock.

                The Company entered into an additional agreement with the former
                shareholders of RPM for a consulting agreement for a period of 5
                years expiring in June, 2002. In exchange for this consulting
                agreement, 3,000,000 shares of common stock were issued valued
                at $240,000. Other than the consulting agreement and the
                issuance of the debentures, RPM was inactive.

                For accounting purposes the Company recorded the merger as a
                purchase and not as a pooling of interests.

NOTE 13 -       GOVERNMENT ASSISTANCE
                The Company received financial assistance from Revenue Canada
                and Revenue Quebec in the form of scientific research tax
                credits. During the year ended June 30, 2000, the Company
                received approximately $395,683, which has been recorded as paid
                in capital. During the six month period ended December 31, 2000,
                the Company recorded additional tax credits receivable in the
                amount of $165,021, bringing the reported balance of tax credits
                receivable from $475,221 as of June 30, 2000 to $640,242 as of
                December 31, 2000.

NOTE 14 -       COMMITMENTS
                The Company leases office and warehouse space at an annual
                minimum rent of $82,000 for the first year, $169,000 for the
                second year and $211,000 per year for the third through the
                fifth years. The lease expires 2003. The company is responsible
                for its proportionate share of any increase in real estate taxes
                and utilities. Also under the terms of the lease, the Company is
                required to obtain adequate public liability and property damage
                insurance. The minimum future rental payments under this lease
                are as follows:

                                       11

<PAGE>
                           June 30,                        Amount
                         -----------                     ----------

                             2001                        $  102,050
                             2002                           204,100
                             2003                           170,100
                                                         ----------

                                                         $  527,275
                                                         ==========

                Rental expense for the year ended June 30, 2000 amounted to
                $176,900. One of these leases contains a second ranking moveable
                hypothec in the amount of $300,000 on the universality of the
                Company's moveable property.

                For the six month period ended December 31, 2000, the rent for
                the factory, warehouse and office space amounted to $113,920.

NOTE 15 -       LITIGATION
                In September 2000, an action was brought by a Plaintiff against
                the Company alleging that the Company had agreed to issue
                1,000,000 shares of its stock to the Plaintiff in consideration
                for expenses allegedly paid by the Plaintiff in the amount of
                approximately $150,000. The Plaintiff's complaint seeks to
                impose an equitable trust or lien on 1,000,000 of authorized but
                unissued shares of the Company, demands the issuance of
                1,000,000 shares to the Plaintiff and seeks for breach of
                contract, monetary damages of $1,400,000. Counsel for the
                Company believes that the Company has valid defenses against all
                of the Plaintiff's claims and has filed a responsive pleading.

                The Company is also involved with a lawsuit with a prior
                consultant. The complaint alleges that the Company breached its
                consulting agreement by failing to pay compensation due
                thereunder and seeks damages in the amount of $221,202 including
                interest and legal costs. The Company filed a counter claim for
                fraud, breach of contract and unjust enrichment on the part of
                the consultant. The Company is seeking relief consisting of
                compensatory damages in the amount of $28,800 and cancellation
                of the stock certificate issued to the plaintiff for 263,529
                shares; a declaratory judgment that the consulting agreement is
                of no force and effect; punitive damages; and interest and legal
                costs. The Company's position is that it has viable defenses and
                counterclaims respecting this lawsuit.

NOTE 16 -       ACCUMULATED OTHER COMPREHENSIVE INCOME
                The deficit accumulated during the development stage included
                other accumulated comprehensive income totaling $103,396.

NOTE 17 -       SUBSEQUENT EVENT
                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.

                                       12
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

The following is management's discussion and analysis of significant factors
which have affected the Company's financial position and operations during the
three month and six month periods ended December 31, 2000. This discussion also
includes events which occurred subsequent to the end of such quarter and
contains both historical and forward- looking statements. When used in this
discussion, the words "expect(s)", "feel(s)", "believe(s)", "will", "may",
"anticipate(s)" "intend(s)" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected.

For most of Fiscal 2000, the Company was primarily devoted to the completion of
the prototype of its patented cryogenic scrap tire recycling equipment (the "TCS
System") such that the Company would have a demonstrable and operational
technology and thus the capability of concluding sales agreements with
customers. While the Company would have preferred a more rapid progression to
the commercial stage, limitations on the availability of financial resources
imposed more modest development toward the Company's goal. It was not until
March 2000 that the Company was in a position to state that its tire recycling
technology was ready for replication and thus commercialization. During the
first six months of Fiscal 2001 and in the weeks following to the date of this
Report, the Company has been demonstrating its technology to numerous groups
from China, Italy, Korea, Brazil, the U.K., Egypt and Canada and potential
strategic alliance partners. Additional demonstrations are scheduled for
February for potential customers in Canada and Europe. Numerous Letters of
Intent have been signed, but as of this date, no contracts with unconditional
release dates have been received. While the Company believes that firm contracts
will be concluded in the near future, Management cannot guarantee that any such
contracts will materialize.

The demonstrations and dialogue with potential customers have provided the
Company with valuable information respecting the conditions of the market and
customer needs. This information has enabled the Company to more accurately
define certain details of the TCS System and variations which can be configured
into the front and back ends of the system to best suit customer requirements.
The Company has been identified a potentially significant requirement for large
volumes of very fine mesh crumb rubber, finer than what the TCS was originally
designed to produce in substantial quantities. The Company is experimenting with
such production capability variants at this time to meet these expressed
demands. Accordingly, while the Company now has a demonstrable and operational
technology to present to potential customers, and is currently working on
enhancements to enable it to serve additional segments of the tire recycling
market, the Company nonetheless considers that it is still in the very early
stages of marketing and fabricating the various versions of the TCS System.

On November 16, 2000, the Company announced that Simpro S.p.a. of Torino, Italy,
("Simpro") had entered into a manufacturing Agreement in Principle with the
Company to produce the TCS System. The Agreement in Principle was potentially
subject to modifications, which could be required by law and suggested by the
legal counsel for both parties. Minor modifications were suggested and the final
agreement was concluded in late January 2001. Since 1986, Simpro has operated
worldwide as a high technology content design and manufacturing company,
primarily for the automotive industry. Simpro will fabricate, install and test
all versions of the TCS Systems sold by the Company within a defined territory
and potentially in countries outside that territory, subject to mutual
agreement. Simpro is a certified supplier and manufacturer to Fiat Automobile,
as well as Volkswagon, Ford, BMW, and others, and has manufacturing facilities
in Europe and in South America. Simpro possesses the ISO 9001 certification (the
highest ISO quality standard which is applicable to companies employing or
offering a product or system design function), has obtained the environmental
certification in conformity with UNI EN ISO 14001 standards, as well as the EMAS
(Eco-Management and Audit Scheme) registration according to EEC (European
Economic Community) Regulations.

On December 21, 2000, the Company announced the signing of the first purchase
and sale agreement in respect of a TCS-1 System. The order was signed by Well
Express International Ltd., an import/export company of Hong Kong, with which
the Company signed a Memorandum of Understanding respecting their cooperative
development of the Chinese market for TCS Systems. The purchase order was

                                       13
<PAGE>
conditioned upon a final technical report to be made available to the partner of
Well Express in Mainland China. In accordance with the agreement reached with
the Mainland Chinese partner, the Company, in collaboration with Well Express is
in the process of completing the requested report. The Mainland Chinese partner
of Well Express has requested anonymity until such time as the contract is fully
effective with release dates and financial details in place. There can be no
assurance that all conditions will be met.

During the last quarter of calendar 2000 and during the interim period up to the
date of this report, the Company has been in negotiations with European
interests to establish a distribution capability, primarily in Europe. These
residents would form a company to undertake the sales, distribution and client
servicing in an established territory.

With respect to the US market, the Company executed a License Agreement in
November 1999 with Ocean Equipment Manufacturing and Sales Co. (OEMS) of New
Jersey for the marketing, manufacturing, installation and service of Tirex tire
recycling systems. This agreement relates to the entire U.S. market and pursuant
to its terms the Company will receive a royalty for each system sold, subject to
adjustments respecting actual manufacturing costs. The Company is required to
deliver drawings regarding its technology and have the TCS System operating at
stated performance levels before sales quotas set forth in the agreement come
into effect. Certain modifications and/or improvements have been made to the
Company's technology, including the development of the TCS-2 System and the
Company has supplied all of the drawings to OEMS. As of January 31, 2001, OEMS
had not yet concluded any sales of TCS Systems to independent parties.

Management, through its European contacts, has received numerous other inquires
respecting the Company's technology from a number of other countries such as
Russia, South Africa, Morocco, Malaysia, Japan, Mexico, Greece, the Middle East,
India, etc. While noting that inquiries do not constitute sales, Management is
encouraged by the apparent global interest in its TCS System. While no
assurances can be given that any of these inquires will result in a sale, it is
Management's intention to pursue all possible avenues aggressively and to
increase its market penetration efforts wherever opportunities might present
themselves.

Because of the lengthy delay preceding the commencement of commercial
operations, the Company has had to, and will in the near future be forced to
continue to discharge its overhead expenses from sources other than revenues
from operations. As of January 31, 2001, the Company estimates that overhead
expenses from January 1, 2001 until the date that adequate revenues could be
generated from operations to cover its overhead costs will be approximately
$750,000.

LIQUIDITY AND CAPITAL RESOURCES

The activities of the Company since its formation in 1987, and the inception of
its current business in 1993 have been financed by sources other than
operations. Such financing was principally provided by the sale of securities in
private transactions and by additional capital investments by directors,
officers and employees. During the six-month period which ended December 31,
2000, directors, officers, employees and consultants made direct cash
investments into the Company for an amount of $120,000.

As reported in previous 10-KSB filings, the Company received financial
assistance by way of loans and grants from the governments of Canada and of
Quebec, directly or through agencies thereof, for the design and development of
the TCS-1 Plant and for export market development. Briefly, they have included
the following (note that conversions to the US Dollar were made at 70(cent)
which was the approximate prevailing rate at the time such loans and grants were
received:)

                                       14
<PAGE>
<TABLE>
<CAPTION>
ACTUAL CASH RECEIVED

                                           Type of
Source                                    Assistance         Purpose                  CDN$ Amount       US$ Equivalent
------                                    ----------         -------                  -----------       --------------
<S>                                      <C>                <C>                         <C>                <C>
GOVERNMENT OF CANADA

   Industrial Recovery Program           Interest-free      Construct                   $500,000           $350,000
for Southwest Montreal.                  loan               prototype TCS-1
   Innovation, Development &             Interest-free      Market Study -               $20,000            $14,000
Entrepreneurship Assistance              loan               Iberian Peninsula
Program      (IDEA) (#1)
   IDEA (#2)                             Interest-free      Market Study for             $20,000            $14,000
                                         loan               India
   IDEA (#3)                             Interest-free      US market for                $95,000            $66,500
                                         loan               crumb rubber
   IDEA (#4)                             Interest-free      Market                       $95,000            $66,500
                                         loan               development in
                                                            Iberia

   IDEA (#5)                             Interest-free      Use of crumb                 $98,000            $68,600
                                         loan               rubber in
                                                            thermoplastic
                                                            compounding
GOVERNMENT OF QUEBEC

   Recyc-Quebec                          Grant              Construct                    $75,000            $52,500
                                                            prototype TCS-1
</TABLE>

Repayment of the loans received under the Industrial recovery Program for
Southwest Montreal (IRPSWM), and the Innovation, Development & Entrepreneurship
Assistance Program (IDEA), noted above, are as per the following table. Note
that the IDEA loans designated above as #1, #2 and #4 provide for repayment as a
percentage of sales; there is no fixed repayment schedule. In each case, the
percentage is used to compute an amount payable to the Government of Canada
under these loans as a function of gross sales in a specified territory, these
being the Iberian Peninsula for IDEA #2 and #4 and India for IDEA #2. If sales
do not result in the specified territories, no repayment of the loan is
required. In all three cases, the amount which results from the multiplication
of the percentages by the gross sales is capped at the actual amount of money
lent to the Company. Only IDEA #3 and IDEA #5 have fixed repayment schedules.

The following amounts are in Canadian Dollars. US Dollar equivalents follow
using a 66(cent) equivalent, which is the approximate current exchange rate
versus the Canadian dollar:

LOAN            NOW DUE(1)   FY 2001    FY 2002    FY 2003   FY 2004    FY 2005
----            --------     -------    -------    -------   -------    -------
IRPSWM          $100,000    $150,000   $200,000
IDEA #3           $6,333     $12,666    $18,999    $25,333   $31,666
IDEA #5                       $6,533    $13,067    $19,600   $26,133    $32,667
TOTAL (CDN$)    $106,333    $169,199   $232,066    $44,933   $57,799    $32,667
US$ equivalent   $70,180    $111,671   $153,164    $29,656   $38,147    $21,560

-------------------
(1)     Historically, the Company is has been charged interest on all past due
        reimbursements and payment therefore is deducted from tax credit
        payments or other form of revenue payment otherwise due the Company.

                                       15
<PAGE>
The Company is presently negotiating with various financial and operating
companies concerning a possible investment by such companies in Tirex. As of
this date, the Company has tentatively negotiated a private placement with a
United States based funding group, which requires the escrow of shares in order
to complete the private placement. In that regard, the Company's stockholders
approved an increase in the authorized share capital of the Company to
250,000,000 shares of common stock, which had previously been approved by the
Company's Board of Directors. Other potential financing sources are also being
considered. In addition, the Company is in discussions with a major tire
manufacturer concerning a possible working relationship, or investment by that
Company into Tirex. There is no assurance that any such relationships will be
established or investment funds received.

Whether or not the funds, which the Company obtains from any of the above
proposed sources will be sufficient to enable the Company to reach a profitable
operating stage will be entirely dependent upon the amount of such financing
which the Company is actually able to raise and the as yet unproven ability of
the TCS System to operate continuously on a long-term commercial basis in
accordance with its anticipated performance specifications.

Any failure or delay in the Company's receipt of the proposed financing would be
directly reflected in a commensurate delay or failure in the commencement of
full-scale manufacturing and / or sales of TCS Systems. It should be noted also
that the period of time during which any funds raised will be available to cover
normal overhead expenses could be significantly reduced if the Company is
required to make substantial, presently unanticipated, expenditures to modify or
correct any defects in the design or construction of the TCS System, which could
manifest themselves over the next several months. Given the early stage of the
transition of the Company from that of a developmental stage company to a fully
commercial stage operation, it is impossible at this time to estimate with any
degree of certainty the amount of incoming cash flow from operations, if any,
during the next twelve months.

In order for the Company to continue to pay its general and administrative
expenses in the future, it must raise funds from the sale of securities, receive
loans from its officers and directors, or obtain financing from other sources.
In order to conduct further research on its existing or future products, it will
continue to depend principally on various governmental financing assistance
programs.

In the event that the Company does not succeed in completing the private sale of
securities or an investment from a strategic alliance partner, there can be no
assurance that the Company will be able to obtain outside financing on a debt or
equity basis on terms favorable to it, if at all. In the event that there is a
failure in any of the finance-related contingencies described above, the funds
available to the Company may not be sufficient to cover the costs of its
operations, capital expenditures and anticipated growth during the next twelve
months. If the proceeds from the above described potential sources of funding
should be insufficient for the Company's requirements and it is not able to
effect a public offering of its securities within the next twelve months, or
find other sources of alternate funding, the Company's financial position and
its prospects for developing a profitable business operations would be
materially adversely affected. The Company does not presently have the funds
necessary to manufacture any of its TCS Systems and must therefore depend on
potential customers or other financial sources for such working capital. Also,
at present the Company does not have the funds on hand required to defray the
administrative expenses expected to be incurred in fiscal year 2001.

As of December 31, 2000, the Company had total assets of $3,297,211 as compared
to $3,598,899 at December 31, 1999 reflecting a decrease of $301,688,and an
increase of $9,827 as compared to total assets as of the last fiscal year-end,
June 30, 2000, which total amounted to $3,287,384. Management attributes the
decrease from December 31, 1999 to December 31, 2000 primarily to the following
factors: (i) a decrease of $347,986 in Prepaid Expenses and Deposits and Other
Assets from the balance as of December 31, 1999 in the amount of $658,851
compared to December 31, 2000 balance of $310,865; (ii) a decrease of $147,260
in Inventory from the balance as of December 31, 1999 in the amount of $253,089
compared to the December 31, 2000 balance of $105,829; and (iii) an increase of
$232,853 in R & D Tax Credit Receivable from the balance as of December 31, 1999
of $407,389 compared to the December 31, 2000 balance of $640,242. The increase
in total assets of $9,827 from June 30, 2000 to December 31, 2000 is primarily

                                       16
<PAGE>

attributable to the decrease in Accounts and Notes Receivable from $129,431 as
of June 30, 2000 to $11,498 as of December 31, 2000, a difference of $117,933,
reflecting the offset of certain current receivables against current payables to
the same persons. The decrease in Accounts and Notes Receivable was offset by an
increase in Tax Credits Receivable in the amount of $165,021, the difference
from June 30, 2000 balance of $475,221 as compared to December 31,2000 balance
of $640,242. This increase in tax credits receivable reflects the continuing
commitment of the Company to its research and development efforts.

As of December 31, 2000, the Company had total liabilities of $3,432,342, which
when compared to $3,713,758 at December 31, 1999, reflects a decrease of
$281,416 and when compared to total liabilities as of the end of June 30, 2000
(Fiscal 2000) of $4,121,223, reflect a decrease in the amount of $688,881. The
decrease of $688,881 which occurred during the six month period ended December
31, 2000 was primarily due to a $435,432 decrease in amount of Convertible Loans
and a $188,567 decrease in the amount of Accounts Payable and Accrued
Liabilities which resulted from conversions of debt obligations into common
stock.

Reflecting the foregoing, the financial statements indicate that as at December
31, 2000, the Company had a working capital deficit (current assets minus
current liabilities) of $373,146 and that as at December 31, 1999 the Company
had a working capital deficit of $77,715. The difference in the working capital
deficit from December 31, 1999 to December 31, 2000 thus shows an increase of
$295,431, most of which can be attributed to a decrease in Inventory in the
amount of $148,000 and a decrease in Prepaid Expenses and Deposits and Other
Assets in the amount of $347,986 offset by an increase in R&D Tax Credits
Receivable in the amount of $232,853.

The financial statements which are included in this Report reflect total general
and administrative expenses of $1,427,247 for the six month period ended
December 31, 2000 versus $1,461,773 for the same six month period ended December
31,1999, reflecting a decrease of $34,526. The primary reasons for this decrease
relate to increased personnel expenses related to the Company's efforts to
properly establish and position itself for full commercial scale manufacturing
and to issuances of shares in lieu of cash to consultants for assistance in
establishing the marketing and manufacturing capability of TCS Systems offset by
a decrease in the amount recorded for Depreciation and Amortization.

The Company currently has only limited material assets and liquidity. The
success of the Company's tire recycling equipment manufacturing business, and
its ability to continue as a going concern will be dependent upon the Company's
ability to obtain adequate financing to commence profitable, commercial
manufacturing and sales activities and the TCS System's ability to meet
anticipated performance specifications on a continuous, long term, commercial
basis.

RESULTS OF OPERATIONS

As noted above, the Company is presently still in the very early stages of the
business of manufacturing and selling TCS Systems. The Company anticipates that
it will begin manufacturing TCS Systems on a commercial basis in the very near
future. The Company had $390,848 of gross sales during Fiscal 1999, but with the
halting of operations in the rubber mat molding business, the Company did not
generate any gross sales during Fiscal 2000. Unless and until the Company
successfully develops and commences TCS System manufacturing and sales
operations on a full-scale commercial level, it will not generate any revenues
from operations. Except for the foregoing, the Company has never engaged in any
significant business activities.

Management 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 a discount from the then current public market price. Management
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 the Company's ability to continue
as a going concern.

                                       17
<PAGE>

From inception (July 15, 1987) through December 31, 2000, the Company has
incurred a cumulative net loss of $21,835,128. 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 its proposed health care operations and therefore,
generated no revenues therefrom.

         PART II

         OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

An action was brought by a Plaintiff against the Company seeking preliminary
injunctive relief and alleging that the Company had agreed to issue 1,000,000
shares of its stock to the Plaintiff in consideration for expenses allegedly
paid by the Plaintiff in the amount of approximately $150,000. The Plaintiff's
Complaint sought to impose an equitable trust or lien on 1,000,000 of authorized
but unissued shares of the Company; demanded the issuance of 1,000,000 shares to
the Plaintiff; and sought monetary damages of $1,400,000 for breach of contract.
The Company moved to dismiss the case on various procedural grounds and in
September 2000, the Court granted the Company's motion based upon the lack of
venue in Union County, New Jersey. A new action has been instituted by the
Plaintiff in the Superior Court, Bergen County, New Jersey, alleging the same
claims as in the dismissed action, except that the new action does not seek
injunctive relief and has not requested a jury trial. Counsel for the Company
believes that the Company has valid defenses against all of Plaintiff's claims
and has filed a responsive pleading

On November 2, 2000, the Chancery Court of the State of Delaware dismissed a
legal action initiated against the Company by IM2 and David Sinclair, which suit
had alleged breach of contract and fraud.

The Company is involved with a lawsuit with a prior consultant. The complaint
alleged that the Company breached its consulting agreement by failing to pay
compensation due there under and sought damages in the amount of $221,202
including interest and legal costs. The Company filed a counter claim for fraud,
breach of contact and unjust enrichment on the part of the consultant. The
Company sought relief consisting of compensatory damages in the amount of
$28,800 and cancellation of the stock certificate issued to the plaintiff for
263,529 shares; a declaratory judgment that the consulting agreement is of no
force and effect; punitive damages; and interest and legal costs. The Company's
position is that it has viable defenses and counterclaims respecting this
lawsuit.

The Company is unaware of any other pending or threatened legal proceedings to
which Company is a party or of which any of its assets is the subject. 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 the
Company.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

During the first half of fiscal 2001, a total of 13,858,510 shares were issued.
Of this number, 3,950,065 shares were issued in lieu of salaries and consulting
fees; 121,000 shares were issued pursuant to debenture conversion rights;
9,335,308 shares were issued in exchange for outstanding loan obligations;
400,000 shares were issued in consideration for the settlement of a legal
dispute and 52,137 shares were issued to a Director in lieu of cash
reimbursement for Company expenses paid by that Director. All but 305,226 shares
of the total number issued of 13,858,510 were issued either under the Company
Stock Option Plan or under an S-8.

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<PAGE>
Except for 11,484,138 shares registered pursuant to Form S-8, all other shares
of common stock issued by the Registrant were issued in reliance on an exemption
from the registration requirements of Section 5 of the Securities Act of 1933
reason of Section 4(2) of that Act.

     SHARE ISSUANCES DURING THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2000:

NUMBER OF
PERSONS               REASON FOR ISSUANCE                          SHARES ISSUED

6                     In lieu of salaries and consulting fees          2,645,683
8                     In lieu of independent consultant fees           1,356,519
2                     Debenture conversions including interest           121,000
4                     In lieu of loan repayments                       9,335,308
1                     Settlement of legal dispute                        400,000

21                    TOTAL                                           13,858,510

Subsequent to December 31, 2000 and through January 31, 2001, no additional
shares were issued.

The total number of shares issued and outstanding as of January 31, 2001 is
164,991,687

BASIS FOR SECTION 4(2) EXEMPTION CLAIMED

With respect to all sales and other issuances of securities as hereinabove
described, which Registrant claims to have been exempt from the registration
requirements of Section 5 of the Securities Act by reason of Section 4(2)
thereof:

(i)      Registrant did not engage in general advertising or general
         solicitation and paid no commission or similar remuneration, directly
         or indirectly, with respect to such transactions.

(ii)     The persons who acquired these securities were executive officers and
         directors, or employees of the Registrant, all of whom are
         sophisticated investors; Such persons had continuing access to all
         relevant information concerning the Registrant and/or have such
         knowledge and experience in financial and business matters that they
         are capable of evaluating the merits and risks of such investment and
         are able to bear the economic risk thereof.

(iii)    The persons who acquired these securities advised Registrant that the
         Shares were purchased for investment and without a view to their resale
         or distribution unless subsequently registered and acknowledged that
         they were aware of the restrictions on resale of the Shares absent
         subsequent registration and that an appropriate legend would be placed
         on the certificates evidencing the Shares reciting the absence of their
         registration under the Securities Act and referring to the restrictions
         on their transferability and resale.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

During 1998, the Company issued an aggregate of $535,000 of two (2) year
convertible, subordinated debentures bearing interest at the rate of 10%.
Interest thereon was due and payable semi-annually commencing six months from
the date of issuance. All debentures have either been converted or repaid,
except for debentures in the principal amount of US$55,000, which remain
outstanding and on which principal and interest, which has accrued since the
issuance of the debentures, are now due. On debentures converted subsequent to
December 1999, interest was capitalized and converted to equity. Although the
conversion option on the outstanding debentures has lapsed, the Company intends
to extend the conversion dates of these debentures upon the request of the
holders.

                                       19
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

In accordance with the Delaware General Corporation Law, Section 228(a), on July
9, 1998, the holders of record of approximately 50.7% of the issued and
outstanding shares of common stock, $.001 par value, of the issuer, in person or
by proxy, by their consent in writing authorized, approved and adopted a
resolution respecting the amendment of the issuer's certificate of
incorporation. Pursuant thereto, effective July 10, 1998, the Certificate of
Incorporation of the Company was amended to increase the amount of capital stock
of the Company from 69,900,000 shares of Common Stock, par value $.001 per share
and 100,000 shares of Open Stock, par value $.001 per share; to 115,000,000
shares of Common Stock, par value $.001 per share and 5,000,000 shares of Class
A Stock, par value $.001 per share. The Board of Directors has the power to
designate the Class A Stock in one or more classes and/or series, with such
rights and preferences as the Board of Directors shall determine. In January
2000, following approval in December 1999 by more than 50% of the shareholders,
and in accordance with the Delaware General Corporation Law, the Company's
charter was amended to increase the authorized number of shares to 165,000,000,
par value $0.001. On January 31, 2001 the Company's stockholders approved an
amendment to Articles of Incorporation of the Company to increase the number of
authorized shares of common stock (par value $.001) to 250,000,000 shares.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

The exhibits filed as a part of this Report are as follows:

EXHIBIT NO.                DESCRIPTION

3.1                        November 1999 License Agreement between Ocean
                           Equipment Manufacturing and Sales Co. and the Company


REPORTS ON FORM 8-K

No reports on Form 8-K were filed by the Company for the quarter ended December
31, 2000.

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.

                                       THE TIREX CORPORATION

Date: February 7, 2001                 By /s/ JOHN L. THRESHIE, JR.
      --------------------               ---------------------------------------
                                         John L. Threshie, Jr. President


Date: February 7, 2001                 By /s/ MICHAEL ASH
      --------------------               ---------------------------------------
                                         Michael Ash, Treasurer and
                                         Chief Accounting and Financial Officer

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