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, 1997

[ ] 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.)

                 740 St. Maurice, Suite 201 Montreal, Quebec H3C 1L5
                    (Address of Principal executive offices)

                                 (514) 878-0727
                (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 February 10, 1998: 47,530,358 shares Transitional Small Business
Disclosure Format (check one):
Yes ___   No  _X_

<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                          (A Development State Company)

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

                                TABLE OF CONTENTS

PART I

Item 1 - Financial Information (unaudited)                                 Page
                                                                           -----
         The Tirex Corporation and Subsidiary
           Consolidated Balance Sheets as at
             December 31, 1997 and 1996 ...............................      3

         Consolidated Statements of Operations
           for the six-month periods
             ended December 31, 1997 and 1996 .........................      4

         Consolidated Statements of Cash Flows
           for the six-month periods
             ended December 31, 1997 and 1996  ........................      5

         Notes to Financial Statements (unaudited).....................      6


Item 2  Management's Discussion and Analysis of

        Financial Condition and Results of Operations..................     12

PART II

Item 2 - Changes in Securities.........................................

Item 6 - Exhibits and Reports on Form 8-K..............................     16

                                   ----------

     The financial statements are unaudited. However, the management of
registrant believes that all necessary adjustments (which include only normal
recurring adjustments) have been reflected to present fairly the financial
position of registrant at December 31, 1997 and the results of its operations
and changes in its financial position for the six-month periods ended December
31, 1996 and 1997 and for the period from inception (July 15, 1987).


                                       2

<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                           Consolidated Balance Sheet
                                  (Unaudited)

                                                             December 31
                                                          1997          1996
ASSETS
Current Assets
   Cash                                              $      --      $     9,309
   Notes receivable                                       39,729          1,158
   Prepaid expenses                                       18,972           --
   Employee advances                                     157,096           --
   Sales tax receivable                                   29,092           --
   Income taxes receivable                               494,918           --
                                                     -----------    -----------
Total current assets                                     739,807         10,467
                                                     -----------    -----------
Equipment, at cost, net of accumulated
 depreciation of $ 9,792                                  16,853         16,561
                                                     -----------    -----------
Other assets
   Equipment development costs                         1,032,920        184,482
   Deferred start-up costs                                74,683           --
   Organization costs, net of accumulated
     amortization of $ 795                                   747          1,059
                                                     -----------    -----------
                                                       1,108,350        185,541
                                                     -----------    -----------
Total Assets                                         $ 1,865,010    $   212,569
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
Current Liabilities
   Bank indebtedness                                 $    64,210    $      --
   Note payable                                           24,000         24,000
   Accrued expenses                                      948,616        212,576
   Due to shareholders                                      --            5,000
   Loans payable                                         437,626         80,796
   Deposits payable                                      963,500         65,000
                                                     -----------    -----------
Total current liabilities                              2,437,952        387,372
                                                     -----------    -----------
Commitments and contingencies

Stockholders' equity(deficit)
   Common stock, $.001 par value, authorized
   50,000,000 shares, issued and outstanding
   39,599,182 shares                                      39,599         23,664
   Additional paid-in capital                          3,984,997      2,563,049
   Deficit accumulated during the development
     stage                                            (4,597,538)    (2,761,516)
                                                     -----------    -----------
                                                        (572,942)      (174,803)
                                                     -----------    -----------
Total Liabilities and Stockholders'
  Equity (Deficit)                                   $ 1,865,010    $   212,569
                                                     ===========    ===========


                                       3
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                      Consolidated Statement of Operations
                                  (Unaudited)

                                                           December 31
                                                      1997             1996

Revenues                                          $       --       $       --

Cost of sales                                             --               --
                                                  ------------     ------------
Gross profit                                              --               --
                                                  ------------     ------------

General and administrative expenses
   Officers' salaries                                  397,221          263,524
   Consulting services                                  70,186           30,973
   Professional services                               120,004           24,627
   Rent                                                 16,174            4,114
   Travel and entertainment                            189,545           24,310
   Telephone                                             8,763            2,476
   Depreciation and amortization                         4,786            1,390
   Office expenses                                      33,861            2,867
   Miscellaneous                                          --              1,056
   Franchise and other tax                               2,852             --
   Interest and bank charges                             3,698            1,656
   Investor relations                                    2,829             --
   Transfer agent                                        1,695            3,226
   Foreign exchange                                    (15,353)            --
                                                  ------------     ------------
Total general and administrative expenses              836,261          360,219
                                                  ------------     ------------
Net loss                                          $   (836,261)    $   (360,219)
                                                  ============     ============
Net loss per common share                         $      (0.02)    $      (0.02)
                                                  ============     ============
Weighted average shares of common
   stock outstanding                                38,607,926       22,533,003
                                                  ============     ============


                                       4
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                      Consolidated statement of cash flows
                                  (Unaudited)

                                                             December 31
                                                          1997           1996

Cash flows from operating activities:
   Net loss                                            $(836,261)     $(360,219)

Adjustments to reconcile net loss to net cash
  provided by operating activities:
   Depreciation and amortization                           4,786          1,390
   Stocks issued in exchange for services                403,049        286,898

Change in assets and liabilities
   Decrease in employee advances                          28,846           --
   Decrease in sales tax receivable                       21,192           --
   Increase in prepaid expenses                          (18,972)          --
   Increase in notes receivable                          (30,000)          --
   Decrease in loan-director                              10,881           --
   Increase in accrued expenses                           56,362        (25,853)
                                                                      ---------
   Increase in income taxes receivable                  (225,000)
                                                       ---------      ---------
   Net cash used in operating activities                (585,117)       (97,784)
                                                       ---------      ---------
Cash flows from investing activities:
   Equipment                                              (6,691)          --
   Equipment assembly costs                             (249,469)        (7,258)
                                                       ---------      ---------
   Net cash used in investing activities                (256,160)        (7,258)
                                                       ---------      ---------
Cash flows from financing activities:
   Repayment of notes payable                            (98,551)          --
   Proceeds from loans payable                           237,081         45,796
   Proceeds from deposits payable                        483,500           --
   Proceeds from issuance of common stocks                  --           68,315
                                                       ---------      ---------
   Net cash provided by financing activities             622,030        114,111
                                                       ---------      ---------
Net increase (decrease) in cash                         (219,247)         9,069

Cash and cash equivalents-beginning of period            155,037            240
                                                       ---------      ---------
Cash and cash equivalents-end of period                $ (64,210)     $   9,309
                                                       =========      =========


                                       5
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies

     TirexAmerica, Inc. (the "Company") was incorporated under the laws of the
     State of Delaware on August 19, 1987. The Company originally planned to
     provide comprehensive health care services to persons with Acquired Immune
     Deficiency Syndrome, however due to its inability to raise sufficient
     capital it was unable to implement its business plan. The Company had been
     inactive since it ceased operations in November 1990.

     In the Fall of 1992, a group of shareholders lead by Edward Mihal and
     including 16 other shareholders acting in concert with Mr. Mihal along with
     Patrick McLaren and George Fattell, individuals without any prior
     affiliation with the Company, became interested in the Company as an entity
     potentially suitable for merger or similar transaction with an operating
     private company seeking to become public in this manner. This group
     approached the Company's incumbent management with a proposal whereby they
     agreed to assume management control, make all delinquent filings with the
     Securities and Exchange Commission, restore service by transfer agent and
     pay all other expenses required to enable the Company to begin trading its
     stock and completing a merger or similar transaction.

     In furtherance of the foregoing, on November 5, 1992, J. Richard Goldstein,
     MD, Peter R. Stratton and Robert Kopsack resigned from their positions as
     officers and directors of the Company. From June 1989 until the date of
     such resignations, Dr. Goldstein was the Company's President and Chief
     Executive Officer, Mr. Stratton was Vice-President, Chief Operating
     Officer, Secretary and Treasurer, and Mr. Kopsack was the Company's Vice
     President. In resigning their positions, Dr. Goldstein and Messrs. Stratton
     and Kopsack acknowledged that they acceded to their respective positions
     and had received compensation in consideration of their representations
     that they would, and their best efforts to, implement a business plan for
     the Company which would encompass, among other things, the establishment
     and operating of skilled nursing care facilities for patients with Acquired
     Immune Deficiency Syndrome. Compensation received by Dr. Goldstein and
     Messrs. Stratton and Kopsack consisted of cash payments, stock issuances,
     and the grants of stock options and/or stock purchase warrants. As part of
     their resignations, Dr. Goldstein and Messrs. Stratton and Kopsack each
     executed releases whereby the Company was released and forever discharged
     from all debts, obligations, covenants, agreements, contracts, claims or
     demands in law or in equity, including but not limited to any stock options
     or stock purchase warrants granted or promised to them, which against the
     Company, each ever had, or thereafter may have for or by reason of any
     matter, cause or thing up to and through November 5, 1992. Each of Dr.
     Goldstein and Messrs. Stratton and Kopsack also acknowledged the
     termination and rescission of their respective employment agreements with
     the Company to such persons as the Company should direct for the purpose of
     satisfying certain of the Company's obligations to third parties. In
     consideration of the resignations and releases executed by Dr. Goldstein
     and Messrs. Stratton and Kopsack, Edward Mihal and each of the sixteen
     shareholders of the Company acting in concert with Mr. Mihal executed and
     delivered reciprocal personal releases to and on behalf of Dr. Goldstein
     and Messrs. Stratton and Kopsack. In connection with the foregoing
     resignations, Dr. Goldstein and Messrs. Stratton and Kopsack appointed, as
     an interim board of directors, Patrick McLaren, George Fattell, and Edward
     Mihal (the "Interim Management"). It was the goal of the Interim Management
     to find suitable acquisition and/or development by the Company. On December
     29, 1992, Edward Mihal resigned his position as an officer and a director
     of the Company and Louis V. Muro was appointed as an officer and director
     of the Company to fill the vacancy created thereby.


                                       6
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies (continued)

     On March 26, 1993, the Company entered into an acquisition agreement (the
     "Acquisition Agreement") with Louis V. Muro, Patrick McLaren and George
     Fattell, officers and directors of the Company (collectively the
     "Sellers"), for the purchase of certain technology owned and developed by
     the Sellers (the "Technology") and extensive and detailed plans (the
     "Business Plan") for a business which will engage in the exploitation of
     the Technology. The Technology will be used to design, develop and
     construct a prototype machine and thereafter a production quality machine
     for the cryogenic disintegration of used tires. Pursuant to the Acquisition
     Agreement, Sellers agreed to assign, transfer and sell to the Company all
     of their right, title and interest in the Technology and Business Plan in
     exchange for fifteen million nine hundred thousand (15,900,000) shares of
     the Company's common stock, $.001 par value per share (the "Sellers'
     Stock") of which eleven million nine hundred thousand (11,900,000) shares
     were put into escrow. The Business Plan and Technology were developed by
     the Sellers prior to their affiliation or association with the Company. The
     Sellers were engaged as the Company's officers and directors for the
     purpose of implementing the Business Plan with the Technology or such other
     technology which they believed could reasonably satisfy the requirements of
     the Business Plan.

     Effective with the March 26, 1993, closing date of the Acquisition
     Agreement (the "Closing Date"), the Company authorized an increase in the
     number of directors of the Company from three to six. Pursuant thereto, the
     Company appointed Messrs. Kenneth Forbes, Nicholas Campagna, and Alfred J.
     Viscido to fill the vacancies created in the size of the board. As an
     inducement to Messrs. Forbes, Campagna and Viscido to join the board of
     directors, the Company issued 250,000 shares of its common stock, $.001 par
     value to each of them. The Acquisition Agreement also provided for stock
     issuances in the form of finders fees. Pursuant thereto, the Company issued
     300,000 and 1,700,000 shares of its common stock, $.001 par value, to
     Joseph Territo and Edward Mihal, respectively.

     Effective March 24, 1994, George Fattell resigned as an officer and
     director of the Company. Per the terms of his resignation any future shares
     of the Company's common stock issued to Mr. Fattell are to be equally
     distributed to Louis V. Muro and Patrick McLaren. Effective January 18,
     1995, Louis V. Muro and Patrick McLaren resign their positions as officers
     and directors of the Company. In addition to their resignations they
     acknowledged that none of the requisite performance levels for the release
     of any of the 11,900,000 escrow shares had been met and renounced all
     rights to such shares. In May of 1995, in order to take advantage of
     various research and development incentives, the Company and officers of
     the Company formed a Canadian corporation named 3143619 Canada, Inc. (Tirex
     Canada). All of the research and development work on the first production
     model of the TCS-1 System is being completed by Tirex Canada and after the
     completion of the model, they will manufacture the product. On July 11,
     1997 the Company's name was changed to The Tirex Corporation.

     Basis of Consolidation

     The consolidated financial statements include the accounts of Tirex
     America, Inc. and its subsidiary Tirex Canada. All intercompany
     transactions and accounts have been eliminated in consolidation.


                                       7
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies (continued)

     Equipment Development Costs

     Deferred development costs are stated at cost net of any investment tax
     credits when there is reasonable assurance that the credits will be
     realized. Amortization will begin once commercial production of the product
     has commenced and will be computed based upon the estimated useful life of
     related products as determined from management's future sales estimates and
     will not exceed five years from the date of the product's market launching.

     Deferred Start-Up Costs

     Deferred start-up costs represent pre-operating expenses and will be
     amortized on a straight-line basis over a three year period once commercial
     operations have commenced.

     Equipment

     Equipment is recorded at cost less accumulated depreciation. Depreciation
     is provided over the estimated useful lives of the assets by using the
     straight-line method of depreciation. 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 gain 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 and disclosures
     of contingent assets and liabilities at the date of the financial
     statements and the reported amounts of revenues and expenses during the
     reporting period. Actual results could differ from those estimates.

     Organization Costs

     Organization costs are being amortized on a straight-line basis over a
     sixty month period.

     Per Share Data

     The primary income (loss) per share was computed on the weighted number of
     shares of common stock outstanding during the period. Common share
     equivalents were not included as their inclusion would have been
     anti-dilutive.

     Income Taxes

     The Company has net operating loss carryovers of approximately $4 million
     as of June 30, 1997, expiring in the years 2004 through 2011. 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.


                                       8
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Development Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies (continued)

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

     The Company has research and development investment tax credits receivable
     from Canada and Quebec amounting to $494,918 as of December 31, 1997.

     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.

Note 2 - Going Concern

     In March 1993, the Company, which was still in the development stage,
     developed a new Business Plan. The Company is in the process of
     constructing a production quality machine for the cryogenic disintegration
     of used tires. The Company also plans to recycle used tires using ambient
     temperature disintegration equipment. At June 30, 1997, the Company is
     still in the development stage. Fees generated from tipping and culling
     were insufficient to fund the current operations of the Company. All of
     these factors create an uncertainty about the Company's ability to continue
     as a going concern.

     The Company is currently in the process of trying to obtain funding needed
     through a private placement of its securities in an amount of not less than
     $700,000, which will provide working capital while the Company constructs
     its cryogenic disintegration machine. The ability of the Company to
     continue as going concern is dependent on the success of the plan. 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 - Notes Payable

     The Company also had a note payable in the amount of $24,000 outstanding as
     of June 30, 1997. The repayment terms were being negotiated as of that
     time.


                                       9
<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 4 - Loan Payable

                                          1997           1996
                                         -----           ----
       FORD-Q ...................      $ 321,429       $ 80,796
       IDEA-SME .................        116,197            --
                                       ---------       --------
                                       $ 437,626       $ 80,796
                                       =========       ========

     On April 11, 1996 the Company entered into a loan agreement with the
     Federal Office of Regional Development - Quebec (FORD-Q) which will be
     repayable annually over a period of forty-eight months following the
     completion of the project. The loan is being contributed under the
     Industrial Recovery Program for South-West Montreal and will be calculated
     as the lesser of $362,319 or 20% of the eligible costs incurred for the
     construction of a commercial scale prototype of the cryogenic scrap tire
     disintegration system. The loan is non-interesting bearing and unsecured.
     The Company received $178,806 under this program in fiscal 1997.

     On April 30, 1997 the Company received a refundable contribution awarded
     under the terms of the Program for the Development of Quebec's SME'S
     (IDEA-SME). The contribution is repayable in amounts equal to 1% of the
     annual gross sales in Spain and Portugal occurring after June 1, 1997.

     On March 26, 1997, the Company received a refundable contribution for the
     preparation of market development studies for India under the Quebec SME
     development assistance program (IDEA-SME). The maximum contribution is
     $14,493 based on 50% of the approved eligible costs. The contribution is
     repayable in amounts equal to 1% of the annual gross sales in India
     occurring after June 1, 1997.

     On June 6, 1997, the Company entered into an agreement under the Quebec SME
     development assistance program (IDEA-SME) to receive a refundable
     contribution for market development activities for the Iberian Peninsula.
     The maximum contribution is $68,841 , based on 50% of approved eligible
     costs. The contribution is repayable in amounts equal to 1.5% of the annual
     gross sales in Spain and in Portugal occurring after June 1, 1998 less
     amounts repaid through the amounts noted in the April 30, 1997 agreement.

Note 5 - Related Party Transactions

     In 1994, a stockholder loaned the Company $5,000. This loan was converted
     to common stock and additional paid-in capital during the year ended June
     30, 1997. On July 22, 1994, 3,000,000 shares of Tirex America, Inc. were
     released from escrow and issued to Louis V. Muro and Patrick McLaren
     (1,500,000 shares each) in accordance with the terms and provisions of the
     Acquisition Agreement dated March 26, 1993.

     The Company has entered into employment agreements with all of its
     executive officers and with its in-house corporate counsel. In addition to
     the employment services, the officers agree not to compete with the Company
     for the 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.


                                       10
<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 5 - Related Party Transactions (continued)

     Included in accrued expenses at December 31, 1997 is $34,733 of salary to
     officers which the company subsequently issued common stock. The Company
     advanced funds to its officers and directors during the year ended June 30,
     1997 in the amount of $185,942. These will be repaid during the year ending
     June 30, 1998.

     On June 30, 1997 and 1996, the Company had notes receivable from various
     officers in the amount of $9,729 and $1,158, respectively. All of these
     notes and loans are non-interest bearing and will be repaid during the year
     ending June 30, 1998.

     Deposits payable include an amount of $738,500 which are payable to
     companies which are owned by a director of the Company.

Note 6 - Stock Option

     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, 1999. 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 per share and
     conversion into shares of common stock. The conversion to common stock
     ratio varies depending on when the conversion is made. At September 30,
     1997, the option has not been exercised.

Note 7 - Government Assistance

     The Company has entered into an agreement with Recyc-Quebec for financial
     assistance covering 50% of certain defined costs incurred in developing the
     cryogenic scrap tire disintegration system to a maximum of $54,348. $36,500
     has been received during the year and this amount has reduced the equipment
     development costs on the balance sheet.


                                       11
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 8 - Commitments

     The Company has entered into a property lease agreement, with a term from
     July 1, 1997 to June 30, 2000. The Company has an option to renew this
     lease for an additional three years. Minimum rentals in each of the next
     three years is as follows:

                          1998 .................. $ 18,967
                          1999 ..................   18,967
                          2000 ..................   18,967
                                                  --------
                                                  $ 56,901
                                                  ========

Note 9 - Contingency

     The Company is a defendant in an action which commenced on June 18, 1997
     entitled Great American Commercial Funding Corp. vs. Tirex America, Inc.
     The Company agreed to pay the plaintiff a placement fee of $250,000 and to
     grant them an option to acquire 400,000 shares of the company's common
     stock at a price of $.01 per share in the event that the plaintiff
     succeeded in obtaining financing acceptable to the Company. The amount and
     terms of the financing are not mentioned in the documents. The plaintiff
     recommended an equipment lease financing company who in turned introduced
     the Company to one of their customers. The customer ultimately entered into
     a lease financing arrangement with Tirex America, Inc. Because the advances
     made to the Company pursuant to that lease financing arrangement did not
     constitute the type of financing originally contemplated, the Company
     believes it has no financial obligation to the plaintiff. The Company and
     its litigation counsel believe that the plaintiffs complaint is without
     merit and that the Company will prevail in this litigation.


                                       12
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

     The  following  is  management's  discussion  and  analysis of  significant
factors  which have  affected  Registrant's  financial  position and  operations
during the fiscal quarter ended December 31, 1997.

Liquidity and Capital Resources

     Registrant is presently engaged in the very early stages of the business of
manufacturing  cryogenic  tire  disintegration  equipment.  At the present time,
Registrant is engaged in completing the design and  development,  and commencing
the construction of a production quality cryogenic tire  disintegration  machine
based on its proprietary  TCS-1 System  technology.  Unless and until Registrant
successfully   develops  and  commences   manufacturing   and  sales  operations
respecting such a machine, Registrant will continue to generate no revenues from
operations.  The activities of Registrant  since its inception in 1987 have been
financed  by sources  other than  operations.  Such  financing  was  principally
provided by the sale of securities in private transactions, as follows:

                                            Proceeds From
              Year Ended                      Sales of
              June 30th                      Securities
              ---------                      ----------

                1997                          $345,391
                1996                            80,872
                1995                            22,316
                1994                           237,430
                1993                            76,055
                1990                            80,812
                1989                            77,000


     In addition,  Canadian Government tax credits, grants and/or loans provided
Registrant  with an aggregate of an  additional  $225,000,  during the six-month
period ended December 31, 1997.

     As at  December  31,  1997,  Registrant  had  total  assets  of  $1,865,010
reflecting  an increase  decrease  from the end of the previous  fiscal  quarter
ended  September  30, 1997 when total  assets were  $706,340  and an increase of
$1,652,441  from the end of the analogous  quarter in the previous  fiscal year,
when total assets as at December 31, 1996 were $212,569. Such increases reflect,
in the main part, accrued development costs related to the TCS-1 System,  income
tax


                                       13
<PAGE>

credits  receivable,  and advances to employees.  As at December 31, 1997, total
liabilities  were  $2,437,952.  This reflects an increase of $2,070,580 from the
analogous date in the previous fiscal year, when total liabilities were $387,372
as at December  31, 1996,  and an increase of $364,573  from the end of the last
fiscal quarter,  when total liabilities were $2,073,379.  Management  attributes
such increases to accrued  operating  expenses and increase in deposit and loans
payable.  Reflecting  the foregoing,  as at December 31, 1997,  Registrant had a
working   capital  deficit   (current  assets  minus  current   liabilities)  of
($1,698,145).  The amount of Registrant's  working capital deficit has therefore
increased since December 31, 1996, when Registrant had a working capital deficit
of  ($376,905),  and  since  the end of the  last  fiscal  quarter,  when it was
($1,440,518).

     Registrant  currently has limited material assets and a negative net worth.
The success of its  proposed  cryogenic  tire  disintegration  business  and its
ability to continue  as a going  concern  will be  dependent  upon  Registrant's
ability to obtain  adequate  financing to complete the design and development of
the TCS-1  System and to commence  manufacturing  and sales  activities  related
thereto.  While  Registrant  believes  that it will be able to do so during  the
current  fiscal  year which will end June 30,  1998,  it cannot,  at the present
time, give any assurances that this will in fact be the case.

Results of Operations

     Registrant has engaged in only limited business  activities since inception
and had no revenues  from  operations  during the six months ended  December 31,
1997.  No revenues were received  during the analogous  six-month  period in the
previous  fiscal year.  Management  has continued to devote all of  Registrant's
limited  resources  to  activities  connected  with  completing  the  design and
development of the first TCS-1 System,  commencing the manufacture  thereof, and
endeavoring to raise financing to cover the costs of such activities.

     From inception  (July 15, 1987) through  December 31, 1997,  Registrant has
incurred a cumulative net loss of ($4,597,538),  approximately  23% of which was
incurred,  prior to the  inception of  Registrant's  present  business  plan, in
connection with Registrant's discontinued proposed health care business.


                                       14
<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 2.   Changes in Securities

Recent Sales of Unregistered Securities

     During the fiscal  quarter  ended  December 31, 1997,  Registrant  made the
following sales of its common stock, $.001 par value, per share ("Common Stock")
without  registration  under  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"). The following sets forth  information  respecting the dates,
purchasers,  and  consideration  involved  in  such  sales  and  the  bases  for
Registrant's  claim  that all  such  sales  were  exempt  from the  registration
provisions of Section 5 of the Securities Act.

Sales to Executive Officers in Respect of Services Rendered

     On December 15, 1997,  Registrant  authorized the following stock issuances
to its executive  officers and employees in consideration of unpaid salaries due
and owing to them under their respective employment agreements with Registrant:

     1.  In  consideration   of  unpaid  executive   services  and  unreimbursed
disbursements  made on behalf of  Registrant,  rendered or disbursed  during the
five-month  period  which  commenced  on July 1, 1997 and ended on November  30,
1997,  Registrant  authorized  the issuance of an aggregate of 765,733 shares of
its Common Stock to four of its  executive  officers and its in-house  corporate
attorney at a per share price of $.275 reflecting in full the average of the bid
and ask prices for the Common Stock during the  five-month  period in which such
services and disbursements were rendered or disbursed. These issuances reflect a
computational  error insofar as the Executive Committee of Registrant's Board of
Directors had actually authorized that they be made at 50% of the average of the
bid as ask prices for the Common Stock. Accordingly, the shares should have been
issued at a per share price of $.1375 instead of $.275.  The aggregate amount of
unpaid  services  and  unreimbursed  disbursements  for which these  shares were
issued was $209,409.32. Therefore, at the per-share price authorized by the said
Executive Committee, Registrant would have issued a total of 1,522,976 shares in
lieu of cash payments.  Registrant intends to correct this error by the issuance
of additional shares at its earliest convenience.

     These sales are claimed to have been  exempt  from  registration  under the
Securities Act pursuant to Section 4(2) thereof, as more fully described below.


                                       15
<PAGE>

Sales to Non-Affiliate as Compensation Under Consulting Agreement

     2. On  November  20,  1997,  in  consideration  of business  and  financial
consulting  services rendered by a nonaffiliated  consultant (the  "Consultant")
under  the  terms  of  a  Consulting  Agreement,  dated  October  1,  1997  (the
"Consulting  Agreement"),  Registrant  sold 58,824 shares of its Common Stock to
the  said  Consultant  at a per  share  price of $.17.  Under  the  terms of the
Consulting  Agreement,  the  Consultant  agreed  to take,  as  compensation  for
services rendered, the right to purchase shares of Registrants Common Stock at a
discount from the market price.

     This  sale is  claimed  to have been  exempt  from  registration  under the
Securities Act pursuant to Section 4(2) thereof, as more fully described below.

Basis for Exemption Claimed

     With respect to all sales and other  issuances of securities as hereinabove
described:

(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 current executive  officers
      and directors, employees, and a consultant, all of whom were sophisticated
      private  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.

(iv)  Such sales did not  constitute a single  financing  plan of the Issuer for
      the following reasons:

      (a)   Five of the  Purchasers  are executive  officers or employees of the
            Issuer  who have  agreed to take stock in lieu of all or part of the
            cash compensation due to them for services rendered;


                                       16
<PAGE>

      (b)   One of the  Purchasers  is a consultant to the Issuer who has agreed
            to take, as compensation for services  rendered under his consulting
            agreement  with   Registrant,   the  right  to  purchase  shares  of
            Registrants Common Stock at a discount from the market price.

      Accordingly,  Registrant claims the transactions hereinabove described, to
have  been  exempt  from  the  registration  requirements  of  Section  5 of the
Securities Act by reason of Section 4(2) thereof in that such  transactions  did
not form part of a single  financing plan and did not involve a public  offering
of securities.

Item 6.   Exhibits and Reports on Form 8-K

         (a)  Exhibits filed herewith:

                  None

         (b) Current  Reports on Forms 8-K filed during  quarter ended  December
31, 1997

                  No Current  Reports on Form 8-K were filed with the Commission
         during the quarter ended December 31, 1997.

                                   SIGNATURES

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

                                          THE TIREX CORPORATION

                                          By  /s/ Terence C. Byrne
                                             -----------------------------------
                                              Terence C. Byrne, President
                                                   and Treasurer

Date: February 13, 1998                       /s/ Terence C. Byrne
                                             -----------------------------------
                                              Terence C. Byrne, Chief Executive
                                                and Chief Financial Officer

                                       17