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 September 30, 2002

[ ] 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.)


   Unit 17 - 3400 Losch, Longueuil (St-Hubert Borough), Quebec, Canada J3Y5T6
   --------------------------------------------------------------------------
                    (Address of Principal executive offices)

                                 (450) 676-4499
                ------------------------------------------------
                (Issuer's telephone number, including area code)

               3828 St. Patrick, Montreal, Quebec, Canada, H4E 1A4
              ----------------------------------------------------
              (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 for each of the issuer's classes of
common equity, as of January 3, 2003: 224,757,559 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 Statements (Unaudited)                                   Page
                                                                            ----

         The Tirex Corporation and Subsidiaries
           Consolidated Balance Sheets as of
             September 30, 2002 and June 30, 2002...........................   1

         Consolidated Statements of Operations
           for the three month periods
             ended September 30, 2002 and 2001..............................   2

         Consolidated Statements of Cash Flows
           for the three month periods
             ended September 30, 2002 and 2001..............................   3

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

Item 2 - Management's Discussion and Analysis of
           Financial Condition and Results of Operations....................  17

PART II B OTHER INFORMATION

Item 1 - Legal Proceedings..................................................  19

Item 2 - Changes in Securities and Use of Proceeds..........................  21

Item 3 - Defaults Upon Senior Securities....................................  21

Item 4 - Submission of Matters
            to a Vote of Security Holders...................................  22

Item 6 - Exhibits and Reports on Form 8-K...................................  22




The financial statements are unaudited. However, pursuant to SEC requirements,
the Company's independent auditor reviewed the consolidated financial
statements. Readers are cautioned that a review engagement does not constitute
an audit. Management of registrant believes that all necessary adjustments,
including normal recurring adjustments, have been reflected to present fairly
the financial position of registrant at September 30, 2002 and the results of
its operations and changes in its cash position for the three month periods
ended September 30, 2002 and 2001 and for the period from inception (July 15,
1987).

                                        i
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                           CONSOLIDATED BALANCE SHEET
                               September 30, 2002

<TABLE>
<CAPTION>

                                                                 (Unaudited)       (Audited)

                                                                 September 30,     June 30,
                                                                     2002            2002
                                                                 ------------    ------------

                                     ASSETS
                                     ------
<S>                                                              <C>             <C>
Current Assets
  Cash and cash equivalents                                      $         --    $         --
  Accounts receivable                                                  28,577          33,213
  Notes receivable                                                     18,428          19,291
  Sales taxes receivable                                               29,397          22,089
  Inventory                                                            62,250          65,165
  Research and experimental development tax credits receivable        169,876         246,970
  Prepaid expenses and deposits                                        30,648          33,956
                                                                 ------------    ------------
                                                                      339,176         420,684

Property and equipment,
  salvage value                                                        50,000         583,771
                                                                 ------------    ------------

Other assets
  Investment, at cost                                                  89,500          89,500
  Prepaid expenses and deposits                                       209,000         209,000
                                                                 ------------    ------------
                                                                      298,500         298,500
                                                                 ------------    ------------


                                                                 $    687,676    $  1,302,955
                                                                 ============    ============


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

Current Liabilities
  Accounts payable and accrued liabilties                        $  1,545,405    $  1,485,766
  Current portion of long-term debt                                    37,246          62,033
                                                                 ------------    ------------
                                                                    1,582,651       1,547,799

Other liabilities
  Long-term deposits and notes                                        217,500         217,500
  Government loans (net of current)                                   131,158         139,708
  Capital lease obligations (net of current)                           13,559          13,559
  Convertible notes                                                   932,240         932,240
  Convertible note                                                    185,556         185,556
  Loans from related parties                                        1,062,155       1,012,778
                                                                 ------------    ------------
                                                                    2,542,168       2,501,341
                                                                 ------------    ------------

                                                                    4,124,819       4,049,140
                                                                 ------------    ------------
Stockholders' Equity (Deficit)
  Common stock,  $.001 par value, authorized
   250,000,000 shares, issued and outstanding
   224,757,559 shares (June 30, 2001 - 176,366,408 shares)            224,758         224,758
  Additional paid-in capital                                       24,618,899      24,618,899
  Deficit accumulated during the development stage                (28,114,811)    (27,389,673)
  Unrealized loss on foreign exchange                                (165,989)       (200,169)
                                                                 ------------    ------------
                                                                   (3,437,143)     (2,746,185)
                                                                 ------------    ------------


                                                                 $    687,676    $  1,302,955
                                                                 ============    ============
</TABLE>

                                        1
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


<TABLE>
<CAPTION>

                                                       (Unaudited)

                                                   Three months ended
                                                       September 30             Cumulative from
                                               ------------------------------  March 26, 1993 to
                                                    2002             2001      September 30, 2002
                                               -------------    -------------    -------------
<S>                                            <C>              <C>              <C>
Revenues                                       $          --    $          --    $   1,354,088

Cost of Sales                                             --               --        1,031,075

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

Gross profit                                              --               --          323,013
                                               -------------    -------------    -------------

Operations
  General and administrative                         245,359          289,954       10,901,264
  Depreciation and amortization                        5,914           13,954          346,499
  Research and development                           450,000           87,839       15,396,966
                                               -------------    -------------    -------------

Total expense                                        701,273          391,747       26,644,729
                                               -------------    -------------    -------------

Loss before other expenses (income)                 (701,273)        (391,747)     (26,321,716)
                                               -------------    -------------    -------------

Other (expenses) income
  Interest expense                                    23,865           26,093          681,351
  Interest income                                         --               --          (45,443)
  Income from stock options                               --               --          (10,855)
  Loss on disposal of equipment                           --               --            4,549
                                               -------------    -------------    -------------

                                                      23,865           26,093          629,602
                                               -------------    -------------    -------------

Net loss                                            (725,138)        (417,840)     (26,951,318)
                                               -------------    -------------    -------------

Other comprehensive loss
  Loss on foreign exchange                                --            1,081          106,137
                                               -------------    -------------    -------------


Net loss and comprehensive loss                $    (725,138)   $    (418,921)   $ (27,057,455)
                                               =============    =============    =============

Basic and Diluted net loss and comprehensive
  loss per common share                        $       (0.00)   $       (0.00)   $       (0.53)
                                               =============    =============    =============

Weighted average shares of common
  stock outstanding                              224,757,559      181,615,765       50,555,679
                                               =============    =============    =============
</TABLE>

                                        2
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                      CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                            (Unaudited)

                                                                         Three months ended
                                                                             September 30           Cumulative from
                                                                     ----------------------------  March 26, 1993 to
                                                                         2002            2001      September 30, 2002
                                                                     ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>
Cash flows from operating activities:

     Net  loss                                                       $   (725,138)   $   (418,921)   $(27,057,455)
                                                                     ------------    ------------    ------------

     Adjustments to reconcile net loss to net cash
       used in operating activities:
     Depreciation and amortization                                          5,914          13,943         345,258
     (Gain) loss on disposal and abandonment of assets                    530,651              --       2,005,498
     Stock issued in exchange for interest                                     --              --         169,142
     Stock issued in exchange for services and expenses                        --         367,273      10,531,722
     Stock options issued in exchange for services                             --              --       3,083,390
     Unrealized (loss) gain on foreign exchange                            34,180          24,158        (166,009)

Changes in assets and liabilities:
     (Increase) decrease in:
     Account receivable                                                     4,636             514         (28,577)
     Inventory                                                              2,915           2,928         (62,250)
     Sales tax receivable                                                  (7,308)          5,175         (29,397)
     Research and experimental development tax credits receivable          77,094          32,356        (169,876)
     Other assets                                                           3,308          90,572        (249,768)
     (Decrease) increase in :
     Accounts payables and accrued liabilities                             48,613        (269,751)      1,671,128
     Accrued salaries                                                      11,026         (12,374)        301,098
     Due to stockholders                                                       --              --           5,000
                                                                     ------------    ------------    ------------

Net cash used in operating activities                                     (14,109)       (164,127)     (9,651,096)
                                                                     ------------    ------------    ------------

Cash flow from investing activities:
     Increase in notes receivable                                              --              --        (256,943)
     Reduction in notes receivable                                            863              --         238,515
     Investment                                                                --         (89,500)        (89,500)
     Equipment                                                                 --              --        (321,567)
     Equipment assembly costs                                                  --              --      (1,999,801)
     Organization cost                                                         --              --           6,700
     Reduction in security deposit                                             --              --          (1,542)
                                                                     ------------    ------------    ------------

Net cash used in investing activities                                         863         (89,500)     (2,424,138)
                                                                     ------------    ------------    ------------

Cash flow from financing activities:
     Loans from related parties                                                --              --       4,221,235
     Deferred financing costs                                                  --          26,968         180,557
     Proceeds from deposits                                                    --              --         143,500
     Payments on notes payable                                                 --              --        (409,939)
     Proceeds from convertible notes                                           --              --         754,999
     Proceeds from notes payable                                               --              --         409,939
     Payments on lease obligations                                             --         (17,148)        (86,380)
     Proceeds from issuance of convertible subordinated debentures             --              --       1,035,000
     Proceeds from loan payable                                                --              --         591,619
     Payments on loan payable                                             (53,815)             --        (489,626)
     Proceeds from issuance of stock options                                   --              --          20,000
     Proceeds from grants                                                  67,061         239,609       3,508,216
     Proceeds from issuance of common stock                                    --              --          81,299
     Proceeds from additional paid-in capital                                  --              --       2,114,558
                                                                     ------------    ------------    ------------

Net cash provided by financing activities                                  13,246         249,429      12,074,977
                                                                     ------------    ------------    ------------

Net (decrease) increase in cash and cash equivalents                           --          (4,198)           (257)

Cash and cash equivalents -  beginning of period                               --           1,356             257
                                                                     ------------    ------------    ------------

Cash and cash equivalents - end of period                            $         --    $     (2,842)   $         --
                                                                     ============    ============    ============
</TABLE>

                                        3
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                      CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>

                                                           (Unaudited)

                                                         Three months ended
                                                            September 30           Cumulative from
                                                    ---------------------------   March 26, 1993 to
                                                        2002           2001      September 30, 2002
                                                    ------------  -------------     ------------
<S>                                                 <C>            <C>              <C>
Supplemental Disclosure of Cash Flow Information:

           Interest paid                            $        862   $     26,094     $    212,586
                                                    ============   ============     ============

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

                                        4
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002
                                   (UNAUDITED)


Note 1   SUMMARY OF ACCOUNTING POLICIES

CHANGE 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 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 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 developed by the Seller prior
to their affiliation or association with the Company.

DEVELOPMENTAL STAGE
At September 30, 2002, 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 the
certain 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.

                                        5
<PAGE>

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.

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.

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.

                                        6
<PAGE>

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 three month period ended
September 30, 2002, 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 2002 and 2001, and accordingly, in those months, 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. As of September 30, 2002 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 $27.6 million as
of September 30, 2002, expiring in the years 2004 through 2018. 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 carry forwards 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.

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.

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.

                                        7
<PAGE>

Note 2   GOING CONCERN

As shown in the accompanying financial statements, the Company incurred a net
loss for the three month period ended September 30, 2002 in the amount of
$194,487.

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 six month
period ended June 30, 2002, all rubber crumb production has ceased 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 September 30, 2002, 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 Plants,
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, SALVAGE VALUE

Subsequent to September 30, 2002, Management vacated its production facility.
All of the Company's product, property and equipment was either abandoned,
stored, or returned to the Lessor of that equipment. Management decided to
suspend indefinitely its efforts to re-lease or exercise purchase options of the
Air Plant which had been returned to the Lessor. Without these components, the
TCS-1 First Production Model cannot be used. Management decided to further write
down, retroactive to September 30, 2002, those assets owned by the Company to
net realizable salvage value which the Company estimated at approximately
US$50,000. As of June 30th, these assets were being carried on the Company's
books at $580,651, resulting in a write-down amount to $530,651.

Depreciation and amortization expense charged to operations for the three-month
period ended September 30, 2002 was $5,914.

                                        8
<PAGE>

Note 4   GOVERNMENT LOANS

Canada Economic Development
A loan payable under the Industrial Recovery Program for Southwest Montreal
amounting to 20% of certain eligible costs incurred (maximum loan $333,300)
repayable over four years commencing March 31, 1999 and ending March 31, 2002,
unsecured and non-interest bearing. (If the Company defaults, the loans become
interest bearing).

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).

Loan repayable over five years commencing June 30, 2000
and ending June 30, 2004                                               $  38,138
Loan repayable over five years commencing June 30, 2001
and ending June 30, 2005                                                  39,596
Loan repayable in amounts equal to 1% of annual sales in Spain
and / or Portugal throughout June 30, 2007, to a maximum of the
balance of the loan outstanding.  If no sales occur on or before
this date in Spain and Portugal, the loan will become non-repayable       14,000

Loan repayable in amounts equal to 11/2% of annual sales in Spain
and / or Portugal through June 30, 2004 to a maximum of the balance
of the loan outstanding. If no sales occur before this date in Spain
and Portugal, the loan will become non-repayable

                                                                          66,500
                                                                       ---------
                                                                         158,234
Less: Current portion                                                     27,076
                                                                       ---------
Long-term portion                                                      $ 131,158
                                                                       =========

Principal repayments are as follows:
June 30                                                                  Amount
-------                                                                ---------

2003                                                                   $  27,076
2004                                                                      96,578
2005                                                                      20,580
2006                                                                           -
2007                                                                      14,000
                                                                       $ 158,234
                                                                       =========

During the year ended June 30, 2002, the Company was declared in default, with
respect to the loan under the Industrial Recovery Program for Southwest
Montreal.

Note 5   CAPITAL LEASE OBLIGATIONS

The Company leases certain manufacturing equipment under agreements classified
as capital leases.

The value of such equipment as of September 30, 2002 is included in property and
equipment salvage value on the balance sheet. The Company is in arrears on
payment of these leases but default has not been declared. The leased equipment
is not part of the Company's TCS System prototype.

The following is a schedule by years of future minimum lease payments under
capital leases of equipment together with the obligations under capital leases
(present value of future minimum rentals) as at September 30, 2002:

                                        9
<PAGE>

Years ended June 30                                                      Amount
-------------------                                                    ---------

2003                                                                   $  11,635
2004                                                                      15,514
                                                                       ---------
Total minimum lease payments                                              27,149
Less: Amount representing interest                                         3,420
                                                                       ---------
Total obligations under capital lease                                     23,729
Less: Current portion of obligations under capital leases                 10,170
                                                                       ---------

Long-term obligation portion of under capital leases,
with interest rate of 10%                                              $  13,559
                                                                       =========

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 original terms of the convertible note were:

Balance at June 30, 2001            $ 750,000

Interest rate                       8%, payable quarterly, commencing June 30,
                                    2001

Issue date                          February 26, 2001

Maturity date                       February 26, 2003

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 Directors and Officers of the Company 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 has still not been declared effective by
the Securities and Exchange Commission as of this date, and until such occurs,
the Convertible Notes cannot be converted to Common Stock nor may the Common
Stock warrants be exercised.

                                       10
<PAGE>

On April 24, 2002 the Company entered into a Settlement Agreement with the Note
holders. In the event of a default under the Settlement Agreement, the term of
the Convertible Notes would become effective once again. The conclusion of the
Settlement Agreement has negated the default. The main terms of the Settlement
Agreement are as follows:

Amount due including interest calculated
to June 30, 2002 and penalties to date,
and deducting proceeds from the sale of        $932,240
collateral shares in the amount of $16,260

Interest rate on the debt                      8%

Repayment terms                                $1,000 on May 15, 2002
                                               $1,000 on June 15, 2002
                                               $38,843.33 each month for up
                                               to twenty-four months
                                               starting August 1, 2002

Warrants for purchase of common shares         500,000 three-year warrants
                                               exerciseable immediately at a
                                               price of $0.01 per share.

                                               500,000 two-year warrants
                                               exerciseable one year from the
                                               date of the Settlement Agreement
                                               at a price of $0.05 per share.

                                               500,000 one-year warrants
                                               exerciseable two years from the
                                               date of the Settlement Agreement
                                               at a price of $0.10 per share.

Right to sell collateral shares                The Investors have the right to
and Rule 144 shares                            sell up to 600,000 collateral
                                               shares and / or Rule 144 shares
                                               per month, with proceeds to be
                                               first applied against interest
                                               and fees and thereafter against
                                               principal.

Right of prepayment                            The Company has the right to pay
                                               amounts in excess of the
                                               prescribed monthly amount,
                                               without penalty.

Collateral shares                              As of the date of signing of the
                                               Settlement Agreement, the
                                               Investors had 10,790,885
                                               Collateral Shares in their
                                               possession.

During the year ended June 30, 2002, the Company authorized the investors to
sell 1,800,000 of the shares held as security. As of October 1, 2002, the
investors had 8,765,432 collateral shares in their possession.

                                       11
<PAGE>

Note 8   CONVERTIBLE NOTE

A convertible note, under a private arrangement, consists of the following:

Balance at September 30, 2002          $ 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 19th, 2001,
                                       at 20% discount to market between July
                                       19th, 2001 and January 19th, 2002 or at
                                       25% to market if held to maturity, to a
                                       maximum of not more than 2,500,000
                                       shares.

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 September 30, 2002, the balances owing to Directors and Officers
was $844,218. These amounts are without interest or terms of repayment.

Long-term deposits and notes included an amount of $118,500 at September 30,
2002, which is payable to Ocean Tire Recycling & Processing Co., Inc., a company
owned by a Director of the Company.

Subsequent to June 30, 2000, the Company modified an agreement with Ocean Tire
Recycling & Processing Co., Inc. to clarify various terms of the parties' prior
agreements and to obtain a commitment by Ocean Tire Recycling & Processing Co.,
Inc. to pay, when necessary, lease payments on the prototype TCS System. As part
of the agreement, the Company will repay Ocean Tire Recycling & Processing Co.,
Inc. in cash or through the issuance of stock. The lease payments, under the
accounting provisions for an operating lease, have been recorded as a Research
and Development expense and the debt obligation included in loans from related
parties. During the year ended June 30, 2001, 6,500,000 common shares were
issued under the agreement as a partial Settlement. During the year period ended
June 30, 2002, an additional 4,553,102 common shares were issued under the
agreement to a designated person assigned by Ocean Tire Recycling & Processing
Co., Inc.

Included in this amount are payments to Officers of the Company in exchange for
salary and expenses in the amount of $57,796. During the three month period
ended September 30, 2002, the Company did not issue common stock in exchange for
services performed. The dollar amounts assigned to such transactions have been
recorded at the fair value of the services received.

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 September 30, 2002, the Company had 224,757,559 Common shares issued and
outstanding.

                                       12
<PAGE>

Note 10  COMMON STOCK

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 of September 30, 2002, the Company had 224,757,559 Common shares issued and
outstanding.

Note 11  STOCK PLAN

The Company established a Stock Plan in June of 2000 whereby key personnel of
the Company, consultants and other persons who have made substantial
contributions to the Company may be issued shares as compensation and incentives
through Awards, Options or Grants under the terms set forth in the Stock Plan.
The Stock Plan originally called for the issuance of a maximum of 7,000,000
shares of stock as Awards, the issuance of a maximum of 7,000,000 shares of
stock to underlie Options and the issuance of a maximum of 7,000,000 shares of
stock that may be issued as Grants. Awards and Options can only be given to
individuals who have been either in the employ of the Company, an Officer,
Director or consultant for the preceding six months Awards are not fully vested
until the end of three years with one-twelfth of the aggregate award vesting at
the end of each quarter. If the Awardee is terminated for cause or resigns, the
unvested portion of the award is forfeited. Options can be exercised at any time
and upon exercise, the underlying stock is fully vested with the purchaser. The
Options are not transferable and are exercisable for two years after which time
they expire. If the Optionee is terminated for cause or resigns, all unexercised
options are forfeited. A Grant can only be given to persons who have made a
substantial contribution to the Company and the shares are not forfeitable. On
January 31, 2001, the Company amended the Stock Plan providing for an additional
3,000,000 shares being allocated as Grants and an additional 2,000,000 shares
allocated to be given as Options. On May 30, 2001, the Stock Plan was further
amended reallocating the 7,000,000 shares to be given as Awards to allow
5,000,000 of the shares to be used for Options and 2,000,000 of the shares to be
used as Grants. There were no stock issuances under the Stock Plan for the
quarter ended September 30, 2000.

                                       13
<PAGE>

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 as an expense 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 consulting services for a period of 5 years expiring in June 2002.
Pursuant to 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 was 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, 2002, the Company received approximately
$569,111 which has been recorded as an increase in stockholders' equity paid-in
capital. Also, during the three month period ended September 30, 2002, the
Company received approximately $67,061 which has also been recorded as an
increase in stockholders' equity paid-in capital. The Company reported
receivable balances from these governments of $169,876 as of September 30, 2002.
(See Subsequent Events Note)

                                       14
<PAGE>

Note 14  LITIGATION

IM2 Merchandising and Manufacturing, Inc. and David B. Sinclair v. The Tirex
Corporation, Tirex Corporation Canada, Inc., et al
--------------------------------------------------

An action was instituted by Plaintiffs, a Canadian resident and a Canadian
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.

Surgent v. The Tirex Corporation
--------------------------------

An action was brought by a Plaintiff against the Company, alleging that the
Company had agreed to issue 1,000,000 shares of its Common stock to the
Plaintiff in consideration for expenses allegedly paid by the Plaintiff 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 1,000,000

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".  The
Plaintiff has filed a Notice of Appeal, but has not yet perfected his appeal.
The Company's Counsel has advised it that the Company has meritorious defenses
to this appeal.

Lefebvre Freres Limited v. The Tirex Corporation
------------------------------------------------

Lefebvre Freres Limited instituted an action against the Company on August 13,
2001 in the superior Court, Judicial District of Montreal, claiming Canadian
$98,513 (approximately US $63,000) was due and owing for the manufacture and
delivery of car tire disintegrators. We are preparing 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. 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 (approximately US
$113,900). We are currently in negotiation with Tri-Steel Industries and the
action is still pending.

                                       15
<PAGE>

Note 15  ACCUMULATED OTHER COMPREHENSIVE INCOME

The deficit accumulated during the development stage included accumulated
comprehensive other income totaling $103,396.

Note 16  SUBSEQUENT EVENTS

Cessation of Production Operations
----------------------------------

Subsequent to September 30, 2002, the Company ceased all production operations
and vacated its production facility. All of the Company's products, property and
equipment have been abandoned, stored, or returned to the Lessor. Management
decided to indefinitely suspend its efforts to re-lease or exercise purchase
options of various parts of the Air Plant that had been returned to the Lessor.
Without these components, the TCS-1 First Production Model cannot be used.
Management decided to further write down, retroactive to September 30, 2002,
those assets owned by the Company to net realizable salvage value which the
Company estimated at approximately US$50,000. As of June 30th, these assets were
being carried on the Company's books at $580,651, resulting in a write-down
amount to $530,651.

Return, Storage, or Abandonment of Equipment
--------------------------------------------

As of December 2002, all leased equipment has either been returned to the
Lessor, stored, or abandoned. The Company was not in a position to renegotiate a
lease or purchase the equipment. During the preceding year, parts of the
equipment had been in need of repair in order to be functional, and the Company
lacked capital to effect those repairs.

Tax
---

Subsequent to September 30, 2002, the Canadian federal government approved a tax
credit of US$124,000, but $39,500 was held back [1] for payroll tax arrearages,
and [2] for repayment of CEDQR loans. A tax credit of US$115,500 was approved by
the government of the Province of Quebec, but a tax audit was performed
resulting in a holdback of $38,700, and the balance of $76,800 was withheld due
to tax issues of the Company's President.

Agreement between The Tirex Corporation and Simpro, S.p.A.
----------------------------------------------------------

The Company has negotiated a contract with Simpro S.p.A., headquartered in
Brandizzo, Italy. The agreement calls for the Company to license to Simpro the
exclusive right to use its Patent (U.S. Patent # 57355471), for manufacture,
installation, marketing and after-sales service. Since signing, the Company has
worked with Simpro to finalize costing of the TCS System on a component basis,
in such a format as to facilitate quotations for potential customers to respond
to their input and output requirements. The effect of this agreement will be
recorded on Simpro's books, not on the books of the Company. The amount remitted
back to the Company would be in the form of royalty, and would be accounted for
as such. The Company hopes to benefit from such royalties during the second or
third quarters of 2003. However, at the present time the agreement has not been
finalized.

                                       16
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

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 period ended September 30, 2001. This discussion also includes
events, which occurred subsequent to the end of the last 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.

As previously reported, the Company suspended rubber crumb production operations
in January of 2002 because of a lack of financial resources necessary to
complete the acquisition of certain additional secondary processing equipment
and its failure to renegotiate leases or to exercise purchase options or with
respect to this equipment or to support contributing operations until cash
inflows from the collection of any receivables or tipping fees could reasonably
be expected to be received. As reported in the last Annual Report, two of the
five leases related to the TCS-1 Production Model expired during the fourth
quarter of Fiscal 2002, one of the tire preparation equipment and the other
certain components of the Air Plant. At approximately the same time of the
expiration of these leases, a component of the Air Plant broke down requiring an
estimated US$55,000 to repair.

While the Company has abandoned any interest in the return of the tire
preparation equipment, Management had explored various avenues to re-acquire
those components of the Air Plant. At approximately the same time of the removal
of these components, the Company's landlord, having secured a new tenant for our
premises, requested that we vacate the premises. This process was completed in
December, 2002. The Tirex office was relocated to new, temporary premises, in an
industrial park in the former municipality of St. Hubert on the south shore of
the St. Lawrence River across from Montreal,leased by Ashbyrne Investments Inc.,
a company owned by Michael Ash, our CFO. The amount charged by Ashbyrne to Tirex
will be below fair market.

Management is of the opinion that the signing of a License Agreement will be the
best method of entering into a Purchase and Sales Agreements with potential
customers. Concurrent with the Licensing Agreement, Simpro signed a conditional
sales contract with our Puerto Rican customer, the most important condition of
which contract being the completion of the project financing package for this
customer. As of the date of signing of the conditional sales contract, one
customer had secured commitments for $7.5 million of an overall project cost of
$9.0 million, with negotiations under way to secure bank support for an equity
investment of the remaining $1.5 million.

The equivalent of what would have been the gross profit, would Tirex have signed
such Purchase and Sales Agreements directly, would be recorded on the books of
Tirex as a royalty. Given the time required to complete the manufacture and
installation of the TCS-2 Systems envisioned by two potential customers, no
potential royalties would be recognized until Fiscal 2004. Even with a Licensing
Agreement, there can be no assurances that the contemplated Purchase and Sales
Agreements will actually materialize.

                                       17
<PAGE>

As reported in the last Annual Report, in February of 2001, the Company
concluded a private financing with an investor group managed by a New York-based
company. Under the terms of the Agreement, the Company drew down US$750,000 of
the available US$5,000,000 amount. The initial $750,000 was provided in the form
of a Convertible Note. The Company defaulted by not having an SB-2 Registration
Statement declared effective within 150 days of the date of the Note. Following
lengthy negotiations, we reached a Settlement Agreement with the investors on
April 26, 2002 under which the Company agreed to a reimbursement schedule and
provided three series of warrants, 500,000 each, exercisable at different prices
to the investors. The lack of financial resources prevented us from being able
to honor the reimbursement schedule, and thus the Company is currently in
default with respect the Settlement Agreement. To date, the investors have not
exercised any of their recourse rights under the agreement except to sell
portions of the collateral security. We intend to re-negotiate the Agreement
based on our expectations of probable cash availability. However, there can be
no guarantee that these negotiations will be successful, that the investors will
continue to not exercise their recourse rights and that the anticipated cash
availability to support a Settlement Agreement will actually be available.


Because of the lengthy delay preceding the commencement of commercial
operations, particularly insofar the sale and manufacturing of TCS Systems is
concerned, the Company has had to, and in the foreseeable near future will, be
forced to continue to cover a substantial part of its operating expenses out of
from sources other than revenues from operations. For the first quarter of
Fiscal 2003, our monthly expenses were approximately US$67,000 per month. Cash
amounts payable to third parties amounted to approximately US$27,000 including
approximately US$16,000 for building rent. With the relocation, monthly expenses
will be reduced and liabilities by approximately US$13,000 per month including
approximately US$6,000 per month in accumulated interest on the Convertible
Notes.


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 three month period ended September 30, 2002,
directors, officers, employees and consultants did not make any direct cash
investments into the Company. During the Fiscal year ended June 30, 2002, direct
cash investments made by the directors, officers, shareholders and consultants
amounted to $950,713.

As of September 30, 2002, the Company had total assets of $1,218,327 as compared
to $2,976,484 at September 30, 2001 reflecting a decrease of $1,758,157, and a
decrease of $84,628 versus total assets as of the last fiscal year end, June 30,
2002, which amounted to $1,302,955. Management attributes the decrease from
September 30, 2001 to September 30, 2002 primarily to the following factors: (i)
a decrease of $158,797 in Tax Credits Receivable from the balance as of
September 30, 2001 in the amount of $328,673 to the September 30, 2002 balance
of $169,876, and (ii) a decrease of $10,781 in Inventory from the balance as of
September 30, 2001 in the amount of $73,031 to the September 30, 2002 balance of
$62,250, and (iii) a decrease of $1,542,351 in Property and Equipment from the
balance as of September 30, 2001 in the amount of $$2,123,002 to the September
30, 2002 balance of $580,651, and (iv) an increase of $22,787 in Sales Tax
Receivable from the balance as of September 30, 2001 in the amount of $6,610 to
the September 30, 2002 balance of $29,397. Management attributes the decrease
from June 30, 2002 to September 30, 2002 primarily to the following factors: (i)
a decrease of $77,094 in Tax Credits Receivable from the balance as of June 30,
2002 in the amount of $246,970 to the September 30, 2002 balance of $169,876
and, (ii) a decrease of $4,636 in Accounts Receivable from the balance as of
June 30, 2002 in the amount of $33,213 to the September 30, 2002 balance of
$28,577, and (iii) a decrease of $3,308 in Prepaid expenses and Deposits from
the balance as of June 30, 2002 in the amount of $242,956 to the September 30,
2002 balance of $239,648, and (iv) an increase of $7,308 in Sales Tax Receivable
from the balance as of June 30, 2002 in the amount of $22,089 to the September
30, 2002 balance of $29,397.

                                       18
<PAGE>

As of September 30, 2002, the Company had total liabilities of $4,124,819 as
compared to $3,364,155 at September 30, 2001, reflecting an increase of
$760,664, and reflecting an increase of $75,679 versus total liabilities as of
the last fiscal year end, June 30, 2002, which total amounted to $4,049,140. The
increase in total liabilities from September 30, 2001 to September 30, 2002 is
primarily attributable to an increase of $182,240 in Convertible Securities and
by an increase in Loans from Related Parties in the amount of $299,800 and by an
increase in Accounts Payable and Accrued Liabilities in the amount of $568,084.
The increase in total liabilities from June 30, 2002 to September 30, 2002 is
primarily attributable to an increase of $59,639 in Accounts Payable and Accrued
Liabilities and to an increase of $49,377 in Loans from Related Parties.

Reflecting the foregoing, the financial statements indicate that as at September
30, 2002, the Company had a working capital deficit (current assets minus
current liabilities) of $1,243,476 compared to a working capital deficit of
$786,302 as at September 30, 2001, reflecting an increase of $457,174. The
working capital deficit of $1,243,476 as at September 30, 2002 compares to a
working capital deficit of $1,127,115 as at June 30, 2002, reflecting an
increase of $116,361.

The financial statements which are included in this report reflect total
operations and other expenses of $194,487 for the three month period ended
September 30, 2002 versus $417,840 for the comparative three month period ended
September 30, 2001, reflecting a decrease of $224,434. The primary reasons for
this decrease relate to decreased personnel expenses, albeit without sacrifice
to the Company's efforts to properly establish and position itself for full
commercial scale production, and to a decrease in the amount recorded for
Research and Development.

PART II:   OTHER INFORMATION

Item 1:
-------

         We are presently a party in the following legal proceedings, the status
of which has not changed since the Company filed its Annual Report on Form
10-KSB for Fiscal 2002:

IM(2)  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.

                                       19
<PAGE>

         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$508,600)
representing expenses and an additional Canadian$5,411,158 (approximately
US$1,874,000) in loss of profits. 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 un-issued 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. This action was dismissed with prejudice and the
Plaintiff has filed a notice of appeal, which he has not yet perfected. Our
counsel has advised us that in their opinion, the Company will prevail on
appeal.

Lefebvre Freres Limited v. The Tirex Corporation
         Lefebvre Freres Limited instituted an action against us on August 13,
2001 in the Superior Court, judicial district of Montreal claiming
Canadian$98,513 (approximately US$63,000) is due and owing for the manufacture
and delivery of car tire disintegrators. We are preparing 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. 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$230,050 (approximately
US$147,232 using a $0.64 exchange rate). We are currently in negotiation with
Tri-Steel Industries and the action is still pending, but the premises were
vacated by us as of November 2002.

         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.

                                       20
<PAGE>

Item 2: - Changes in Securities and Use of Proceeds
---------------------------------------------------

Share Issuance Continuity Schedule

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

         Shares issued and outstanding as of June 30, 2002          224,757,559
         -----------------------------------------------------------------------

         Total Issuances for the Quarter                             Nil

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

         Total Outstanding as of September 30, 2002                 224,757,559
                                                                    ===========
         -----------------------------------------------------------------------


No common shares were issued between September 30, 2002 and the date of this
Report.


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.

As indicated above, in February of 2001, The Company concluded a private
financing with an investor group managed by a New York-based company. Under the
terms of the Agreement, the Company had the contractual right to require the
Investor to purchase up to US$5,000,000 of put notes and the Company had drawn
down US$750,000, which was provided in the form of a Convertible Note. Under the
terms of the Agreement, the Company was required to file and have declared
effective a Registration Statement on Form SB-2 within 150 days of the Closing
Date of the Agreement. As of June 25, 2001, the Company was in technical default
for failing to have an effective Registration Statement on record with the SEC.
The Company was advised of the default in mid-July 2001.

Following lengthy negotiations, we reached a Settlement Agreement with the
investors on April 26, 2002 under which the Company agreed to a reimbursement
schedule and provided three series of warrants, 500,000 each, exercisable at
different prices to the investors. The lack of financial resources prevented us
from being able to honor the reimbursement schedule, and thus the Company is
currently in default with respect the Settlement Agreement. To date, the
investors have not exercised any of their recourse rights under the agreement.
We intend to re-negotiate the Agreement with the investors based on our
expectations of cash availability. However, there can be no guarantee that these
negotiations will be successful, that the investors will continue to not
exercise their recourse rights and that the anticipated cash availability to
support a Settlement Agreement will actually be available

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<PAGE>

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

Item 6 - Exhibits and Reports on Form 8-K


                                   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


                                    By  /s/ JOHN L. THRESHIE, JR.
                                        --------------------------------------
                                        John L. Threshie, Jr., President


                                    By  /s/ MICHAEL ASH
                                        --------------------------------------
                                        Chief Accounting and Financial Officer

                                       22