UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549


FORM 10-Q

(Mark One)

QQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  For the quarterly period ended December 31, 2008.

£TRANSITION REPORT PURSUANT TO 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 Ident. No.)
|Incorporation or Organization)      |                                 

1771 Post Road EastWestport, CT, USA
06880(Address of principal executive offices, Zip Code)

(203) 292-6922
(Issuers telephone number, including area code)

PO Box 1000 
Stratford, CT, USA 
06614-9991



Indicate by check mark whether the registrant (1) has 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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

Q
Yes     £ No



Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.



|Large accelerated filer
    £ | Accelerated filer
    £    
|----------------------------- | ---------------------------
|                              |                            
|Non-accelerated filer
    £   | Smaller reporting company Q



The number of shares outstanding of each of the issuers classes of common
equity, as of February 4, 2009 is as follows:

Class
      of Securities
      
      Shares OutstandingCommon Shares
      
      887,172,007Convertible Preferred Shares
      
      5,000,000




Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)

Yes £
     No Q



---





|TABLE OF CONTENTS                                                                                    
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
|PART I - FINANCIAL INFORMATION                                                                       
|                                                                                                     
|Item 1 - Financial
      Statements (Unaudited)                                                      
|The Tirex Corporation
      and Subsidiaries Consolidated Balance Sheet as of December 31, 2008      
|Consolidated Statements of
      Operations for the six month period ended December 31, 2008 and 2007
|Consolidated Statements of Cash
      Flows for the six month period ended December 31, 2008 and 2007
|Notes to Financial Statements
      (Unaudited)                                                      
|Item 2 - Managements Discussion and Analysis of
      Financial Condition and Results of Operations 
|Item 3 -  Controls and Procedures                                                                    
|                                                                                                     
|PART II B OTHER INFORMATION                                                                          
|                                                                                                     
|Item 1 - Legal Proceedings                                                                           
|Item 2 - Changes in Securities and Use of Proceeds                                                   
|Item 3 - Defaults Upon Senior Securities                                                             
|Item 4 - Submission of Matters to a Vote of Security
      Holders                                   
|Item 5  Other Information                                                                           
|Item 6 - Exhibits and Reports on Form 8-K                                                            

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 December 31, 2008 and the results of its operations and changes in
its cash position for the six period ended December 31, 2008 and 2007 and for
the period from inception (July 15, 1987). This quarterly statement has been
reviewed by an independent accountant.

i

---

PART I 
FINANCIAL INFORMATION



ITEM 1. Financial Statements



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED
FINANCIAL STATEMENTS

DECEMBER 31, 2008



ii

---

THE TIREX CORPORATIONA
DEVELOPMENT STAGE COMPANYCONSOLIDATED BALANCE
SHEETDECEMBER 31, 2008

|                                                                                                      |   | December 31, |  
|----------------------------------------------------------------------------------------------------- | - | ------------ | -
|                                                                                                      |   | 2008         |  
|                                                                                                      |   |              |  
|ASSETS                                                                                               
|                                                                                                      |   |              |  
|Current Assets                                                                                        |   |              |  
|Cash and cash equivalents                                                                             | $ | -            |  
|Accounts receivable                                                                                   |   | -            |  
|Notes receivable                                                                                      |   | -            |  
|Inventory                                                                                             |   | -            |  
|Research and Experimental Development tax credits
      receivable                                    |   | -            |  
|Total Current Assets                                                                                  |   | -            |  
|                                                                                                      |   |              |  
|Property and equipment                                                                                |   | 25,000       |  
|                                                                                                      |   |              |  
|Other assets                                                                                          |   |              |  
|Patents                                                                                               |   | 1            |  
|Investment, at cost                                                                                   |   | -            |  
|Total Other Assets                                                                                    |   | 1            |  
|                                                                                                      |   |              |  
|                                                                                                      |   |              |  
|Total Assets                                                                                          | $ | 25,001       |  
|                                                                                                      |   |              |  
|                                                                                                      |   |              |  
|LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)                                                 
|                                                                                                      |   |              |  
|Current Liabilities                                                                                   |   |              |  
|Accounts payable and accrued
      liabilities                                                        | $ | 1,319,605    |  
|Current portion of long-term debt                                                                     |   | -            |  
|Total Current Liabilities                                                                             |   | 1,319,605    |  
|                                                                                                      |   |              |  
|Other liabilities                                                                                     |   |              |  
|Long-term deposits and convertible notes                                                              |   | 127,500      |  
|Government loans (net of current)                                                                     |   | -            |  
|Capital lease obligations (net of current)                                                            |   | -            |  
|Convertible notes                                                                                     |   | 389,294      |  
|Convertible notes                                                                                     |   | 185,556      |  
|Convertible loans                                                                                     |   | 2,415,560    |  
|Total Other Liabilities                                                                               |   | 3,117,910    |  
|                                                                                                      |   |              |  
|Total Liabilities                                                                                     |   | 4,437,515    |  
|                                                                                                      |   |              |  
|Stockholders' Equity (Deficit)                                                                        |   |              |  
|Preferred stock, $.005 par value,
      authorized  3,000,000 Series A shares, issued and outstanding |   |              |  
|3,000,000 Series A shares (June 30,
      2008 - 3,000,000 shares)                                    |   | 15,000       |  
|Common stock, $.001 par value, authorized
    1,000,000,000 shares, issued and outstanding            |   |              |  
|766,097,007 shares (June 30, 2008 - 291,995,892
      shares)                                         |   | 766,097      |  
|Additional paid-in capital                                                                            |   | 25,611,047   |  
|Deficit accumulated during the development stage                                                      |   | (30,368,013  | )
|Unrealized gain (loss) on foreign
      exchange                                                      |   | (436,645     | )
|                                                                                                      |   | (4,412,514   | )
|                                                                                                      |   |              |  
|Total Liabilities and Stockholders' Equity
      (Deficit)                                            | $ | 25,001       |  

1

---

THE TIREX CORPORATIONA DEVELOPMENT STAGE
COMPANYCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

|                                                                   |   |             | Three months ended December 31 |   |             | Six months ended December 31 |   | Cumulative from March 26, 1993 to December 31, 2008
|------------------------------------------------------------------ | - | ----------- | ------------------------------ | - | ----------- | ---------------------------- | - | ---------------------------------------------------
|                                                                   |   | 2008        |                                |   | 2007        |                              |   | 2008                                               
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Revenues                                                           | $ | -           |                                | $ | -           |                              | $ | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Cost
    of Sales                                                  |   | -           |                                |   | -           |                              |   | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Gross profit                                                       |   | -           |                                |   | -           |                              |   | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Operations                                                         |   |             |                                |   |             |                              |   |                                                    
|General and administrative                                         |   | 135,889     |                                |   | 97,378      |                              |   | 286,159                                            
|Depreciation and amortization                                      |   | -           |                                |   | -           |                              |   | -                                                  
|Research and development                                           |   | -           |                                |   | -           |                              |   | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Total Expense                                                      |   | 135,889     |                                |   | 97,378      |                              |   | 286,159                                            
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Income (loss) before
    other expenses                            |   | (135,889)   |                                |   | (97,378)    |                              |   | (286,159)                                          
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Other expenses
    (income)                                        |   |             |                                |   |             |                              |   |                                                    
|Interest expense                                                   |   | 11,698      |                                |   | 11,699      |                              |   | 23,397                                             
|Interest income                                                    |   | -           |                                |   | -           |                              |   | -                                                  
|Income from stock options                                          |   | -           |                                |   | -           |                              |   | -                                                  
|Gain from extinguishment of debt                                   |   | -           |                                |   | -           |                              |   | -                                                  
|Loss on disposal of equipment                                      |   | -           |                                |   | -           |                              |   | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Total Other expenses (income)                                      |   | 11,698      |                                |   | 11,699      |                              |   | 23,397                                             
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Provision for income taxes                                         |   | -           |                                |   | -           |                              |   | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Net
    income (loss)                                              |   | (147,587)   |                                |   | (109,077)   |                              |   | (309,556)                                          
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Other comprehensive loss Loss (gain) on foreign exchange           |   | -           |                                |   | -           |                              |   | -                                                  
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Net
    income (loss) and comprehensive loss                       | $ | (147,587)   |                                | $ | (109,077)   |                              | $ | (309,556)                                          
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Basic and Diluted net loss and comprehensive loss per common share | $ | (0.00)      |                                | $ | (0.00)      |                              | $ | (0.00)                                             
|                                                                   |   |             |                                |   |             |                              |   |                                                    
|Weighted average shares of common
    stock outstanding            |   | 411,495,352 |                                |   | 249,895,892 |                              |   | 411,495,352                                        

2

---

THE TIREX CORPORATIONA DEVELOPMENT STAGE
COMPANYCONSOLIDATED STATEMENT OF CASH FLOWS

|                                                                    |   | Three
      months endedDecember 31 |   |   | Six
      months endedDecember 31 |   |   | Cumulative
      fromMarch 26, 1993 to December 31, 2008 |  
|------------------------------------------------------------------- | - | ----------------------------------- | - | - | --------------------------------- | - | - | -------------------------------------------------------- | -
|                                                                    |  
|                                                                    |   | 2008                                |   |   | 2007                              |   |   | 2008                                                     |  
|                                                                    |   |                                     |   |   |                                   |   |   |                                                          |  
|Cash flows from operating activities:                               |   |                                     |   |   |                                   |   |   |                                                          |  
|                                                                    |   |                                     |   |   |                                   |   |   |                                                          |  
|Net income (loss)                                                   | $ | (147,587                            | ) | $ | (109,077                          | ) | $ | (309,556                                                 | )
|                                                                    |   |                                     |   |   |                                   |   |   |                                                          |  
|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                    |   | 125,408                             |   |   | (7,748                            | ) |   | 168,595                                                  |  
|Other non-cash items                                                |   | 123,615                             |   |   | 83,750                            |   |   | 300,278                                                  |  
|                                                                    |   |                                     |   |   |                                   |   |   |                                                          |  
|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                     |   | (132,686                            | ) |   | 1,825                             |   |   | (221,817                                                 | )
|Accrued salaries                                                    |   | 31,250                              |   |   | 31,250                            |   |   | 62,500                                                   |  
|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                           | $ | -                                   |   | $ | -                                 |   | $ | -                                                        |  

3

---

THE TIREX CORPORATIONA DEVELOPMENT STAGE
COMPANYCONSOLIDATED STATEMENT OF CASH FLOWS

|                                                                                                                                                                                                                                                                                                                                                                             |   | Three months endedDecember 31 |  |   | Six months endedDecember 31 |  |   | Cumulative fromMarch 26, 1993 to December 31,
      2008 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------------------------- |  | - | --------------------------- |  | - | -------------------------------------------------------- | 
|                                                                                                                                                                                                                                                                                                                                                                             |  
|                                                                                                                                                                                                                                                                                                                                                                             |   | 2008                          |  |   | 2007                        |  |   | 2008                                                     | 
|                                                                                                                                                                                                                                                                                                                                                                             |   |                               |  |   |                             |  |   |                                                          | 
|Supplemental Disclosure of Non-Cash Activities:                                                                                                                                                                                                                                                                                                                              |   |                               |  |   |                             |  |   |                                                          | 
|During the year ended June 30, 2008,
      the Company issued 42,100,000 common shares in exchange for services
      performed and in recognition of the payment of debt. During the six
      month period ended December 31, 2008, the Company issued 474,101,115
      common shares in exchange for services performed and in recognition of the
      payment of debt. |   |                               |  |   |                             |  |   |                                                          | 
|                                                                                                                                                                                                                                                                                                                                                                             |   |                               |  |   |                             |  |   |                                                          | 
|                                                                                                                                                                                                                                                                                                                                                                             |   |                               |  |   |                             |  |   |                                                          | 
|Supplemental Disclosure of Cash Flow
      Information:                                                                                                                                                                                                                                                                                                                      |   |                               |  |   |                             |  |   |                                                          | 
|                                                                                                                                                                                                                                                                                                                                                                             |   |                               |  |   |                             |  |   |                                                          | 
|Interest paid                                                                                                                                                                                                                                                                                                                                                                | $ | -                             |  | $ | -                           |  | $ | -                                                        | 
|                                                                                                                                                                                                                                                                                                                                                                             |   |                               |  |   |                             |  |   |                                                          | 
|Income taxes paid                                                                                                                                                                                                                                                                                                                                                            | $ | -                             |  | $ | -                           |  | $ | -                                                        | 

4

---

THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

Note
1           SUMMARY OF
ACCOUNTING POLICIES

NATURE OF BUSINESS The Tirex Corporation (the "Company")
was incorporated under the laws of the State of Delaware on August 19, 1987 as
Tirex America, Inc. 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.

CHANGE OF NAME On July 11, 1997, the Company changed its
name from Tirex America, Inc. to The Tirex Corporation.

DEVELOPMENTAL STAGE At December 31, 2008, 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, substantively for
recording purposes, 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 material 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 policy is to value inventory, which
could consist of finished goods and equipment held for resale, at the lower of
cost (first-in, first-out method) or market. At present, the Company has no
inventory.

5

---

THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

PROPERTY AND EQUIPMENT The Company policy is to record
Property and equipment 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. The Company has written off its equipment to
salvage value.

The Company policy is that repairs and maintenance costs are
expensed as incurred while additions and betterments are capitalized. The cost
and related accumulated depreciation of assets sold or retired are eliminated
from the accounts and any gains or losses are reflected in earnings.

ESTIMATES Preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results may differ
from those estimates.

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123 In
1997, the Company adopted Statement of Financial Accounting Standards ("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,
warrants outstanding and debt conversions during the period.

A net loss was reported for the years ended June 30, 2008 and
June 30, 2007, 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.

6

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

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, 2008 and June 30, 2008,
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 $30.7 million as of December 31, 2008, expiring through 2029.
However, based upon present Internal Revenue Service regulations governing the
utilization of net operating loss carryovers where the corporation has issued
substantial additional stock and there has been a change in control as defined
by the Internal Revenue Service regulations, a substantial portion of this loss
carryover may not be available to the Company.

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

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, 2008.

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 CONCERNAs reported in the accompanying financial statements, the Company
incurred a net loss of $498,322 for the year ended June 30, 2008 and a net loss
of $309,556 for the six month period ended December 31, 2008.

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, 2008, the Company had not yet consummated an
unconditional purchase order for a TCS System.

7

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

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 December 31, 2008, 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 (the amount remaining is the salvage
      value) | $ | 25,000  | 

A valuation write-down charged to operations for the year ended
June 30, 2008 was zero. Depreciation and amortization expense charged to
operations for the year ended June 30, 2008 was zero. Depreciation and
amortization expense charged to operations for the six month period ended
December 31, 2008 was zero.

Note
4           PATENTS

The Companys technology is patent protected in both the United
States and Canada. Patent maintenance fees are current in both countries. The
valuation on the Balance Sheet reflects recognition of valid patents and does
not attempt to establish true commercial value.

8

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

Note
5           CAPITAL LEASE
OBLIGATIONSThe Company leased certain manufacturing equipment under
agreements classified as capital leases. The cost and the accumulated
amortization for such equipment as of December 31, 2008 and June 30, 2008 was
$62,400 and $62,400, respectively. The Company is in arrears on payment of these
leases but default has not been declared. The lease expired on June 30,
2004.

Note
6           CONVERTIBLE
SUBORDINATED DEBENTURESThe 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 NOTESThe 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, 2008 | $389,294                                                                                                                                                                                                                                                                                              
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 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 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 would successfully file 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 was never declared effective by the Securities and
Exchange Commission and was eventually withdrawn.

9

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

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. 8,371,597
collateral common shares provided to the investors were the property of former Tirex Director, Louis A, Sanzaro, now deceased. The shares due to Louis A.
Sanzaro have been issued during the quarter ended September 30, 2008 to a family
member. The collateral shares provided by Louis V. Muro, 1,723,514 common
shares, were replaced during the quarter ended September 30, 2008. The
collateral shares provided by John L. Threshie Jr., 1,891,204 shares, were
replaced during the quarter ended December 31, 2008.

Note
8           CONVERTIBLE NOTES

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

|Balance at December 31, 2008 | $ 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.

Since Fiscal year 2006, the expenses of the Company have been
funded by a series of non-interest bearing convertible loans with no specific
terms of repayment made by a significant number of individuals investing modest
amounts for a grand total of U.S.$203,800. These investors, fully cognizant of
the Companys situation and so documented in writing, accepted that their
investments were being made and represented by a convertible debt, the
conversion of which could occur only once the Company would have shares
available for issuance. These debts are convertible at fixed prices rather than
as a discount to market.

|                 | Fiscal year | Fiscal year | Fiscal year | Fiscal year | Fiscal year | Fiscal year
|---------------- | ----------- | ----------- | ----------- | ----------- | ----------- | -----------
|                 | 2006&2007   | 2008 Q-1    | 2008 Q-2    | 2008 Q-3    | 2008 Q-4    | 2009 Q-1   
|Dollars received | $114,700    | $10,700     | $19,400     | $22,000     | $25,000     | $12,000    
|Shares           | 26,040,000  | 3,840,000   | 5,460,000   | 5,400,000   | 7,000,000   | 2,400,000  

Of the above shares, most were issued, unrestricted, during the
six month period ended December 31, 2008. The remaining shares will be issued
progressively during the remainder of Fiscal year 2009.

10

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

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 December 31, 2008 and June 30, 2008, the balances
owing to Directors and Officers was $2,146,494 and $2,609,429, respectively.
These amounts are without interest or terms of repayment.

Long-term deposits and notes at June 30, 2008 included an
amount of $118,500 which was payable to Ocean Tire Recycling & Processing
Co., Inc., a company previously owned by a former Director of the Company, Louis
A. Sanzaro, deceased approximately 30 months ago. The Company negotiated a
Settlement Agreement with the family of Louis A. Sanzaro with respect to the
note representing $118,500, lease obligations and other expenses paid by Mr.
Sanzaro, under which the Company would issue a total of 50,000,000 shares.
35,500,000 million shares were issued during the quarter ended September 30,
2008. There thus remains 14,500,000 million shares to be issued. As part of the
share issuance during the quarter ended September 30, 2008, the note of 118,500
has been eliminated. The balance owing as part of the Settlement Agreement, at
December 31, 2008, is included in Convertible Loans.

Note
10           COMMON STOCK

During the year ended June 30, 2008, the Company issued
42,100,000 common shares for services performed and in partial payment of a
Settlement Agreement under Securities Act Regulation 10(a)3. During the six
month period ended December 31, 2008, the Company issued 474,101,115 common
shares for services performed and in partial payment of a Settlement Agreement
under Securities Act Regulation 10(a)3.

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. These shares were issued during the first quarter of Fiscal
year 2009.

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. On February 11, 2008, the Company's Board of Directors
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
250,000,000 shares to 1,000,000,000 shares.

As at December 31, 2008, the Company had 766,097,007 Common
shares issued and outstanding, versus its authorization of 1,000,000,000 shares.

Note
11           PREFERRED STOCK

On May 12, 2008, the Companys Board of Directors approved an
amended Certificate of Designation with respect to the authorization and
issuance of up to 3,000,000 Series A Preferred shares, an increase from the
1,000,000 shares of Series A Preferred stock that were authorized to be issued
in the Certificate of Designation of Series A Preferred stock passed by the
Board of Directors on February 12, 2008. No cash dividends shall be paid with
respect to the shares of Series A Preferred stock. The Series A Preferred stock
shall give its holders the right to 100 votes per share on any matter properly
before the shareholders for a vote. The voting rights of the Series A Preferred
stock shall be subject to all splits and each share will be convertible into 5
shares of Common stock upon the earlier of: (i) the holders election or (ii)
January 8, 2009. The holders of all shares of Series A Preferred stock shall not
be subject to any non-cash distributions to holders of shares of Common stock,
including without limitation, stock dividends, stock splits and securities
issued in a recapitalization. In the event of liquidation or winding up of the
Corporation, the holders of the Series A Preferred stock will be entitled to
receive, prior and in preference to the holders of the Common stock, an amount up to
but not greater than the original purchase price per share of Series A Preferred
stock, notwithstanding the par value of the Series A Preferred stock. These
three million Series A Preferred Shares were issued to three Directors and
Officers in June 2008.

11

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

Note
12           GOVERNMENT
ASSISTANCE

The Company was eligible for and 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, June 30, 2008 and December 31, 2008.

Note
13           COMMITMENTS

Rental expense for the year ended June 30, 2008 amounted to
zero. Rental expense for the six month period ended December 31, 2008 amounted
to zero.

At December 31, 2008, the Company was in arrears of rent,
including interest and related charges, in the approximate amount of $560,000
related to its former occupation of premises in Montreal up to the end of Fiscal
year 2003. 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.

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. 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.

12

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THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2008

Note
15           ACCUMULATED OTHER
COMPREHENSIVE INCOME

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

Note
16           SUBSEQUENT EVENTS

Following December 31, the company issued 43 million shares to
Sequoia to complete that Settlement agreement, 28,875,000 shares to two other
individuals, 14,800,000 restricted shares to complete payment to the private
placement investors and 37,550,000 restricted shares to affiliates in
recognition of past services.

13

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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, 2008. 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. Under the Manufacturing Agreement, any improvements
to the TCS-2 revert to Tirex. 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 with customers based in the Middle East, the Far
East, 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 in which we have no interest.
Furthermore, we have been informed that negotiations are also continuing between
the Middle Eastern partners and the British partners as to the proportional
ownership of this venture.

14

---

The Far
Eastern customer continues to represent to us that the project financing is in place and that they are waiting for a funds transfer to complete the purchase and sales agreement. With the recent upheavals in world financial markets and appreciable
credit squeezing, it is clear that we cannot assure that this project will be consummated quickly, if at all. 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.

Over the last eighteen 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.

During the first quarter of Fiscal 2009 and continuing into January 2009, these individuals have identified an investor group with actual experience in the recycling industry who have expressed substantial interest in the possibility of establishing
a TCS facility in Upstate New York. This investor group has purportedly completed its due diligence with respect to our technology and has represented to us that they are at a stage of having opened negotiations with Simpro for the purchase of one
or more TCS-2 systems. In the event of failed negotiations, Tirex would have the right to contract with another systems integrator to install a system, given that the contract price would be reasonable. North American suppliers of components have
been identified.

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.

15

---

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 December 31, 2008, 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$7.07 million using the exchange rate of February 5, 20091 Euro = US$1.2856, which is a lot of money for most entrepreneurs or their financial backers for unproven long-term technology, and particularly in the context
of global financial and credit difficulties. 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$8
million to US$9 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.

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 since the first nine months of Fiscal 2007, and on which efforts continue, include projects for the Middle East, the United Kingdom, Malaysia, 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.

16

---

Given the time line required to manufacture, install and have accepted these systems, it is unlikely 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, 2009. 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. 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 Fiscal 2006, the expenses of our company were funded by a series of loans made by a significant number of individuals investing modest amounts totaling approximately US$198,000 to September 30, 2008. No additional borrowings were during
the last quarter of Calendar 2008. Each investment was made through Tirex President, John L. Threshie Jr., and insofar as Tirex did not have shares to issue at that time, these investors, fully cognizant of our situation, and so documented in
writing, accepted that their investment was being made via Mr. Threshie and represented a convertible debt, the conversion of which could occur once Tirex would have shares available for issuance. To September 30, 2008, approximately 48,940,000
shares were involved. All of these shares have been issued. The funds were lent directly to Mr. Threshie rather than to Tirex directly, with Mr. Threshie then paying personally the expenses of Tirex, which expenses were duly recorded in our
accounts, offset by a liability to him.

In addition to the above liability for shares, Tirex has been liable for the replacement of 11,986,315 shares which were delivered as collateral by Tirex Directors, Threshie, Muro and Sanzaro (now deceased, 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. All of the collateral shares have been replaced.

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.

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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 an accounting standpoint, is for salaries. These salaries have not actually been paid for several years, but rather set up as payables. Some of these accrued
salaries were translated into convertible promissory notes. 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 the third quarter of Fiscal 2008, Management has devoted substantial time and efforts to restructure the Balance Sheet of the Corporation and to position the company for release from the gray sheets and elevation to the Pink Sheets, with an
ultimate goal of seeing its securities listed once again on the OTC Bulletin Board. During the fourth quarter of Fiscal 2008 and during the first quarter of Fiscal 2009, booked liabilities in excess of one million dollars were written off as a
function of the Statute of Limitations and other liabilities were converted to equity through the issuance of stock. During the fourth quarter of Fiscal 2008, Tirex engaged the services of Moore & Associates to undertake the audit of our annual
accounts for the years ended June 30, 2004 through 2007 inclusive and to continue with an additional mandate for the audit of our Fiscal 2008 accounts and to undertake the required Review Engagements for our Fiscal 2009 quarterly reports. This new
certifying accountant released its audit opinions for the fiscal years 2004 through 2007 inclusive in October 2007. We prepared and filed amended 10-KSB Reports for these fiscal years. Moore & Associates is currently completing the audit of our
financial statements for our fiscal year ended June 30, 2008, and an amended 10-KSB will be filed once the audit report is released.

Concurrently, the company engaged the services of consultants to assist us in getting our stock listed on the Pink Sheets. The efforts of this consultant and the marketmaker engaged by him were successful in that our stock was officially re-listed
on the Pink Sheets on October 24, 2008. We intend that, once the 2008 financial statements are audited and an amended 10-KSB filed, we will apply for a further elevation of our listing to the OTC Bulletin Board. We can offer no guarantees that such
an application will be accepted.

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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.

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 December 31, 2008. 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 second quarter of fiscal 2008-09, 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.



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PART II: OTHER INFORMATION

Item 1 - Legal ProceedingsWe 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 2008.

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 CorporationNo 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 ProceedsFollowing Fiscal 2005, the expenses of our company have
been funded by a series of non-interest bearing convertible loans with no
specific terms of repayment made by a significant number of individuals
investing modest amounts for a grand total of approximately US$196,800 these
loans being made to Tirex via Tirex President, John L. Threshie Jr. These
investors, fully cognizant of the Companys situation, and so documented in
writing, accepted that their investments were being made via Mr. Threshie and
represented a convertible debt, the conversion of which would occur once Tirex
would have shares available for issuance. These debts were and are convertible
at fixed prices rather than as a discount to market.

|                 | Fiscals    | Fiscal 2008 | Fiscal 2008 | Fiscal 2008 | Fiscal 2008 | Fiscal 2009
|---------------- | ---------- | ----------- | ----------- | ----------- | ----------- | -----------
|                 | 2006-2007  | Q-1         | Q-2         | Q-3         | Q-4         | Q-1        
|Dollars received | $114,700   | $10,700     | $10,400     | $22,000     | $21,000     | $12,000    
|Shares           | 26,040,000 | 3,840,000   | 5,460,000   | 5,400,000   | 6,200,000   | 2,400,000  

Of the above shares, all have been issued.

Item 3 - Defaults Upon Senior SecuritiesOther 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
HoldersDuring the three-month period ended December 31,
2008, there were no submissions of matters to a vote of Security Holders.

Item 5  Other InformationThere have
been no material changes in the way in which shareholders may nominate
directors.

Item 6 - Exhibits and Reports on Form 8-K

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|Exhibits | Description                                                                          
|-------- | -------------------------------------------------------------------------------------
|         |                                                                                      
|31.1     | Certification of Form 10-Q filing by the
    Chief Executive Officer                 
|31.2     | Certification of Form 10-Q filing by the Chief
      Financial Officer               
|32.1     | Certification Pursuant to the Sarbanes-Oxley
      Act by the Chief Executive Officer
|32.2     | Certification Pursuant to the Sarbanes-Oxley
      Act by the Chief Financial Officer

No Reports on Form 8-K were filed during the period covered by
this report

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SIGNATURES

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

THE TIREX CORPORATION

|Date: | February 11, 2009 | By | /s/ John L.
    Threshie,jr.                            
|----- | ----------------- | -- | --------------------------------------------------------
|      |                   |    | John L. Threshie, Jr.                                   
|      |                   |    | President                                               
|      |                   |    |                                                         
|Date: | February 11, 2009 | By | /s/ Michael Ash                                         
|      |                   |    | Michael Ash,                                            
|      |                   |    | Treasurer and Chief
    Accounting and Financial Officer

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