U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

     For the quarterly period ended December 31, 2002

[ ]  Transition report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

     For the transition period from __________ to __________

                       Commission File Number 33-17598-NY


                              THE TIREX CORPORATION
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

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


     38 Cours du Fleuve, Montreal (Verdun Borough), Quebec, Canada, H3E 1X1
     ----------------------------------------------------------------------
                    (Address of Principal executive offices)

                                 (514) 768-5630
                ------------------------------------------------
                (Issuer's telephone number, including area code)


         ---------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)


Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.

Yes [X]  No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding for each of the issuer's classes of
common equity, as of January 3, 2003 :249,896,892 shares

Transitional Small Business Disclosure Format (check one):
Yes [ ]  No [X]
<PAGE>

                              The Tirex Corporation
                          (A Development Stage Company)



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements (Unaudited)

         The Tirex Corporation and Subsidiaries
           Consolidated Balance Sheets as of
             December 31, 2002............................................    3

         Consolidated Statements of Operations
           for the three and six-month periods
             ended December 31, 2002 and 2001.............................    4

         Consolidated Statements of Cash Flows
           for the three and six-month periods
             ended December 31, 2002 and 2001.............................    5

         Notes to Financial Statements (Unaudited)........................    7

Item 2 - Management's Discussion and Analysis of
           Financial Condition and Results of Operations..................   18

PART II B OTHER INFORMATION

Item 1 - Legal Proceedings................................................   20
Item 2 - Changes in Securities and Use of Proceeds........................   22
Item 3 - Defaults Upon Senior Securities..................................   22
Item 4 - Submission of Matters to a Vote of Security Holders..............   23
Item 6 - Exhibits and Reports on Form 8-K.................................   23


                                        i
<PAGE>

The financial statements are unaudited. However, pursuant to SEC requirements,
the consolidated financial statements have been reviewed by the Company's
independent auditor. Readers are cautioned that a review engagement does not
constitute an audit. Management of registrant believes that all necessary
adjustments, including normal recurring adjustments, have been reflected to
present fairly the financial position of registrant at Decem,ber 31, 2002 and
the results of its operations and changes in its cash position for the three and
six-month periods ended December 31, 2002 and 2001 and for the period from
inception (July 15, 1987).

                                        1
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                        CONSOLIDATED FINANCIAL STATEMENTS


                                DECEMBER 31, 2002

                                        2
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                           CONSOLIDATED BALANCE SHEET
                             AS AT DECEMBER 31, 2002

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


                                                                   (Unaudited)

                                                                   December 31,
                                                                       2002
                                                                   ------------

                                     ASSETS
                                     ------

Current Assets
  Cash and cash equivalents                                                  --
  Accounts receivable                                                    28,751
  Notes receivable                                                       18,540
  Sales taxes receivable                                                 37,103
  Inventory                                                              62,629
  Research and Experimental Development tax credits receivable          126,428
  Prepaid expenses and deposits                                          31,077
                                                                   ------------
                                                                        304,529

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

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

                                                                   $    653,029
                                                                   ============


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

Current Liabilities
  Accounts payable and accrued liabilties                          $  1,740,396
  Current portion of long-term debt                                      41,299
                                                                   ------------
                                                                      1,781,695

Other liabilities
  Long-term deposits and notes                                          217,500
  Government loans (net of current)                                     131,158
  Capital lease obligations (net of current)                              6,358
  Convertible notes                                                     932,240
  Convertible note                                                      185,556
  Loans from related parties                                          1,144,342
                                                                   ------------
                                                                      2,617,154
                                                                   ------------

                                                                      4,398,849
                                                                   ------------
Stockholders' Equity (Deficit)
  Common stock,  $.001 par value, authorized
   250,000,000 shares, issued and outstanding
   224,757,559 shares (June 30, 2001 - 176,366,408 shares)              224,758
  Additional paid-in capital                                         24,618,899
  Deficit accumulated during the development stage                  (28,419,901)
  Unrealized gain (loss) on foreign exchange                           (169,576)
                                                                   ------------
                                                                     (3,745,820)
                                                                   ------------

                                                                   $    653,029
                                                                   ============

                                        3
<PAGE>

<TABLE>
<CAPTION>
                                                       THE TIREX CORPORATION
                                                    A DEVELOPMENT STAGE COMPANY

                                   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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


                                                         (Unaudited)                       (Unaudited)

                                                     Three months ended                 Six months ended          Cumulative from
                                                         December 31                       December 31           March 26, 1993 to
                                               ------------------------------    ------------------------------     December 31,
                                                    2002             2001             2002             2001             2002
                                               -------------    -------------    -------------    -------------    -------------

<S>                                            <C>              <C>              <C>              <C>              <C>
Revenues                                       $          --    $       1,424    $      28,515    $       1,424    $   1,354,088

Cost of Sales                                             --              854           12,981              854        1,031,075

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

Gross profit                                              --              570           15,534              570          323,013
                                               -------------    -------------    -------------    -------------    -------------

Operations
  General and administrative                         190,170          308,601          451,063          598,553       11,010,783
  Depreciation and amortization                           --           13,718            5,914           27,672          346,499
  Research and development                                --          154,175          450,000          242,015       14,946,966
                                               -------------    -------------    -------------    -------------    -------------

Total Expense                                        190,170          476,494          906,977          868,240       26,304,248
                                               -------------    -------------    -------------    -------------    -------------

Loss before other expenses (income)                 (190,170)        (475,924)        (891,443)        (867,670)     (25,981,235)
                                               -------------    -------------    -------------    -------------    -------------

Other expenses (income)
  Interest expense                                    35,769           28,185           59,634           54,279          717,120
  Interest income                                         --               --               --               --          (45,443)
  Income from stock options                               --               --               --               --          (10,855)
  Loss on disposal of equipment                           --               --               --            4,549
                                               -------------    -------------    -------------    -------------    -------------

                                                      35,769           28,185           59,634           54,279          665,371
                                               -------------    -------------    -------------    -------------    -------------

Net loss                                            (225,939)        (504,109)        (951,077)        (921,949)     (26,646,606)
                                               -------------    -------------    -------------    -------------    -------------

Other comprehensive loss
  Loss (gain) on foreign exchange                         --              882               --            1,963          106,137
                                               -------------    -------------    -------------    -------------    -------------


Net loss and comprehensive loss                $    (225,939)   $    (504,991)   $    (951,077)   $    (923,912)   $ (26,752,743)
                                               =============    =============    =============    =============    =============

Basic and Diluted net loss and comprehensive
  loss per common share                        $       (0.00)   $       (0.00)   $       (0.00)   $       (0.00)   $       (0.50)
                                               =============    =============    =============    =============    =============

Weighted average shares of common
  stock outstanding                              224,757,559      186,865,121      224,757,559      186,865,121       53,345,335
                                               =============    =============    =============    =============    =============
</TABLE>

                                        4
<PAGE>

<TABLE>
<CAPTION>
                                                        THE TIREX CORPORATION
                                                     A DEVELOPMENT STAGE COMPANY

                                                CONSOLIDATED STATEMENT OF CASH FLOWS

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


                                                              (Unaudited)                     (Unaudited)

                                                          Three months ended               Six months ended         Cumulative from
                                                              December 31                     December 31          March 26, 1993 to
                                                     ----------------------------    ----------------------------    December 31,
                                                         2002            2001            2002            2001            2002
                                                     ------------    ------------    ------------    ------------    ------------

<S>                                                  <C>             <C>             <C>             <C>             <C>
Cash flows from operating activities:

     Net  loss                                       $   (305,091)   $   (504,991)   $ (1,030,229)   $   (923,912)   $(26,831,895)
                                                     ------------    ------------    ------------    ------------    ------------

     Adjustments to reconcile net loss to net cash
       used in operating activities:
     Depreciation and amortization                             --          13,718           5,914          27,672         345,258
     (Gain) loss on disposal and abandonment of
       assets                                                  --              --         530,651              --       1,474,847
     Stock issued in exchange for interest                     --              --              --              --         169,142
     Stock issued in exchange for services and
       expenses                                                --              --              --         367,273      10,531,722
     Stock options issued in exchange for services             --              --              --              --       3,083,390
     Unrealized (loss) gain on foreign exchange            (3,587)         (4,931)         30,593          19,227        (169,596)

Changes in assets and liabilities:
     (Increase) decrease in:
     Account receivable                                      (174)         (1,625)          4,462          (1,625)        (28,751)
     Inventory                                               (379)            654          10,794           3,582         (62,629)
     Sales tax receivable                                  (7,706)          6,610         (15,014)         47,350         (37,103)
     Research and experimental development tax
       credits receivable                                  43,448         185,675         120,542         218,031        (126,428)
     Other assets                                            (429)         39,604           2,879         130,176        (250,197)
     (Decrease) increase in :
     Accounts payables and accrued liabilities            186,206         265,875         214,937        (149,114)      1,857,334
     Accrued salaries                                       9,997              --          16,118         (12,374)        311,095
     Due to stockholders                                       --              --              --              --           5,000
                                                     ------------    ------------    ------------    ------------    ------------

Net cash used in operating activities                     (77,715)            589        (108,353)       (273,714)     (9,728,811)
                                                     ------------    ------------    ------------    ------------    ------------

Cash flow from investing activities:
     Increase in notes receivable                            (112)         (4,280)            751          (3,766)       (257,055)
     Reduction in notes receivable                             --              --              --              --         238,515
     Investment                                                --              --              --         (89,500)        (89,500)
     Equipment                                                 --              --              --              --        (321,567)
     Equipment assembly costs                                  --              --              --              --      (1,999,801)
     Organization cost                                         --              --              --              --           6,700
     Reduction in security deposit                             --              --              --              --          (1,542)
                                                     ------------    ------------    ------------    ------------    ------------

Net cash used in investing activities                        (112)         (4,280)            751         (93,266)     (2,424,250)
                                                     ------------    ------------    ------------    ------------    ------------

Cash flow from financing activities:
     Loans from related parties                                --              --              --              --       4,221,235
     Deferred financing costs                                  --          26,968              --          53,936         180,557
     Proceeds from deposits                                    --              --              --              --         143,500
     Payments on notes payable                                 --              --              --              --        (409,939)
     Proceeds from convertible notes                           --              --              --              --         754,999
     Proceeds from notes payable                               --              --              --              --         409,939
     Payments on lease obligations                             --              --              --              --         (86,380)
     Proceeds from issuance of convertible
       subordinated debentures                                 --              --              --              --       1,035,000
     Proceeds from loan payable                            33,116              --              --              --         624,735
     Payments on loan payable                                  --        (256,940)         (4,170)       (256,940)       (489,626)
     Proceeds from issuance of stock options                   --              --              --              --          20,000
     Proceeds from grants                                  44,711         236,988         111,772         569,111       3,552,927
     Proceeds from issuance of common stock                    --              --              --              --          81,299
     Proceeds from additional paid-in capital                  --              --              --              --       2,114,558
                                                     ------------    ------------    ------------    ------------    ------------

Net cash provided by financing activities                  77,827           7,016         107,602         366,107      12,152,804
                                                     ------------    ------------    ------------    ------------    ------------

Net (decrease) increase in cash and cash
  equivalents                                                  --           3,325              --            (873)           (257)

Cash and cash equivalents - beginning of period                --          (2,842)             --           1,356             257
                                                     ------------    ------------    ------------    ------------    ------------

Cash and cash equivalents - end of period            $         --    $        483    $         --    $        483    $         --
                                                     ============    ============    ============    ============    ============
</TABLE>

                                        5
<PAGE>

<TABLE>
<CAPTION>
                                                        THE TIREX CORPORATION
                                                     A DEVELOPMENT STAGE COMPANY

                                                CONSOLIDATED STATEMENT OF CASH FLOWS

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


                                                              (Unaudited)                     (Unaudited)

                                                          Three months ended               Six months ended         Cumulative from
                                                              December 31                     December 31          March 26, 1993 to
                                                     ----------------------------    ----------------------------    December 31,
                                                         2002            2001            2002            2001            2002
                                                     ------------    ------------    ------------    ------------    ------------

<S>                                                  <C>             <C>             <C>             <C>             <C>
Supplemental Disclosure of Non-Cash Activities:
     During the year ended June 30, 2002, the
     Company recorded an increase in common stock
     and in additional paid-in capital of
     $1,673,518 which was in recognition of the
     payment of debt. During the six month period
     ended December 31, 2002, the Company did not
     issue common stock in recognition of the
     payment of debt. During the year ended June
     30, 2002, stock was issued in exchange for
     services performed and expenses in the amount
     of $333,325. During the six month period ended
     December 31, 2002, the Company did not issue
     common stock in exchange for services
     performed and expenses. No stock options were
     issued for services performed and expenses
     during the year ended June 30, 2002. No stock
     options were issued for services performed and
     expenses during the six month period ended
     December 31, 2002

     For the year ended June 30, 2002, there were no
     convertible debentures or accrued interest
     converted into common stock. Also, for the six
     month period ended December 31, 2002, there were
     no convertible debentures or accrued interest
     converted into common stock

Supplemental Disclosure of Cash Flow Information:

          Interest paid                              $     20,162    $      7,219    $     21,024    $     33,313    $    232,748
                                                     ============    ============    ============    ============    ============

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

                                        6
<PAGE>

                              THE TIREX CORPORATION
                           A DEVELOPMENT STAGE COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002
                                   (UNAUDITED)


Note 1        SUMMARY OF ACCOUNTING POLICIES

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

NATURE OF BUSINESS
The Tirex Corporation and Subsidiaries (the "Company") was incorporated under
the laws of the State of Delaware on August 19, 1987. The Company was originally
organized to provide comprehensive health care services, but due to its
inability to raise sufficient capital, was unable to implement its business
plan. The Company became inactive in November 1990.

REORGANIZATION
On March 26, 1993, the Company entered into an acquisition agreement (the
"Acquisition Agreement") with Louis V. Muro, currently an officer and a director
of the Company, and former Officers and Directors of the Company (collectively
the "Seller"), for the purchase of certain technology owned and developed by the
Seller (the "Technology") to be used to design, develop and construct a
prototype machine and thereafter a production quality machine for the cryogenic
disintegration of used tires. The Technology was developed by the Seller prior
to their affiliation or association with the Company.

DEVELOPMENTAL STAGE
At December 31, 2002, the Company is still in the development stage. The
operations consist mainly of raising capital, obtaining financing, developing
equipment, obtaining customers and supplies, installing and testing equipment
and administrative activities.

BASIS OF CONSOLIDATION
The consolidated financial statements include the consolidated accounts of The
Tirex Corporation, Tirex Canada R&D Inc., The Tirex Corporation Canada Inc.,
Tirex Advanced Products Quebec Inc. and Tirex Acquisition Corp. Tirex Canada R&D
Inc. is held 51% by certain shareholders of the Company. The shares owned by the
certain shareholders are held in escrow by the Company's attorney and are
restricted from transfer thereby allowing for a full consolidation of this
Company. The Tirex Corporation Canada Inc., Tirex Advanced Products Quebec Inc.
and Tirex Acquisition Corp. are 100% held by the Company. All subsidiary
companies except Tirex Canada R&D Inc. are dormant. All inter-company
transactions and accounts have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all highly liquid debt instruments
purchased with a maturity of three months or less, were deemed to be cash
equivalents.

INVENTORY
The Company values inventory, which consists of finished goods and equipment
held for resale, at the lower of cost (first-in, first-out method) or market.

                                        7
<PAGE>

PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost less accumulated depreciation and
provisions for write-downs. Depreciation is computed using the straight-line
method over the estimated useful lives of five years.

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

INVESTMENT
An investment made by the Company, in which the Company owns less than a 20%
interest, is stated at cost value. The cost value approximates the fair market
value of the investment.

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

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123
In 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 123, Accounting for Stock-Based Compensation. SFAS 123 encourages,
but does not require, companies to record stock-based Compensation and other
costs paid by the issuance of stock at fair value. The Company has chosen to
account for stock-based compensation, stock issued for non-employee services and
stock issued to obtain assets or in exchange for liabilities using the fair
value method prescribed in SFAS 123. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire the stock.

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128
In 1997, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings per Share. SFAS 128 changes the standards for
computing and presenting earnings per share (EPS) and supersedes Accounting
Principles Board Opinion No. 15, Earnings per Share. SFAS 128 replaces the
presentation of Primary EPS with a presentation of Basic EPS and replaces the
presentation of Fully Diluted EPS with a presentation of Diluted EPS. It also
requires dual presentation of Basic and Diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the Basic EPS computation to
the numerator and denominator of the Diluted EPS computation. SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. SFAS 128 also requires restatement of all
prior-period EPS data presented.

As it relates to the Company, the principal differences between the provisions
of SFAS 128 and previous authoritative pronouncements are the exclusion of
common stock equivalents in the determination of Basic Earnings Per Share and
the market price at which common stock equivalents are calculated in the
Determination of Diluted Earnings Per Share.

                                        8
<PAGE>

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

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

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

The fair values of the Company's debt instruments are based on the amount of
future cash flows associated with each instrument discounted using the Company's
borrowing rate. At December 31, 2002 and June 30, 2002, 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 $27.8 million as
of December 31, 2002, expiring in the years 2004 through 2018. However, based
upon present Internal Revenue Service regulations governing the utilization of
net operating loss carryovers where the corporation has issued substantial
additional stock and there has been a change in control as defined by the
Internal Revenue Service regulations, a substantial portion of this loss
carryover may not be available to the Company.

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

The Company has research and experimental development tax credits receivable
from the Canadian Federal government and the Quebec Provincial government
amounting to $126,428 at December 31, 2002 compared to $246,970 as of June 30,
2002. These are the result of tax credits for research and experimental
development expenditures made by the Company which are not contingent upon any
offset against any income taxes Otherwise payable.

FOREIGN CURRENCY TRANSLATION
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency
environment are translated to U.S. dollars at exchange rates in effect at the
balance sheet date for monetary items and historical rates of exchange for
non-monetary items with the resulting translation adjustment recorded directly
to a separate component of shareholders' equity. Income and expense accounts are
translated at average exchange rates during the year. Currency transaction gains
or losses are recognized in current operations.

                                        9
<PAGE>

REVENUE RECOGNITION
Revenue from the sale of TCS Systems will be recognized when the installed
product is accepted by the Customer. All other revenue from other products will
be recognized when shipped to the customer.


Note 2        GOING CONCERN

As shown in the accompanying financial statements, the Company incurred a net
loss of $3,767,344 during the year ended June 30, 2002 and an additional net
loss for the six month period ended December 31, 2002 in the amount of $951,077.

In March 1993, the Company had begun its developmental stage with a new business
plan. As of March 2000, the Company had developed a production quality prototype
of its patented system for the disintegration of scrap tires, but nonetheless
continued its research and development efforts to improve the machine's
performance and to permit greater flexibility in design for specific customer
applications. Due to the Company's lack of working capital during the six month
period ended June 30, 2002, all rubber crumb production has ceased and research
and development efforts have been hampered. Pending receipt of funding from
operations, government assistance, loans or equity financing, crumb rubber
production and previous research and development efforts will not be resumed.
While the Company has engaged the process of marketing the TCS System to
numerous potential clients since the beginning of the fiscal year commencing
July 1, 2000, as of December 31, 2002, the Company had not yet consummated an
unconditional purchase order for a TCS System.

The Company is dependent on the success of its marketing of its TCS Plants,
and/or raising funds through equity sales, bank or investor loans, governmental
grants or a combination of these, to continue as a going concern. The Company's
uncertainty as to its ability to generate revenue and its ability to raise
sufficient capital, raise substantial doubt about the entity's ability to
continue as a going concern. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.


Note 3        FINANCING COST

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


Note 4        PROPERTY AND EQUIPMENT, SALVAGE VALUE

As of December 31, 2002, the Company had vacated its former premises where the
TCS-1 Production Model had been constructed. All of the production equipment has
been either returned to lessors, abandoned or stored. Management has decided to
suspend indefinitely its efforts to re-acquire these components of the Air Plant
which had been shipped to the United States. Without these components, the TCS-1
First Production Model cannot be used. Bearing in mind that management could not
predict when, if ever, the First Production Model would be put back into
service, Management decided to further write down, as of September 30, 2002,
those assets owned by the Company to net realizable salvage value which
Management believes to be approximately $50,000. As at June 30, 2002, these
assets were being carried on our books at a net value of $580,651. The
write-down thus amounted to $530,651.

Depreciation and amortization expense charged to operations for the year ended
June 30, 2002 amounted to $53,184. Depreciation and amortization expense charged
to operations for the six month period ended December 31, 2002 was $5,914.

                                       10
<PAGE>

Depreciation and amortization expense charged to operations for the year ended
June 30, 2002 was $53,184. Depreciation and amortization expense charged to
operations for the six month period ended December 31, 2002 was $5,914.


Note 5        GOVERNMENT LOANS

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

Loans payable under the Program for the Development of Quebec SMEs based on 50%
of approved eligible costs for the preparation of market development studies in
certain regions. Loans are unsecured and non-interest bearing. (If the Company
defaults, the loans become interest bearing).

Loan repayable over five years commencing June 30, 2000 and ending
June 30, 2004                                                           $ 38,125

Loan repayable over five years commencing June 30, 2001 and ending
June 30, 2005                                                             39,773

Loan repayable in amounts equal to 1% of annual sales in Spain
and / or Portugal throughout June 30, 2007, to a maximum of the
balance of the loan outstanding. If no sales occur on or before this
date in Spain and Portugal, the loan will become non-repayable            14,000

Loan repayable in amounts equal to 11/2% of annual sales in Spain
and / or Portugal through June 30, 2004 to a maximum of the balance
of the loan outstanding. If no sales occur before this date in Spain
and Portugal, the loan will become non-repayable                          66,500
                                                                        --------
                                                                         158,398

Less: Current portion                                                     27,240
                                                                        --------
Long-term portion                                                       $131,158
                                                                        ========

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

2003                                                                    $ 27,240
2004                                                                      96,578
2005                                                                      20,580
2006                                                                          --
2007                                                                      14,000
                                                                        --------
                                                                        $158,398
                                                                        ========

During the year ended June 30, 2002, the Company was declared in default, with
respect to the loan under the Industrial Recovery Program for Southwest
Montreal, as a result of a late installment repayment and as such was obligated
to repay the entire remaining balance due on the loan at an earlier date than
the March 31, 2002 maturity date.

                                       11
<PAGE>

Note 6        CAPITAL LEASE OBLIGATIONS

The Company leases certain manufacturing equipment under agreements classified
as capital leases. The cost and the accumulated amortization for such equipment
as of June 30, 2002 was $62,400 and $37,440, respectively. The value of such
equipment as of December 31, 2002 is included in property and equipment salvage
value on the balance sheet. The Company is in arrears on payment of these leases
but default has not been declared. The leased equipment is not part of the
Company's TCS System prototype.

The following is a schedule by years of future minimum lease payments under
capital leases of equipment together with the obligations under capital leases
(present value of future minimum rentals) as at December 31, 2002:

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

2003                                                                     $ 7,757
2004                                                                      15,514
                                                                         -------
Total minimum lease payments                                              23,271
Less: Amount representing interest                                         2,854
                                                                         -------
Total obligations under capital lease                                     20,417
Less: Current portion of obligations under capital leases                 14,059
                                                                         -------

Long-term obligation portion of under capital leases, with interest
rate of 10%                                                                6,358
                                                                         =======


Note 7        CONVERTIBLE SUBORDINATED DEBENTURES

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


Note 8        CONVERTIBLE NOTES

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

Balance at June 30, 2001            $ 750,000

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

Issue date                          February 26, 2001

Maturity date                       February 26, 2003

Redemption rights                   If not converted, the holder may require the
                                    Company to redeem at any time after maturity
                                    for the principal amount pus interest.

Conversion ratio                    Lower of (i) - 80% of the average of the
                                    three lowest closing bid prices for the
                                    thirty trading days prior to the issue date,
                                    which equals $.073, or (ii) - 80% of the
                                    average of the three lowest closing bid
                                    prices for the sixty trading days prior to
                                    the conversion date.

                                       12
<PAGE>

Common stock warrants               The Convertible Notes carried an option to
                                    purchase Common stock warrants at the rate
                                    of one Warrant for each $1.25 of purchase
                                    price. The exercise price on the first
                                    tranche of $ 750,000 is $ .077 per share.

Certain Directors and Officers of the Company pledged approximately 12,000,000
of their personal shares of Common Stock of the Company as security for the
Convertible Notes until such time as the Company files with the Securities and
Exchange Commission a Registration Statement on Form SB-2, to register common
stock And warrants issuable upon the conversion of the notes, no later than 150
days after the issue date of the Convertible Notes. This deadline was not met
and, as such, the investors served a notice of default to the Company on July
19, 2001. The Registration Statement has still not been declared effective by
the Securities and Exchange Commission as of this date, and until such occurs,
the Convertible Notes cannot be converted to Common Stock nor may the Common
Stock warrants be exercised.

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


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

Interest rate on the debt                        8%

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

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

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

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

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

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

                                       13
<PAGE>

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

During the year ended June 30, 2002, the Company authorized the investors to
sell 1,800,000 of the shares held as security. As of December 31, 2002, the
investors had 8,765,432 collateral shares in their possession.


Note 9        CONVERTIBLE NOTE

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

Balance at December 31, 2002 and June 30,
2002                                             $ 185,556

Interest rate                                    8%

Issue date                                       July 19th, 2000

Maturity date                                    January 19th, 2002

Redemption rights                                If not converted, the holder
                                                 may require the Company to
                                                 redeem at any time after
                                                 maturity for the principal
                                                 amount plus interest.

Conversion ratio                                 Not convertible prior to July
                                                 19th, 2001, at 20% discount to
                                                 market between July 19th, 2001
                                                 and January 19th, 2002 or at
                                                 25% to market if held to
                                                 maturity, to a maximum of not
                                                 more than 2,500,000 shares.


Note 10       RELATED PARTY TRANSACTIONS

Convertible loans include amounts primarily due to Directors, Officers and
employees. Historically, such amounts due have been repaid through the issuance
of stock. At December 31, 2002 and June 30, 2002, the balances owing to
Directors and Officers was $924,948 and $796,429, respectively. These amounts
are without interest or terms of repayment.

                                       14
<PAGE>

Long-term deposits and notes included an amount of $118,500 at December 31,
2002, which is payable to Ocean Tire Recycling & Processing Co., Inc., a company
owned by a Director of the Company.

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


Note 11       EXCHANGE OF DEBT FOR COMMON STOCK

During the year ended June 30, 2002, the Company recorded increases in common
stock and paid-in capital of $1,673,518, reflecting the exchange of common stock
for debts owed. During the six month period ended December 31, 2002, the Company
did not record an increase in common stock and additional paid-in capital.


Note 12       COMMON STOCK

During the year ended June 30, 2002, the Company issued common stock in exchange
for services performed totaling $333,325. Included in this amount are payments
to Officers of the Company in exchange for salary and expenses in the amount of
$57,796. During the six month period ended December 31, 2002, the Company did
not issue common stock in exchange for services performed. The dollar amounts
assigned to such transactions have been recorded at the fair value of the
services received.

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

As at December 31, 2002, the Company had 224,757,559 Common shares issued and
outstanding.


Note 13       STOCK PLAN

The Company established a Stock Plan in June of 2000 whereby key personnel of
the Company, consultants and other persons who have made substantial
contributions to the Company may be issued shares as compensation and incentives
through Awards, Options or Grants under the terms set forth in the Stock Plan.
The Stock Plan originally called for the issuance of a maximum of 7,000,000
shares of stock as Awards, the issuance of a maximum of 7,000,000 shares of
stock to underlie Options and the issuance of a maximum of 7,000,000 shares of
stock that may be issued as Grants. Awards and Options can only be given to
individuals who have been either in the employ of the Company, an Officer,
Director or consultant for the preceding six months Awards are not fully vested
until the end of three years with one-twelfth of the aggregate award vesting at
the end of each quarter. If the Awardee is terminated for cause or resigns, the
unvested portion of the award is forfeited. Options can be exercised at any time

                                       15
<PAGE>

and upon exercise, the underlying stock is fully vested with the purchaser. The
Options are not transferable and are exercisable for two years after which time
they expire. If the Optionee is terminated for cause or resigns, all unexercised
options are forfeited. A Grant can only be given to persons who have made a
substantial contribution to the Company and the shares are not forfeitable. On
January 31, 2001, the Company amended the Stock Plan providing for an additional
3,000,000 shares being allocated as Grants and an additional 2,000,000 shares
allocated to be given as Options. On May 30, 2001, the Stock Plan was further
amended reallocating the 7,000,000 shares to be given as Awards to allow
5,000,000 of the shares to be used for Options and 2,000,000 of the shares to be
used as Grants. There were no stock issuances under the Stock Plan for the year
ended June 30, 2000.

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

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

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

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

There were no Options granted or exercised during the year ended June 30, 2002.
There were no Options granted or exercised during the six month period ended
December 31, 2002.


Note 14       ACQUISITION BY MERGER OF RPM INCORPORATED

During November 1997, the Company entered into a merger agreement with RPM
Incorporated ("RPM"). The Company acquired all of the assets and liabilities of
RPM by acquiring all of the outstanding common stock of RPM in exchange for
common stock in the Company on a unit for unit basis. RPM ceased to exist
following the exchange.

The assets and liabilities acquired by the Company from RPM consisted of the
proceeds from the sale of debentures of $535,000. The financing fees on the
issuance of the debentures, totaling $61,755, were included as an expense in the
statement of operations for the year ended June 30, 1998. A total of 535,000
shares were issued as a result of the merger valued at $16,050. A total of
$16,050 was received for this stock.

The Company entered into an additional agreement with the former shareholders of
RPM for consulting services for a period of 5 years expiring in June 2002.
Pursuant to this consulting agreement, 3,000,000 shares of common stock were
issued valued at $240,000. Other than the consulting agreement and the issuance
of the debentures, RPM was inactive.

For accounting purposes, the Company recorded the merger as a purchase and not
as a pooling of interests.


Note 15       GOVERNMENT ASSISTANCE

The Company is eligible for and has made claims for tax credits related to
scientific research and experimental development expenditures made in Canada.

                                       16
<PAGE>

These amounts, under Canadian Federal and Provincial tax law in conjunction with
its annual tax return filings, need not be offset against taxes otherwise
payable to become refundable to the Company at the end of its fiscal year. As
such, during the year ended June 30, 2002, the Company received approximately
$569,111 which has been recorded as an increase in stockholders' equity paid-in
capital. Also, during the six month period ended December 31, 2002, the Company
received approximately $111,772 which has also been recorded as an increase in
stockholders' equity paid-in capital. During the six month period ended December
31, 2002, the Company did not record any additional tax credits, bringing the
reported receivable balance from these governments from $246,970 as of June 30,
2002 to $126,428 as of December 31, 2002.


Note 16       LITIGATION

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

An action was brought by a Plaintiff against the Company, alleging that the
Company had agreed to issue 1,000,000 shares of its Common stock to the
Plaintiff in consideration for expenses allegedly paid by the Plaintiff in the
amount of approximately $150,000. These expenses allegedly were incurred in
relation to the rental of certain office space and performance of administrative
services. The Plaintiff's complaint seeks to impose an equitable trust or lien
on 1,000,000 of unissued shares of the Company, demands the issuance of
1,000,000 shares to the Plaintiff and seeks for breach of contract, monetary
damages of $1,400,000. Counsel for the Company denied all of the Plaintiff's
allegations and on July 24, 2002, a court dismissed the complaint for "Lack of
Prosecution". Plaintiff has taken an appeal and the Company's Counsel has
advised that in their opinion the Company has a valid basis to prevail on the
appeal.

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

An action was instituted by a Plaintiff, the Company's landlord, against the
Company in June 2001 for arrears of rent in the amount of approximately
$113,900. The Company abandoned its facility in December 2002 but is still in
negotiation with its landlord with respect to the amounts owing under the
action. As at December 31, 2002, the Company was in arrears of rent and property
taxes to its previous landlord in the amount of approximately $560,000.


Note 17       ACCUMULATED OTHER COMPREHENSIVE INCOME

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

                                       17
<PAGE>

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

The following is management's discussion and analysis of significant factors,
which have affected the Company's financial position, and operations during the
three-month period ended September 30, 2002. This discussion also includes
events, which occurred subsequent to the end of the last quarter and contains
both historical and forward-looking statements. When used in this discussion,
the words "expect(s)", "feel(s)","believe(s)", "will", "may", "anticipate(s)"
"intend(s)" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those projected.

As previously reported, the Company suspended rubber crumb production operations
in January of 2002 because of a lack of financial resources necessary to
complete the acquisition of certain additional secondary processing equipment
and its failure to renegotiate leases or to exercise purchase options or with
respect to this equipment or to support contributing operations until cash
inflows from the collection of any receivables or tipping fees could reasonably
be expected to be received. As reported in the last Annual Report, two of the
five leases related to the TCS-1 Production Model expired during the fourth
quarter of Fiscal 2002, one for the tire preparation equipment and the other for
certain components of the Air Plant. At approximately the same time of the
expiration of these leases, a component of the Air Plant broke down requiring an
estimated US$55,000 to repair. While the Company has abandoned any interest in
the return of the tire preparation equipment, Management had explored various
avenues to re-acquire those components of the Air Plant. At approximately the
same time of the removal of these components, the Company's landlord, having
secured a new tenant for our premises, requested that we vacate the premises.
This process was completed in December, 2002. The Tirex office was relocated to
new, temporary premises, in an industrial park in the former municipality of St.
Hubert on the south shore of the St. Lawrence River across from Montreal, leased
by Ashbyrne Investments Inc., a company owned by Michael Ash, our CFO. The
amount charged by Ashbyrne to Tirex was based on cost recovery. At the end of
January 2003, the Company again relocated its office closer to Montreal in the
Verdun Borough of the city. The new office is located approximately three miles
from downtown Montreal. Ashbyrne Investments verbally waived its right to a
30-day notice to terminate the sub-lease. As such, the Company has no sub-lease
obligation effective February 1, 2003.

Management is of the opinion that the signing of a License Agreement with Simpro
S.p.A. will be the best method of entering into a Purchase and Sales Agreements
with potential customers. Concurrent with the Licensing Agreement signed
December 17, 2002, Simpro signed a conditional sales contract with our Puerto
Rican customer, the most important condition of which contract being the
completion of the project financing package for this customer. As of the date of
signing of the conditional sales contract, this customer had secured commitments
for $7.5 million of an overall project cost of $9.0 million. Subsequently, the
Puerto Rican customer initiated negotiations with respect to a capital lease for
the equipment. There can be no assurances that the customer's efforts will be
successful and thus that the conditional sales contract will become
unconditional.

Pursuant to the signing of the License Agreement with Simpro, the Boards of
Directors of The Tirex Corporation and Tirex Canada R&D Inc. approved
resolutions, the effect of which was to convert the previous exclusive rights of
Tirex Canada R&D Inc. with respect to system design, marketing, manufacturing
and installation of TCS Systems to a non-exclusive basis. This action was
necessary to validate the Simpro License Agreement.

The equivalent of what would have been the gross profit, would Tirex have signed
such Purchase and Sales Agreements directly, would be recorded on the books of
Tirex as a royalty. Given the time required to complete the manufacture and

                                       18
<PAGE>

installation of the TCS-2 Systems envisioned by two potential customers, no
potential royalties would be recognized under Generally Accepted Accounting
Principles applicable in the USA until Fiscal 2004. Even with a Licensing
Agreement, there can be no assurances that the contemplated Purchase and Sales
Agreements will actually materialize.

As reported in the last Annual Report, in February of 2001, the Company
concluded a private financing with an investor group managed by a New York-based
company. Under the terms of the Agreement, the Company drew down US$750,000 of
the available US$5,000,000 amount. The initial $750,000 was provided in the form
of a Convertible Note. The Company defaulted by not having an SB-2 Registration
Statement declared effective within 150 days of the date of the Note. Following
lengthy negotiations, we reached a Settlement Agreement with the investors on
April 26, 2002 under which the Company agreed to a reimbursement schedule and
provided three series of warrants, 500,000 each, exercisable at different prices
to the investors. The lack of financial resources prevented us from being able
to honor the reimbursement schedule, and thus the Company is currently in
default with respect to the Settlement Agreement. To date, the investors have
not exercised their recourse rights under the agreement except to sell portions
of the collateral security and, on February 4th, sent a request to the Company
to convert some of the outstanding debt into common shares. We intend to
re-negotiate the Agreement based on our expectations of probable cash
availability. However, there can be no guarantee that these negotiations will be
successful, that the investors will continue to not exercise their recourse
rights and that the anticipated cash availability to support a Settlement
Agreement will actually be available.

Because of the lengthy delay preceding the commencement of commercial
operations, particularly insofar the sale and manufacturing of TCS Systems is
concerned, the Company has had to, and in the foreseeable near future will, be
forced to continue to cover a substantial part of its operating expenses out of
from sources other than revenues from operations. For the first quarter of
Fiscal 2003, our monthly expenses were approximately US$67,000 per month. Cash
amounts payable to third parties amounted to approximately US$27,000 including
approximately US$16,000 for building rent. With the relocation to the St-Hubert
Borough of Verdun, monthly expenses were reduced by approximately US$13,000 per
month including approximately US$6,000 per month in accumulated interest on the
Convertible Notes. With the subsequent relocation closer to Montreal, monthly
expenses have been reduced by another approximately US$3,000 per month.

LIQUIDITY AND CAPITAL RESOURCES

The activities of the Company, since its formation in 1987, and the inception of
its current business in 1993 have been financed by sources other than
operations. Such financing was principally provided by the sale of securities in
private transactions and by additional capital investments by directors,
officers and employees. During the six month period ended December 31, 2002,
directors, officers, employees and consultants did not make any direct cash
investments into the Company. During the Fiscal year ended June 30, 2002, direct
cash investments made by the directors, officers, shareholders and consultants
amounted to $950,713.

As of December 31, 2002, the Company had total assets of $653,029 as compared to
$2,739,452 at December 31, 2001 reflecting a decrease of $2,086,423, and a
decrease of $649,926 versus total assets as of the last fiscal year end, June
30, 2002, which amounted to $1,302,955. Management attributes the decrease from
December 31, 2001 to December 31, 2002 primarily to the following factors: (i) a
decrease of $16,570 in Tax Credits Receivable from the balance as of December
31, 2001 in the amount of $142,998 to the December 30, 2002 balance of $126,428,

                                       19
<PAGE>

and (ii) a decrease of $9,748 in Inventory from the balance as of December 31,
2001 in the amount of $72,377 to the December 31, 2002 balance of $62,629, and
(iii) a decrease of $66,000 in Prepaid Expenses and Deposits from the balance as
of December 31, 2001 in the amount of $395,577 to the December 31, 2002 balance
of $329,577, and (iv) a decrease of $2,059,284 in Property and Equipment from
the balance as of December 31, 2001 in the amount of $2,109,284 to the December
31, 2002 balance of $50,000 attributable to the write-down of assets to salvage
value, and (v) an increase of $37,103 in an Sales Tax Receivable from the zero
balance as of December 31, 2001 to the December 31, 2002 balance of $37,103.
Management attributes the decrease from June 30, 2002 to December 31, 2002
primarily to the following factors: (i) a decrease of $120,542 in Tax Credits
Receivable from the balance as of June 30, 2002 in the amount of $246,970 to the
December 31, 2002 balance of $126,428 and, (ii) a decrease of $533,771 in
Property and Equipment from the balance as of June 30, 2002 in the amount of
$583,771 to the December 31, 2002 balance of $50,000 attributable to the
write-down of assets to salvage value.

As of December 31, 2002, the Company had total liabilities of $4,398,849 as
compared to $3,567,381 at December 31, 2001, reflecting an increase of $831,468,
and reflecting an increase of $349,709 versus total liabilities as of the last
fiscal year end, June 30, 2002, which total amounted to $4,049,140. The increase
in total liabilities from December 31, 2001 to December 31, 2002 is primarily
attributable to an increase of $586,911 in Accounts Payable and Accrued
Liabilities and by an increase in Convertible Notes in the amount of $182,240.
The increase in total liabilities from June 30, 2002 to December 31, 2002 is
primarily attributable to an increase of $254,630 in Accounts Payable and
Accrued Liabilities and to an increase of $131,564 in Loans from Related
Parties.

Reflecting the foregoing, the financial statements indicate that as at December
31, 2002, the Company had a working capital deficit (current assets minus
current liabilities) of $1,477,166 compared to a working capital deficit of
$847,355 as at December 31, 2001, reflecting an increase of $629,811. The
working capital deficit of $1,477,166 as at December 31, 2002 compares to a
working capital deficit of $1,127,115 as at June 30, 2002, reflecting a decrease
of $350,051.

The financial statements which are included in this report reflect total
operations and other expenses of $951,077 for the six month period ended
December 31, 2002 versus $923,912 for the comparative six month period ended
December 31, 2001, reflecting an increase of $27,165. Although the Company has
ceased Research and Development activities thereby resulting in a decrease in
personnel expenses and other Research and Development expenses, the Company
incurred a charge of $530,651 to write down Property and Equipment to its
salvage value.

PART II: OTHER INFORMATION

Item 1 - Legal Proceedings

         We are presently a party in the following legal proceedings, the status
of which has not changed since the Company filed its Annual Report on Form
10-KSB for Fiscal 2002:, with the exception of the Tri-Steel case as noted
below.

IM(2) Merchandising and Manufacturing, Inc and David B. Sinclair v. The Tirex
Corporation, Tirex Corporation Canada, Inc., et al.

         The Plaintiffs, a Canadian resident and a Canadian corporation sued in
the Delaware, U.S. Federal District Court claiming fraud, breach of contract,
unjust enrichment and other allegations, that the alleged Defendants, which
include Tirex Corporation Canada and The Tirex Corporation, jointly conspired to
profit from their failure to comply with terms of a manufacturing agreement. The

                                       20
<PAGE>

monetary demand of this complaint was unspecified. We were prepared to move to
dismiss Plaintiffs' Complaint, but after consultations with the Plaintiffs'
Attorneys, the Plaintiffs' withdrew this complaint voluntarily. Plaintiffs later
filed a second action in the Chancery Court of Delaware alleging certain of the
same allegations; fraud, breach of contract, unjust enrichment, breach of
fiduciary duty and misrepresentation, but eliminated other counts including the
securities fraud allegations. The Defendants in the State Court action are the
same named in the Federal Court action, and again the monetary damages are
unspecified. We moved to dismiss the State Court Chancery case alleging
defective service of process and asserting that the Court had no jurisdiction
over the Defendants in Delaware and for removal of the case to Canada based on
forum non-convenience and other considerations. Our motion was granted and the
case dismissed.

         Subsequently, on or about April 25, 2001, the Plaintiffs instituted a
lawsuit in Superior Court, judicial district of Montreal alleging breach of
contract and claims damages of Canadian$794,690 (approximately US$508,600)
representing expenses and an additional Canadian$5,411,158 (approximately
US$1,874,000) in loss of profits. We have filed a detailed answer denying all
liability, stating further that Plaintiffs failed to comply with their
obligations. We believe we have meritorious defenses to all of the Plaintiffs'
claims. The action is still pending.

Surgent v. The Tirex Corporation
         An action was brought by the Plaintiff against us, alleging that we had
agreed to issue 1,000,000 shares of our Common Stock to the Plaintiff in
consideration for expenses allegedly paid by the Plaintiff on our behalf in the
amount of approximately $150,000. These expenses allegedly were incurred in
relation to the rental of certain office space and performance of administrative
services. The Plaintiff's complaint sought to impose an equitable trust or lien
on 1,000,000 of our un-issued common shares, demanded the issuance of the
1,000,000 shares and alleged breach of contract and claimed damages of
$1,400,000.

         We moved to dismiss the case on various procedural grounds and in
September 2000 the Court granted our motion based upon the lack of venue in
Union County, New Jersey. A new action was instituted by Plaintiff in the
Superior Court of New Jersey, Bergen County, in April 2001 alleging similar
claims as set forth in the previous action (Docket L-08060-00). We denied all of
plaintiff's allegations. This action was dismissed with prejudice and the
Plaintiff has filed a notice of appeal, which he has not yet perfected. Our
counsel has advised us that in their opinion, the Company will prevail on
appeal.

Lefebvre Freres Limited v. The Tirex Corporation
         Lefebvre Freres Limited instituted an action against us on August 13,
2001 in the Superior Court, judicial district of Montreal claiming
Canadian$98,513 (approximately US$63,000) is due and owing for the manufacture
and delivery of car tire disintegrators. We are preparing a defense and cross
claim against Plaintiff as the product delivered was defective and we believe we
are entitled to a reimbursement of sums paid. The action is still pending.

Tri-Steel Industries Inc. v. The Tirex Corporation
         Our former landlord Tri-Steel Industries Inc. instituted an action
against us, and our subsidiaries Tirex Canada and Tirex Canada R & D Inc., on or
about June 22, 2001 for arrears of rent in the amount of Canadian$230,050
(approximately US$147,232 using a $0.64 exchange rate). The premises were
vacated by us as of November 2002. The former landlord has accepted that he
would be repaid out of future cash flows and that the premises lease would be
terminated effective December 31, 2002.

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

                                       21
<PAGE>

Item 2 - Changes in Securities and Use of Proceeds

Share Issuance Continuity Schedule

         Shares issued and outstanding as of June 30, 2002           224,757,559
         Total Issuances for the first two quarters of Fiscal 2003           Nil
         Shares issued in February 2003                               25,138,333
                                                                     -----------

         Total Outstanding as of February 11, 2003                   249,896,892
                                                                     ===========

All of the shares issued in February of 2003 were issued with a restrictive
legend. The last preceding share issuance occurred in April of 2002

The shares issued in February of 2003 were issued in accordance with the
following description:

<TABLE>
<CAPTION>
<S>                                                                     <C>
To Directors, Officers and employees in lieu of salaries and expenses   10,405,000
To Legal fees                                                            2,300,000
To Consultants                                                           7,550,000
To Investors                                                             4,383,333
To Compensation to avoid legal action                                      500,000
                                                                        ----------

TOTAL                                                                   25,138,333
                                                                        ==========
</TABLE>

Item 3 - Defaults Upon Senior Securities

During 1998, the Company issued an aggregate of $535,000 of two (2) year
convertible, subordinated debentures bearing interest at the rate of 10%.
Interest thereon was due and payable semi-annually commencing six months from
the date of issuance. All debentures have either been converted or repaid,
except for debentures in the principal amount of US$55,000, which remain
outstanding and on which principal and interest, which has accrued since the
issuance of the debentures, are now due. On debentures converted subsequent to
December 1999, interest was capitalized and converted to equity. Although the
conversion option on the outstanding debentures has lapsed, the Company intends
to extend the conversion dates of these debentures upon the request of the
holders.

As indicated above, in February of 2001, The Company concluded a private
financing with an investor group managed by a New York-based company. Under the
terms of the Agreement, the Company had the contractual right to require the
Investor to purchase up to US$5,000,000 of put notes and the Company had drawn
down US$750,000, which was provided in the form of a Convertible Note. Under the
terms of the Agreement, the Company was required to file and have declared
effective a Registration Statement on Form SB-2 within 150 days of the Closing
Date of the Agreement. As of June 25, 2001, the Company was in technical default
for failing to have an effective Registration Statement on record with the SEC.
The Company was advised of the default in mid-July 2001. Following lengthy
negotiations, we reached a Settlement Agreement with the investors on April 26,
2002 under which the Company agreed to a reimbursement schedule and provided

                                       22
<PAGE>

three series of warrants, 500,000 each, exercisable at different prices to the
investors. The lack of financial resources prevented us from being able to honor
the reimbursement schedule, and thus the Company is currently in default with
respect the Settlement Agreement. To date, the investors have not exercised any
of their recourse rights under the agreement other than to sell some collateral
shares and, on February 4th, sent a request to the Company to convert some of
the outstanding debt into common shares. We intend to re-negotiate the Agreement
with the investors based on our expectations of cash availability. However,
there can be no guarantee that these negotiations will be successful, that the
investors will continue to not exercise their recourse rights and that the
anticipated cash availability to support a Settlement Agreement will actually be
available

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

Item 6 - Exhibits and Reports on Form 8-K

         The Company filed a Form 8-K on December 24, 2002 with respect to the
Simpro License Agreement, the concurrent signing of a conditional sales contract
with a customer, its change of address and the Company's suspension of its
efforts to re-acquire possession of certain leased production assets.

                                       23
<PAGE>

                                   SIGNATURES

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

                                       THE TIREX CORPORATION


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



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

                                       24