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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One) 

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Actof 1934 For the quarterly period ended December 31, 2004 

[ ] Transition report under Section 13 or 15(d) of the Securities ExchangeAct 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.) |

4055 Ste-Catherine Street West, Suite 151,Montreal (Westmount), Quebec, Canada, H3Z 3J8(Address of Principal executive offices) **(514) 935-2525(Issuer's telephone number, including area code) 

(Former Name, Former Address and Former Fiscal Year, ifChanged Since Last Report) 

Check whether the issuer: (1) filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the issuer was required to file such reports) and (2) hasbeen 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 ofcommon equity, as of February 1, 2005 :  249,895,892****shares

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

**The Tirex Corporation (A Development Stage Company) 
TABLE OF CONTENTS 
**PART I - FINANCIAL INFORMATION**   **Item 1 - Financial Statements**(Unaudited)Page  The Tirex Corporation and Subsidiaries        Consolidated Balance    Sheets as of        December 31, 2004   Consolidated Statements of Operations        for the three and six    month periods        ended December 31, 2004    and 2003   Consolidated Statements of Cash Flows        for the three and six    month periods        ended December 31, 2004    and 2003   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  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 registrantbelieves that all necessary adjustments, including normal recurring adjustments,have been reflected to present fairly the financial position of registrant atDecember 31, 2004 and the results of its operations and changes in its cashposition for the three and six month periods ended December 31, 2004 and 2003and for the period from inception (July 15, 1987).****
** 

THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

CONSOLIDATED BALANCE SHEETAS AT DECEMBER 31, 2004_______________________________________________________
   **December 31,**   **2004**     ASSETS      Current Assets      Cash and cash equivalents $-   Accounts receivable  -   Notes receivable  20,475   Inventory  73,322   Research and      Experimental Development tax credits receivable -   93,797    Property and equipment,   salvage value  50,000    Other assets   Investment, at cost  89,500   89,500      $233,297         LIABILITIES AND      STOCKHOLDERS' EQUITY (DEFICIT    Current Liabilities      Accounts payable      and accrued liabilties$2,305,370   Current portion of      long-term debt 78,091   2,383,461    Other liabilities      Long-term deposits and notes  217,500   Government loans      (net of current) -   Capital lease      obligations (net of current) -   Convertible notes  586,356   Convertible note  185,556   Convertible loans  1,403,668   2,393,080       4,776,542Stockholders' Equity (Deficit)      Common stock,      $.001 par value, authorized            250,000,000 shares, issued and outstanding            249,895,892 shares (June 30, 2003 - 249,895,892 shares) 249,896   Additional paid-in capital  25,222,219   Deficit      accumulated during the development stage (29,453,710)   Unrealized gain      (loss) on foreign exchange (561,649)   (4,543,244)      $233,297
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS_______________________________________________________
  **Three months    ended** **Six months    ended** **Cumulative from**  **December 31** **December 31** **March 26, 1993    to**  **2004** **2003** **2004** **2003** **December 31, 2004**            Revenues$**-**$**-**$**-**$**-** $1,354,088            Cost of Sales **-** **-** **-** **-**  1,031,075                        Gross profit **-** **-** **-** **-**  323,013            Operations              General and administrative 150,485 123,574 270,890 269,646  12,384,761   Depreciat **-** **-** **-** **-**  365,545   Research and development **-** **-** **-** **-**  15,396,966            Total Expense 150,485 123,574 270,890 269,646  28,147,272            Loss before other expenses (income) (150,485) (123,574) (270,890) (269,646)  (27,824,259)            Other expenses (income)              Interest expense 8,711 14,942 17,422 37,623  863,591   Interest income **-** **-** **-** **-**  (45,443)   Income from stock options **-** **-** **-** **-**  (10,855)   Loss on disposal of equipment **-** **-** **-** **-**  4,549              8,711 14,942 17,422 37,623  811,842            Net loss (159,196) (138,516) (288,312) (307,269)  (28,636,101)            Other comprehensive loss              Loss (gain) on foreign exchange **-** **-** **-** **-**  106,137                        Net loss and comprehensive loss$(159,196)$(138,516)$(288,312)$(307,269) $(28,742,238)            Basic and Diluted net loss and comprehensive              loss per common share$(0.00)$(0.00)$(0.00)$(0.00) $(0.38)            Weighted average shares of common              stock outstanding 249,895,892 249,895,892 249,895,892 249,895,892  75,531,631**
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS_______________________________________________________
  **Three months    ended** **Six months    ended** **Cumulative from**  **December 31** **December 31** **March 26, 1993 to**  **2004** **2003** **2004** **2003** **December 31, 2004**           Cash flows from operating activities:                        Net loss$(159,196)$(138,516)$(288,312)$(307,269)$(28,742,238)              Adjustments to reconcile net    loss to net cash               used in operating    activities:             Depreciation and amortization - - - - 364,304   (Gain) loss on disposal and    abandonment of assets - - - - 2,005,498   Stock issued in exchange for    interest - - - - 169,142   Stock issued in exchange for    services and expenses - - - - 10,574,972   Stock options issued in exchange    for services - - - - 3,083,390   Unrealized (loss) gain on    foreign exchange (76,984) (54,691) (160,518) (53,321) (561,669)   Other non-cash items 138,750   232,500   514,688           Changes in assets and liabilities:             (Increase) decrease in:             Account receivable - - - - -   Inventory - - - - (73,323)   Sales tax receivable - - - - (36)   Research and experimental    development tax credits receivable - - - - -   Other assets - - - - (10,120)   (Decrease) increase in :             Accounts payables and accrued    liabilities 28,680 59,355 103,830 92,790 2,121,574   Accrued salaries 68,750 43,750 112,500 87,500 610,652   Due to stockholders - - - - 5,000           Net cash used in operating activities - (90,102) - (180,300) (9,938,166)           Cash flow from investing activities:             Increase in notes receivable - - - - (259,358)   Reduction in notes receivable - - - - 237,652   Investment - - - - (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 - - - - (2,427,416)           Cash flow from financing activities:             Loans from related parties   90,102   180,300 4,354,835   Deferred financing costs - - - - 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 - - - - 591,619   Payments on loan payable - - - - (488,439)   Proceeds from issuance of stock    options - - - - 20,000   Proceeds from grants - - - - 3,628,277   Proceeds from issuance of common    stock - - - - 85,582   Proceeds from additional paid-in    capital - - - - 2,145,775           Net cash provided by financing activities - 90,102 - 180,300 12,365,325           Net (decrease) increase in cash and cash    equivalents - - - - (257)           Cash and cash equivalents - beginning of    period - - - - 257           Cash and cash equivalents - end of period$-$-$-$-$-**
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS_______________________________________________________
  **Three months    ended** **Six months    ended** **Cumulative from**  **December 31** **December 31** **March 26, 1993    to**  **2004** **2003** **2004** **2003** **December 31, 2004**            Supplemental Disclosure of    Non-Cash Activities:          During the year ended June 30,    2004, the Company did not issue common stock in recognotion of the       payment of debt. During the six    month periods ended December 31, 2004 and December 31, 2003, the       Company did not issue common    stock in recognition of the payment of debt.       During the year ended June 30,    2004, the Company did not issue common stock in exchange       for services performed and    expenses. During the six month periods ended December 31, 2004 and       December 31, 2003, the Company    did not issue common stock in exchange for services performed       and expenses.                       Supplemental Disclosure of Cash Flow    Information:                            Interest paid$**-**$-$**-**$- $232,748                 Income taxes paid$**-**$-$**-**$- $-

THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 

**Note 1 SUMMARY OF ACCOUNTING POLICIES**

CHANGE OF NAME 

On July 11, 1997, the Company changed its name from Tirex America, Inc. toThe Tirex Corporation. 

NATURE OF BUSINESS 

The Tirex Corporation (the "Company") was incorporated underthe laws of the State of Delaware on August 19, 1987. The Company was originallyorganized to provide comprehensive health care services, but due to itsinability to raise sufficient capital, was unable to implement its businessplan. The Company became inactive in November 1990. 

REORGANIZATION 

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

DEVELOPMENTAL STAGE 

At December 31, 2004, the Company is still in the developmentstage. The operations consist mainly of raising capital, obtaining financing,developing equipment, obtaining customers and supplies, installing and testingequipment and administrative activities. 

BASIS OF CONSOLIDATION 

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

CASH AND CASH EQUIVALENTS 

For purposes of the statement of cash flows, all highly liquid debtinstruments purchased with a maturity of three months or less, were deemed to becash equivalents. 

INVENTORY 

The Company values inventory, which consists of finished goods and equipmentheld for resale, at the lower of cost (first-in, first-out method) or market.
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 

PROPERTY AND EQUIPMENT 

Property and equipment are recorded at cost less accumulateddepreciation and provisions for write-downs. Depreciation is computed using thestraight-line method over the estimated useful lives of five years. Nodepreciation is recorded for equipment written down to salvage value. 

Repairs and maintenance costs are expensed as incurred whileadditions and betterments are capitalized. The cost and related accumulateddepreciation of assets sold or retired are eliminated from the accounts and anygains 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 marketvalue of the investment. 

ESTIMATES 

Preparation of financial statements in conformity withgenerally accepted accounting principles requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities atthe date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results may differ from thoseestimates. 

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123 

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

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128 

In 1997, the Company adopted Statement of FinancialAccounting Standards ("SFAS") No. 128, Earnings per Share. SFAS 128 changes thestandards for computing and presenting earnings per share (EPS) and supersedesAccounting Principles Board Opinion No. 15, Earnings per Share. SFAS 128replaces the presentation of Primary EPS with a presentation of Basic EPS andreplaces the presentation of Fully Diluted EPS with a presentation of DilutedEPS. It also requires dual presentation of Basic and Diluted EPS on the face ofthe income statement for all entities with complex capital structures andrequires a reconciliation of the numerator and denominator of the Basic EPScomputation to the numerator and denominator of the Diluted EPS computation.SFAS 128 is effective for financial statements issued for periods ending afterDecember 15, 1997, including interim periods. SFAS 128 also requires restatementof all prior-period EPS data presented. 
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 

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

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

The adoption of SFAS 128 had no effect on previously reportedloss per share amounts for the year ended June 30, 1997. For the years endedJune 30, 2004 and June 30, 2003, Primary Loss per Share was the same as BasicLoss per Share and Fully Diluted Loss per Share was the same as Diluted Loss perShare. A net loss was reported in 2004 and 2003, and accordingly, in thoseyears, the denominator for the Basic EPS calculation was equal to the weightedaverage of outstanding shares with no consideration for outstanding options andwarrants to purchase shares of the Company's common stock because to do so wouldhave 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 accruedexpenses, approximates fair value due to the relatively short maturity of suchinstruments. 

The fair values of the Company's debt instruments are basedon the amount of future cash flows associated with each instrument discountedusing the Company's borrowing rate. At December 31, 2004 and June 30, 2004,respectively, the carrying value of all financial instruments was not materiallydifferent from fair value. 

INCOME TAXES 

The Company has net operating loss carryovers ofapproximately $29.8 million as of December 31, 2004, expiring through 2025.However, based upon present Internal Revenue Service regulations governing theutilization of net operating loss carryovers where the corporation has issuedsubstantial additional stock and there has been a change in control as definedby the Internal Revenue Service regulations, a substantial portion of this losscarryover may not be available to the Company. 

The Company adopted Statement of Financial AccountingStandards ("SFAS") No. 109, Accounting for Income Taxes, effective July 1993.SFAS No. 109 requires the establishment of a deferred tax asset for alldeductible temporary differences and operating loss carryforwards. Because ofthe uncertainties discussed in Note 2, however, any deferred tax assetestablished for utilization of the Company's tax loss carryforwards wouldcorrespondingly require a valuation allowance of the same amount pursuant toSFAS No. 109. Accordingly, no deferred tax asset is reflected in these financialstatements. 

The Company does not currently have research and experimentaldevelopment tax credits receivable from the Canadian Federal government and theQuebec Provincial government as at September 30, 2004. 

FOREIGN CURRENCY TRANSLATION 

Assets and liabilities of non-U.S. subsidiaries that operatein a local currency environment are translated to U.S. dollars at exchange ratesin effect at the balance sheet date for monetary items and historical rates ofexchange for non-monetary items with the resulting translation adjustmentrecorded directly to a separate component of shareholders' equity. Income andexpense accounts 
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 

are translated at average exchange rates during the year. Currencytransaction gains or losses are recognized in current operations. 

REVENUE RECOGNITION 

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

**Note 2 GOING CONCERN**

As reported in the accompanying financial statements, theCompany incurred a net loss of $560,234 for the year ended June 30, 2004 and anadditional net loss for the six month period ended December 31, 2004 in theamount of $288,312. 

In March 1993, the Company had begun its developmental stagewith a new business plan. As of March 2000, the Company had developed aproduction quality prototype of its patented system for the disintegration ofscrap tires, but nonetheless continued its research and development efforts toimprove the machine's performance and to permit greater flexibility in designfor specific customer applications. Due to the Company's lack of working capitalduring the year ended June 30, 2002, all rubber crumb production was suspendedand research and development efforts have been hampered. Pending receipt offunding from operations, government assistance, loans or equity financing, crumbrubber production and previous research and development efforts will not beresumed. While the Company has engaged the process of marketing the TCS Systemto numerous potential clients since the beginning of the fiscal year commencingJuly 1, 2000, as of December 31, 2004, the Company had not yet consummated anunconditional purchase order for a TCS System. 

The Company is dependent on the success of its marketing ofits TCS Systems, and/or raising funds through equity sales, bank or investorloans, governmental grants or a combination of these, to continue as a goingconcern. The Company's uncertainty as to its ability to generate revenue and itsability to raise sufficient capital, raise substantial doubt about the entity'sability to continue as a going concern. The financial statements do not includeany adjustments that might be necessary if the Company is unable to continue asa going concern. 
**Note 3 PROPERTY AND EQUIPMENT**
As at December 31, 2004, plant and equipment consisted of the following: 
**Furniture, fixtures and equipment$149,516Manufacturing equipment62,400Subtotal211,916  Less: Accumulated depreciation and    amortization161,916  Total$ 50,000**
Depreciation and amortization expense charged to operationsfor the year ended June 30, 2004 was zero. Depreciation and amortization expensecharged to operations for the six month period ended December 31, 2004 was zero.
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 

Note 4 GOVERNMENT LOANS 

Canada Economic Development 

Loans payable under the Program for the Development of QuebecSMEs based on 50% of approved eligible costs for the preparation of marketdevelopment studies in certain regions. Loans are unsecured and non-interestbearing. (If the Company defaults, the loans become interest bearing at the rateof 8%). 
**Loan repayable over five years commencing    June 30, 2000 and ending June 30, 2004$ 34,300Loan repayable over five years commencing    June 30, 2001 and ending June 30, 200543,791 78,091Less: Current portion78,091Long-term portion$ NIL  Principal repayments are as follows: June 30Amount  2005$78,091**
**Note 5 CAPITAL LEASE OBLIGATIONS**

The Company leases certain manufacturing equipment underagreements classified as capital leases. The cost and the accumulatedamortization for such equipment as of December 31, 2004 and June 30, 2004 was$62,400 and $62,400, respectively. The equipment under capital leases has beenincluded in property and equipment on the balance sheet. The Company is inarrears on payment of these leases but default has not been declared. The leaseexpired on June 30, 2004. The leased equipment is not part of the Company's TCSSystem prototype. 

**Note 6 CONVERTIBLE SUBORDINATED DEBENTURES**

The Company issued Type B Convertible Subordinated Debenturesbetween 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. Theconversion privilege on the remaining $55,000 of these debentures expired andthe amount is now included on the Balance Sheet in Long term deposits and notes.

**Note 7 CONVERTIBLE NOTES**

The Convertible Notes appearing on the balance sheetconsisted of an investment arrangement with a group of institutional investorsinvolving a multi-stage financing under which the Company had access to, at itsoption, up to $5,000,000. A first tranche of $750,000 was completed but nofurther draw downs were made. The terms of the convertible note were: 

 
**Balance at December 31, 2004$586,356  Interest rate8%, payable quarterly, commencing June 30, 2001  Issue dateFebruary 26, 2001  Maturity dateFebruary 26, 2003

THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 
Redemption rightsIf not converted, the holder may require the Company to redeem at any time after maturity for the principal amount pus interest.  Conversion ratioLower 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 warrantsThe Convertible Notes carried an option to purchase Common stock warrants at the rate of one Warrant for each $1.25 of purchase price. The exercise price on the first    tranche of $ 750,000 is $ .077 per share.
Certain Directors and Officers of the Company have pledgedapproximately 12,000,000 of their personal shares of Common Stock of the Companyas security for the Convertible Notes until such time as the Company files withthe Securities and Exchange Commission a Registration Statement on Form SB-2, toregister common stock and warrants issuable upon the conversion of the notes, nolater than 150 days after the issue date of the Convertible Notes. This deadlinewas not met and, as such, the investors served a notice of default to theCompany on July 19, 2001. The Registration Statement was never declaredeffective by the Securities and Exchange Commission as of this date, and untilsuch occurs, the Convertible Notes cannot be converted to Common Stock nor maythe Common Stock warrants be exercised. On April 24, 2002 the Company enteredinto a Settlement Agreement with the Note holders. In the event of a defaultunder the Settlement Agreement, the term of the Convertible Notes would becomeeffective once again. The Company defaulted on the terms of the SettlementAgreement. 

**Note 8 CONVERTIBLE NOTE**

A convertible note, under a private arrangement, consists of the following:
**Balance at December 31, 2004$ 185,556  Interest rate8%  Issue dateJuly 19th, 2000  Maturity dateJanuary 19th, 2002  Redemption rightsIf not converted, the holder may require the Company to redeem at any time after maturity for the principal amount plus interest.  Conversion ratioNot 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.

**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004**

**Note 9 RELATED PARTY TRANSACTIONS**

Convertible loans include amounts primarily due to Directors,Officers and employees. Historically, such amounts due have been repaid throughthe issuance of stock. At December 31, 2004 and June 30, 2004, the balancesowing to Directors and Officers was $1,529,962 and $1,297,462, respectively.These amounts are without interest or terms of repayment. 

Long-term deposits and notes included an amount of $118,500at December 31, 2004, which is payable to Ocean Tire Recycling & Processing Co.,Inc., a company owned by a Director of the Company. 

**Note 10 COMMON STOCK**

During the year ended June 30, 2004 and the six month periodended December 31, 2004, the Company did not issue any common stock in exchangefor services performed. The dollar amounts assigned to such transactions havebeen recorded at the fair value of the services received. 

During the year ended June 30, 2004, an Officer of theCompany exercised stock options pursuant to a services agreement. The exerciseof these stock options entitled the Officer to 1,500,000 common shares of theCompany on a cash-less basis. The Company does not have sufficient authorizedand unissued shares available at December 31, 2004 for issuance of this stockand as such, the amount attributable to these shares has been recorded as partof the balances owing to Directors and Officers included in Convertible loans.

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

As at December 31, 2004, the Company had 249,895,892 Common shares issued andoutstanding, versus its authorization of 250,000,000 shares. 

**Note 11 CONVERTIBLE DEBT**

In the event that holders of convertible rights of optionexercise such rights of conversion, the Company does not have sufficient numberof authorized shares conversion stock to fulfill such obligations and ashareholder meeting would be required to approve the additional authorizednumber of shares. There is no assurance that the shareholders would approve theincrease to the number of authorized shares of stock to meet the conversionobligations under the various conversion agreements or options. 

**Note 12 GOVERNMENT ASSISTANCE**

The Company is eligible for and has made claims for taxcredits related to scientific research and experimental development expendituresmade in Canada. These amounts, under Canadian Federal and Provincial tax law inconjunction with its annual tax return filings, need not be offset against taxesotherwise payable to become refundable to the Company at the end of its fiscalyear. As such, during the year ended June 30, 2003, the Company receivedapproximately $246,970, which was recorded as an increase in stockholders'equity paid-in capital. During the year ended June 30, 2004 and the six monthperiod ended December 31, 2004, the Company did not make any additional claimsfor tax credits as it was not eligible to do so and, as such, the Company didnot record any additional tax credits receivable. The previous receivablebalance in respect of tax credits from these governments went from $246,970 asof June 30, 2002 to zero as of June 30, 2003 and remained as such as of June 30,2004 and December 31, 2004. 
**THE TIREX CORPORATION A DEVELOPMENT STAGE COMPANY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 

**Note 13 COMMITMENTS**

Rental expense for the year ended June 30, 2004 amounted to zero. Rentalexpense for the six month period ended December 31, 2004 amounted to zero. 

At December 31, 2004, the Company was in arrears of rent,including interest and related charges, in the approximate amount of $560,000. Asettlement agreement with the former landlord is in place under the terms ofwhich the Company would pay to the former landlord the sum of $140,000 from theproceeds to the Company of revenues from each of the first four sales of TCSSystems. 

**Note 14 LITIGATION**

An action was instituted by Plaintiffs, an individual and acorporation, in a Canadian court alleging a breach of contract and claimsdamages of approximately $508,600 representing expenses and an additionalapproximate amount of $1,874,000 in loss of profits. The current action followstwo similar actions taken in United States courts, the first of which waswithdrawn and the second of which was dismissed based on forum non convenienceand other considerations. A detailed answer has been filed by the Companydenying all liability, stating further that Plaintiffs failed to comply withtheir obligations. Counsel for the Company believes that the Company hasmeritorious defenses to all of the Plaintiff's claims. The action is stillpending. 

A Plaintiff instituted an action, a corporation, in August2001 in a Canadian court claiming approximately $63,000 is due and owing for themanufacture and delivery of tire disintegrators. The Company has prepared itsdefense and a cross claim against the Plaintiff as the product delivered wasdefective and the Company believes it is entitled to a reimbursement of sumspaid. The action is still pending. 

An action was instituted by a Plaintiff, the Company'slandlord, against the Company in June 2001 for arrears of rent in the amount ofapproximately $113,900. Subsequent additions to arrearages with respect to rentand property taxes raised the amount due to approximately $560,000. A settlementagreement with the former landlord is in place, under the terms of which theCompany would pay to the former landlord the sum of $140,000 from the proceedsto the Company of revenues from the first four sales of TCS Systems. 

**Note 15 ACCUMULATED OTHER COMPREHENSIVE INCOME**

The deficit accumulated during the development stage included accumulatedcomprehensive other income totaling $103,396. 
**ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLANOF OPERATIONS

The following is management's discussion and analysis of significant factorswhich have affected the Company's financial position and operations during thethree month period ended September 30, 2004. This discussion also includesevents which occurred subsequent to the end of the last quarter and containsboth 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 couldcause actual results to differ materially from those projected. 

In March 2000, we announced that our tire recycling technology was ready forreplication and commercialization. Since Fiscal 2001, we have demonstrated ourtechnology to numerous groups from Asia, Europe, North and South and America andthe Caribbean, as well as to some shareholders and potential strategic alliancepartners. While numerous Letters of Intent were signed during the earlymarketing stage, none materialized into firm purchase contracts. Managementattributed these failures to proceed to firm contracts to the lack of a trackrecord for the TCS technology, or alternatively, to the Company's inability toprovide performance guarantees. The Company signed its License Agreement withSimpro S.p.A. of Italy in January of 2003, and thus created the potential thatperformance guarantees could be offered. However, as of December 31, 2004, nopurchase/sale contracts had been written. 

Tirex has continued with its marketing structure consisting primarily ofindependent representatives who have the possibility of gainingsemi-exclusivities in certain territories based on sales results. Ourmanufacturing partner, Simpro, has a non-exclusive marketing agreementapplicable on a worldwide basis. The Company continues to entertain requests formarketing agreements on several continents, but steadfastly adheres to itspolicy of not providing exclusivities in the absence of prior-establishedresults. 

In January 2003, the Company entered into a License Agreement with SimproS.p.A. for exclusive manufacturing rights and for non-exclusive marketing rightswith respect to TCS Systems. Simpro is actually negotiating with the Italiangovernment respecting the financing of the construction of a new demonstrationmodel in Italy, which it plans to use to support their marketing efforts. Todate, Simpro has not sold any systems. 

The lack of a significant track record relative to the operation and outputof the TCS System has proven to be difficult hurdle to overcome in making TCSSystem sales. The installed cost of a TCS-1 System to an entrepreneur, dependingon the system configuration, the condition of the feedstock and the outputrequirements and excluding building and infrastructure costs, is in the vicinityof Euros 4,300,000 (approximately US$5.62 million at prevailing exchange rates).For a TCS-2, the comparable cost to the entrepreneur is in the vicinity of Euros5,500,000 (approximately US$7.189 million at prevailing exchange rates). Thisrepresents a substantial investment for an entrepreneur and, without performanceguarantees to substitute for the lack of a significant operating history,entrepreneurs or their financial backers have heretofore been unwilling toaccept the risk of purchasing a new technology. Simpro has been able to obtaininsurance backing to support their offer of limited performance guarantees, andsuch potential is expected to assist the marketing effort. Simpro is nowoffering limited Performance Guarantees. Management is of the opinion that,insofar as the systems are normally priced in Euros, the continuing appreciationof the Euro against the US dollar is having a negative on the sales efforts. 

During Fiscal 2004 and in the first half of Fiscal 2005, the Company andSimpro have responded to numerous requests for information. Out of theserequests, several opportunities have presented themselves which merited theexpenditure of considerable effort to close a Purchase and Sales Agreement. Inaddition to the Puerto Rican project, for which recent correspondence indicatesthat the Puerto Rican project continues to develop, Tirex and Simpro areactively pursuing opportunities in 

Mexico, Europe, Australia, Brazil, Malaysia, the Middle East and Botswana.All of these opportunities are well advanced. Simpro is also pursuinginteresting opportunities in the UK, France and Italy,. However, regardless ofManagement's optimism as the various opportunities enunciated above, there canbe no assurance that these opportunities will actually result in unconditionalsales contracts. 

Subsequent to the second quarter of fiscal 2005, the Companycompleted its restructuring of its web site, designed to provide information toinvestors and customers alike. This site is now available for viewing attirex-tcs.com. 

The finalizing of the License Agreement with Simpro means that the grossrevenues from these sales will be recorded on Simpro's books, not in the booksof Tirex. The amount remitted back to Tirex will take the form of a royalty andwill be accounted for as such. Even if these sales would have been set up insuch a way as to be recordable on the books of Tirex, generally acceptedaccounting principles in effect in the USA would have prevented the Company fromrecognizing the revenue as such until the systems would have been accepted bythe customers. Given the time line required to manufacture, install and haveaccepted these systems, it is quite impossible that these revenues would becomerecognizable during our fiscal year which will end June 30, 2005. By extension,the same principles would apply to the royalty to be received by Tirex. Whilethe Company will benefit from the periodic cash inflows resulting from progresspayments during the next approximately ten months, the royalty will, in fact,not have been earned until the systems are accepted by the customers. 

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 theInvestor to purchase up to US$5,000,000 of put notes. We drew down US$750,000 ofthis amount and used the proceeds of this financing toward legal and consultingfees due, normal operating expenses such as payroll, rent and taxes and theacquisition of equipment for our prototype TCS-1 Plant. In July of 2001, theCompany entered into a technical default with respect to the Agreement by nothaving an SB-2 Registration Statement declared effective by the SEC. Afterseveral months of negotiations, the Company entered into a Settlement Agreementwith the Investor Group which provided for a cash paydown of the amount owed,including interest and penalties over a period of approximately two yearsstarting with the date the Settlement Agreement was signed, the right of theInvestor Group to continue to be able to sell up to 600,000 collateral and Rule144 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 yearperiod. This Settlement Agreement was announced in April of 2002, and details ofthe 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 toour expectations, was unable to generate the cash flow necessary to pay down theConvertible Note in accordance with the terms of the Settlement Agreement. Thus,the Company once again finds itself in a position of default. Numerous recoursesare available to the holders of the Convertible Notes, but to date, theserecourses have not been exercised. Such recourses can be exercised at any timeand the fact that they have not been exercised so far does not preclude theirbeing exercised now or in the future. The Company has kept the Convertible Noteholders apprised of its efforts to sell TCS Systems and thus restart therepayments on the Convertible Notes. 

Because of the lengthy delay preceding the commencement of commercialoperations, we have historically had to cover our overhead costs from sourcesother than from commercial revenues. We expect that some portion of our futureoverhead costs, which may be quite significant, will continue to be covered fromsources other than commercial revenues. Until December of 2001, our monthlyoperating 

costs were about US$100,000 per month. With the cessation of productionactivities and the scaling back of research and development expendituresstarting in January of 2002, our monthly costs were reduced to approximatelyUS$35,000 per month. Since March of 2003, our monthly our-of-pocket cash costshave been reduced to negligeable amounts, and thus our requirement to findfinancial resources to fund operations is minimal. Our cash flow deficitcondition will continue until such time as the Company will start generatingrevenues from the sale of TCS Systems. Until we can succeed in securing anunconditional sales contract for the sale of one or more systems employing ourtechnology, the company will not be engaging any significant financialcommitments and will not be engaging in any significant research and developmentactivities nor increasing employment. 

While we have initiated marketing of TCS Systems and have in place a LicenseAgreement, as of December 31, 2004, no unconditional sales orders for TCSSystems had been received and manufacturing of TCS Systems has not beeninitiated. We do anticipate that we will begin selling or licensing out the saleof TCS Systems and thus initiating the manufacturing of these systems on acommercial basis in the near future. Unless and until we successfully developand commence TCS System manufacturing and sales operations on a full-scalecommercial level, we will not generate significant revenues from operations.Accordingly, we would be obligated to attempt to seek noncommercial sources ofrevenues to support operations until TCS Systems sales and manufacturingoperations would become a reality. In the event of such a circumstance, therecan further be no assurance that such non-commercial revenue funding would beavailable at all or on terms acceptable to management. Except for activitiesrelated to the recycled crumb rubber industry, as noted above and in previousfilings, we have never engaged in any other significant business activities. 

Liquidity and Capital Resources 

As of December 31, 2004, the Company had total assets of $233,297 as comparedto $233,333 at December 31, 2003 reflecting a decrease of $36, and no changeversus total assets as of the last fiscal year end, June 30, 2004. There were nosignificant changes in individual asset balances between the balances atDecember 31, 2004 and the balances at December 31, 2003 and between the balancesat December 31, 2004 and the balances at June 30, 2004. 

As of December 31, 2004, the Company had total liabilities of $4,776,542 ascompared to $4,109,505 at December 31, 2003, reflecting an increase of $667,037,and reflecting an increase of $448,831 versus total liabilities as of the lastfiscal year end, June 30, 2004, which total amounted to $4,327,711. The increasein total liabilities from December 31, 2003 to December 31, 2004 is primarilyattributable to an increase of $332,648 in Accounts Payable and AccruedLiabilities, by a decrease of $87,080 in Government Loans, by an increase of$421,245 in Convertible Loans and by a increase of $222 in the Current Portionof Long-Term Debt. The increase in total liabilities from June 30, 2004 toDecember 31, 2004 is primarily attributable to an increase of $216,330 inAccounts Payable and Accrued Liabilities and to an increase of $232,500 inConvertible Loans. 

Reflecting the foregoing, the financial statements indicate that as atDecember 31, 2004, the Company had a working capital deficit (current assetsminus current liabilities) of $2,289,664 compared to a working capital deficitof $1,956,758 as at December 31, 2003, reflecting an increase of $332,906. Theworking capital deficit of $2,289,664 as at December 31, 2004 compares to aworking capital deficit of $2,073,334 as at June 30, 2004, reflecting anincrease of $216,330. 

The financial statements which are included in this reportreflect total operations and other expenses of $288,312 for the six month periodended December 31, 2004 versus $307,269 for the comparative six month periodended December 31, 2003, reflecting a decrease of $18,957. The Company hasceased Research and Development activities thereby resulting in a significantdecrease in personnel expenses and other Research and Development expensescompared with prior periods. 

The success of the tire recycling manufacturing business and the ability tocontinue as a going concern will be dependent upon the ability of the Company toobtain adequate financing to commence profitable, commercial manufacturing andsales activities and the TCS Systems' ability to meet anticipated performancespecifications on a continuous, long term commercial basis. 

**Item 3 - Controls and Procedures**
The Company's management, with the participation of its Chief ExecutiveOfficer, who is the Company's principal executive officer, and its ChiefFinancial Officer, who is the Company's principal financial officer, hasevaluated the effectiveness of the Company's disclosure controls and proceduresas of December 31, 2004. Based upon that evaluation, the Chief Executive Officerand the Chief Financial Officer have concluded that the Company's disclosurecontrols and procedures are effective in alerting them in a timely manner tomaterial information relating to The Tirex Corporation, including itsconsolidated subsidiaries, required to be included in this report and the otherreports that the Company files or submits under the Securities Exchange Act of1934. During the second fiscal quarter of 2004, there have been no changes inthe Company's internal control over financial reporting that have materiallyaffected, or that are reasonably likely to materially affect, its internalcontrol over financial reporting. 

**PART II: OTHER INFORMATION
**Item 1:

Item 1 - Legal Proceedings 

We are presently a party in the following legal proceedings, the status ofwhich has not changed since the Company filed its Quarterly Report on Form10-QSB for the first quarter of Fiscal 2005. 
**IM(2) Merchandising and Manufacturing, Inc and David B. Sinclair v. The TirexCorporation, Tirex Corporation Canada, Inc., et al. 

Lefebvre Freres Limited v. The Tirex Corporation 

Tri-Steel Industries Inc. v. The Tirex Corporation**
No director, officer, or affiliate of the Company, or any associate of any ofthem, is a party to or has a material interest in any proceeding adverse to us.
**Item 2: - Unregistered Sales of Equity Securities and Use of Proceeds

None 
**Item 3 - Defaults Upon Senior Securities**
Other than defaults previously reported on in prior periods, there were noother defaults upon senior securities. 
**Item 4 - Submission of Matters to a Vote of Security Holders**
During the three-month period ended December 31, 2004, there were nosubmissions of matters to a vote of Security Holders. 

**Item 5 - Other Information**
There have been no material changes in the way in which shareholders maynominate directors. 
**Item 6 - Exhibits and Reports on Form 8-K**
Exhibits Exhibit 31.1 Certification of Form 10-Q filing by the Chief Executive OfficerExhibit 31.2 Certification of Form 10-Q filing by the Chief Financial OfficerExhibit 32.1 Certification Pursuant to the Sarbanes-Oxley Act by the ChiefExecutive Officer Exhibit 32.2 Certification Pursuant to the Sarbanes-Oxley Act by the ChiefFinancial Officer 

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

**SIGNATURES 

In accordance with the requirements of the ExchangeAct, the registrant has caused this report to be signed on its behalf by theundersigned thereunto duly authorized.  THE TIREX CORPORATION      Date: February 15, 2005By   /s/ John L.    Threshie,jr. John L. Threshie, Jr. President      Date: February 15, 2005By   /s/ Michael Ash Michael Ash, Treasurer and Chief Accounting and Financial    Officer**********************************