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

                                   FORM 10-QSB

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

For the quarterly period ended September 30, 1997

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

For the transition period from _______________ to ____________

                       Commission File Number 33-17598-NY

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

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

               740 St. Maurice, Suite 201 Montreal, Quebec H3C 1L5
                    (Address of Principal executive offices)

                                 (514) 878-0727
                (Issuer's telephone number, including area code)

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of November 11, 1997: 38,774,625 shares

     Transitional Small Business Disclosure Format (check one):

 Yes _____   No __X___

<PAGE>

                      The Tirex Corporation and Subsidiary
                          (A Development State Company)

                                   ----------

                                TABLE OF CONTENTS

 PART I

 Item 1 - Financial Information (unaudited)                                Page
                                                                            ----
     The Tirex Corporation and Subsidiary
      Consolidated Balance Sheets as of
       September 30, 1997 and 1996 ........................................    3

     Consolidated Statements of Operations
      for the three month periods
       ended September 30, 1997 and 1996 ..................................    4

     Consolidated Statements of Cash Flows
      for the three-month periods
       ended September 30, 1997 and 1996 ..................................    5

     Notes to Financial Statements (unaudited) ............................    6

 Item 2 - Management's Discussion and Analysis of
          Financial Condition and Results of Operations ...................   13

 PART II

 Item 2 - Changes in Securities ...........................................   15

 Item 6 - Exhibits and Reports on Form 8-K ................................   16

                                   ----------

          The financial  statements  are unaudited.  However,  the management of
 registrant  believes that all necessary  adjustments (which include only normal
 recurring  adjustments)  have been  reflected to present  fairly the  financial
 position of registrant at September 30, 1997 and the results of its  operations
 and  changes  in its  financial  position  for the three  month  periods  ended
 September 30, 1996 and 1997 and for the period from inception (July 15, 1987).


                                       2
<PAGE>

                      The Tirex Corporation and Subsidiary
                          (A Development Stage Company)
                           Consolidated Balance Sheet
                                   (Unaudited)

                                                           As at September 30
                           Assets                          1997           1996
                                                           ----           ----
 Current Assets:
    Cash ...........................................       68,436           153

    Notes Receivable (Note 5) ......................       39,729         1,158
    Employee advances (Note 5) .....................      185,942          --
    Sales tax receivable ...........................       54,907          --
    R&D Investment tax credit receivable (Note 1) ..      269,918          --   
    Prepaid expense ................................       13,929          --
                                                        ---------     ---------
 Total Current assets ..............................      632,861         1,311
                                                        ---------     ---------
 Equipment - At Cost - Net of Accumulated
 Depreciation of $9,792 (Note l) ...................       12,932        17,181
                                                        ---------     ---------
 Other Assets
    Equipment Development costs (Notes 1 & 7) ......      985,040       192,224
    Deferred start-up costs (Note 1) ...............       74,683          --
    Organization Costs, Net of Accumulated
    Amortization of $718 ...........................          824         1,134
                                                        ---------     ---------
 Total Other Assets ................................    1,060,547       193,358
                                                        ---------     ---------
 Total Assets ......................................    1,706,340       211,850
                                                        =========     =========

      Liabilities and Owners' Equity (Deficit):
      
 Current Liabilities
    Notes Payable (Note 3) .........................       24,000          --
    Accrued expenses ...............................      882,186       105,483
    Loan Payable (Note 4) ..........................      383,693        35,000
    Deposit Payable (Note 5) .......................      763,500        65,000
    Due to Shareholders ............................         --           5,000
    Stock Options (Note 6) .........................       20,000        20,000
                                                        ---------     ---------
 Total Current Liabilities .........................    2,073,379       230,483
                                                        ---------     ---------
 Commitments and Contingencies

 Stockholder's Equity (Deficit) (Notes 1 and 5)
    Common Stock, $.001 par value; Authorized
    50,000,000 Shares, Issued and Outstanding,
    38,774,625 .....................................       38,775        22,062
    Additional paid-in capital .....................    3,776,353     2,538,581
    Deficit accumulated during the development stage   (4,182,167)   (2,579,276)
                                                        ---------     ---------
 Total Stockholder's Equity ........................     (367,039)      (18,633)
                                                        ---------     --------- 
Total Liability and Stockholder's Equity ...........    1,706,340       211,850
                                                        =========     =========
See Notes to Financial Statements

                                  
                                        3
<PAGE>

                      The Tirex Corporation and Subsidiary
                          (A Development Stage Company)
                      Consolidated Statement of Operations
                                   (Unaudited)

                                                 Three months ended September 30
                                                 -------------------------------
                                                     1997              1996
                                                     ----              ----
Revenues ...................................           --                --
Cost of Sales ..............................           --                --
                                                 ----------        ----------
Gross Profit ...............................           --                --
General and Administrative
Expenses
Officers Salary (Note 3) ...................        165,335           137,500
Consulting Services ........................         67,400            15,266
Professional Services ......................         32,606             9,234
Rent .......................................          5,064              --
Travel and Entertainment ...................        122,821             9,042
Telephone ..................................          3,555               125
Depreciation and Amortization ..............          4,709               695
Office Expenses ............................          6,115             1,963
Miscellaneous ..............................          1,683               518
Franchise and Other Tax ....................           --                --
Bank Charges ...............................            640               197
Investor Relations .........................          2,829             2,000
Transfer Agent .............................          3,659             1,439
Foreign Exchange ...........................          4,474              --
Total General and Administration                 ----------        ----------
Expenses ...................................        420,890           177,979
Net (LOSS) .................................       (420,890)         (177,979)
                                                 ----------        ----------
Net (Loss) Per Common Share ................           (.0l)             (.0l)
                                                 ----------        ----------
Weighted Average Shares of
Common Stock Outstanding ...................     38,112,298        19,500,000
                                                 ==========        ==========
                                                 
See Notes to Financial Statements


                                       4
<PAGE>

                      The Tirex Corporation and Subsidiary
                          (A Development Stage Company)
                      Consolidated Statement of Cash Flows
                                   (Unaudited)

                                                          Three months ended
                                                              September 30
                                                        -----------------------
                                                          1997           1996
                                                          ----           ----
Operating Activities
Net (loss) .......................................      (420,890)      (177,979)
                                                        --------      ---------
Adjustments to Reconcile Net (Loss) to Net
Cash Provided by Operating Activities:
Depreciation and Amortization ....................         4,709            695
Stock Issued in exchange for services ............       193,581           --
Change in Assets and Liabilities:
   Increase in Accrued Expenses ..................         9,932            554
   Increase in Loan Payable ......................       183,148           --
   Increase in Deposit Payable ...................       283,500           --
   Decrease in Notes Payable .....................       (98,551)          --
   Increase in Notes Receivable ..................       (30,000)          --
   Increase in Sales Tax Receivables .............        (4,623)          --
   Decrease in Loan Director .....................        10,881           --
   Increase in Prepaid Expense ...................       (13,929)          --
                                                        --------      ---------
Total Adjustments ................................       538,648          1,249
                                                        --------      ---------
Net Cash-Operating Activities ....................       117,758       (176,730)
                                                        --------      ---------
Investing Activities
  Equipment Development Costs ....................      (201,589)       (15,000)
  Equipment ......................................        (2,770)          --
                                                        --------      ---------
Net Cash-Investing Activities ....................      (204,359)       (15,000)
Financing Activities
   Issuance of Common Stock ......................          --          191,643
                                                        --------      ---------
   Net Cash - Financing Activities ...............          --          191,643
                                                        --------      ---------
   Net Decrease in Cash ..........................       (86,601)           (87)
   Cash - Beginning of Period ....................       155,037            240
                                                        --------      ---------
   Cash - End of Period ..........................        68,436      $     153
                                                        ========      =========

See Notes to Financial Statements.


                                       5
<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies

         Nature of Business

         Tirex America,  Inc. (the "Company") was incorporated under the laws of
         the State of  Delaware  on August  19,  1987.  The  Company  originally
         planned to provide  comprehensive  health care services to persons with
         Acquired Immune  Deficiency  Syndrome,  however due to its inability to
         raise sufficient  capital it was unable to implement its business plan.
         The Company had been  inactive  since it ceased  operations in November
         1990.

         In the Fall of 1992, a group of  shareholders  lead by Edward Mihal and
         including 16 other shareholders  acting in concert with Mr. Mihal along
         with Patrick McLaren and George Fattell,  individuals without any prior
         affiliation  with the Company,  became  interested in the Company as an
         entity potentially  suitable for merger or similar  transaction with an
         operating private company seeking to become public in this manner. This
         group  approached the Company's  incumbent  management  with a proposal
         whereby they agreed to assume management  control,  make all delinquent
         filings with the Securities and Exchange Commission, restore service by
         transfer  agent  and pay all other  expenses  required  to  enable  the
         Company to begin  trading its stock and  completing a merger or similar
         transaction.

         In  furtherance  of the  foregoing,  on  November 5, 1992,  J.  Richard
         Goldstein, MD, Peter R. Stratton and Robert Kopsack resigned from their
         positions  as officers and  directors  of the  Company.  From June 1989
         until the date of such  resignations,  Dr.  Goldstein was the Company's
         President and Chief Executive Officer, Mr. Stratton was Vice-President,
         Chief Operating Officer,  Secretary and Treasurer,  and Mr. Kopsack was
         the  Company's  Vice  President.  In  resigning  their  positions,  Dr.
         Goldstein  and  Messrs.  Stratton  and Kopsack  acknowledged  that they
         acceded to their respective positions and had received  compensation in
         consideration of their  representations that they would, and their best
         efforts  to,  implement  a business  plan for the  Company  which would
         encompass,  among other  things,  the  establishment  and  operating of
         skilled  nursing care  facilities  for patients  with  Acquired  Immune
         Deficiency Syndrome. Compensation received by Dr. Goldstein and Messrs.
         Stratton and Kopsack consisted of cash payments,  stock issuances,  and
         the grants of stock options and/or stock purchase warrants.  As part of
         their resignations, Dr. Goldstein and Messrs. Stratton and Kopsack each
         executed   releases  whereby  the  Company  was  released  and  forever
         discharged  from  all  debts,   obligations,   covenants,   agreements,
         contracts,  claims or demands in law or in  equity,  including  but not
         limited to any stock  options  or stock  purchase  warrants  granted or
         promised  to them,  which  against  the  Company,  each  ever  had,  or
         thereafter  may have for or by reason of any matter,  cause or thing up
         to and through  November  5, 1992.  Each of Dr.  Goldstein  and Messrs.
         Stratton and Kopsack also  acknowledged  the termination and rescission
         of their  respective  employment  agreements  with the  Company to such
         persons as the  Company  should  direct for the  purpose of  satisfying
         certain of the Company's obligations to third parties. In consideration
         of the resignations and releases  executed by Dr. Goldstein and Messrs.
         Stratton and Kopsack, Edward Mihal and each of the sixteen shareholders
         of the Company  acting in concert with Mr. Mihal executed and delivered
         reciprocal  personal  releases  to and on behalf of Dr.  Goldstein  and
         Messrs.   Stratton  and  Kopsack.  In  connection  with  the  foregoing
         resignations, Dr. Goldstein and Messrs. Stratton and Kopsack appointed,
         as an interim board of directors,  Patrick McLaren, George Fattell, and
         Edward Mihal (the "Interim Management"). It was the goal of the Interim
         Management  to find  suitable  acquisition  and/or  development  by the
         Company. On December 29, 1992, Edward Mihal resigned his position as an
         officer and a director  of the Company and Louis V. Muro was  appointed
         as an officer and  director of the Company to fill the vacancy  created
         thereby.


                                       6
<PAGE>
                                   
                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies (continued)

         Reorganization

         On March 26, 1993, the Company  entered into an  acquisition  agreement
         (the "Acquisition  Agreement") with Louis V. Muro,  Patrick McLaren and
         George Fattell, officers and directors of the Company (collectively the
         "Sellers"),  for the purchase of certain technology owned and developed
         by the Sellers (the "Technology") and extensive and detailed plans (the
         "Business  Plan") for a business which will engage in the  exploitation
         of the Technology.  The Technology will be used to design,  develop and
         construct  a prototype  machine and  thereafter  a  production  quality
         machine for the cryogenic disintegration of used tires. Pursuant to the
         Acquisition Agreement,  Sellers agreed to assign,  transfer and sell to
         the Company all of their right,  title and  interest in the  Technology
         and Business Plan in exchange for fifteen million nine hundred thousand
         (15,900,000)  shares of the Company's common stock, $.001 par value per
         share (the  "Sellers'  Stock") of which  eleven  million  nine  hundred
         thousand  (11,900,000)  shares were put into escrow.  The Business Plan
         and Technology were developed by the Sellers prior to their affiliation
         or  association  with the  Company.  The  Sellers  were  engaged as the
         Company's  officers and directors for the purpose of  implementing  the
         Business Plan with the Technology or such other  technology  which they
         believed  could  reasonably  satisfy the  requirements  of the Business
         Plan.

         Effective  with the March 26,  1993,  closing  date of the  Acquisition
         Agreement (the "Closing Date"),  the Company  authorized an increase in
         the number of  directors  of the  Company  from three to six.  Pursuant
         thereto,  the  Company  appointed  Messrs.  Kenneth  Forbes,   Nicholas
         Campagna,  and Alfred J. Viscido to fill the  vacancies  created in the
         size of the board.  As an  inducement to Messrs.  Forbes,  Campagna and
         Viscido to join the board of  directors,  the  Company  issued  250,000
         shares  of its  common  stock,  $.001  par  value to each of them.  The
         Acquisition  Agreement also provided for stock issuances in the form of
         finders  fees.  Pursuant  thereto,   the  Company  issued  300,000  and
         1,700,000  shares  of its  common  stock,  $.001 par  value,  to Joseph
         Territo and Edward Mihal, respectively.

         Effective  March 24, 1994,  George  Fattell  resigned as an officer and
         director of the Company.  Per the terms of his  resignation  any future
         shares of the  Company's  common stock issued to Mr.  Fattell are to be
         equally distributed to Louis V. Muro and Patrick McLaren.

         Effective  January 18, 1995,  Louis V. Muro and Patrick  McLaren resign
         their  positions as officers and directors of the Company.  In addition
         to their  resignations  they  acknowledged  that none of the  requisite
         performance  levels  for the  release of any of the  11,900,000  escrow
         shares had been met and renounced all rights to such shares.

         In May of 1995,  in order to take  advantage  of various  research  and
         development incentives,  the Company and officers of the Company formed
         a Canadian  corporation named 3143619 Canada, Inc. (Tirex Canada).  All
         of the research and development  work on the first  production model of
         the  TCS-1  System is being  completed  by Tirex  Canada  and after the
         completion of the model, they will manufacture the product.

         On  July  11,  1997  the  Company's  name  was  changed  to  The  Tirex
         Corporation.

         Basis of Consolidation

         The  consolidated  financial  statements  include the accounts of Tirex
         America,  Inc.  and  its  subsidiary  Tirex  Canada.  All  intercompany
         transactions and accounts have been eliminated in consolidation.


                                       7
<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies (continued)

         Equipment Development Costs

         Deferred development costs are stated at cost net of any investment tax
         credits  when there is  reasonable  assurance  that the credits will be
         realized.  Amortization  will begin once  commercial  production of the
         product has  commenced  and will be computed  based upon the  estimated
         useful life of related products as determined from management's  future
         sales  estimates  and will not  exceed  five years from the date of the
         product's market launching.

         Deferred Start-Up Costs

         Deferred  start-up costs represent  pre-operating  expenses and will be
         amortized  on a  straight-line  basis  over a three  year  period  once
         commercial operations have commenced.

         Equipment

         Equipment   is   recorded  at  cost  less   accumulated   depreciation.
         Depreciation is provided over the estimated  useful lives of the assets
         by using the straight-line method of depreciation.

         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 gain or losses are reflected in earnings.

         Estimates

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

         Organization Costs

         Organization costs are being amortized on a straight-line  basis over a
         sixty month period.

         Per Share Data

         The primary income (loss) per share was computed on the weighted number
         of shares of common stock outstanding  during the period.  Common share
         equivalents  were not  included  as their  inclusion  would  have  been
         anti-dilutive.

         Income Taxes

         The Company has net  operating  loss  carryovers  of  approximately  $4
         million as of June 30, 1997,  expiring in the years 2004 through  2011.
         However,  based upon present Internal Revenue regulations governing the
         utilization of net operating loss carryovers  where the corporation has
         issued  substantial  additional  stock, most of this loss carryover may
         not be available to the Company.


                                      8
<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 1 - Summary of Accounting Policies (continued)

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

         The  Company  has  research  and  development  investment  tax  credits
         receivable from Canada and Quebec amounting to $269,918.

         Foreign  Exchange  

         Assets and liabilities of the Company which are denominated in foreign
         currencies are translated at exchange rates prevailing at the balance
         sheet date. Revenues and expenses are translated at average rates
         throughout the year.

Note 2 - Going Concern

         In March 1993, the Company,  which was still in the development  stage,
         developed  a new  Business  Plan.  The  Company  is in the  process  of
         constructing   a   production   quality   machine  for  the   cryogenic
         disintegration  of used tires.  The Company  also plans to recycle used
         tires using ambient temperature  disintegration  equipment. At June 30,
         1997,  the Company is still in the  development  stage.  Fees generated
         from  tipping  and  culling  were  insufficient  to  fund  the  current
         operations of the Company.  All of these factors  create an uncertainty
         about the Company's ability to continue as a going concern.

         The Company is  currently  in the  process of trying to obtain  funding
         needed  through a private  placement of its  securities in an amount of
         not less than $700,000,  which will provide  working  capital while the
         Company constructs its cryogenic disintegration machine. The ability of
         the Company to continue as going concern is dependent on the success of
         the plan. 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 - Notes Payable

         The  Company  also  had  a  note  payable  in  the  amount  of  $24,000
         outstanding  as of June  30,  1997.  The  repayment  terms  were  being
         negotiated as of that time.


                                      9

<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 4 - Loan Payable

                                                  1997           1996
                                               ---------      ---------
         FORD-Q ...........................    $ 277,976      $    --
         IDEA-SME .........................      105,717           --
                                               ---------      ---------
                                               $ 383,693      $    --
                                               =========      =========

         On April 11, 1996 the Company  entered into a loan  agreement  with the
         Federal Office of Regional  Development - Quebec (FORD-Q) which will be
         repayable  annually over a period of forty-eight  months  following the
         completion  of the  project.  The loan is being  contributed  under the
         Industrial  Recovery  Program  for  South-West  Montreal  and  will  be
         calculated  as the  lesser of  $362,319  or 20% of the  eligible  costs
         incurred for the  construction  of a commercial  scale prototype of the
         cryogenic scrap tire disintegration system. The loan is non-interesting
         bearing and unsecured. The Company received $178,806 under this program
         in fiscal 1997.

         On April  30,  1997 the  Company  received  a  refundable  contribution
         awarded under the terms of the Program for the  Development of Quebec's
         SME'S (IDEA-SME).  The contribution is repayable in amounts equal to 1%
         of the annual gross sales in Spain and Portugal occurring after June 1,
         1997. 

         On March 26, 1997, the Company  received a refundable  contribution for
         the  preparation  of market  development  studies  for India  under the
         Quebec SME  development  assistance  program  (IDEA-SME).  The  maximum
         contribution  is $14,493 based on 50% of the approved  eligible  costs.
         The  contribution  is  repayable  in amounts  equal to 1% of the annual
         gross sales in India occurring after June 1, 1997. 

         On June 6, 1997, the Company entered into an agreement under the Quebec
         SME development  assistance  program (IDEA-SME) to receive a refundable
         contribution  for  market   development   activities  for  the  Iberian
         Peninsula.  The  maximum  contribution  is  $68,841  ,  based on 50% of
         approved eligible costs. The contribution is repayable in amounts equal
         to 1.5% of the annual  gross sales in Spain and in  Portugal  occurring
         after June 1, 1998 less amounts repaid through the amounts noted in the
         April 30, 1997 agreement.

Note 5 - Related Party Transactions

         In 1994,  a  stockholder  loaned  the  Company  $5,000.  This  loan was
         converted to common stock and  additional  paid-in  capital  during the
         year ended June 30, 1997.

         On July 22, 1994, 3,000,000 shares of Tirex America, Inc. were released
         from escrow and issued to Louis V. Muro and Patrick McLaren  (1,500,000
         shares  each)  in  accordance  with the  terms  and  provisions  of the
         Acquisition Agreement dated March 26, 1993.

         The Company  has entered  into  employment  agreements  with all of its
         executive officers and with its in-house corporate counsel. In addition
         to the employment services,  the officers agree not to compete with the
         Company  for  the  two  year  period   following  the   termination  of
         employment.  If an  officer is  terminated  other than for cause or for
         "good reason",  the terminated officer will be paid twice the amount of
         their base salary for twelve months.


                                      10

<PAGE>

                      The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 5 - Related Party Transactions (continued)

         Included  in accrued  expenses  at  September  30,  1997 is $120,000 of
         salary to officers which the company  subsequently issued common stock.
         The Company  advanced  funds to its officers and  directors  during the
         year  ended  June 30,  1997 in the  amount of  $185,942.  These will be
         repaid during the year ending June 30, 1998.

         On June 30,  1997 and  1996,  the  Company  had notes  receivable  from
         various officers in the amount of $9,729 and $1,158,  respectively. All
         of these notes and loans are non-interest bearing and  will  be  repaid
         during the year ending June 30, 1998.

         Deposits  payable  include an amount of  $738,500  which are payable to
         companies which are owned by a director of the Company.

Note 6 - Stock Option

         On May 19,  1995,  the  Company  sold to a director  of the  Company an
         option to purchase  20,000 shares of Cumulative  Convertible  Preferred
         Stock at an exercise price of $10 per share, exercisable during the two
         year  period  beginning  May 19,  1995,  and ending May 18,  1999.  The
         director paid $20,000 for the option.  The terms of the Preferred Stock
         purchasable  under the option call for  cumulative  cash dividends at a
         rate of $1.20 per share and conversion into shares of common stock. The
         conversion  to  common  stock  ratio  varies   depending  on  when  the
         conversion  is made.  At September  30,  1997,  the option has not been
         exercised.

Note 7 - Government Assistance

         The  Company  has  entered  into an  agreement  with  Recyc-Quebec  for
         financial  assistance covering 50% of certain defined costs incurred in
         developing the cryogenic scrap tire disintegration  system to a maximum
         of $54,348.  $36,500 has been received  during the year and this amount
         has reduced the equipment development costs on the balance sheet.


                                      11
<PAGE>

                       The Tirex Corporation and Subsidiary
                         (A Developmental Stage Company)

                   Notes to Consolidated Financial Statements

Note 8 - Commitments

         The Company has entered into a property  lease  agreement,  with a term
         from July 1, 1997 to June 30, 2000.  The Company has an option to renew
         this lease for an additional  three years.  Minimum  rentals in each of
         the next three years is as follows:

                          1998 ..................   $ 18,967
                          1999 ..................     18,967
                          2000 ..................     18,967
                                                    --------
                                                    $ 56,901
                                                    ========

Note 9 - Contingency

         The Company is a defendant  in an action  which  commenced  on June 18,
         1997  entitled  Great  American  Commercial  Funding  Corp.  vs.  Tirex
         America,  Inc. The Company  agreed to pay the plaintiff a placement fee
         of $250,000  and to grant them an option to acquire  400,000  shares of
         the  company's  common  stock at a price of $.01 per share in the event
         that the plaintiff succeeded in obtaining  financing  acceptable to the
         Company. The amount and terms of the financing are not mentioned in the
         documents.  The  plaintiff  recommended  an equipment  lease  financing
         company who in turned introduced the Company to one of their customers.
         The customer ultimately entered into a lease financing arrangement with
         Tirex America,  Inc.  Because the advances made to the Company pursuant
         to that lease  financing  arrangement  did not  constitute  the type of
         financing  originally  contemplated,  the  Company  believes  it has no
         financial  obligation to the plaintiff.  The Company and its litigation
         counsel believe that the plaintiffs complaint is without merit and that
         the Company will prevail in this litigation.


                                       12
<PAGE>

                      The Tirex Corporation and Subsidiary
                          (A Development Stage Company)

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

     The  following  is  management's  discussion  and  analysis of  significant
factors  which have  affected  Registrant's  financial  position and  operations
during the fiscal quarter ended September 30, 1997.

Liquidity and Capital Resources

     The activities of Registrant since its inception in 1987 have been financed
by sources other than operations. Such financing was principally provided by the
sale of securities in private transactions, including the exercise of both
public and private warrants of Registrant, as follows:

                                                    Proceeds From
                Year Ended                            Sales of
                June 30th                            Securities
                ---------                            ----------
                   1997 .........................     $318,685
                   1996 .........................       80,872
                   1995 .........................       22,316
                   1994 .........................      237,430
                   1993 .........................       76,055
                   1990 .........................       80,812
                   1989 .........................       77,000


     As at  September  30,  1997,  Registrant  had total  assets  of  $1,706,340
reflecting  an increase of $1,494,490  from the end of the analagous  quarter in
the fiscal  year  ended  June 30,  1996 when total  assets  were  $211,850.  The
foregoing  reflects an increase of $792,816  attributable  to accrued design and
development  costs of the  TCS-1 System,  and  increases  in:  (i)  cash  in the
amount of $68,283;  (ii) research and development tax credit  receivables in the
amount  of  $269,918;  (iii)  deferred  start  up costs of  $74,683;  (iv)  note
receivable of $38,571; (v) sales tax receivable of $54,907; and (vi) advances to
employees of $185,942.  During that same period, total liabilities  increased by
$l,842,896  from  $230,483 at September  30, 1996 to $2,073,379 at September 30,
1997. Such increase was due primarily to the recording of liabilities associated
with the  accruing  of various  expenses,  including:  (i)  $120,000  in accrued
officers'  salaries,  all of  which  will be paid in  unregistered  stock of the
Company and not in cash;  (ii)  $698,500  reflecting  the  Company's  receipt of
refundable  deposits  from O/V III,  and  recycletron;  (iii)  increase  in debt
consisting  of loans from the FORDQ in the amount of  $383,693.  Reflecting  the
foregoing,  as at September 30, 1997, the Company had a working capital deficit
(current assets minus current liabilities) of


                                       13
<PAGE>

$1,440,518 as compared to a working capital deficit of $229,172 at September 30,
1996.  The major part of such  working  capital  deficit  ($120,000)  represents
accrued officers' salaries,  to be paid by the Company in stock and not in cash,
and deposits of future sales of $763,500.

     The Company  currently  has limited  material  assets of $22,724,  negative
working  capital and a negative net worth of  $367,039.  The success of its tire
disintegration equipment manufacturing business and its ability to continue as a
going concern will be dependent  upon the Company's  ability to obtain  adequate
financing  to complete  the design and  development  of the TCS-l  System and to
commence  manufacturing  and  sales  activities  related  thereto.  The  Company
believes  that it will be able to do so during  the  fiscal  year which will end
June 30,  1998.  Currently,  the Company is  negotiating  the terms of a private
placement of the  Company's  securities  in an amount of up to  $1,400,000  (the
"Proposed  Private  Placement").  The  Company is also  conducting  negotiations
respecting  the terms of a public  offering of the Company's  common stock in an
amount  of not less than  $8,000,000  (the  "Proposed  Public  Offering").  The
Company  can give no  assurance  at this time that either the  Proposed  Private
Placement or the Proposed  Public  Offering  will be attempted or, if attempted,
that either of such offerings will be successfully completed.

Results of Operations

     Registrant has never engaged in any significant business activities and had
no revenues from operations during the first quarter ended September 30, 1997 or
in the  first  quarter  of the prior  fiscal  year  ended  September  30,  1996.
Management  has  continued to devote all of  Registrant's  limited  resources to
activities   connected  with  raising  financing  to  complete  the  design  and
development, and to commence manufacture, of the TCS-1 System.

     The  financial  statements  which  form a part of this  Report  reflect  an
increase in total  general and  administrative  expenses,  from $177,979 for the
quarter ended  September  30, 1996, to $420,890 for the quarter ended  September
30, 1997,  however,  the great bulk of such  increase  reflects the accrual,  as
expenditures,  of $165,335 in executive officers' salaries, payment of virtually
all of which was actually  waived by the  executive  officers and the  Company's
corporate  counsel,  who have  agreed to accept  shares of the  Company's Common
Stock in lieu of such payment.  Management  believes that the amounts accrued in
respect of the shares issued to compensate the executive  officers'  reflect the
fair value of the  services  rendered and not the value of the stock at the time
it was issued. In respect of the value of the compensation  actually received by
such officers, management believes that it is impossible to determine the actual
current or  potential  value,  if any,  of the such  shares in light of the fact
that,  as of the dates when such shares were issued to the  executive  officers,
they had no or only very minimal  actual  market value and the actual  potential
market  value of such  shares,  if any,  was at such  dates,  and as at the date
hereof remains,  highly  contingent  upon, and subject to,  extremely high risks
including but not limited to the following factors:  (i) the very early stage of
development  of the Company's  business;  (ii) the Company's  lack of sufficient
funds to implement  its business  plan and the absence of any  commitments  from
potential investors to provide such funds; (iii) the absence of


                                       14
<PAGE>

a reliable,  stable,  or substantial  trading  market for such shares;  (iv) the
restrictions  on transfer  arising out of the  absence of  registration  of such
shares; and (v) the uncertainty  respecting the Company's ability to continue as
a going concern.

     From inception (July 15, 1987) through  September 30, 1997, the Company has
incurred  a  cumulative  net  loss  of  $4,182,167.  Approximately  28% of  such
cumulative  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  expensing of costs  associated  with
the  unsuccessful  attempt to establish such health care  business.  The Company
never commenced its proposed health care operations and therefore,  generated no
revenues  therefrom.  The Company is presently in the business of designing  and
developing cryogenic tire disintegration  equipment (the "TCS-I System"),  which
it intends to begin  manufacturing  on a  commercial  basis,  during the current
fiscal year.  Design and development  work on the first  production model of the
TCS-1 System has been brought to approximately 90% completion.  Unless and until
the  Company  successfully  develops  and  commences   manufacturing  and  sales
operations  respecting such a machine,  the Company will continue to generate no
revenues from operations.

                                     PART II

                                OTHER INFORMATION

Item 2. Changes in Securities

Recent Sales of Unregistered Securities

     Registrant has reported the information  required with respect to all sales
of  unregistered  securities  made by it during the quarter ended  September 30,
1997, in Item 5 of  Registrant's  annual  report on Form 10-KSB,  for the fiscal
year ended June 30, 1997,  which  information is hereby  incorporated  herein by
reference and attached as an Exhibit hereto.


                                       15
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits filed herewith:

Exhibit No.                                   Exhibit
-----------                                   -------
     99           Item 5 of Registrant's Annual Report on Form  1O-KSB  for  the
                  year ended June 30, 1997

     (b) Current  Reports on  Forms 8-K filed during quarter ended September 30,
1996

     Registrant  filed two Current Reports on Forms 8-K during the first quarter
ended September 30, 1997, as follows:

     Current Report on  Form 8-K, dated June 24, 1997, filed with the Commission
     on July 14, 1997.

     Current Report on  Form 8-K, dated July 11, 1997, filed with the Commission
     on August 14, 1997.


                                   SIGNATURES

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

                                            THE TIREX CORPORATION




Date: November 12, 1997                 By   /s/ Terence C. Byrne
                                             -----------------------------------
                                             Terence C. Byrne, President 
                                                 and Treasurer


Date: November 12, 1997                      /s/ Terence C. Byrne
                                             -----------------------------------
                                              Terence C. Byrne, Chief Executive 
                                                 and Chief Financial Officer


                                       16