U.S. SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

(Mark One)

QQuarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period ended December 31, 2007.

£Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 
For the transition period from ____to ____

Commission File Number 33-17598-NY

THE TIREX CORPORATION

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



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

PO Box 1000, 
Stratford CT USA 06614-9991(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding for each of the
issuers classes of common equity, as of December 31, 2007 : 249,895,892shares

Transitional Small Business Disclosure Format (check one):
Yes

---



The Tirex Corporation 
(A Development Stage Company)

TABLE OF CONTENTS

|              |                                                                                                        |     
|------------- | ------------------------------------------------------------------------------------------------------ | ----
|PART I
      | FINANCIAL INFORMATION                                                                                  | Page
|              |                                                                                                        |     
|Item 1
      | Financial Statements (Unaudited)                                                                       | 1   
|              |                                                                                                        |     
|              | The Tirex Corporation and
    Subsidiaries Consolidated Balance Sheet as of December 31, 2007          | 2   
|              |                                                                                                        |     
|              | Consolidated Statements of
    Operations for the three month periods ended December 31, 2007 and 2006 | 3   
|              |                                                                                                        |     
|              | Consolidated Statements of Cash
    Flows for the three month periods ended December 31, 2007 and 2006 | 4   
|              |                                                                                                        |     
|              | Notes to Financial Statements (Unaudited)                                                              | 6   
|              |                                                                                                        |     
|Item 2
      | Managements Discussion and
    Analysis of Financial Condition and Results of Operations              | 15  
|              |                                                                                                        |     
|Item 3
      | Controls and Procedures                                                                                | 20  
|              |                                                                                                        |     
|PART II
     | OTHER INFORMATION                                                                                      | 21  
|              |                                                                                                        |     
|Item 1
      | Legal Proceedings.                                                                                     | 21  
|Item 2
      | Changes in Securities and Use of
    Proceeds                                                          | 21  
|Item 3
      | Defaults Upon Senior Securities                                                                        | 21  
|Item 4
      | Submission of Matters to a Vote
    of Security Holders                                                | 21  
|Item 5
      | Other Information                                                                                      | 21  
|Item 6
      | Exhibits and Reports on Form 8-K                                                                       | 21  

The financial statements are unaudited. However, Management
of registrant believes that all necessary adjustments, including normal
recurring adjustments, have been reflected to present fairly the financial
position of registrant at December 31, 2007 and the results of its operations
and changes in its cash position for the three and six month periods ended
December 31, 2007 and 2006 and for the period from inception (July 15, 1987).
This quarterly statement has not been reviewed by an independent accountant.

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2007

1

---



THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 2007

|                                                                 |   | December 31,
|---------------------------------------------------------------- | - | ------------
|                                                                 |   | 2007        
|                                                                 |   |             
|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                                                    |   | 25,000      
|                                                                 |   |             
|Other assets                                                     |   |             
|Investment, at cost                                              |   | 89,500      
|                                                                 |   | 89,500      
|                                                                 |   |             
|                                                                 | $ | 208,297     
|                                                                 |   |             
|LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)               |   |             
|                                                                 |   |             
|Current Liabilities                                              |   |             
|Accounts payable and accrued liabilties                          | $ | 3,076,624   
|Current portion of long-term debt                                |   | 112,537     
|                                                                 |   | 3,189,161   
|                                                                 |   |             
|Other liabilities                                                |   |             
|Long-term deposits and notes                                     |   | 217,500     
|Government loans (net of current)                                |   | -           
|Capital lease obligations (net of current)                       |   | -           
|Convertible notes                                                |   | 399,389     
|Convertible notes                                                |   | 195,556     
|Convertible loans                                                |   | 2,359,135   
|                                                                 |   | 3,171,580   
|                                                                 |   |             
|                                                                 |   | 6,360,741   
|Stockholders Equity (Deficit)                                   |   |             
|Common stock, $.001 par value, authorized                        |   |             
|250,000,000 shares, issued and
    outstanding                   |   |             
|249,895,892 shares (June 30, 2005 -
    249,895,892 shares)      |   | 249,896     
|Additional paid-in capital                                       |   | 25,222,219  
|Deficit accumulated during the development stage                 |   | (30,661,310)
|Unrealized gain (loss) on foreign exchange                       |   | (963,249)   
|                                                                 |   | (6,152,444) 
|                                                                 |   |             
|                                                                 | $ | 208,297     

2

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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
|                                             |   | 2007                   |   | 2006                 |   | 2007                 
|                                             |   |                        |   |                      |   |                      
|Revenues                                     | $ | -                      | $ | -                    | $ | -                    
|                                             |   |                        |   |                      |   |                      
|Cost of Sales                                |   | -                      |   | -                    |   | -                    
|                                             |   |                        |   |                      |   |                      
|Gross profit                                 |   | -                      |   | -                    |   | -                    
|                                             |   |                        |   |                      |   |                      
|Operations                                   |   |                        |   |                      |   |                      
|General and administrative                   |   | 97,378                 |   | 127,215              |   | 194,328              
|Depreciation and amortization                |   | -                      |   | -                    |   | -                    
|Research and development                     |   | -                      |   | -                    |   | -                    
|                                             |   |                        |   |                      |   |                      
|Total Expense                                |   | 97,378                 |   | 127,215              |   | 194,328              
|                                             |   |                        |   |                      |   |                      
|Income (loss) before other expenses          |   | (97,378)               |   | (127,215)            |   | (194,328)            
|                                             |   |                        |   |                      |   |                      
|Other expenses (income)                      |   |                        |   |                      |   |                      
|Interest expense                             |   | 11,699                 |   | 11,699               |   | 23,397               
|Interest income                              |   | -                      |   | -                    |   | -                    
|Income from stock options                    |   | -                      |   | -                    |   | -                    
|Loss on disposal of equipment                |   | -                      |   | -                    |   | -                    
|                                             |   |                        |   |                      |   |                      
|                                             |   | 11,699                 |   | 11,699               |   | 23,397               
|                                             |   |                        |   |                      |   |                      
|Net income (loss)                            |   | (109,077)              |   | (138,914)            |   | (217,725)            
|                                             |   |                        |   |                      |   |                      
|Other comprehensive loss                     |   |                        |   |                      |   |                      
|Loss (gain) on foreign exchange              |   | -                      |   | -                    |   | -                    
|                                             |   |                        |   |                      |   |                      
|                                             |   |                        |   |                      |   |                      
|Net income (loss) and comprehensive loss     | $ | (109,077)              | $ | (138,914)            | $ | (217,725)            
|                                             |   |                        |   |                      |   |                      
|Basic and Diluted net loss and comprehensive |   |                        |   |                      |   |                      
|loss per common share                        | $ | (0.00)                 | $ | (0.00)               | $ | (0.00)               
|                                             |   |                        |   |                      |   |                      
|Weighted average shares of common            |   |                        |   |                      |   |                      
|stock outstanding                            |   | 249,895,892            |   | 249,895,892          |   | 249,895,892          

3

---



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
|                                                                  |   | 2007               |   | 2006             |   | 2007                 
|                                                                  |   |                    |   |                  |   |                      
|Cash flows from operating activities:                             |   |                    |   |                  |   |                      
|                                                                  |   |                    |   |                  |   |                      
|Net income (loss)                                                 | $ | (109,077)          | $ | (138,914)        | $ | (217,725)            
|                                                                  |   |                    |   |                  |   |                      
|Adjustments to reconcile net loss to net cash                     |   |                    |   |                  |   |                      
|used in operating activities:                                     |   |                    |   |                  |   |                      
|Depreciation and amortization                                     |   | -                  |   | -                |   | -                    
|(Gain) loss on disposal and abandonment of assets                 |   | -                  |   | -                |   | -                    
|Stock issued in exchange for interest                             |   | -                  |   | -                |   | -                    
|Stock issued in exchange for services and
    expenses            |   | -                  |   | -                |   | -                    
|Stock options issued in exchange for services                     |   | -                  |   | -                |   | -                    
|Unrealized (loss) gain on foreign exchange                        |   | (7,748)            |   | 75,488           |   | (154,030)            
|Other non-cash items                                              |   | 83,750             |   | 83,500           |   | 167,500              
|                                                                  |   |                    |   |                  |   |                      
|Changes in assets and liabilities:                                |   |                    |   |                  |   |                      
|(Increase) decrease in:                                           |   |                    |   |                  |   |                      
|Account receivable                                                |   | -                  |   | -                |   | -                    
|Inventory                                                         |   | -                  |   | -                |   | -                    
|Sales tax receivable                                              |   | -                  |   | -                |   | -                    
|Research and experimental development tax credits
    receivable  |   | -                  |   | -                |   | -                    
|Other assets                                                      |   | -                  |   | -                |   | -                    
|(Decrease) increase in :                                          |   |                    |   |                  |   |                      
|Accounts payables and accrued liabilities                         |   | 1,825              |   | (51,324)         |   | 141,755              
|Accrued salaries                                                  |   | 31,250             |   | 31,250           |   | 62,500               
|Due to stockholders                                               |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Net cash used in operating activities                             |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Cash flow from investing activities:                              |   |                    |   |                  |   |                      
|Increase in notes receivable                                      |   | -                  |   | -                |   | -                    
|Investment                                                        |   | -                  |   | -                |   | -                    
|Equipment                                                         |   | -                  |   | -                |   | -                    
|Equipment assembly costs                                          |   | -                  |   | -                |   | -                    
|Organization cost                                                 |   | -                  |   | -                |   | -                    
|Reduction in security deposit                                     |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Net cash used in investing activities                             |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Cash flow from financing activities:                              |   |                    |   |                  |   |                      
|Loans from related parties                                        |   |                    |   |                  |   |                      
|Deferred financing costs                                          |   | -                  |   | -                |   | -                    
|Proceeds from deposits                                            |   | -                  |   | -                |   | -                    
|Payments on notes payable                                         |   | -                  |   | -                |   | -                    
|Proceeds from convertible notes                                   |   | -                  |   | -                |   | -                    
|Proceeds from notes payable                                       |   | -                  |   | -                |   | -                    
|Payments on lease obligations                                     |   | -                  |   | -                |   | -                    
|Proceeds from issuance of convertible
    subordinated debentures |   | -                  |   | -                |   | -                    
|Proceeds from loan payable                                        |   | -                  |   | -                |   | -                    
|Payments on loan payable                                          |   | -                  |   | -                |   | -                    
|Proceeds from issuance of stock options                           |   | -                  |   | -                |   | -                    
|Proceeds from grants                                              |   | -                  |   | -                |   | -                    
|Proceeds from issuance of common stock                            |   | -                  |   | -                |   | -                    
|Proceeds from additional paid-in capital                          |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Net cash provided by financing activities                         |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Net (decrease) increase in cash and cash
    equivalents          |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Cash and cash equivalents - beginning of
    period               |   | -                  |   | -                |   | -                    
|                                                                  |   |                    |   |                  |   |                      
|Cash and cash equivalents - end of period                         | $ | -                  | $ | -                | $ | -                    

4

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                                                          |   | Three months
    ended |   | Six months
    ended |   | Cumulative
    from  
|----------------------------------------------------------------------------------------- | - | ---------------------- | - | -------------------- | - | ---------------------
|                                                                                          |   | December 31            |   | December 31          |   | March 26, 1993
    to
|                                                                                          |   | 2007                   |   | 2006                 |   | 2007                 
|                                                                                          |   |                        |   |                      |   |                      
|Supplemental Disclosure of Non-Cash
    Activities:                                       |   |                        |   |                      |   |                      
|                                                                                          |   |                        |   |                      |  
|During the year ended June 30, 2007, the Company
    did not issue common stock           |   |                        |   |                      |  
|in recognition of the payment of debt. During the
    six months ended December 31, 2007, |   |                        |   |                      |  
|the Company did not issue common stock in
    recognition of the payment of debt.         |   |                        |   |                      |  
|                                                                                          |   |                        |   |                      |   |                      
|During the year ended June 30, 2007, the Company
    did not issue common stock           |   |                        |   |                      |  
|in exchange for services performed and expenses.
    During the six months ended          |   |                        |   |                      |  
|December 31, 2007, the Company did not issue
    common stock in exchange                 |   |                        |   |                      |  
|for services performed and expenses.                                                      |   |                        |   |                      |  
|                                                                                          |   |                        |   |                      |   |                      
|Supplemental Disclosure of Cash
    Flow Information:                                     |   |                        |   |                      |   |                      
|                                                                                          |   |                        |   |                      |   |                      
|Interest paid                                                                             | $ | -                      | $ | -                    | $ | -                    
|                                                                                          |   |                        |   |                      |   |                      
|Income taxes paid                                                                         | $ | -                      | $ | -                    | $ | -                    

5

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007
Note 1     SUMMARY OF ACCOUNTING POLICIES

CHANGE OF NAME
On July 11, 1997, the Company changed its name from Tirex
America, Inc. to The Tirex Corporation.
NATURE OF BUSINESS
The Tirex Corporation (the "Company") was incorporated under
the laws of the State of Delaware on August 19, 1987. The Company was originally
organized to provide comprehensive health care services, but due to its
inability to raise sufficient capital, was unable to implement its business
plan. The Company became inactive in November 1990.
REORGANIZATION
On March 26, 1993, the Company entered into an acquisition
agreement (the "Acquisition Agreement") with Louis V. Muro, currently an officer
and a director of the Company, and former Officers and Directors of the Company
(collectively the "Seller"), for the purchase of certain technology owned and
developed by the Seller (the "Technology") to be used to design, develop and
construct a prototype machine and thereafter a production quality machine for
the cryogenic disintegration of used tires. The Technology was conceptually
developed by the Seller prior to their affiliation or association with the
Company.
DEVELOPMENTAL STAGE
At December 31, 2007, the Company is still in the development
stage. The operations consist mainly of raising capital, obtaining financing,
developing equipment, obtaining customers and supplies, installing and testing
equipment and administrative activities.
BASIS OF CONSOLIDATION
The consolidated financial statements include the
consolidated accounts of The Tirex Corporation, Tirex Canada R&D Inc., The Tirex
Corporation Canada Inc., Tirex Advanced Products Quebec Inc. and Tirex
Acquisition Corp., all of these subsidiaries currently being dormant. Certain of
these companies have actually been de-registered by government authorities but
could easily be revived if circumstances would warrant such action. Tirex Canada
R&D Inc. is held 51% by two shareholders of the Company. The shares owned by
these shareholders are held in escrow by the Companys attorney and are
restricted from transfer thereby allowing for a full consolidation of this
Company. The Tirex Corporation Canada Inc., Tirex Advanced Products Quebec Inc.
and Tirex Acquisition Corp. are 100% held by the Company. All subsidiary
companies are dormant. All inter-company transactions and accounts have been
eliminated in consolidation.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all highly
liquid debt instruments purchased with a maturity of three months or less, were
deemed to be cash equivalents.
INVENTORY
The Company values inventory, which consists of finished
goods and equipment held for resale, at the lower of cost (first-in, first-out
method) or market.
6

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007
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. No
depreciation is recorded for equipment written down to salvage value.
Repairs and maintenance costs are expensed as incurred while
additions and betterments are capitalized. The cost and related accumulated
depreciation of assets sold or retired are eliminated from the accounts and any
gains or losses are reflected in earnings.
INVESTMENT
An investment made by the Company, in which the Company owns
less than a 20% interest, is stated at cost value. The cost value approximates
the fair market value of the investment.
ESTIMATES
Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.
ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123
In 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation.
SFAS 123 encourages, but does not require, companies to record stock-based
Compensation and other costs paid by the issuance of stock at fair value. The
Company has chosen to account for stock-based compensation, stock issued for
non-employee services and stock issued to obtain assets or in exchange for
liabilities using the fair value method prescribed in SFAS 123. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Companys stock at the date of the grant over the
amount an employee must pay to acquire the stock.
ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128
In 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings per Share. SFAS 128 changes the
standards for computing and presenting earnings per share (EPS) and supersedes
Accounting Principles Board Opinion No. 15, Earnings per Share. SFAS 128
replaces the presentation of Primary EPS with a presentation of Basic EPS and
replaces the presentation of Fully Diluted EPS with a presentation of Diluted
EPS. It also requires dual presentation of Basic and Diluted EPS on the face of
the income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the Basic EPS
computation to the numerator and denominator of the Diluted EPS computation.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. SFAS 128 also requires restatement
of all prior-period EPS data presented.
As it relates to the Company, the principal differences
between the provisions of SFAS 128 and previous authoritative pronouncements are
the exclusion of common stock equivalents in the determination of Basic Earnings
Per Share and the market price at which common stock equivalents are calculated
in the Determination of Diluted Earnings Per Share.
A Basic Earnings per Share is computed using the weighted
average number of shares of common stock outstanding for the period. Diluted
Earnings per Share is computed using the weighted average number of shares of
common stock and dilutive common equivalent shares related to stock options and
warrants outstanding during the period.
7

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007The adoption of SFAS 128 had no effect on previously reported
loss per share amounts for the year ended June 30, 1997. For the years ended
June 30, 2006 and June 30, 2005, Primary Loss per Share was the same as Basic
Loss per Share and Fully Diluted Loss per Share was the same as Diluted Loss per
Share. A net loss was reported in 2006 and 2005, and accordingly, in those
years, the denominator for the Basic EPS calculation was equal to the weighted
average of outstanding shares with no consideration for outstanding options and
warrants to purchase shares of the Companys common stock because to do so would
have been anti-dilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Companys financial instruments,
which principally include cash, note receivable, accounts payable and accrued
expenses, approximates fair value due to the relatively short maturity of such
instruments.
The fair values of the Companys debt instruments are based
on the amount of future cash flows associated with each instrument discounted
using the Companys borrowing rate. At December 31, 2007 and June 30, 2007,
respectively, the carrying value of all financial instruments was not materially
different from fair value.
INCOME TAXES
The Company has net operating loss carryovers of
approximately $30.9 million as of December 31, 2007, expiring through 2028.
However, based upon present Internal Revenue Service regulations governing the
utilization of net operating loss carryovers where the corporation has issued
substantial additional stock and there has been a change in control as defined
by the Internal Revenue Service regulations, a substantial portion of this loss
carryover may not be available to the Company.
The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, Accounting for Income Taxes, effective July 1993.
SFAS No. 109 requires the establishment of a deferred tax asset for all
deductible temporary differences and operating loss carryforwards. Because of
the uncertainties discussed in Note 2, however, any deferred tax asset
established for utilization of the Companys tax loss carryforwards would
correspondingly require a valuation allowance of the same amount pursuant to
SFAS No. 109. Accordingly, no deferred tax asset is reflected in these financial
statements.
The Company does not currently have research and experimental
development tax credits receivable from the Canadian Federal government and the
Quebec Provincial government as at December 31, 2007.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of non-U.S. subsidiaries that operate
in a local currency environment are translated to U.S. dollars at exchange rates
in effect at the balance sheet date for monetary items and historical rates of
exchange for non-monetary items with the resulting translation adjustment
recorded directly to a separate component of shareholders equity. Income and
expense accounts are translated at average exchange rates during the year.
Currency transaction gains or losses are recognized in current operations.
REVENUE RECOGNITION
Revenue from the sale of TCS Systems will be recognized when
the installed product is accepted by the Customer. All other revenue from other
products will be recognized when shipped to the customer.

8

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007Note 2     GOING CONCERN

As reported in the accompanying financial statements, the
Company incurred a net loss of $480,849 for the year ended June 30, 2007 and a
net loss of $217,725 for the six months ended December 31, 2007.
In March 1993, the Company had begun its developmental stage
with a new business plan. As of March 2000, the Company had developed a
production quality prototype of its patented system for the disintegration of
scrap tires, but nonetheless continued its research and development efforts to
improve the machines performance and to permit greater flexibility in design
for specific customer applications. Due to the Companys lack of working capital
during the year ended June 30, 2002, all rubber crumb production was suspended
and research and development efforts have been hampered. Pending receipt of
funding from operations, government assistance, loans or equity financing, crumb
rubber production and previous research and development efforts will not be
resumed. While the Company has engaged the process of marketing the TCS System
to numerous potential clients since the beginning of the fiscal year commencing
July 1, 2000, as of December 31, 2007, the Company had not yet consummated an
unconditional purchase order for a TCS System.
The Company is dependent on the success of its marketing of
its TCS Systems, and/or raising funds through equity sales, bank or investor
loans, governmental grants or a combination of these, to continue as a going
concern. The Companys uncertainty as to its ability to generate revenue and its
ability to raise sufficient capital, raise substantial doubt about the entitys
ability to continue as a going concern. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.
Note 3     PROPERTY AND EQUIPMENT

As at December 31, 2007, plant and equipment consisted of the
following:

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

Depreciation and amortization expense charged to operations
for the six months ended December 31, 2007 was zero. Depreciation and
amortization expense charged to operations for the year ended June 30, 2007 was
$25,000.

Note 4 GOVERNMENT LOANS

Canada Economic Development

Loans payable under the Program for the Development of Quebec
SMEs based on 50% of approved eligible costs for the preparation of market
development studies in certain regions. At December 31, 2007, the balance of
these loans was $112,141 (June 30, 2007 - $104,710). The loans are unsecured and
bear interest at 8%.

9

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007Note 5     CAPITAL LEASE OBLIGATIONS

The Company leased certain manufacturing equipment under
agreements classified as capital leases. The cost and the accumulated
amortization for such equipment as of December 31, 2007 and June 30, 2007 was
$62,400 and $62,400, respectively. The equipment under capital leases has been
included in property and equipment on the balance sheet. The Company is in
arrears on payment of these leases but default has not been declared. The lease
expired on June 30, 2004. The leased equipment is not part of the Companys TCS
System prototype.
Note 6     CONVERTIBLE SUBORDINATED
DEBENTURES

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

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

|Balance at December 31, 2007 | $399,389                                                                                                                                                                                                                                                                                      
|---------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                             |                                                                                                                                                                                                                                                                                               
|Interest rate                | 8%, payable quarterly,
    commencing June 30, 2001                                                                                                                                                                                                                                           
|                             |                                                                                                                                                                                                                                                                                               
|Issue date                   | February 26, 2001                                                                                                                                                                                                                                                                             
|                             |                                                                                                                                                                                                                                                                                               
|Maturity date                | February 26, 2003                                                                                                                                                                                                                                                                             
|                             |                                                                                                                                                                                                                                                                                               
|Redemption rights            | If not converted, the holder may
    require the Company to redeem at any time after maturity for the principal
    amount pus interest.                                                                                                                                                      
|                             |                                                                                                                                                                                                                                                                                               
|Conversion ratio             | Lower of (i)  80% of the
    average of the three lowest closing bid prices for the thirty trading days
    prior to the issue date, which equals $.073, or (ii)  80% of the average of
    the three lowest closing bid prices for the sixty trading days prior to the
    conversion date.
|                             |                                                                                                                                                                                                                                                                                               
|Common stock warrants        | The Convertible Notes carried an
    option to purchase Common stock warrants at the rate of one Warrant for each
    $1.25 of purchase price. The exercise price on the first tranche of $
    750,000 is $ .077 per share.                                                                  

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

10

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007

Note 8     CONVERTIBLE NOTES

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

|Balance
    at December 31, 2007 | $ 185,556                                                                                                                                                                                                                  
|-------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                 |                                                                                                                                                                                                                            
|Interest
    rate                | 8%                                                                                                                                                                                                                         
|                                 |                                                                                                                                                                                                                            
|Issue
    date                   | July 19th,
    2000                                                                                                                                                                                                        
|                                 |                                                                                                                                                                                                                            
|Maturity
    date                | January
    19th, 2002                                                                                                                                                                                                     
|                                 |                                                                                                                                                                                                                            
|Redemption rights                | If not
    converted, the holder may require the Company to redeem at any time after
    maturity for the principal amount plus interest.                                                                                  
|                                 |                                                                                                                                                                                                                            
|Conversion ratio                 | Not
    convertible prior to July 19th, 2001, at 20% discount to market
    between July 19th, 2001 and January 19th, 2002 or at
    25% to market if held to maturity, to a maximum of not more than 2,500,000
    shares.

During Fiscal 2006, 2007 and the first half of Fiscal 2008,
the Company president completed a series of small private placements with
various investors having a total aggregate value as of December 31, 2007 of
US$144,800. During the first and second quarters of Fiscal 2008, ten further
private placements were undertaken for cash consideration of $30,100. Subsequent
to the period covered by this report, a further $15,000 representing 3,000,000
shares was transacted. Insofar as the Company does not have enough common shares
available for issuance, the investors agreed to accept that the investment would
be in the form of non-interest-bearing convertible debt with no fixed terms of
repayment and that their investment would be made via Tirex President, John
Threshie. When an adequate number of common shares become available, these
investors will be able to convert their loans at pre-determined prices. Any
conversion would be proportionally adjusted in the event of stock splits or
reverse splits.

11

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007

|Fiscal Period       | Cash Invested | Maximum share conversion
|------------------- | ------------- | ------------------------
|Up to June 30, 2007 | $114,700      | 26,040,000              
|First quarter 2008  | 10,700        | 3,840,000               
|Second quarter 2008 | 19,400        | 5,460,000               
|TOTAL               | $144,800      | 35,340,000              

In February 2008 (third quarter of Fiscal 2008), an
additional $15,000 was invested representing 3 million shares.

As noted above, over the thirty months ended December 31,
2007, the expenses of our company have been funded by a series of loans made by
a significant number of individuals investing modest amounts each totaling
approximately US$144,800 through Tirex President, John L. Threshie Jr. Insofar
as the funds were lent to Mr. Threshie rather than to Tirex directly, with Mr.
Threshie then paying personally the expenses of Tirex, which expenses have been
duly recorded in our accounts offset by a liability to Mr. Threshie, the
liability on our books is still listed as being toward Mr. Threshie. Thus no
direct liability toward these investors is on our books.

In addition to the above liability for shares, Tirex is
liable for the replacement of 11,986,315 shares which were delivered as
collateral by Tirex Directors, Threshie, Muro and Sanzaro (recently deceased)
for the $750,000 of convertible debt contracted for in 2001, which shares were
sold by the debt holders.

Note 9     RELATED PARTY TRANSACTIONS

Convertible loans include amounts primarily due to Directors,
Officers and employees. Historically, such amounts due have been repaid through
the issuance of stock. At December 31, 2007 and June 30, 2007, the balances
owing to Directors and Officers was $2,446,929 and $2,284,429, respectively.
These amounts are without interest or terms of repayment.

Long-term deposits and notes included an amount of $118,500
at December 31, 2007, which is payable to Ocean Tire Recycling & Processing Co.,
Inc., a company previously owned by a former Director of the Company, Louis A.
Sanzaro, now deceased. We expect that the Executor of the estate of Mr. Sanzaro
will contact us with respect to the disposition of our liabilities toward the
estate of Mr. Sanzaro.

Note 10     COMMON STOCK

During the year ended June 30, 2007 and the six months ended
December 31, 2007, the Company did not issue any common stock in exchange for
services performed.

During the year ended June 30, 2004, an Officer of the
Company exercised stock options pursuant to a services agreement. The exercise
of these stock options entitled the Officer to 1,500,000 common shares of the
Company on a cash-less basis. The Company does not have sufficient authorized
and unissued shares available at December 31, 2007 for issuance of this stock
and as such, the amount attributable to these shares has been recorded as part
of the balances owing to Directors and Officers included in Convertible loans.

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

12

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007As at December 31, 2007, the Company had 249,895,892 Common
shares issued and outstanding, versus its authorization of 250,000,000 shares.

Note 11     CONVERTIBLE DEBT

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

Note 12     GOVERNMENT ASSISTANCE

The Company has been eligible for and has made claims for tax
credits related to scientific research and experimental development expenditures
made in Canada in previous years. These amounts, under Canadian Federal and
Provincial tax law in conjunction with its annual tax return filings, need not
be offset against taxes otherwise payable to become refundable to the Company at
the end of its fiscal year. As such, during the year ended June 30, 2003, the
Company received approximately $246,970, which was recorded as an increase in
stockholders equity paid-in capital. Since the last tax credit claim for which
the Company received cash during Fiscal 2003, the Company did not make any
additional claims for tax credits as it was not eligible to do so. As such, the
Company has not recorded any additional tax credits receivable and this account
balance remains at zero as of December 31, 2007. .

Note 13     COMMITMENTS

Rental expense for the six months ended December 31, 2007
amounted to zero. Rental expense for the year ended June 30, 2007 amounted to
zero.

At December 31, 2007, the Company was in arrears of rent,
including interest and related charges, in the approximate amount of $560,000. A
settlement agreement with the former landlord is in place under the terms of
which the Company would pay to the former landlord the sum of $140,000 from the
proceeds to the Company of revenues from each of the first four sales of TCS
Systems.

Note 14     LITIGATION

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

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

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

13

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THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
DECEMBER 31, 2007Note 15     ACCUMULATED OTHER
COMPREHENSIVE INCOME

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



14

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ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN
OF OPERATIONS
The following is managements discussion and analysis of
significant factors which have affected the Companys financial position and
operations during the three and six month periods ended December 31, 2007. This
discussion also includes events which occurred subsequent to the end of the last
quarter and contains both historical and forward-looking statements. When used
in this discussion, the words "expect(s)", "feel(s)","believe(s)", "will",
"may", "anticipate(s)" "intend(s)" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties, which could cause actual results to differ materially
from those projected.
In March 2000, we announced that our tire recycling
technology prototype was ready for replication and commercialization. Our
technology has been upgraded and refined since that year 2000 date. The
intellectual property owned by Tirex comprises the patented fracturing mill
(both US and Canadian patents) which permits the effective separation of the
materials components of the tires, and this at a significant cost saving. The
intellectual property of our process is recognized in the Manufacturing License
Agreement we have with Simpro www.simpro.it.
Our patent renewals for both the USA and Canada have both been completed.
Since the March 2000 announcement respecting the commercial
availability of its TCS-1 model, Tirex worked to complete the design of the
TCS-2, the version of the technology which processes two million tires per year,
and has worked with its manufacturing partner, Simpro S.p.A. of Turin, Italy, to
refine the technology and to create the possibility of auxiliary crumb rubber
processing to permit the production of much finer mesh crumb rubber than the
initial technology delivers. These refinements, at no significant additional
cost to customers, allow for access to higher-value crumb rubber markets which
some customers desire. The TCS-2 is now the primary model being offered to
customers for reasons of capital and operating cost efficiencies per unit volume
of output of finished product although inquiries for TCS-3 and TCS-4 models have
been entertained.
As we continued with the technological refinement of our
technology, we also initiated the first substantial marketing efforts in order
to conclude a first purchase and sales agreement of a TCS System. In this
regard, Tirex responded to requests for information and has engaged in
negotiations with potential customers throughout the world. Since the conclusion
of our development efforts respecting the TCS-2 system, Tirex accelerated its
efforts to make our technology known and to attempt to secure that first
unconditional sales agreement. Simultaneously, our manufacturing partner, Simpro,
which also has a non-exclusive marketing agreement, has been actively
negotiating with numerous potential customers, most recently with customers
based in the Middle East, the Far East, Russia and with British interests who
indicated their interest to install one or more systems in the Middle East. The
process has been slower than what Management would have preferred, but
Management recognizes that the TCS element of the British / Middle East
initiative represents but a fraction of the total industrial development program
being considered by this potential customer, and thus the timing of the
conclusion of the agreement is constrained by other negotiations in which we
have no interest. Insofar as none of the above opportunities have reached the
point of being actual agreements, we cannot offer any guarantees that any of the
above will actually result in formal contracts.

15

---

During Calendar 2007, Tirex developed a relationship with New
York based individuals who have expressed their belief in our technology and
have represented to us that they would be able to put together US-based TCS
projects. Necessary marketing and business plans were completed to pursue the
opportunities presented to us. These New York individuals have devoted
substantial time to the understanding of our technology and to the structure and
key successful factors of the tire recycling industry. We are awaiting further
developments with respect to the New York initiative. While Tirex has no reason
to doubt the abilities of these individuals, neither can we assure that they
will, in fact, be successful with their efforts to sell TCS systems.
In the context of the information being provided to potential
customers, we point out to these persons or entities that the original TCS-1
prototype located in Montreal has been disassembled and that the patented
fracturing mill is currently physically located in Italy for reference in
research and development purposes. These customers are also provided copies of
videotapes which include, among other things, a visual demonstration of the
prototype actually in use. In addition, these customers are provided with
documentation as to the various accreditations and attestations as to the
effectiveness of the TCS technology, this documentation coming entirely from
independent sources, including private sector engineering firms, public sector
government agencies and internationally-accredited technical universities.
Customers are also offered the free-of-charge possibility to obtain tailor-made
pro-forma financial forecasts for their specific region, based on an adjustable
financial model created by our Chief Financial Officer, which allows for the
input of local economic costing of goods and services, local taxation
conditions, and various loan and depreciation scenarios.
Despite this important quantity of substantiation of the
effectiveness of the TCS technology and the substantial offers of assistance in
the development of the business plans for these customers, the conclusion of the
first purchase and sales agreement has proven elusive. Our manufacturing
partner, Simpro, has succeeded in putting into place a limited performance
guarantee with respect to the installations which it would accomplish, and this
performance guarantee, backed by a major international insurance company, is
offered to potential customers. Even with performance guarantees, conclusion of
an agreement has been difficult. At issue is that Tirex is not in a position to
simply sell new technology systems into an established industry. Also with
Simpro selling its systems in Euros, and considering the appreciation of the
Euro versus US Dollar, North American sales have proven very difficult. Most
potential customers are confronted with the reality of becoming involved in a
recycling industry which has complexities not found in other industrial sectors.
To screen inquiries from potential customers and to assist them in their own
decision-making process as to whether or not they want to really participate in
this industrial sector, Tirex routinely sends out a questionnaire to such
persons pertaining to the key success factors of their proposed initiative to
ascertain their readiness and capability to become involved in such activities.
While negotiations on several fronts have progressed to an
advanced stage, as of December 31, 2007, no unconditional contracts had been
concluded.

16

---

Management attributes the difficulty in concluding a sale
primarily to the lack of a long-term track record of the system and to the lack
of a demonstration unit to establish the visual confirmation for customers that
the technology actually works as represented. While the video of the prototype
creates interest, it would appear that, by itself, it cannot replace the visual
impact of a functioning fracturing mill. The approximate installed cost of a
TCS-2 is 5,500,000 Euros (currently approximately US$8.16 million using the
exchange rate of February 4, 2008 i.e. 1 Euro = US$1.4832, which is a lot of
money for most entrepreneurs or their financial backers for unproven long-term
technology. The project cost is not limited to the acquisition cost of the TCS.
Depending somewhat on the location, we consider that the entrepreneur is facing
a total investment cost of approximately US$9 million to US$10 million, taking
into account pre-production and early production losses, local infrastructure
costs, freight an in-transit insurance, local labor, permits and a reasonable
allocation for working capital to support early operations. There could also be
import duties on equipment imported from Europe.
During the second quarter of Fiscal 2007, Tirex engaged
several new commissioned representatives from New York and Connecticut, each
with extensive marketing and business development backgrounds. These
commission-based representatives are still committed to our technology. Other
than the possibilities for system installations outside of North America, where
Simpro has been undertaking the primary development activities, the most active
opportunities in North America on which Tirex has been working during the last
two years, and on which efforts continue, include projects New York State,
California very recently and a significant possibility for a Quebec-based
project. The California opportunity presented itself very late in the second
quarter of Fiscal 2008. The California-based investors have represented to us
that they would be capable of putting together the necessary financial package
for the acquisition and installation of one or more TCS systems in that state.
In all cases, it has been represented to either Tirex or
Simpro that these projects have done their due diligence and either all or a
major part of their funding requirement is feasible. Management, however, is not
in a position to assert that TCS System sales contracts will be concluded.
As noted, these opportunities may not conclude in definitive
agreements. Until there is a commercial system in operation, and regardless of
Managements optimism, there can be no assurance that these opportunities will
actually result in unconditional sales contracts.
Tirex continues to be listed on the Internet Recycling
Exchange and FundingPost.com. Combined with our web site, www.tirex.tcs.com, and Mr. Threshies network,
it continues to generate interest on a global basis. What appears to be quite
clear is the desire to acquire new technologies to replace existing technologies
which are either being phased out by evolving government regulations or which
are not economically viable in the absence of tire recycling subsidies.
Furthermore, government subsidies and focus, as is the case in New York, are
towards technologies that can produce higher value added recycled products.
The Agreement with Simpro means that the gross revenues from
sales will be recorded on Simpros books, not in the books of Tirex, unless
Simpro refuses the contract at which time the gross revenues would be recorded
by Tirex. The amount remitted back to Tirex by Simpro would take the form of a
royalty and would be accounted for as such. Regardless of the contract structure
and the accounting effects which result, generally accepted accounting
principles in effect in the USA have the effect that the revenues to Tirex
resulting from such transactions will not be recognizable until the systems will
have been accepted by the customers. Given the time line required to
manufacture, install and have accepted these systems, it is impossible that any
revenues would become recognizable, from the point of view of US Generally
Accepted Accounting Principles, during our fiscal year which will end June 30,
2008. While the Company will benefit from the periodic cash inflows resulting
from progress payments during the next approximately ten months, the royalty
will, in fact, not have been earned until the systems are accepted by the
customers.
17

---

As a result of this period preceding the commencement of
commercial operations, we have had to cover our overhead costs from sources
other than from commercial revenues. We expect that some portion of our future
overhead costs, which may be significant, will continue to be covered from
sources other than commercial revenues. Since March of 2003, our monthly
our-of-pocket cash costs have been reduced to inconsequential amounts, and thus
our requirement to find financial resources to fund operations is minimal. Our
greatest expense, from an accounting standpoint, is for salaries. These salaries
have not been paid for over six years, but rather set up as payables and
represent by far the greatest proportion of our current liabilities. Our cash
flow deficit condition will continue until such time as the Company will start
generating revenues from the sale of TCS Systems. Until we can succeed in
securing an unconditional sales contract for the sale of one or more systems
employing our technology, the company will not be engaging any significant
financial commitments and will not be engaging in any significant research and
development activities nor increasing employment.
Since 2005, the expenses of our company have been funded by a
series of loans made by a significant number of individuals investing modest
amounts totaling approximately US$125,000 to September 21, 2007. Of this total,
$10,700 representing 3,840,000 shares were related to first quarter Fiscal 2008
transactions and $19,400 representing 5,460,000 shares were related to second
quarter activities. Subsequent to the period covered by this report, a further
$15,000 representing 3,000,000 shares was transacted. Each investment was made
through Tirex President, John L. Threshie Jr. Insofar as Tirex does not have
shares to issue at this time, these investors, fully cognizant of our situation
and so documented in writing, have accepted that their investment is being made
via Mr. Threshie and represents a convertible debt, the conversion of which can
occur once Tirex will have shares available for issuance. To December 31, 2007,
approximately 35.34 million shares are involved, this number being before any
adjustments to our share authorization structure which would cause a
proportionate adjustment to the number of shares actually issuable. We will
require a modification to our share authorization. This convertible debt is
priced at fixed prices rather than as a discount to market. Insofar as the funds
were lent to Mr. Threshie rather than to Tirex directly, with Mr. Threshie then
paying personally the expenses of Tirex, which expenses have been duly recorded
in our accounts offset by a liability to Mr. Threshie, the liability on our
books is still listed as being toward Mr. Threshie. Thus no direct liability
toward these investors is on our books. However, once shares will become
available for issuance, the amounts due to Mr. Threshie will be transferred by
him to these investors and the shares issued accordingly. Some shares could be
issued to Mr. Threshie to cover his position, but such shares would be accounted
for as a reduction of the salary currently payable to Mr. Threshie. In the event
of a share capital restructuring, a proportionate adjustment to the number of
otherwise shares would be effected.
In addition to the above liability for shares, Tirex is
liable for the replacement of 11,986,315 shares which were delivered as
collateral by Tirex Directors, Threshie, Muro and Sanzaro (deceased
approximately twenty-one months ago, and thus the shares due to his estate) for
the $750,000 of convertible debt contracted for in 2001, which shares were sold
by the debt holders.
We will require a modification to our share authorization in
order to be able to satisfy the obligation to issue new shares. Once shares will
become available for issuance, the amounts due to Mr. Threshie, Mr. Muro and the
estate of Mr. Sanzaro will be will be satisfied. With respect to a portion of
the shares issuable to Mr. Threshie, these shares will be transferred by him to
and thence to the indirect investors noted above.
18

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Since August 2005, the office rent of Tirex has been assumed
by Mr. Threshie. Until mid August 2006, this amount was CA$1,500 per month. This
amount was accrued as a liability to Mr. Threshie on our books. For a period of
three weeks from mid-August to early September 2006, Mr. Threshie and the Tirex
office was lodged personally by Tirex CFO, Michael Ash, who has provided these
premises at a discounted rate of CA$1,000 for the three-week period in question.
Effective the week following Labor Day 2006, the Tirex Head Office was relocated
to Stratford, Connecticut where office and operational expenses are relatively
nominal.
In February of 2001, we concluded a private financing with an
investor group. Under the terms of the Agreement, we had the contractual right
to require the Investor to purchase up to US$5,000,000 of put notes. We drew
down US$750,000 of this amount and used the proceeds of this financing toward
legal and consulting fees due, normal operating expenses such as payroll, rent
and taxes and the acquisition of equipment for our prototype TCS-1 Plant. In
July of 2001, the Company entered into a technical default with respect to the
Agreement by not having an SB-2 Registration Statement declared effective by the
SEC. After several months of negotiations, the Company entered into a Settlement
Agreement with the Investor Group which provided for a cash pay down of the
amount owed, including interest and penalties over a period of approximately two
years starting with the date the Settlement Agreement was signed, the right of
the Investor Group to continue to be able to sell up to 600,000 collateral and
Rule 144 shares per month and the issuance of three series of warrants, 500,000
each, exercisable at prices of one cent, five cents and ten cents over a three
year period. This Settlement Agreement was announced in April of 2002, and
details of the terms of the Agreement are filed as an Exhibit to this Report.
The Company, in the absence of having completed its first sales of TCS Systems
according to our expectations, was unable to generate the cash flow necessary to
pay down the Convertible Note in accordance with the terms of the Settlement
Agreement. Thus, the Company once again finds itself in a position of default.
Numerous recourses are available to the holders of the Convertible Notes, but to
date, these recourses have not been exercised. Such recourses can be exercised
at any time and the fact that they have not been exercised so far does not
preclude their being exercised now or in the future. The Company has kept the
Convertible Note holders apprised of its efforts to sell TCS Systems and thus
restart the repayments on the Convertible Notes. The collateral shares provided
by the directors, totaling approximately 11,986,000 shares, have been sold by
the investors.
The previously unsigned Executive Agreements respecting
Messrs. Threshie, Muro and Ash were signed. New Agreements covering the period
from 2007 to 2010 have been negotiated and signed by the Corporation and the
Executives. No significant changes from the previous agreements were agreed
upon.
Because of the lengthy delay preceding the commencement of
commercial operations, we have historically had to cover our overhead costs from
sources other than from commercial revenues. We expect that some portion of our
future overhead costs, which may be significant, will continue to be covered
from sources other than commercial revenues. Since March of 2003, our monthly
our-of-pocket cash costs have been reduced to relatively inconsequential
amounts, and thus our requirement to find financial resources to fund operations
has been minimal. Our greatest expense, from an accounting standpoint, is for
salaries. These salaries have not actually been paid for periods ranging from
four to six years, but rather set up as payables. Our cash flow deficit
condition will continue until such time as the Company will start generating
revenues from the sale of TCS Systems. Until we can succeed in securing an
unconditional sales contract for the sale of one or more systems employing our
technology, the company will not be engaging any significant financial
commitments and will not be engaging in any significant research and development
activities nor increasing employment.
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Liquidity and Capital Resources

As of December 31, 2007, the Company had total assets of
$208,297 as compared to $233,297 at December 31, 2006 reflecting a decrease of
$25,000, and no change versus total assets at June 30, 2007. Except for a
$25,000 valuation decrease in Property and Equipment recorded in the fourth
quarter of Fiscal 2007, there were no other changes in the value of individual
assets, representing Notes Receivable, Inventory and an Investment, from
December 31, 2006 to December 31, 2007, and no changes in the value of
individual assets from June 30, 2007 to December 31, 2007.
As of December 31, 2007, the Company had total liabilities of
$6,360,741 as compared to $5,583,380 at December 31, 2006, reflecting an
increase of $660,536, and reflecting an increase of $372,028 versus total
liabilities as at June 30, 2007, which total amounted to $5,988,713. The
increase in total liabilities from December 31, 2006 to December 31, 2007 is
primarily attributable to an increase of $412,915 in Accounts Payable and
Accrued Liabilities and by an increase of $330,000 in Convertible Loans. The
increase in total liabilities from June 30, 2007 to December 31, 2007 is
primarily attributable to an increase of $196,701 in Accounts Payable and
Accrued Liabilities and to an increase of $167,500 in Convertible Loans.
Reflecting the foregoing, the financial statements indicate
that as at December 31 30, 2007, the Company had a working capital deficit
(current assets minus current liabilities) of $3,095,634 compared to a working
capital deficit of $2,648,003 as at December 31, 2006, reflecting an increase of
$447,631. The working capital deficit of $3,095,634 as at December 31, 2007
compares to a working capital deficit of $2,890,836 as at June 30, 2007,
reflecting an increase of $204,798.
The financial statements which are included in this report
reflect total operations and other expenses of $109,077 for the three month
period ended December 31, 2007 versus $138,914 for the comparative three month
period ended December 31, 2006, reflecting a decrease of $29,837.
The success of the tire recycling manufacturing business and
the ability to continue as a going concern will be dependent upon the ability of
the Company to obtain adequate financing to commence profitable, commercial
manufacturing and sales activities and the TCS Systems ability to meet
anticipated performance specifications on a continuous, long term commercial
basis.
The Company believes that the amounts accrued to date in
respect of the shares issued to compensate the executive officers and
consultants reflect the fair value of the services rendered, and that the
recipients of such shares received such shares at an appropriate and reasonable
discount from the then current public market price. The Company believes that
the discount is warranted due to the fact that there are often restrictions on
the transfer of said shares arising out of the absence of registration, and the
uncertainty respecting our ability to continue as a going concern.
From inception (July 15, 1987) through December 31, 2007, the
Company has incurred a cumulative net loss of $30,661,310. Approximately
$1,057,356 of such cumulative net loss was incurred prior to the inception of
the Companys present business plan, in connection with the Companys
discontinued proposed health care business and was due primarily to the
expending of costs associated with the unsuccessful attempt to establish such
health care business. The Company never commenced the proposed health care
operations and therefore, generated no revenues therefrom.
Item 3 - Controls and Procedures

The Companys management, with the participation of its Chief
Executive Officer, who is the Companys principal executive officer, and its
Chief Financial Officer, who is the Companys principal financial officer, has
evaluated the effectiveness of the Companys disclosure controls and procedures
as of December 31, 2007. Based upon that evaluation, the Chief Executive Officer
and the Chief Financial Officer have concluded that the Companys disclosure
controls and procedures are effective in alerting them in a timely manner to
material information relating to The Tirex Corporation, including its
consolidated subsidiaries, required to be included in this report and the other
reports that the Company files or submits under the Securities Exchange Act of
1934. During the second quarter of fiscal 2007-08, there have been no changes in
the Companys internal control over financial reporting that have materially
affected, or that are reasonably likely to materially affect, its internal
control over financial reporting.
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PART II: OTHER INFORMATION
Item 1:
Item 1 - Legal Proceedings

We are presently a party in the following legal proceedings, the status of
which has not changed since the Company filed its Annual Report on Form 10-KSB
for Fiscal 2007.
IM(2) Merchandising and Manufacturing, Inc and David B. Sinclair v. The Tirex
Corporation, Tirex Corporation Canada, Inc., et al.
Lefebvre Frères Limited v. The Tirex Corporation
Tri-Steel Industries Inc. v. The Tirex Corporation

No director, officer, or affiliate of the Company, or any associate of any of
them, is a party to or has a material interest in any proceeding adverse to us.
Item 2: - Unregistered Sales of Equity Securities and Use of Proceeds

None
Item 3 - Defaults Upon Senior Securities

Other than defaults previously reported on in prior periods, there were no
other defaults upon senior securities.Item 4 - Submission of Matters to a Vote of Security HoldersDuring the three-month period ended September 30, 2007, there were no
submissions of matters to a vote of Security Holders.
Item 5  Other Information

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

Exhibits
Exhibit 31.1 Certification of Form 10-Q filing by the Chief Executive OfficerExhibit 31.2 Certification of Form 10-Q filing by the Chief Financial OfficerExhibit 32.1 Certification Pursuant to the Sarbanes-Oxley Act by the Chief
Executive OfficerExhibit 32.2 Certification Pursuant to the Sarbanes-Oxley Act by the Chief
Financial OfficerNo Reports on Form 8-K were filed during the period covered by this report
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SIGNATURESIn accordance with the requirements of the Exchange
Act, the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        | THE TIREX CORPORATION                 
|----------------------- | --------------------------------------
|                        |                                       
|                        |                                       
|Date: February 13, 2008 | By /s/ John L. Threshie,jr.           
|                        | John L. Threshie, Jr. President       
|                        |                                       
|                        |                                       
|Date: February 13, 2008 | By /s/ Michael Ash                    
|                        | Michael Ash, Treasurer and            
|                        | Chief Accounting and Financial Officer

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