U.S. SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

(Mark One)

[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period ended September 30, 2007.

[   ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 
For the transition period from to

Commission File Number 33-17598-NY

THE TIREX CORPORATION

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



(203) 522-3247 
(Issuers telephone number, including area code)

PO Box 1000, Stratford Postal Office 
411 Barnum Ave. Cutoff 
Stratford CT USA 06614-9991(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 September 30, 2007 : 249,895,892shares

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

---



The Tirex Corporation 
(A Development Stage Company)



TABLE OF CONTENTS

|              |                                                                                                        |     
|------------- | ------------------------------------------------------------------------------------------------------ | ----
|PART I
      | FINANCIAL INFORMATION                                                                                  | Page
|              |                                                                                                        |     
|Item 1
      | Financial Statements (Unaudited)                                                                       | 1   
|              |                                                                                                        |     
|              | The Tirex Corporation and Subsidiaries
    Consolidated Balance Sheet as of September 30, 2007         | 2   
|              |                                                                                                        |     
|              | Consolidated Statements of Operations for the
    three month period ended September 30, 2007 and 2006 | 3   
|              |                                                                                                        |     
|              | Consolidated Statements of Cash Flows for the
    three month period ended September 30, 2007 and 2006 | 4   
|              |                                                                                                        |     
|              | Notes to Financial Statements (Unaudited)                                                              | 6   
|              |                                                                                                        |     
|Item 2
      | Management's Discussion and Analysis of
    Financial Condition and Results of Operations              | 15  
|              |                                                                                                        |     
|Item 3
      | Controls and Procedures                                                                                | 20  
|              |                                                                                                        |     
|PART II
     | OTHER INFORMATION                                                                                      | 20  
|              |                                                                                                        |     
|Item 1
      | Legal Proceedings.                                                                                     | 20  
|Item 2       | Changes in Securities and Use of Proceeds                                                              | 21  
|Item 3       | Defaults Upon Senior Securities                                                                        | 21  
|Item 4
      | Submission of Matters to a Vote of Security Holders                                                    | 21  
|Item 5       | Other Information                                                                                      | 21  
|Item 6
      | Exhibits and Reports on Form 8-K                                                                       | 21  



The financial statements are unaudited. However, Management of registrant
believes that all necessary adjustments, including normal recurring adjustments,
have been reflected to present fairly the financial position of registrant at
September 30, 2007 and the results of its operations and changes in its cash
position for the three period ended September 30, 2007 and 2006 and for the
period from inception (July 15, 1987). This quarterly statement has not been
reviewed by an independent accountant.

---







THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007





1

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 2007

|                                                                 | September 30,
    2007
|---------------------------------------------------------------- | ----------------------
|ASSETS                                                          
|                                                                 |                       
|Current Assets                                                   |                       
|Cash and cash equivalents                                        | $                     
|Accounts receivable                                              |                       
|Notes receivable                                                 |                       
|Inventory                                                        |                       
|Research and Experimental
    Development tax credits receivable |                       
|                                                                 |                       
|                                                                 |                       
|Property and equipment, salvage
    value                        |                       
|                                                                 |                       
|Other assets                                                     |                       
|Investment, at cost                                              |                       
|                                                                 |                       
|                                                                 |                       
|                                                                 |                       
|                                                                 | $                     
|                                                                 |                       
|                                                                 |                       
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                  
|                                                                 |                       
|Current Liabilities                                              |                       
|Accounts payable and accrued
    liabilties                      | $                     
|Current portion of long-term
    debt                            |                       
|                                                                 |                       
|                                                                 |                       
|Other liabilities                                                |                       
|Long-term deposits and notes                                     |                       
|Government loans (net of
    current)                            |                       
|Capital lease obligations (net
    of current)                   |                       
|Convertible notes                                                |                       
|Convertible notes                                                |                       
|Convertible loans                                                |                       
|                                                                 |                       
|                                                                 |                       
|                                                                 |                       
|Stockholders' Equity (Deficit)                                   |                       
|Common stock, $.001 par value,
    authorized                    |                       
|250,000,000 shares, issued and
    outstanding                   |                       
|249,895,892 shares (June 30,
    2005 - 249,895,892 shares)      |                       
|Additional paid-in capital                                       |                       
|Deficit accumulated during the
    development stage             |                       
|Unrealized gain (loss) on
    foreign exchange                   |                       
|                                                                 |                       
|                                                                 |                       
|                                                                 | $                     

2

---

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

|                                                                       | Three months ended
 September 30 |             | Cumulative from
 March 26, 1993 to
    September 30, 2007
|---------------------------------------------------------------------- | -------------------------------- | ----------- | ---------------------------------------------------------
|2007                                                                   |                                  | 2006       
|                                                                       |                                  |             |                                                          
|Revenues                                                               | $                                | -           |                                                          
|                                                                       |                                  |             |                                                          
|Cost of Sales                                                          |                                  | -           |                                                          
|                                                                       |                                  |             |                                                          
|Gross profit                                                           |                                  | -           |                                                          
|                                                                       |                                  |             |                                                          
|Operations                                                             |                                  |             |                                                          
|General and administrative                                             |                                  | 96,949      |                                                          
|Depreciation and amortization                                          |                                  | -           |                                                          
|Research and development                                               |                                  | -           |                                                          
|                                                                       |                                  |             |                                                          
|Total Expense                                                          |                                  | 96,949      |                                                          
|                                                                       |                                  |             |                                                          
|Income (loss) before other
    expenses                                |                                  | (96,949)    |                                                          
|                                                                       |                                  |             |                                                          
|Other expenses (income)                                                |                                  |             |                                                          
|Interest expense                                                       |                                  | 11,699      |                                                          
|Interest income                                                        |                                  | -           |                                                          
|Income from stock options                                              |                                  | -           |                                                          
|Loss on disposal of equipment                                          |                                  | -           |                                                          
|                                                                       |                                  |             |                                                          
|                                                                       |                                  | 11,699      |                                                          
|                                                                       |                                  |             |                                                          
|Net income (loss)                                                      |                                  | (108,648)   |                                                          
|                                                                       |                                  |             |                                                          
|Other comprehensive loss                                               |                                  |             |                                                          
|Loss (gain) on foreign exchange                                        |                                  | -           |                                                          
|                                                                       |                                  |             |                                                          
|Net income (loss) and
    comprehensive loss                           | $                                | (108,648)   |                                                          
|                                                                       |                                  |             |                                                          
|Basic and Diluted net loss and
    comprehensive loss per common share | $                                | (0.00)      |                                                          
|                                                                       |                                  |             |                                                          
|Weighted average shares of
    common stock outstanding                |                                  | 249,895,892 |                                                          

3

---

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

|                                                                                | Three months ended
 September 30 |           | Cumulative from
 March 26, 1993 to
    September 30, 2007
|------------------------------------------------------------------------------- | -------------------------------- | --------- | ---------------------------------------------------------
|2007                                                                            |                                  | 2006     
|                                                                                |                                  |           |                                                          
|Cash flows from operating
    activities:                                       |                                  |           |                                                          
|                                                                                |                                  |           |                                                          
|Net income (loss)                                                               | $                                | (108,648) |                                                          
|                                                                                |                                  |           |                                                          
|Adjustments to reconcile net
    loss to net cash used in operating activities: |                                  |           |                                                          
|Depreciation and amortization                                                   |                                  | -         |                                                          
|(Gain) loss on disposal and
    abandonment of assets                           |                                  | -         |                                                          
|Stock issued in exchange for
    interest                                       |                                  | -         |                                                          
|Stock issued in exchange for
    services and expenses                          |                                  | -         |                                                          
|Stock options issued in
    exchange for services                               |                                  | -         |                                                          
|Unrealized (loss) gain on
    foreign exchange                                  |                                  | (262,706) |                                                          
|Other non-cash items                                                            |                                  | 83,750    |                                                          
|                                                                                |                                  |           |                                                          
|Changes in assets and
    liabilities:                                          |                                  |           |                                                          
|(Increase) decrease in:                                                         |                                  |           |                                                          
|Account receivable                                                              |                                  | -         |                                                          
|Inventory                                                                       |                                  | -         |                                                          
|Sales tax receivable                                                            |                                  | -         |                                                          
|Research and experimental
    development tax credits receivable                |                                  | -         |                                                          
|Other assets                                                                    |                                  | -         |                                                          
|(Decrease) increase in :                                                        |                                  |           |                                                          
|Accounts payables and accrued
    liabilities                                   |                                  | 256,354   |                                                          
|Accrued salaries                                                                |                                  | 31,250    |                                                          
|Due to stockholders                                                             |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Net cash used in operating
    activities                                       |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Cash flow from investing
    activities:                                        |                                  |           |                                                          
|Increase in notes receivable                                                    |                                  | -         |                                                          
|Reduction in notes receivable                                                   |                                  | -         |                                                          
|Investment                                                                      |                                  | -         |                                                          
|Equipment                                                                       |                                  | -         |                                                          
|Equipment assembly costs                                                        |                                  | -         |                                                          
|Organization cost                                                               |                                  | -         |                                                          
|Reduction in security deposit                                                   |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Net cash used in investing
    activities                                       |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Cash flow from financing
    activities:                                        |                                  |           |                                                          
|Loans from related parties                                                      |                                  |           |                                                          
|Deferred financing costs                                                        |                                  | -         |                                                          
|Proceeds from deposits                                                          |                                  | -         |                                                          
|Payments on notes payable                                                       |                                  | -         |                                                          
|Proceeds from convertible notes                                                 |                                  | -         |                                                          
|Proceeds from notes payable                                                     |                                  | -         |                                                          
|Payments on lease obligations                                                   |                                  | -         |                                                          
|Proceeds from issuance of
    convertible subordinated debentures               |                                  | -         |                                                          
|Proceeds from loan payable                                                      |                                  | -         |                                                          
|Payments on loan payable                                                        |                                  | -         |                                                          
|Proceeds from issuance of stock
    options                                     |                                  | -         |                                                          
|Proceeds from grants                                                            |                                  | -         |                                                          
|Proceeds from issuance of
    common stock                                      |                                  | -         |                                                          
|Proceeds from additional
    paid-in capital                                    |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Net cash provided by financing
    activities                                   |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Net (decrease) increase in cash
    and cash equivalents                        |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Cash and cash equivalents -
    beginning of period                             |                                  | -         |                                                          
|                                                                                |                                  |           |                                                          
|Cash and cash equivalents - end
    of period                                   | $                                | -         |                                                          

4

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

|                                                                                                                                                                                                                                                                                       | Three months ended
 September 30 |      | Cumulative from
 March 26, 1993 to
    September 30, 2007
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ---- | ---------------------------------------------------------
|2007                                                                                                                                                                                                                                                                                   |                                  | 2006
|                                                                                                                                                                                                                                                                                       |                                  |      |                                                          
|Supplemental
    Disclosure of Non-Cash Activities:                                                                                                                                                                                                                                    |                                  |      |                                                          
|                                                                                                                                                                                                                                                                                       |                                  |      |                                                          
|During the year ended June 30,
    2007, the Company did not issue common stock in recognition of the payment
    of debt. During the three months ended September 30, 2007, the Company did
    not issue common stock in recognition of the payment of debt.                         |                                  |      |                                                          
|                                                                                                                                                                                                                                                                                       |                                  |      |                                                          
|During the year ended June 30,
    2007, the Company did not issue common stock in exchange for services
    performed and expenses. During the three months ended September 30, 2007,
    the Company did not issue common stock in exchange for services performed
    and expenses. |                                  |      |                                                          
|                                                                                                                                                                                                                                                                                       |                                  |      |                                                          
|Supplemental
    Disclosure of Cash Flow Information:                                                                                                                                                                                                                                  |                                  |      |                                                          
|                                                                                                                                                                                                                                                                                       |                                  |      |                                                          
|Interest paid                                                                                                                                                                                                                                                                          | $                                | -    |                                                          
|                                                                                                                                                                                                                                                                                       |                                  |      |                                                          
|Income taxes paid                                                                                                                                                                                                                                                                      | $                                | -    |                                                          

5

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007

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

DEVELOPMENTAL STAGE

At September 30, 2007, 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., all of these subsidiaries currently being dormant. Certain of
these companies have actually been de-registered by government authorities but
could easily be revived if circumstances would warrant such action. Tirex Canada
R&D Inc. is held 51% by two shareholders of the Company. The shares owned by
these shareholders are held in escrow by the Company's attorney and are
restricted from transfer thereby allowing for a full consolidation of this
Company. The Tirex Corporation Canada Inc., Tirex Advanced Products Quebec Inc.
and Tirex Acquisition Corp. are 100% held by the Company. All subsidiary
companies 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.

6

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost less accumulated
depreciation and provisions for write-downs. Depreciation is computed using the
straight-line method over the estimated useful lives of five years. No
depreciation is recorded for equipment written down to salvage value.
Repairs and maintenance costs are expensed as incurred while
additions and betterments are capitalized. The cost and related accumulated
depreciation of assets sold or retired are eliminated from the accounts and any
gains or losses are reflected in earnings.
INVESTMENT
An investment made by the Company, in which the Company owns
less than a 20% interest, is stated at cost value. The cost value approximates
the fair market value of the investment.
ESTIMATES
Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.
ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123
In 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation.
SFAS 123 encourages, but does not require, companies to record stock-based
Compensation and other costs paid by the issuance of stock at fair value. The
Company has chosen to account for stock-based compensation, stock issued for
non-employee services and stock issued to obtain assets or in exchange for
liabilities using the fair value method prescribed in SFAS 123. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.
ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128
In 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings per Share. SFAS 128 changes the
standards for computing and presenting earnings per share (EPS) and supersedes
Accounting Principles Board Opinion No. 15, Earnings per Share. SFAS 128
replaces the presentation of Primary EPS with a presentation of Basic EPS and
replaces the presentation of Fully Diluted EPS with a presentation of Diluted
EPS. It also requires dual presentation of Basic and Diluted EPS on the face of
the income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the Basic EPS
computation to the numerator and denominator of the Diluted EPS computation.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. SFAS 128 also requires restatement
of all prior-period EPS data presented.
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.
7

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007The 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, 2006 and June 30, 2005, 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 2006 and 2005, 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 September 30, 2007 and June 30, 2007,
respectively, the carrying value of all financial instruments was not materially
different from fair value.
INCOME TAXES
The Company has net operating loss carryovers of
approximately $30.9 million as of September 30, 2007, expiring through 2028.
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 September 30, 2007.
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.
8

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007Note 2
GOING CONCERN

As reported in the accompanying financial statements, the
Company incurred a net loss of $480,849 for the year ended June 30, 2007 and a
net loss of $108,648 for the three months ended September 30, 2007.
In March 1993, the Company had begun its developmental stage
with a new business plan. As of March 2000, the Company had developed a
production quality prototype of its patented system for the disintegration of
scrap tires, but nonetheless continued its research and development efforts to
improve the machine's performance and to permit greater flexibility in design
for specific customer applications. Due to the Companys lack of working capital
during the year ended June 30, 2002, all rubber crumb production was suspended
and research and development efforts have been hampered. Pending receipt of
funding from operations, government assistance, loans or equity financing, crumb
rubber production and previous research and development efforts will not be
resumed. While the Company has engaged the process of marketing the TCS System
to numerous potential clients since the beginning of the fiscal year commencing
July 1, 2000, as of September 30, 2007, the Company had not yet consummated an
unconditional purchase order for a TCS System.
The Company is dependent on the success of its marketing of
its TCS Systems, and/or raising funds through equity sales, bank or investor
loans, governmental grants or a combination of these, to continue as a going
concern. The Company's uncertainty as to its ability to generate revenue and its
ability to raise sufficient capital, raise substantial doubt about the entity's
ability to continue as a going concern. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.
Note 3
PROPERTY AND
EQUIPMENT

As at September 30, 2007, plant and equipment consisted of
the following:

|Furniture, fixtures
    and equipment               | $ | 149,516
|--------------------------------------------------- | - | -------
|Manufacturing
    equipment                         |   | 62,400 
|Subtotal                                            |   | 211,916
|                                                    |   |        
|Less: Accumulated
    depreciation and amortization |   | 186,916
|                                                    |   |        
|Total                                               | $ | 25,000 

Depreciation and amortization expense charged to operations for the three
months ended September 30, 2007 was zero. Depreciation and amortization expense
charged to operations for the year ended June 30, 2007 was $25,000.

Note 4

GOVERNMENT LOANS

Canada Economic Development

Loans payable under the Program for the Development of Quebec SMEs based on
50% of approved eligible costs for the preparation of market development studies
in certain regions. At September 30, 2007, the balance of these loans was
$112,141 (June 30, 2007 - $104,710). The loans are unsecured and bear interest
at 8%.

9

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007Note 5
CAPITAL LEASE OBLIGATIONS

The Company leased certain manufacturing equipment under
agreements classified as capital leases. The cost and the accumulated
amortization for such equipment as of September 30, 2007 and June 30, 2007 was
$62,400 and $62,400, 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 lease
expired on June 30, 2004. The leased equipment is not part of the Companys TCS
System prototype.
Note 6
CONVERTIBLE
SUBORDINATED DEBENTURES

The Company issued Type B Convertible Subordinated Debentures
between December 1997 and February 1998. These debentures bore interest at 10%
and were convertible into common shares of the Company at $0.20 per share. The
conversion privilege on the remaining $55,000 of these debentures expired and
the amount is now included on the Balance Sheet in Long term deposits and notes.
Note 7
CONVERTIBLE NOTES

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

|Balance at September
    30, 2007 | $399,389                                             
|--------------------------------- | -----------------------------------------------------
|                                  |                                                      
|Interest rate                     | 8%, payable quarterly,
    commencing                
|                                  | June 30, 2001                                        
|                                  |                                                      
|Issue date                        | February 26, 2001                                    
|                                  |                                                      
|Maturity date                     | February 26, 2003                                    
|                                  |                                                      
|Redemption rights                 | If not converted, the
    holder may require the     
|                                  | Company to redeem at
    any time after maturity     
|                                  | for the principal
    amount pus interest.           
|                                  |                                                      
|Conversion ratio                  | Lower of (i)  80% of
    the average of the three   
|                                  | lowest closing bid
    prices for the thirty trading 
|                                  | days prior to the
    issue date, which equals       
|                                  | $.073, or (ii)  80%
    of the average of the three 
|                                  | lowest closing bid
    prices for the sixty trading  
|                                  | days prior to the
    conversion date.               
|                                  |                                                      
|Common stock warrants             | The Convertible Notes
    carried an option to       
|                                  | purchase Common stock
    warrants at the rate       
|                                  | of one Warrant for
    each $1.25 of purchase        
|                                  | price. The exercise
    price on the first tranche of
|                                  | $ 750,000 is $ .077
    per share.                   
|                                  |                                                      

10

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007

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

Note 8 CONVERTIBLE NOTES

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

|Balance at September 30, 2007 | $ 185,556                                           
|----------------------------- | ----------------------------------------------------
|                              |                                                     
|Interest rate                 | 8%                                                  
|                              |                                                     
|Issue date                    | July 19th, 2000                                     
|                              |                                                     
|Maturity date                 | January 19th, 2002                                  
|                              |                                                     
|Redemption rights             | If not converted, the holder may require the        
|                              | Company to redeem at any time after maturity        
|                              | for the principal amount plus interest.             
|                              |                                                     
|Conversion ratio              | Not convertible prior to July 19th,
    2001, at 20%
|                              | discount to market between July 19th,
    2001 and  
|                              | January 19th, 2002 or at 25% to
    market if held  
|                              | to maturity, to a maximum of not more than          
|                              | 2,500,000 shares.                                   

During the first quarter of Fiscal 2006, the Company
completed a private placement with two investors having a total aggregate value
of US$10,000, one for $2,500 and the other for $7,500. Insofar as the Company
does not have enough common shares available for issuance, the investors agreed
to accept that the investment would be in the form of non-interest-bearing
convertible debt with no fixed terms of repayment. When an adequate number of
common shares become available, these investors will be able to convert their
loans at a price of US$0.005 per share. Any conversion would be proportionally
adjusted in the event of stock splits or reverse splits. In consideration of the
agreed upon conversion price, prior to any possible adjustments, the company
would issue 2,000,000 common shares. Until such time of any conversion, the
US$10,000 is recorded as a liability on the Companys Balance Sheet.

11

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007
Over the twelve months ended June 30, 2006, the expenses of
our company have been funded by a series of loans made by a significant number
of individuals investing modest amounts each totaling approximately US$60,700
through Tirex President, John L. Threshie Jr. During the six months ended March
31, 2007 a further amount of US$36,000 was secured by Mr. Threshie under
substantially the same terms. Insofar as the funds were lent to Mr. Threshie
rather than to Tirex directly, with Mr. Threshie then paying personally the
expenses of Tirex, which expenses have been duly recorded in our accounts offset
by a liability to Mr. Threshie, the liability on our books is still listed as
being toward Mr. Threshie. Thus no direct liability toward these investors is on
our books. Insofar as Tirex does not have shares to issue at this time, these
investors, fully cognizant of our situation and so documented in writing, have
accepted that their investment is being made via Mr. Threshie and represents a
convertible debt, the conversion of which can occur once Tirex will have shares
available for issuance. This debt is convertible at fixed prices rather than as
a discount to market. To June 30, 2006, approximately 13,140,000 shares were
involved, and a further 8,200,000 shares would be required as a result of the
borrowings during the year ended June 30, 2007, these numbers being before any
adjustments to our share authorization structure which would cause a
proportionate adjustment to the number of shares actually issuable.
In addition to the above liability for shares, Tirex is
liable for the replacement of 11,986,315 shares which were delivered as
collateral by Tirex Directors, Threshie, Muro and Sanzaro (recently deceased)
for the $750,000 of convertible debt contracted for in 2001, which shares were
sold by the debt holders.
Note 9
RELATED PARTY
TRANSACTIONS

Convertible loans include amounts primarily due to Directors,
Officers and employees. Historically, such amounts due have been repaid through
the issuance of stock. At June 30, 2007 and June 30, 2006, the balances owing to
Directors and Officers was $2,365,679 and $2,284,429, respectively. These
amounts are without interest or terms of repayment.
Long-term deposits and notes included an amount of $118,500
at September 30, 2007, which is payable to Ocean Tire Recycling & Processing
Co., Inc., a company previously owned by a former Director of the Company, Louis
A. Sanzaro, recently deceased. We expect that the Executor of the estate of Mr.
Sanzaro will contact us with respect to the disposition of our liabilities
toward the estate of Mr. Sanzaro.
Note 10
COMMON STOCK

During the year ended June 30, 2007 and the three months
ended September 30, 2007, the Company did not issue any common stock in exchange
for services performed.
During the year ended June 30, 2004, an Officer of the
Company exercised stock options pursuant to a services agreement. The exercise
of these stock options entitled the Officer to 1,500,000 common shares of the
Company on a cash-less basis. The Company does not have sufficient authorized
and unissued shares available at September 30, 2007 for issuance of this stock
and as such, the amount attributable to these shares has been recorded as part
of the balances owing to Directors and Officers included in Convertible loans.

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

As at September 30, 2007, the Company had 249,895,892 Common
shares issued and outstanding, versus its authorization of 250,000,000 shares.

12

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007Note 11
CONVERTIBLE DEBT

In the event that holders of convertible rights of option
exercise such rights of conversion, the Company does not have sufficient number
of authorized shares conversion stock to fulfill such obligations and a
shareholder meeting would be required to approve the additional authorized
number of shares. There is no assurance that the shareholders would approve the
increase to the number of authorized shares of stock to meet the conversion
obligations under the various conversion agreements or options or agree to a
reverse split of the stock.
Note 12
GOVERNMENT
ASSISTANCE

The Company is eligible for and has made claims for tax
credits related to scientific research and experimental development expenditures
made in Canada in previous years. These amounts, under Canadian Federal and
Provincial tax law in conjunction with its annual tax return filings, need not
be offset against taxes otherwise payable to become refundable to the Company at
the end of its fiscal year. As such, during the year ended June 30, 2003, the
Company received approximately $246,970, which was recorded as an increase in
stockholders equity paid-in capital. During the years ended June 30, 2004 and
June 30, 2005 and the three month period ended September 30, 2005, the Company
did not make any additional claims for tax credits as it was not eligible to do
so and, as such, the Company did not record any additional tax credits
receivable. The previous receivable balance in respect of tax credits from these
governments went from $246,970 as of June 30, 2002 to zero as of June 30, 2003
and remained as such as of June 30, 2004, June 30, 2005, June 30, 2006, June 30,
2007 and September 30, 2007.
Note 13
COMMITMENTS

Rental expense for the three months ended September 30, 2007
amounted to zero. Rental expense for the year ended June 30, 2007 amounted to
zero.
At September 30, 2007, the Company was in arrears of rent,
including interest and related charges, in the approximate amount of $560,000. A
settlement agreement with the former landlord is in place under the terms of
which the Company would pay to the former landlord the sum of $140,000 from the
proceeds to the Company of revenues from each of the first four sales of TCS
Systems.
Note 14
LITIGATION

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

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

13

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
SEPTEMBER 30, 2007An action was instituted by a Plaintiff, the Companys
landlord, against the Company in June 2001 for arrears of rent in the amount of
approximately $113,900. Subsequent additions to arrearages with respect to rent
and property taxes raised the amount due to approximately $560,000. A settlement
agreement with the former landlord is in place, under the terms of which the
Company would pay to the former landlord the sum of $140,000 from the proceeds
to the Company of revenues from the first four sales of TCS Systems.
Note 15
ACCUMULATED OTHER
COMPREHENSIVE INCOME

The deficit accumulated during the development stage included
accumulated comprehensive other income totaling $103,396.
14

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ITEM 2 - MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND PLAN 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
September 30, 2007. 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.

In March 2000, we announced that
our tire recycling technology prototype was ready for replication and
commercialization. Our technology has been upgraded and refined since that year
2000 date. The intellectual property owned by Tirex comprises the patented
fracturing mill (both US and Canadian patents) which permits the effective
separation of the materials components of the tires, and this at a significant
cost saving. The intellectual property of our process is recognized in the
Manufacturing License Agreement we have with Simpro www.simpro.it. Our patent renewals for both the USA and Canada have
both been completed.

Since the March 2000
announcement respecting the commercial availability of its TCS-1 model, Tirex
worked to complete the design of the TCS-2, the version of the technology which
processes two million tires per year, and has worked with its manufacturing
partner, Simpro S.p.A. of Turin, Italy, to refine the technology and to create
the possibility of auxiliary crumb rubber processing to permit the production of
much finer mesh crumb rubber than the initial technology delivers. These
refinements, at no significant additional cost to customers, allow for access to
higher-value crumb rubber markets which some customers desire. The TCS-2 is now
the primary model being offered to customers for reasons of capital and
operating cost efficiencies per unit volume of output of finished product
although inquiries for TCS-3 and TCS-4 models have been entertained.

Concurrent with the continued
technological refinement of our technology, our primary objective has been to
conclude a first purchase and sales agreement of a TCS System. In this regard,
Tirex has responded to requests for information and has engaged in negotiations
with potential customers throughout the world. Simultaneously, our manufacturing
partner, Simpro, which also has a non-exclusive marketing agreement, has been
actively negotiating with numerous potential customers, most recently with
customers based in the Middle East, the Far East, Russia and with British
interests who would install one or more systems in the Middle East. With respect
to this latter contact, the process has been slower than what Management would
have preferred, but Management recognizes that the TCS element of this
industrial development initiative represents but a fraction of the total and
thus the timing of the conclusion of the agreement is constrained by other
negotiations where which we have no interest. Insofar as none of the above
opportunities have reached the point of being actual agreements, we cannot offer
any guarantees that any of the above will actually result in formal contracts.

15

---

Over the last twelve months we
have developed a relationship with New York based individuals who have expressed
their belief in our technology and have represented to us that they would be
able to put together US-based TCS projects. These individuals have devoted
substantial time to the understanding of our technology and to the structure and
key successful factors of the tire recycling industry. While Tirex has no reason
to doubt the abilities of these individuals, neither can we assure that they
will, in fact, be successful with their efforts to sell TCS systems.
In the context of the
information being provided to potential customers, we point out to these persons
or entities that the original TCS-1 prototype located in Montreal has been
disassembled and that the patented fracturing mill is currently physically
located in Italy for reference in research and development purposes. These
customers are also provided copies of videotapes which include, among other
things, a visual demonstration of the prototype actually in use. In addition,
these customers are provided with documentation as to the various accreditations
and attestations as to the effectiveness of the TCS technology, this
documentation coming entirely from independent sources, including private sector
engineering firms, public sector government agencies and
internationally-accredited technical universities. Customers are also offered
the free-of-charge possibility to obtain tailor-made pro-forma financial
forecasts for their specific region, based on an adjustable financial model
created by our Chief Financial Officer, which allows for the input of local
economic costing of goods and services, local taxation conditions, and various
loan and depreciation scenarios.
Despite this important quantity
of substantiation of the effectiveness of the TCS technology and the substantial
offers of assistance in the development of the business plans for these
customers, the conclusion of the first purchase and sales agreement has proven
elusive. Our manufacturing partner, Simpro, has succeeded in putting into place
a limited performance guarantee with respect to the installations which it would
accomplish, and this performance guarantee, backed by a major international
insurance company, is offered to potential customers. Even with performance
guarantees, conclusion of an agreement has been difficult. At issue is that
Tirex is not in a position to simply sell new technology systems into an
established industry. Also with Simpro selling its systems in Euros, and
considering the appreciation of the Euro versus US Dollar, North American sales
have proven very difficult. Most potential customers are confronted with the
reality of becoming involved in a recycling industry which has complexities not
found in other industrial sectors. To screen inquiries from potential customers
and to assist them in their own decision-making process as to whether or not
they want to really participate in this industrial sector, Tirex routinely sends
out a questionnaire to such persons pertaining to the key success factors of
their proposed initiative to ascertain their readiness and capability to become
involved in such activities.
While negotiations on several
fronts have progressed to an advanced stage, as of September 30, 2007, no
unconditional contracts had been concluded.
Management attributes the
difficulty in concluding a sale primarily to the lack of a long-term track
record of the system and to the lack of a demonstration unit to establish the
visual confirmation for customers that the technology actually works as
represented. While the video of the prototype creates interest, it would appear
that, by itself, it cannot replace the visual impact of a functioning fracturing
mill. The approximate installed cost of a TCS-2 is 5,500,000 Euros (currently
approximately US$7.57 million using the exchange rate of November 9, 20071 Euro
= US$1.3771 which is a lot of money for most entrepreneurs or their financial
backers for unproven long-term technology.  The project cost is not limited
to the acquisition cost of the TCS.   Depending somewhat on the
location, we consider that the entrepreneur is facing a total investment cost of
approximately US$9 million to US$10 million, taking into account pre-production
and early production losses, local infrastructure costs, freight an in-transit
insurance, local labor, permits  and a reasonable allocation for working
capital to support early operations.  There could also be import duties on
equipment imported from Europe.
16

---

During the second quarter of
Fiscal 2007, the Tirex head office and more specifically Mr. Threshie, relocated
to Connecticut. Tirex engaged several new commissioned representatives from New
York and Connecticut, each with extensive marketing and business development
backgrounds. The most active opportunities on which Tirex and Simpro have worked
during the first nine months of Fiscal 2007, and on which efforts continue,
include projects for the Middle East, the United Kingdom, Malaysia, Russia,
Italy and New York State. It has been represented to either Tirex or Simpro that
these projects have done their due diligence and either all or a major part of
their funding requirement is feasible. Management, however, is not in a position
to assert that TCS System sales contracts will be concluded.
As noted, these opportunities
may not conclude in definitive agreements. Until there is a commercial system in
operation, and regardless of Management's optimism, there can be no assurance
that these opportunities will actually result in unconditional sales contracts.
Tirex continues to be listed on
the Internet Recycling Exchange, combined with our web site,
www.tirex.tcs.com, and Mr. Threshies
network, it continues to generate interest on a global basis. What appears to be
quite clear is the desire to acquire new technologies to replace existing
technologies which are either being phased out by evolving government
regulations or which are not economically viable in the absence of tire
recycling subsidies. Furthermore, government subsidies and focus, as is the case
in New York, are towards technologies that can produce higher value added
recycled products.
The Agreement with Simpro means
that the gross revenues from sales will be recorded on Simpro's books, not in
the books of Tirex, unless Simpro refuses the contract at which time the gross
revenues would be recorded by Tirex. The amount remitted back to Tirex will take
the form of a royalty and will be accounted for as such. Regardless of the
contract structure and the accounting effects which result, generally accepted
accounting principles in effect in the USA have the effect that the revenues to
Tirex resulting from such transactions will not be recognizable until the
systems will have been accepted by the customers. Given the time line required
to manufacture, install and have accepted these systems, it is impossible that
any revenues would become recognizable, from the point of view of US Generally
Accepted Accounting Principles, during our fiscal year which will end June 30,
2007. While the Company will benefit from the periodic cash inflows resulting
from progress payments during the next approximately ten months, the royalty
will, in fact, not have been earned until the systems are accepted by the
customers.
17

---

As a result of this period
preceding the commencement of commercial operations, we have had to cover our
overhead costs from sources other than from commercial revenues. We expect that
some portion of our future overhead costs, which may be significant, will
continue to be covered from sources other than commercial revenues. Since March
of 2003, our monthly our-of-pocket cash costs have been reduced to
inconsequential amounts, and thus our requirement to find financial resources to
fund operations is minimal. Our greatest expense, from an accounting standpoint,
is for salaries. These salaries have not been paid for over five years, but
rather set up as payables and represent by far the greatest proportion of our
current liabilities. Our cash flow deficit condition will continue until such
time as the Company will start generating revenues from the sale of TCS Systems.
Until we can succeed in securing an unconditional sales contract for the sale of
one or more systems employing our technology, the company will not be engaging
any significant financial commitments and will not be engaging in any
significant research and development activities nor increasing employment.
Since 2005, the expenses of our
company have been funded by a series of loans made by a significant number of
individuals investing modest amounts totaling approximately US$125,000 to
September 21, 2008. Of this total, $10,700 representing 3,840,000 were related
to first quarter Fiscal 2008 transactions. Each investment was made through
Tirex President, John L. Threshie Jr. Insofar as Tirex does not have shares to
issue at this time, these investors, fully cognizant of our situation and so
documented in writing, have accepted that their investment is being made via Mr.
Threshie and represents a convertible debt, the conversion of which can occur
once Tirex will have shares available for issuance. To September 30, 2007,
approximately 30 million shares are involved, this number being before any
adjustments to our share authorization structure which would cause a
proportionate adjustment to the number of shares actually issuable. We will
require a modification to our share authorization. This convertible debt is
priced at fixed prices rather than as a discount to market. Insofar as the funds
were lent to Mr. Threshie rather than to Tirex directly, with Mr. Threshie then
paying personally the expenses of Tirex, which expenses have been duly recorded
in our accounts offset by a liability to Mr. Threshie, the liability on our
books is still listed as being toward Mr. Threshie. Thus no direct liability
toward these investors is on our books. However, once shares will become
available for issuance, the amounts due to Mr. Threshie will be transferred by
him to these investors and the shares issued accordingly. Some shares could be
issued to Mr. Threshie to cover his position, but such shares would be accounted
for as a reduction of the salary currently payable to Mr. Threshie. In the event
of a share capital restructuring, a proportionate adjustment to the number of
otherwise shares would be effected..
In addition to the above
liability for shares, Tirex is liable for the replacement of 11,986,315 shares
which were delivered as collateral by Tirex Directors, Threshie, Muro and
Sanzaro (deceased approximately eighteen months ago, and thus the shares due to
his estate) for the $750,000 of convertible debt contracted for in 2001, which
shares were sold by the debt holders.
We will require a modification
to our share authorization in order to be able to satisfy the obligation to
issue new shares. Once shares will become available for issuance, the amounts
due to Mr. Threshie, Mr. Muro and the estate of Mr. Sanzaro will be will be
satisfied. With respect to a portion of the shares issuable to Mr. Threshie,
these shares will be transferred by him to and thence to the indirect investors
noted above..
Since August 2005, the office
rent of Tirex has been assumed by Mr. Threshie. Until mid August 2006, this
amount was CA$1,500 per month. This amount was accrued as a liability to Mr.
Threshie on our books since last August. For a period of three weeks from
mid-August to early September 2006, Mr. Threshie and the Tirex office was lodged
personally by Tirex CFO, Michael Ash, who has provided these premises at a
discounted rate of CA$1,000 for the three-week period in question. Effective the
week following Labor Day 2006, the Tirex Head Office was relocated to Stratford,
Connecticut where office and operational expenses are relatively nominal.
18

---

In February of 2001, we
concluded a private financing with an investor group. Under the terms of the
Agreement, we had the contractual right to require the Investor to purchase up
to US$5,000,000 of put notes. We drew down US$750,000 of this amount and used
the proceeds of this financing toward legal and consulting fees due, normal
operating expenses such as payroll, rent and taxes and the acquisition of
equipment for our prototype TCS-1 Plant. In July of 2001, the Company entered
into a technical default with respect to the Agreement by not having an SB-2
Registration Statement declared effective by the SEC. After several months of
negotiations, the Company entered into a Settlement Agreement with the Investor
Group which provided for a cash pay down of the amount owed, including interest
and penalties over a period of approximately two years starting with the date
the Settlement Agreement was signed, the right of the Investor Group to continue
to be able to sell up to 600,000 collateral and Rule 144 shares per month and
the issuance of three series of warrants, 500,000 each, exercisable at prices of
one cent, five cents and ten cents over a three year period. This Settlement
Agreement was announced in April of 2002, and details of the terms of the
Agreement are filed as an Exhibit to this Report. The Company, in the absence of
having completed its first sales of TCS Systems according to our expectations,
was unable to generate the cash flow necessary to pay down the Convertible Note
in accordance with the terms of the Settlement Agreement. Thus, the Company once
again finds itself in a position of default. Numerous recourses are available to
the holders of the Convertible Notes, but to date, these recourses have not been
exercised. Such recourses can be exercised at any time and the fact that they
have not been exercised so far does not preclude their being exercised now or in
the future. The Company has kept the Convertible Note holders apprised of its
efforts to sell TCS Systems and thus restart the repayments on the Convertible
Notes. The collateral shares provided by the directors, totaling approximately
11,986,000 shares, have been sold by the investors.
Because of the lengthy delay
preceding the commencement of commercial operations, we have historically had to
cover our overhead costs from sources other than from commercial revenues. We
expect that some portion of our future overhead costs, which may be significant,
will continue to be covered from sources other than commercial revenues. Since
March of 2003, our monthly our-of-pocket cash costs have been reduced to
relatively inconsequential amounts, and thus our requirement to find financial
resources to fund operations has been minimal. Our greatest expense, from anaccounting standpoint, is for salaries. These salaries have not actually
been paid for over four years, but rather set up as payables. Our cash flow
deficit condition will continue until such time as the Company will start
generating revenues from the sale of TCS Systems. Until we can succeed in
securing an unconditional sales contract for the sale of one or more systems
employing our technology, the company will not be engaging any significant
financial commitments and will not be engaging in any significant research and
development activities nor increasing employment.
Liquidity and Capital Resources

As of September 30, 2007, the Company had total assets of
$208,297 as compared to $233,297 at September 30, 2006 reflecting a decrease of
$25,000, and no change versus total assets at June 30, 2007. Except for a
$25,000 decrease in Property and Equipment, there were no changes in the value
of individual assets, representing Notes Receivable, Inventory and an
Investment, from September 30, 2006 to September 30, 2007, and no changes in the
value of individual assets from June 30, 2007 to September 30, 2007.
19
As of September 30, 2007, the Company had total liabilities
of $6,243,916 as compared to $5,519,953 at September 30, 2006, reflecting an
increase of $723,963, and reflecting an increase of $255,203 versus total
liabilities as at June 30, 2007, which total amounted to $5,988,713. The
increase in total liabilities from September 30, 2006 to September 30, 2007 is
primarily attributable to an increase of $328,913 in Accounts Payable and
Accrued Liabilities and by an increase of $361,000 in Convertible Loans. The
increase in total liabilities from June 30, 2007 to September 30, 2007 is
primarily attributable to an increase of $164,022 in Accounts Payable and
Accrued Liabilities and to an increase of $83,750 in Convertible Loans.
Reflecting the foregoing, the financial statements indicate
that as at September 30, 2007, the Company had a working capital deficit
(current assets minus current liabilities) of $3,062,289 compared to a working
capital deficit of $2,699,326 as at September 30, 2006, reflecting an increase
of $362,963. The working capital deficit of $3,062,289 as at September 30, 2007
compares to a working capital deficit of $2,890,836 as at June 30, 2007,
reflecting an increase of $171,453.
The financial statements which are included in this report
reflect total operations and other expenses of $108,648 for the three month
period ended September 30, 2007 versus $105,690 for the comparative three month
period ended September 30, 2006, reflecting an increase of $2,958. The Company
has ceased Research and Development activities thereby resulting in a
significant decrease in personnel expenses and other Research and Development
expenses compared with prior periods.
The success of the tire recycling manufacturing business and
the ability to continue as a going concern will be dependent upon the ability of
the Company to obtain adequate financing to commence profitable, commercial
manufacturing and sales activities and the TCS Systems ability to meet
anticipated performance specifications on a continuous, long term commercial
basis.
The Company believes that the amounts accrued to date in
respect of the shares issued to compensate the executive officers and
consultants reflect the fair value of the services rendered, and that the
recipients of such shares received such shares at an appropriate and reasonable
discount from the then current public market price. The Company believes that
the discount is warranted due to the fact that there are often restrictions on
the transfer of said shares arising out of the absence of registration, and the
uncertainty respecting our ability to continue as a going concern.
From inception (July 15, 1987) through September 30, 2007,
the Company has incurred a cumulative net loss of $30,898,117. Approximately
$1,057,356 of such cumulative net loss was incurred prior to the inception of
the Companys present business plan, in connection with the Companys
discontinued proposed health care business and was due primarily to the
expending of costs associated with the unsuccessful attempt to establish such
health care business. The Company never commenced the proposed health care
operations and therefore, generated no revenues therefrom.
Item 3 - Controls and Procedures
The Company's management, with
the participation of its Chief Executive Officer, who is the Company's principal
executive officer, and its Chief Financial Officer, who is the Company's
principal financial officer, has evaluated the effectiveness of the Company's
disclosure controls and procedures as of September 30, 2007. Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer have
concluded that the Company's disclosure controls and procedures are effective in
alerting them in a timely manner to material information relating to The Tirex
Corporation, including its consolidated subsidiaries, required to be included in
this report and the other reports that the Company files or submits under the
Securities Exchange Act of 1934. During the first quarter of fiscal 2007-08,
there have been no changes in the Company's internal control over financial
reporting that have materially affected, or that are reasonably likely to
materially affect, its internal control over financial reporting.

PART II: OTHER INFORMATION
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 Annual Report on
Form 10-KSB for Fiscal 2007.
20
IM(2) Merchandising and Manufacturing, Inc and David B.
Sinclair v. The Tirex Corporation, Tirex Corporation Canada, Inc., et al.
Lefebvre Frères Limited v. The Tirex Corporation
Tri-Steel Industries Inc. v. The Tirex Corporation

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:  Unregistered Sales of Equity Securities and Use
of Proceeds

None
Item 3:  Defaults Upon Senior Securities

Other than defaults previously reported on in prior periods,
there were no other defaults upon senior securities.
Item 4:  Submission of Matters to a Vote of Security
Holders

During the three-month period ended September 30, 2007, there
were no submissions of matters to a vote of Security Holders.
Item 5:  Other Information

There have been no material changes in the way in which
shareholders may nominate directors.
Item 6:  Exhibits and Reports on Form 8-K

Exhibits
Exhibit 31.1
    Certification
    of Form 10-Q filing by the Chief Executive OfficerExhibit 31.2
    Certification of
    Form 10-Q filing by the Chief Financial OfficerExhibit 32.1
    Certification
    Pursuant to the Sarbanes-Oxley Act by the Chief Executive OfficerExhibit 32.2
    Certification
    Pursuant to the Sarbanes-Oxley Act by the Chief Financial OfficerNo Reports on Form 8-K were filed during the period covered
by this report
21

SIGNATURES



|                        | THE TIREX CORPORATION                 
|----------------------- | --------------------------------------
|                        |                                       
|                        |                                       
|Date: November 13, 2007 | By                                    
|                        | John L. Threshie, Jr. President       
|                        |                                       
|                        |                                       
|Date: November 13, 2007 | By                                    
|                        | Michael Ash, Treasurer and            
|                        | Chief Accounting and Financial Officer





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