---

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 1934For the quarterly period
      ended December 31, 2003[ ] Transition report under
      Section 13 or 15(d) of the Securities Exchange Act of 1934For the
      transition period fromto


Commission File Number 33-17598-NY

THE TIREX CORPORATION

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


4055 Ste-Catherine Street West, Suite 151, Montreal (Westmount),
Quebec, 
Canada, H3Z 3J8

(514) 935-2525



(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 February 5, 2004 :    249,895,892

Transitional Small Business Disclosure Format (check one): Yes ___    
No X

---



THE TIREX CORPORATIONA DEVELOPMENT STAGE COMPANY



PART I - FINANCIAL INFORMATIONItem 1 - Financial Statements(Unaudited)
      PageThe Tirex Corporation and
      SubsidiariesConsolidated Balance Sheets as
      of December 31, 2003Consolidated Statements of
      Operationsfor the three and six month
      periodsended December 31, 2003 and
      2002Consolidated Statements of
      Cash Flowsfor the three and six month
      periodsended December 31, 2003 and
      2002Notes to Financial
      Statements (Unaudited)Item 2 - Management's
      Discussion and Analysis ofFinancial Condition and
      Results of OperationsPART II B OTHER INFORMATIONItem 1 - Legal ProceedingsItem 2 - Changes in
      Securities and Use of ProceedsItem 3 - Defaults Upon
      Senior SecuritiesItem 4 - Submission of
      Matters to a Vote of Security
      HoldersItem 6 - Exhibits and
      Reports on Form 8-K


The financial statements are unaudited. However, pursuant to SEC
requirements, the consolidated financial statements have been reviewed by the
Company's independent auditor. 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 December 31,
2003 and the results of its operations and changes in its cash position for the
three month and six periods ended December 31, 2003 and 2002 and for the period
from inception (July 15, 1987).

---



THE TIREX CORPORATION

A DEVELOPMENT STAGE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003

---





THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2003

(Unaudited)December 31,2003ASSETSCurrent AssetsCash and cash
      equivalentsAccounts receivableNotes receivable
      
      20,475Sales taxes
      receivable
      
      36Inventory
      
      73,322Research
      and Experimental Development tax credits receivablePrepaid expenses and
      deposits93,833Property and equipment,salvage value
      
      50,000Other assetsInvestment, at cost
      
      89,500Prepaid expenses and
      deposits89,500$       
        233,333LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current LiabilitiesAccounts
      payable and accrued liabilties
      1,972,722Current
      portion of long-term debt
      77,8692,050,591Other liabilitiesLong-term deposits
      and notes
      
      217,500Government loans (net of current)
      87,080Capital
      lease obligations (net of current)
      -Convertible notes
      
      586,356Convertible note
      
      185,556Loans from related
      parties
      
      982,4232,058,9154,109,506Stockholders' Equity
      (Deficit)Common
      stock, $.001 par value, authorized250,000,000 shares, issued and outstanding249,895,892 shares (June 30, 2003 - 249,895,892 shares)
      249,896Additional paid-in
      capital
      
      25,222,219Deficit
      accumulated during the development stage
      (28,912,433)Unrealized gain (loss) on foreign exchange
      (435,855)(3,876,173)$       
        233,333


---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

|                                                 |             | (Unaudited)        |             | (Unaudited)      |                   |           
|------------------------------------------------ | ----------- | ------------------ | ----------- | ---------------- | ----------------- | ----------
|                                                 |             |                    |             |                  |                   |           
|                                                 |             | Three months ended |             | Six months ended | Cumulative from  
|                                                 |             | December 31        |             | December 31      | March 26, 1993 to
|                                                 |             | 2003               |             | 2002             |                   | 2003      
|                                                 |             |                    |             |                  |                   |           
|Revenues                                         | $           | -                  | $           | -                | $                 | -         
|                                                 |             |                    |             |                  |                   |           
|Cost of
    Sales                                |             | -                  |             | -                |                   | -         
|                                                 |             |                    |             |                  |                   |           
|                                                 |             |                    |             |                  |                   |           
|Gross
    profit                                 |             | -                  |             | -                |                   | -         
|                                                 |             |                    |             |                  |                   |           
|Operations                                       |             |                    |             |                  |                   |           
|General and administrative                       |             | 123,574            |             | 190,170          |                   | 269,646   
|Depreciation and amortization                    |             | -                  |             | -                |                   | -         
|Research and development                         |             | -                  |             | -                |                   | -         
|                                                 |             |                    |             |                  |                   |           
|Total
    Expense                                |             | 123,574            |             | 190,170          |                   | 269,646   
|                                                 |             |                    |             |                  |                   |           
|Loss
    before other expenses (income)          |             | (123,574)          |             | (190,170)        |                   | (269,646) 
|                                                 |             |                    |             |                  |                   |           
|Other
    expenses (income)                      |             |                    |             |                  |                   |           
|Interest expense                                 |             | 14,942             |             | 35,769           |                   | 37,623    
|Interest income                                  |             | -                  |             | -                |                   | -         
|Income from stock options                        |             | -                  |             | -                |                   | -         
|Loss on disposal of equipment                    |             | -                  |             | -                |                   | -         
|                                                 |             |                    |             |                  |                   |           
|                                                 |             | 14,942             |             | 35,769           |                   | 37,623    
|                                                 |             |                    |             |                  |                   |           
|Net loss                                         |             | (138,516)          |             | (225,939)        |                   | (307,269) 
|                                                 |             |                    |             |                  |                   |           
|Other
    comprehensive loss                     |             |                    |             |                  |                   |           
|Loss (gain) on foreign exchange                  |             | -                  |             | -                |                   | -         
|                                                 |             |                    |             |                  |                   |           
|                                                 |             |                    |             |                  |                   |           
|Net loss
    and comprehensive loss              | $           | (138,516)          | $           | (225,939)        | $                 | (307,269) 
|                                                 |             |                    |             |                  |                   |           
|Basic and
    Diluted net loss and comprehensive |             |                    |             |                  |                   |           
|loss per
    common share                        | $           | (0.00)             | $           | (0.00)           | $                 | (0.00)    
|                                                 |             |                    |             |                  |                   |           
|Weighted
    average shares of common            |             |                    |             |                  |                   |           
|stock
    outstanding                            | 249,895,892 | 224,757,559        | 249,895,892 | 224,757,559      |                   | 65,086,898

---



THE TIREX CORPORATIONA DEVELOPMENT STAGE COMPANYCONSOLIDATED STATEMENT OF CASH
      FLOWS(Unaudited)
      
      (Unaudited)Three months ended
      
      Six months ended
      Cumulative fromDecember 31
      
      December 31
      March 26, 1993 to2003
      
      2002
      
      2003
      
      2002
      December 31, 2003Cash flows from
      operating activities:Net loss
      $
      (138,516)
      $
      (225,939)
      $
      (307,269)
      $
      (951,077)
      $
      (28,200,961)Adjustments
      to reconcile net loss to net cashused in operating activities:Depreciation
      and amortization
      
      -
      
      -
      
      -
      
      5,914
      
      364,304(Gain) loss
      on disposal and abandonment of assets
      
      -
      
      -
      
      -
      
      530,651
      
      2,005,498Stock issued
      in exchange for interest
      
      -
      
      -
      
      -
      
      -
      
      169,142Stock issued
      in exchange for services and expenses
      
      -
      
      -
      
      -
      
      -
      
      10,574,972Stock options
      issued in exchange for services
      
      -
      
      -
      
      -
      
      -
      
      3,083,390Unrealized
      (loss) gain on foreign exchange
      
      (54,691)
      
      (3,587)
      
      (53,321)
      
      30,593
      
      (435,875)Changes in assets
      and liabilities:(Increase)
      decrease in:Account
      receivable
      
      -
      
      (174)
      
      -
      
      4,462
      
      -Inventory
      
      -
      
      (379)
      
      -
      
      2,536
      
      (73,323)Sales tax
      receivable
      
      -
      
      (7,706)
      
      -
      
      (15,014)
      
      (36)Research and
      experimental development tax credits receivable
      
      -
      
      43,448
      
      -
      
      120,542
      
      -Other assets
      
      -
      
      (429)
      
      -
      
      2,879
      
      (10,120)(Decrease)
      increase in :Accounts
      payables and accrued liabilities
      
      59,355
      
      184,994
      
      92,790
      
      238,512
      
      1,988,891Accrued
      salaries
      
      43,750
      
      9,997
      
      87,500
      
      16,118
      
      410,652Due to
      stockholders
      
      -
      
      -
      
      -
      
      -
      
      5,000Net cash used in
      operating activities
      
      (90,102)
      
      225
      
      (180,300)
      
      (13,884)
      
      (10,118,466)Cash flow from
      investing activities:Increase in
      notes receivable
      
      -
      
      (112)
      
      -
      
      751
      
      (259,358)Reduction in
      notes receivable
      
      -
      
      -
      
      -
      
      -
      
      237,652Investment
      
      -
      
      -
      
      -
      
      -
      
      (89,500)Equipment
      
      -
      
      -
      
      -
      
      -
      
      (321,567)Equipment
      assembly costs
      
      -
      
      -
      
      -
      
      -
      
      (1,999,801)Organization
      cost
      
      -
      
      -
      
      -
      
      -
      
      6,700Reduction in
      security deposit
      
      -
      
      -
      
      -
      
      -
      
      (1,542)Net cash used in
      investing activities
      
      -
      
      (112)
      
      -
      
      751
      
      (2,427,416)Cash flow from
      financing activities:Loans from
      related parties
      
      90,102
      
      (77,940)
      
      180,300
      
      (94,469)
      
      4,535,135Deferred
      financing costs
      
      -
      
      -
      
      -
      
      -
      
      180,557Proceeds from
      deposits
      
      -
      
      -
      
      -
      
      -
      
      143,500Payments on
      notes payable
      
      -
      
      -
      
      -
      
      -
      
      (409,939)Proceeds from
      convertible notes
      
      -
      
      -
      
      -
      
      -
      
      754,999Proceeds from
      notes payable
      
      -
      
      -
      
      -
      
      -
      
      409,939Payments on
      lease obligations
      
      -
      
      -
      
      -
      
      -
      
      (86,380)Proceeds from
      issuance of convertible subordinated debentures
      
      -
      
      -
      
      -
      
      -
      
      1,035,000Proceeds from
      loan payable
      
      -
      
      33,116
      
      -
      
      -
      
      591,619Payments on
      loan payable
      
      -
      
      -
      
      -
      
      (4,170)
      
      (488,439)Proceeds from
      issuance of stock options
      
      -
      
      -
      
      -
      
      -
      
      20,000Proceeds from
      grants
      
      -
      
      44,711
      
      -
      
      111,772
      
      3,628,277Proceeds from
      issuance of common stock
      
      -
      
      -
      
      -
      
      -
      
      85,582Proceeds from
      additional paid-in capital
      
      -
      
      -
      
      -
      
      -
      
      2,145,775Net cash provided by
      financing activities
      
      90,102
      
      (113)
      
      180,300
      
      13,133
      
      12,545,625Net (decrease)
      increase in cash and cash equivalents
      
      -
      
      -
      
      -
      
      -
      
      (257)Cash and cash
      equivalents - beginning of period
      
      -
      
      -
      
      -
      
      -
      
      257Cash and cash
      equivalents - end of period
      $
      -
      $
      -
      $
      -
      $
      -
      $
      -


---



THE TIREX CORPORATIONA DEVELOPMENT STAGE COMPANYCONSOLIDATED STATEMENT OF CASH
      FLOWS(Unaudited)
      (Unaudited)Three months ended
      
      Six months ended
      Cumulative fromDecember 31
      
      December 31
      March 26, 1993 to2003
      2002
      
      2003
      2002
      December 31, 2003Supplemental Disclosure of Non-Cash Activities:During the year ended June 30, 2003, the
      Company recorded an increase in common stock and in additional paid-in
      capital of $456,583 which was in recognition of the payment of debt.
      During the six month period ended December 31, 2003, the Company did not
      issue common stock in recognition of the payment of debt. During the year
      ended June 30, 2003, stockwas also issued in exchange for services
      performed and expenses in the amount of $136,375. During the six month
      period ended December 31, 2003, the Company did not issue common stock in
      exchange for services performed and expenses.Supplemental Disclosure of Cash Flow Information:Interest paid
      $    -
      $  20,162
      $
      -
      $
      21,024
      $
      232,748Income taxes paid
      $    -
      $    -
      $
      -
      $
      -
      $
      -




---

THE TIREX CORPORATIONA DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 
(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 (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 December 31, 2003, 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.

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.

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

The adoption of SFAS 128 had no effect on previously reported
loss per share amounts for the year ended June 30, 1997. For the years ended
June 30, 2002 and June 30, 2001, 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 2003 and 2002, and accordingly, in those
years, the denominator for the Basic EPS calculation was equal to the weighted
average of outstanding shares with no consideration for outstanding options and
warrants to purchase shares of the Company's common stock because to do so would
have been anti-dilutive.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

The fair values of the Company's debt instruments are based
on the amount of future cash flows associated with each instrument discounted
using the Company's borrowing rate. At December 31, 2003 and June 30, 2003,
respectively, the carrying value of all financial instruments was not materially
different from fair value.

INCOME TAXES

The Company has net operating loss carryovers of
approximately $29.0 million as of December 31, 2003, expiring in the years 2004
through 2019. However, based upon present Internal Revenue Service regulations
governing the utilization of net operating loss carryovers where the corporation
has issued substantial additional stock and there has been a change in control
as defined by the Internal Revenue Service regulations, a substantial portion of
this loss carryover may not be available to the Company.

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

The Company does not currently have research and experimental
development tax credits receivable from the Canadian Federal government and the
Quebec Provincial government as at December 31, 2003 and also did not have any
receivable as at June 30, 2003. These were the result of tax credits for
research and experimental Development expenditures made by the Company which are
not contingent upon any offset against any income taxes otherwise payable.

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.

Note 2.     GOING CONCERN

As shown in the accompanying financial statements, the
Company incurred a net loss of $1,561,375 during the year ended June 30, 2003
and an additional net loss for the six month period ended December 31, 2003 in
the amount of $307,269.

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 December 31, 2003, 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.     FINANCING COST

During the year ended June 30, 1999, the Company incurred
costs of $158,255 in connection with debt financing. These costs have been
capitalized in other assets and are being amortized over the terms of the
financing. Amortization of financing costs for the year ended June 30, 2000 was
$125,291, reducing this account balance to zero. During the year ended June 30,
2001, the Company incurred costs of $180,557 in connection with debt financing.
These costs have been capitalized in other assets and are being amortized over
the terms of the financing. Amortization of financing costs for the years ended
June 30, 2002 and June 30, 2001 was $100,614 and $79,943, respectively, reducing
this account balance to zero.

Note 4.     PROPERTY AND EQUIPMENT

As at December 31, 2003, plant and equipment consisted of the following:

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


Depreciation and amortization expense charged to operations
for the year ended June 30, 2003 was $24,960. Depreciation and amortization
expense charged to operations for the three month period ended December 31, 2003
was zero.

Note 5.     GOVERNMENT LOANS

Canada Economic Development

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
      $ 34,300Loan repayable over five
      years commencing June 30, 2001 and ending June 30, 2005
      43,791Loan repayable in amounts
      equal to 1% of annual sales in Spain and / orPortugal throughout June
      30, 2007, to a maximum of the balance of the loanoutstanding. If no sales
      occur on or before this date in Spain and Portugal, theloan will become
      non-repayable.
      14,000Loan repayable in amounts
      equal to 11⁄2% of annual sales in Spain and / orPortugal through June 30,
      2004 to a maximum of the balance of the loanoutstanding. If no sales
      occur before this date in Spain and Portugal, the loanwill become non-repayable.66,500158,591Less: Current portion
      71,511Long-term portion
      $ 87,080Principal repayments are as
      follows:June 30
      Amount2004
      $71,5112005
      20,5802006
      -2007
      66,500$158,591


Note 6.     CAPITAL LEASE OBLIGATIONS

The Company leases certain manufacturing equipment under
agreements classified as capital leases. The cost and the accumulated
amortization for such equipment as of June 30, 2002 was $62,400 and $37,440,
respectively. The accumulated amortization for such equipment as of June 30,
2003 and 2002 was $62,400 and $37,440, respectively. The equipment under capital
leases has been included in property and equipment 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 December 31,
2003:

Years ended June 30
      
      Amount2004
      
      $7,757Total minimum lease
      payments
      
      7,757Less: Amount representing
      interest
      
      1,399Total obligations under
      capital lease
      
      6,358Less: Current portion of
      obligations under capital leases
      
      6,358Long-term obligation
      portion of under capital leases, with interest rate of 10%
      
      $   -


Note 7.     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 8.     CONVERTIBLE NOTES

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

Balance at December 31,
      2003 and June 30, 2003
      $586,356Interest rate
      8%, payable quarterly,
      commencing June 30, 2001Issue date
      February 26, 2001Maturity date
      February 26, 2003Redemption 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
      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 have pledged
approximately 12,000,000 of their personal shares of Common Stock of the Company
as security for the Convertible Notes until such time as the Company files with
the Securities and Exchange Commission a Registration Statement on Form SB-2, to
register common stock and warrants issuable upon the conversion of the notes, no
later than 150 days after the issue date of the Convertible Notes. This deadline
was not met and, as such, the investors served a notice of default to the
Company on July 19, 2001. The Registration Statement 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. 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, 2002and penalties to date, and
      deducting proceeds from the
      $932,240sale of collateral shares
      in the amount of $16,260Interest rate on the debt
      8%$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, 2002Repayment termsWarrants for
      purchase of common shares
      500,000 three-year warrants exercisable
      immediately at a price of $0.01 per share.500,000 two-year warrants exercisable one year from the date of the
      Settlement Agreement at a price of $0.05 per share.500,000 one-year warrants exercisable two
      years from the date of the Settlement Agreement at a price of $0.10 per
      share.Right to sell
      collateral shares and Rule 144 shares
      The Investors have the right to 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 per quarter held as security.

Note 9.     CONVERTIBLE NOTE

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

Balance at December 31,
      2003
      $ 185,556Interest rate
      8%Issue date
      July 19th,
      2000Maturity date
      January 19th,
      2002Redemption 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 10.    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 December 31, 2003 and June 30, 2003, the balances
owing to Directors and Officers was $1,106,962 and $919,462, respectively. These
amounts are without interest or terms of repayment.

Various Notes Receivable from Officers, separately reported
on the audited balance sheet as of June 30, 2000, plus accrued interest thereon,
were offset against amounts due to these Officers as of June 30, 2001.

Long-term deposits and notes included an amount of $118,500
at December 31, 2003, 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.

Note 11.    EXCHANGE OF DEBT FOR COMMON STOCK

During the year ended June 30, 2003, the Company recorded an
increase in common stock and paid-in capital of $456,583 representing issuances
of stock in lieu of cash payments for debts owed. During the six month period
ended December 31, 2003, the Company did not record any increase in common stock
and additional paid-in capital.

Note 12.    COMMON STOCK

During the year ended June 30, 2003, the Company issued
common stock in exchange for services performed totaling $136,375. The amount
for the year ended June 30, 2003 did not include any payments to Officers of the
Company in exchange for salary and expenses. During the six month period ended
December 31, 2003, the Company issued common stock in exchange for services
performed totaling zero. The amount for the six month period ended December 31,
2003 did not include any payments to Officers of the Company in exchange for
salary and expenses. 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 December 31, 2003, the Company had 249,895,892 Common shares issued and
outstanding.

Note 13.    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 year ended June 30, 2000.

During the year ended June 30, 2001, the Company issued
9,300,000 shares as Grants under the Stock Plan at an average stock price of
$.093 for an aggregate consideration of $867,374. During the year ended June 30,
2002, the Company issued 750,000 shares as Grants under the Stock Plan at an
average stock price of $.016 for an aggregate consideration of $12,031.

During the year ended June 30, 2001, the Company had the following
transactions as Options under the Stock Plan:

Number of
      
      Shares
      Avg.
      exercise 
      price
      Aggregate
      
      considerationGranted and unexercised at
      beginning of year
      Nil
      -
      -Granted and exercised
      during the year
      9,698,228
      $ 0.131
      $ 1,273,334Granted and unexercised at
      end of year
      Nil
      -
      -


The exercise price at the time the Options were granted and exercised was
approximately equal to the market price at that time.

There were no Options granted or exercised during the year
ended June 30, 2002. There were no Options granted or exercised during the year
ended June 30, 2003.

Note 14.    CONVERTIBLE DEBT

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

Note 15.    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 16.    GOVERNMENT ASSISTANCE

The Company is eligible for and has made claims for tax
credits related to scientific research and experimental development expenditures
made in Canada. These amounts, under Canadian Federal and Provincial tax law in
conjunction with its annual tax return filings, need not be offset against taxes
otherwise payable to become refundable to the Company at the end of its fiscal
year. As such, during the year ended June 30, 2003, the Company received
approximately $246,970, which has been recorded as an increase in stockholders'
equity paid-in capital. During the six month period ended December 31, 2003, the
Company did not receive any tax credits. Also, during the six month period ended
December 31, 2003, the Company did not record any additional tax credits
bringing the reported receivable balance from these governments from $246,970 as
of June 30, 2002 to zero as of June 30, 2003 and December 31, 2003.

Note 17.    COMMITMENTS

The Company leased office and warehouse space at an annual
minimum rent of $80,000 for the first year, $160,000 for the second year and
$200,000 per year for the third through the fifth years. The lease expired in
2003. The Company was responsible for its proportionate share of any increase in
real estate taxed and utilities. Also, under the terms of the lease, the Company
was required to obtain adequate public liability and property damage insurance.

The lease contained a second ranking moveable hypothec in the amount of
$300,000 on the universality of the Company's moveable property.

Rental expense for the year ended June 30, 2003 amounted to
$124,442. Rental expense for the six month period ended December 31, 2003
amounted to zero.

At December 31, 2003, the Company was in arrears of rent, including interest
and related charges, in the approximate amount of $560,000.

Note 17.    LITIGATION

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.

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

An action was instituted by a Plaintiff, the Company's
landlord, against the Company in June 2001 for arrears of rent in the amount of
approximately $113,900. The Company is currently in negotiation with its
landlord and the action is still pending. As at June 30, 2003, the Company was
in arrears of rent and property taxes to its landlord in the amount of
approximately $560,000.

Note 18.    ACCUMULATED OTHER COMPREHENSIVE INCOME

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

---



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 and six month periods ended December 31, 2003. 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 reported in the Company's Annual Report for the year ended June 30, 2003,
filed in October 2003 on Form 10-KSB, the Company's TCS Tire Recycling System
has been ready for market since March of 2000, although further refinements were
made to the technology during the remainder of Fiscal 2001 and throughout
Calendar 2002. Throughout that period the availability of funds necessary to
permit developmental stage companies, such as ours, to make the transition to
the commercial stage has been very restricted. The Company was late in filing
its September 2002 Form 10-Q on a timely basis, which resulted in our stock
being removed from the Bulletin Board to be shown as OTC-Other, in which
category the "Bid" and "Ask" are not shown. The Company intends to attempt to
rectify this situation and apply for re-listing on the OTC Bulletin Board as
soon as practicable.

On the business development side, we have continued to encounter serious
difficulties in realizing our first system sale, as has our licensee, Simpro.
The substantial cost of a TCS-2, combined with its lack of a substantial
production track record represent obstacles to the sales efforts. Furthermore,
the increase in value of the Euro versus the US dollar has also been detrimental
to the sales efforts. Our systems' being manufactured by Simpro, their costs are
primarily Euro-based. One year ago, one Euro cost approximately US$0.97; today,
one Euro costs approximately US$1.25. This foreign exchange differential on the
price of the installed system thus represents a close to 30% increase in cost,
for those potential customers who would normally be purchasing systems in US
dollars, without any commensurate increase in capacity or functionality of the
system. We are discussing different ways to attenuate this increase with Simpro.
Euro currency customers and those other potential customers whose currencies
have also appreciated against the US dollar are unaffected.

For the past year and a half, the Company has been working with a Puerto
Rican entrepreneur interested in purchasing a TCS-2, but having difficulty in
finding an investor partner, necessary to complete his project financing
package. To date, no appropriate investor partner has been found.

Simpro has also been working on several potential sales in South America and
elsewhere, either directly or through intermediaries. It has been represented to
us that discussions in some cases have reached an advanced stage, but, as of the
date of this Report, no unconditional sales contracts had been signed.

Over a year ago, we had been negotiating with a Canadian entrepreneur for the
installation of a TCS-2 in Quebec. The entrepreneur in question decided to
install a different technology, seemingly with considerable quantities of used
equipment. However, the project initially conceived remains viable, and we are
working with a Montreal-based consulting firm to bring in investors to support
such a Quebec-based facility. The business plan for such a facility has been
completed and the consultants are presenting the plan to potential investors
from both the public and private sectors. To date, while interest has been
demonstrated, no investors have committed to any such project. We remain hopeful
that such investors will be found, but we cannot guarantee that this will occur.

We continue to respond to information requests with respect to our TCS
systems from numerous sources. While the volume of such requests would indicate
continued significant interest in our technology, there can be no assurances
that any of these requests will proceed to actual negotiations for a system
sale, nor that any sales contracts would actually be concluded.

With the suspension of rubber crumb production operations in January of 2002
and the concurrent reduction of R&D activity, we have devoted all of our efforts
to being able to conclude a sale of a TCS System and to the raising of necessary
funds to keep the Company operational until revenue from sales can be realized.

In February of 2001, we concluded a private financing with an investor group
managed by a New York-based company. Under the terms of the Agreement, we drew
down $750,000 of the available $5,000,000 amount. The initial $750,000 was
provided in the form of a Convertible Note. We 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 we are currently
in default with respect the Settlement Agreement. On March 5, 2003, the
Investors sent to us by FAX, demand letters of payments due for each of the
three investor funds involved in the initial transaction, these letters being
dated February 25 and February 26, 2003, being the two-year anniversary date of
their investment. The amount currently due, including accrued interest included
in accrued liabilities, penalties and fees, and after realization on collateral
shares and conversion of debt into 4,000,000 common shares, is approximately
$600,000. The Company is not in a position to pay this sum. The Investors
continue to hold 8,344,811 collateral shares as of

Because of the lengthy delay preceding the commencement of commercial
operations, particularly insofar as regards the sale and manufacturing of TCS
Systems is concerned, we have had to, and in the foreseeable near future, will
be forced to continue to cover a substantial part of our overhead costs from
sources other than revenues from operations. At present, we have no cash and no
cash flow from operations. Since relocating to our current premises, our monthly
cash requirements have been reduced to negligible amounts. Most of the expenses
listed on our Income Statement relate to salary accruals.

Liquidity and Capital Resources

The activities of the Company, since its formation in 1987, and the inception
of its current business in 1993 have been financed by sources other than
operations. Such financing was principally provided by the sale of securities in
private transactions and by additional capital investments by directors,
officers and employees. During the six month period ended December 31, 2003,
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, but no such investments have occurred since that date.

As of December 31, 2003, the Company had total assets of $233,333 as compared
to $653,029 at December 31, 2002 reflecting a decrease of $419,696, and a
decrease of $2 versus total assets as of the last fiscal year end, June 30,
2003, which amounted to $233,335. Management attributes the decrease from
December 31, 2002 to December 31, 2003 primarily to the following factors: (i) a
decrease of $126,428 in Tax Credits Receivable from the balance as of December
31, 2002 in the amount of $126,428 to the balance as of December 30, 2003 in the
amount of $Nil, and (ii) a decrease of $37,067 in Sales Tax Receivable from the
balance as of December 31, 2002 in the amount of $37,103 to the balance as of
December 31, 2003 in the amount of $36, and (iii) a decrease of $240,077 in
Prepaid Expenses and Deposits from the balance as of December 31, 2002 in the
amount of $240,077 to the balance as of December 31, 2003 in the amount of $Nil,
and (iv) a decrease of $28,751 in Accounts Receivable from the balance as of
December 31, 2002 in the amount of $28,751 to the balance as of December 31,
2003 in the amount of $Nil, and (v) an increase of $10,693 in Inventory from the
balance as of December 31, 2002 in the amount of $62,629 to the balance as of
December 31, 2003 in the amount of $73,322, and (vi) an increase of $1,935 in
Notes Receivable from the balance as of December 31, 2002 in the amount of
$18,540 to the balance as of December 31, 2003 in the amount of $20,475. There
were no significant differences attributable to asset balances from June 30,
2003 to December 31, 2003.

As of December 31, 2003, the Company had total liabilities of $4,109,505 as
compared to $4,398,849 at December 31, 2002, reflecting an increase of $289,344,
and reflecting an increase of $14,705 versus total liabilities as of the last
fiscal year end, June 30, 2003, which total amounted to $4,094,800. The decrease
in total liabilities from December 31, 2002 to December 31, 2003 is primarily
attributable to a decrease of $345,884 in Convertible Notes, by a decrease of
$161,919 in Loans from Related Parties, by a decrease of $44,078 in Government
Loans and by an increase in Accounts payable and Accrued Liabilities in the
amount of $232,326. The increase in total liabilities from June 30, 2003 to
December 31, 2003 is primarily attributable to an increase of $180,290 in
Accounts Payable and Accrued Liabilities, to an increase of $187,501 in Loans
from Related Parties and to a decrease of $345,884 in Convertible Notes.

Reflecting the foregoing, the financial statements indicate that as at
December 31, 2003, the Company had a working capital deficit (current assets
minus current liabilities) of $1,956,758 compared to a working capital deficit
of $1,477,166 as at December 31, 2002, reflecting an increase of $479,592. The
working capital deficit of $1,956,758 as at December 31, 2003 compares to a
working capital deficit of $1,783,667 as at June 30, 2003, reflecting an
increase of $173,091.

Results of Operations

The financial statements which are included in this report reflect total
operations and other expenses of $307,269 for the six month period ended
December 31, 2003 versus $951,077 for the comparative six month period ended
December 31, 2002, reflecting a decrease of $643,808. The Company has ceased
Research and Development activities thereby resulting in a decrease in personnel
expenses and other Research and Development expenses and for the six month
period ended December 31, 2002, incurred a charge of $530,651 to write down
Property and Equipment to its salvage value.

The activities of the Company, since its formation in 1987, and the inception
of its current business in 1993 have been financed by sources other than
operations. Such financing was principally provided by the sale of securities in
private transactions and by additional capital investments by directors,
officers and employees. During the six month period ended December 31, 2003,
directors, officers, employees and consultants did not make any direct cash
investments into the Company. During the Fiscal year ended June 30, 2003, direct
cash investments made by the directors, officers, shareholders and consultants
amounted to $950,713.

PART II: OTHER INFORMATION

Item 1:

Item 1 - Legal Proceedings

We are presently a party in the following legal proceedings, the status of
which has not changed since the Company filed its last Quarterly Report on Form
10-QSB for the first quarter of Fiscal 2004.

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.

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$612,000 at current exchange
rates) representing expenses and an additional Canadian$5,411,158 (approximately
US$4,167,000 at current exchange rates) 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.

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 CA$98,513
(approximately US$75,850 at current exchange rates) 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 former landlord Tri-Steel Industries Inc. instituted an action against
us, and our subsidiaries Tirex Corporation Canada Inc. 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 the then prevailing approximate
exchange rate of $0.64 ). The premises were vacated by us as of November 2002.
The former landlord has accepted that he would be repaid out of future cash
flows and that the premises lease would be terminated effective December 31,
2002. As at December 31, 2002, the Company was in arrears of rent and property
taxes to its previous landlord in the amount of Cdn$876,268.79 (approximately
US$5690,000 at the then prevailing exchange rates). The Company came to an
agreement with the landlord under which the debt would be fixed in US dollars at
$560,000, thus cancelling exchange rate fluctuation risks, and that this amount
would not be interest-bearing providing Tirex would direct the payment directly
to the landlord of US$140,000 out of the Company's share of the proceeds on the
first four sales of TCS Systems. Each $140,000 will be progressively paid out as
a function of cash inflows from progress payments made by the customers.

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

Item 2: - Changes in Securities and Use of Proceeds

Share Issuance Continuity Schedule

Shares issued and outstanding as of June
      30, 2003
      249,895,892Total Issuances in the First Half of FY
      2004
      nilTotal Outstanding as of December 31, 2003
      249,,895,892


Item 3 - Defaults Upon Senior Securities

During 1998, we 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, we intend to extend the conversion
dates of these debentures upon the request of the holders.

As indicated above, in February of 2001, we concluded a private financing
with an investor group managed by a New York-based company. Under the terms of
the Agreement, we had the contractual right to require the Investor to purchase
up to US$5,000,000 of put notes and we drew down US$750,000, which was provided
in the form of a Convertible Note. Under the terms of the Agreement, we were
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,
we were in technical default for failing to have an effective Registration
Statement on record with the Securities and Exchange Commission. We were advised
of the default in mid-July 2001. The SB-2 Registration Statement which we had
submitted to the SEC was subsequently withdrawn.

Following lengthy negotiations, we reached a Settlement Agreement with the
investors on April 26, 2002 under which we 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 we are currently in default
with respect the Settlement Agreement.

On March 5, 2003, the Investors sent to us by FAX, demand letters of payments
due for each of the three investor funds involved in the initial transaction,
these letters being dated February 25 and February 26, 2003, being the two-year
anniversary date of their investment. After taking into consideration the
proceeds of sales of collateral shares, share conversions and accumulating
interest, the sum total due, including interest, penalties and fees, as of
September 30, 2003 was $586,356. Accrued interest of approximately $12,000 is
included in accrued liabilities. As of September 30, 2003, the investors had in
their possession 3,190,977 collateral shares plus 4,000,000 shares converted
from the debt. The Company is not in a position to pay this sum of cash due. The
Company is working with the Investors to establish those conditions, related to
the development of the business, such that these sums can be paid over time. The
Investors also sent a request to convert the debt. There can be no guarantee
that the investors will continue to not take legal recourse against the Company
and that the anticipated cash availability to support a re-negotiated Settlement
Agreement will actually be available

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

During the three-month period ended December 31, 2003, there were no
submissions of matters to a vote of Security Holders.

Item 6 - Exhibits and Reports on Form 8-K

Exhibits

No exhibits are filed with this report

Reports on Form 8-K

During the three month period ended December 31, 2003, there were no Reports
on Form 8-K filed by the Company.

---



SIGNATURES



|                            | THE TIREX
    CORPORATION                 
|--------------------------- | ------------------------------------------
|                            |                                           
|                            |                                           
|Date:
    February 17, 2004 | By                                        
|                            | John L. Threshie,
    Jr. President       
|                            |                                           
|                            |                                           
|Date:
    February 17, 2004 | By                                        
|                            | Michael Ash,
    Treasurer and            
|                            | Chief Accounting
    and Financial Officer
|                            |                                           

---



CERTIFICATION OF PRINCIPAL EXECUTIVE, ACCOUNTING AND
FINANCIAL OFFICER 
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of The Tirex Corporation (the
"Company") on Form 10-QSB for the period ended December 31, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
John L. Threshie Jr., President of the Company, hereby certify pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

(1) the Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

/s/ JOHN L. THRESHIE JR.
John L. Threshie Jr. 
President 
February 17, 2004