---

U.S. SECURITIES AND EXCHANGE COMMISSION



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, 2003
>   [ ] 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. EmployerIncorporation or
      Organization)
      Identification No.)




4055 Ste-Catherine Street West,
Suite 151, Montreal (Westmount), Quebec, Canada, H3Z 3J8

(514) 935-2525

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

Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the issuer was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days. Yes X No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding for each of the
issuer's classes of common equity, as of April 30, 2003 :249,895,892
shares

Transitional Small Business Disclosure Format (check one):

Yes    NoX

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The Tirex Corporation

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

> The Tirex Corporation and Subsidiaries Consolidated Balance Sheets as of
>   September 30, 2003
>   Consolidated Statements of Operations for the three month periods ended
>   September 30, 2003 and 2002
>   Consolidated Statements of Cash Flows for the three month periods ended
>   September 30, 2003 and 2002
>   Notes to Financial Statements (Unaudited)

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

PART II B OTHER INFORMATION

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

The financial statements are unaudited. However, pursuant to SEC
requirements, the consolidated financial statements have been reviewed by the
Company's independent auditor. Readers are cautioned that a review engagement
does not constitute an audit. Management of registrant believes that all
necessary adjustments, including normal recurring adjustments, have been
reflected to present fairly the financial position of registrant at September
30, 2003 and the results of its operations and changes in its cash position for
the three month periods ended September 30, 2003 and 2002 and for the period
from inception (July 15, 1987).

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Unaudited)                         |       | (Unaudited)                          |                                                          |                                                      |      |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ----- | ------------------------------------ | -------------------------------------------------------- | ---------------------------------------------------- | ---- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Three months ended
    September 30 |       | Three months ended 
    September 30 | Cumulative from
    March 26, 1993 to September 30, 2003 | Cumulative from
    March 26, 1993 to March 31, 2003
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2003                                | 2002  |                                      | 2003                                                     |                                                      | 2002
|Supplemental Disclosure
    of Non-Cash Activities:During the year ended June 30, 2003, the Company recorded an increase
      in common stock and in additional paid-in capital of $456,583 which was in
      recognition of the payment of debt. During the three month period ended
      September 30, 2003, the Company did not issue common stock in recognition
      of the payment of debt. During the year ended June 30, 2002, stock was
      issued in exchange for services performed and expenses in the amount of
      $1,673,518. During the three month period ended September 30, 2002, the
      Company did not issue common stock in exchange for services performed and
      expenses. |                                     |       |                                      |                                                          |                                                      |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |      |  
|Supplemental Disclosure of Cash Flow Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                     |       |                                      |                                                          |                                                      |      |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |      |  
|Interest paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $  -                                | $ 862 | $                                    | -                                                        | $                                                    | 862  | $
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                     |       |                                      |                                                          |                                                      |      |  
|Income
    taxes paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $    -                              | $   - | $                                    | -                                                        | $                                                    | -    | $

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                              |   | (Unaudited)        |                   |          
|------------------------------------------------------------- | - | ------------------ | ----------------- | ---------
|                                                              |   |                    |                   |          
|                                                              |   | Three months ended | Cumulative from  
|                                                              |   | September 30       | March 26, 1993 to
|                                                              |   | 2003               |                   | 2002     
|                                                              |   |                    |                   |          
|Cash
    flows from operating activities:                     |   |                    |                   |          
|                                                              |   |                    |                   |          
|Net loss                                                      | $ | (168,752)          | $                 | (725,138)
|                                                              |   |                    |                   |          
|Adjustments to reconcile net loss to net cash                 |   |                    |                   |          
|used in operating activities:                                 |   |                    |                   |          
|Depreciation and amortization                                 |   | -                  |                   | 5,914    
|(Gain) loss on disposal and abandonment of assets             |   | -                  |                   | 530,651  
|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                    |   | 1,370              |                   | 34,180   
|                                                              |   |                    |                   |          
|Changes
    in assets and liabilities:                        |   |                    |                   |          
|(Increase) decrease in:                                       |   |                    |                   |          
|Account receivable                                            |   | -                  |                   | 4,636    
|Inventory                                                     |   | -                  |                   | 2,915    
|Sales tax receivable                                          |   | -                  |                   | (7,308)  
|Research and experimental development tax credits receivable  |   | -                  |                   | 77,094   
|Other assets                                                  |   | -                  |                   | 3,308    
|(Decrease) increase in :                                      |   |                    |                   |          
|Accounts payables and accrued liabilities                     |   | 33,435             |                   | 48,613   
|Accrued salaries                                              |   | 43,750             |                   | 11,026   
|Due to stockholders                                           |   | -                  |                   | -        
|                                                              |   |                    |                   |          
|Net
    cash used in operating activities                     |   | (90,197)           |                   | (14,109) 
|                                                              |   |                    |                   |          
|Cash
    flow from investing activities:                      |   |                    |                   |          
|Increase in notes receivable                                  |   | -                  |                   | -        
|Reduction in notes receivable                                 |   | -                  |                   | 863      
|Investment                                                    |   | -                  |                   | -        
|Equipment                                                     |   | -                  |                   | -        
|Equipment assembly costs                                      |   | -                  |                   | -        
|Organization cost                                             |   | -                  |                   | -        
|Reduction in security deposit                                 |   | -                  |                   | -        
|                                                              |   |                    |                   |          
|Net
    cash used in investing activities                     |   | -                  |                   | 863      
|                                                              |   |                    |                   |          
|Cash
    flow from financing activities:                      |   |                    |                   |          
|Loans from related parties                                    |   | 90,197             |                   | -        
|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                                      |   | -                  |                   | (53,815) 
|Proceeds from issuance of stock options                       |   | -                  |                   | -        
|Proceeds from grants                                          |   | -                  |                   | 67,061   
|Proceeds from issuance of common stock                        |   | -                  |                   | -        
|Proceeds from additional paid-in capital                      |   | -                  |                   | -        
|                                                              |   |                    |                   |          
|Net
    cash provided by financing activities                 |   | 90,197             |                   | 13,246   
|                                                              |   |                    |                   |          
|Net
    (decrease) increase in cash and cash equivalents      |   | -                  |                   | -        
|                                                              |   |                    |                   |          
|Cash
    and cash equivalents - beginning of period           |   | -                  |                   | -        
|                                                              |   |                    |                   |          
|Cash
    and cash equivalents - end of period                 | $ | -                  | $                 | -        

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

|                                                 |             | (Unaudited)        |   |                   |                   
|------------------------------------------------ | ----------- | ------------------ | - | ----------------- | ------------------
|                                                 |             |                    |   |                   |                   
|                                                 |             | Three months ended |   | Cumulative from  
|                                                 |             | September 30       |   | March 26, 1993 to
|                                                 |             | 2003               |   | 2002              | September 30, 2003
|                                                 |             |                    |   |                   |                   
|Revenues                                         | $           | -                  | $ | -                 | $                 
|                                                 |             |                    |   |                   |                   
|Cost of
    Sales                                |             | -                  |   | -                 |                   
|                                                 |             |                    |   |                   |                   
|                                                 |             |                    |   |                   |                   
|Gross
    profit                                 |             | -                  |   | -                 |                   
|                                                 |             |                    |   |                   |                   
|Operations                                       |             |                    |   |                   |                   
|General and administrative                       |             | 146,071            |   | 245,359           |                   
|Depreciation and amortization                    |             | -                  |   | 5,914             |                   
|Research and development                         |             | -                  |   | 450,000           |                   
|                                                 |             |                    |   |                   |                   
|Total
    Expense                                |             | 146,071            |   | 701,273           |                   
|                                                 |             |                    |   |                   |                   
|Loss
    before other expenses (income)          |             | (146,071)          |   | (701,273)         |                   
|                                                 |             |                    |   |                   |                   
|Other
    expenses (income)                      |             |                    |   |                   |                   
|Interest expense                                 |             | 22,681             |   | 23,865            |                   
|Interest income                                  |             | -                  |   | -                 |                   
|Income from stock options                        |             | -                  |   | -                 |                   
|Loss on disposal of equipment                    |             | -                  |   | -                 |                   
|                                                 |             |                    |   |                   |                   
|                                                 |             | 22,681             |   | 23,865            |                   
|                                                 |             |                    |   |                   |                   
|Net
    loss                                     |             | (168,752)          |   | (725,138)         |                   
|                                                 |             |                    |   |                   |                   
|Other
    comprehensive loss                     |             |                    |   |                   |                   
|Loss (gain) on foreign exchange                  |             | -                  |   | -                 |                   
|                                                 |             |                    |   |                   |                   
|                                                 |             |                    |   |                   |                   
|Net
    loss and comprehensive loss              | $           | (168,752)          | $ | (725,138)         | $                 
|                                                 |             |                    |   |                   |                   
|Basic
    and Diluted net loss and comprehensive |             |                    |   |                   |                   
|loss per common share                            | $           | (0.00)             | $ | (0.00)            | $                 
|                                                 |             |                    |   |                   |                   
|Weighted average shares of common                |             |                    |   |                   |                   
|stock outstanding                                | 249,895,892 | 224,757,559        |   | 62,261,636       

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY

CONSOLIDATED BALANCE SHEET

|                                                             | (Unaudited)          
|------------------------------------------------------------ | ---------------------
|                                                             |                      
|                                                             | September 30,        
|                                                             | 2003                 
|                                                             |                      
|ASSETS                                                       |                      
|                                                             |                      
|Current
    Assets                                           |                      
|Cash and cash equivalents                                    | -                    
|Accounts receivable                                          | -                    
|Notes receivable                                             | 20,475               
|Sales taxes receivable                                       | 36                   
|Inventory                                                    | 73,322               
|Research and Experimental Development tax credits receivable | -                    
|Prepaid expenses and deposits                                | -                    
|                                                             | 93,833               
|                                                             |                      
|Property and equipment,                                      |                      
|salvage value                                                | 50,000               
|                                                             |                      
|Other
    assets                                             |                      
|Investment, at cost                                          | 89,500               
|Prepaid expenses and deposits                                | -                    
|                                                             | 89,500               
|                                                             |                      
|                                                             | $      
      233,333

|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)         
|-------------------------------------------------------
|                                                       
|Current
    Liabilities                                
|Accounts payable and accrued liabilties                
|Current portion of long-term debt                      
|                                                       
|                                                       
|Other
    liabilities                                  
|Long-term deposits and notes                           
|Government loans (net of current)                      
|Capital lease obligations (net of current)             
|Convertible notes                                      
|Convertible note                                       
|Loans from related parties                             
|                                                       
|                                                       
|                                                       
|Stockholders' Equity (Deficit)                         
|Common stock, $.001 par value, authorized              
|250,000,000 shares, issued and outstanding             
|249,895,892 shares (June 30, 2003 - 249,895,892 shares)
|Additional paid-in capital                             
|Deficit accumulated during the development stage       
|Unrealized gain (loss) on foreign exchange             
|                                                       
|                                                       
|                                                       
|                                                       

---

THE TIREX CORPORATION 
A DEVELOPMENT STAGE COMPANY



SUMMARY OF ACCOUNTING POLICIES

Note 1 
CHANGE OF NAME

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

NATURE OF BUSINESS

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

REORGANIZATION

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

DEVELOPMENTAL STAGE

At September 30, 2003, the Company is still in the
development stage. The operations consist mainly of raising capital, obtaining
financing, developing equipment, obtaining customers and supplies, installing
and testing equipment and administrative activities.

BASIS OF CONSOLIDATION

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

CASH AND CASH EQUIVALENTS

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

INVENTORY

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

PROPERTY AND EQUIPMENT

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

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

INVESTMENT

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

ESTIMATES

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

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 123

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

ADOPTION OF STATEMENT OF ACCOUNTING STANDARD NO. 128

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

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

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

The adoption of SFAS 128 had no effect on previously reported loss per share
amounts for the year ended June 30, 1997. For the years ended June 30, 2003 and
June 30, 2002, 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 2003 and 2002, 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 September 30, 2003 and June 30, 2003, 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 $28.9 million
as of September 30, 2003, expiring in the years 2004 through 2019. 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 September 30, 2003 and also did not have any
receivable as at June 30, 2003. These were the result of tax credits for
research and experimental development expenditures made by the Company which are
not contingent upon any offset against any income taxes otherwise payable.

FOREIGN CURRENCY TRANSLATION

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

REVENUE RECOGNITION

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

Note 2 
GOING CONCERN

As shown in the accompanying financial statements, the Company incurred a net
loss of $1,561,375 during the year ended June 30, 2003 and an additional net
loss for the three month period ended September 30, 2003 in the amount of
$168,752.

In March 1993, the Company had begun its developmental stage with a new
business plan. As of March 2000, the Company had developed a production quality
prototype of its patented system for the disintegration of scrap tires, but
nonetheless continued its research and development efforts to improve the
machine's performance and to permit greater flexibility in design for specific
customer applications. Due to the Company's lack of working capital during the
six month period ended June 30, 2002, all rubber crumb production has ceased and
research and development efforts have been hampered. Pending receipt of funding
from operations, government assistance, loans or equity financing, crumb rubber
production and previous research and development efforts will not be resumed.
While the Company has engaged the process of marketing the TCS System to
numerous potential clients since the beginning of the fiscal year commencing
July 1, 2000, as of September 30, 2003, the Company had not yet consummated an
unconditional purchase order for a TCS System.

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

Note 3 
FINANCING COST

During the year ended June 30, 1999, the Company incurred costs of $158,255
in connection with debt financing. These costs have been capitalized in other
assets and are being amortized over the terms of the financing. Amortization of
financing costs for the year ended June 30, 2000 was $125,291, reducing this
account balance to zero. During the year ended June 30, 2001, the Company
incurred costs of $180,557 in connection with debt financing. These costs have
been capitalized in other assets and are being amortized over the terms of the
financing. Amortization of financing costs for the years ended June 30, 2002 and
June 30, 2001 was $100,614 and $79,943, respectively, reducing this account
balance to zero.

Note 4 
PROPERTY AND EQUIPMENT

As at September 30, 2003, 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 | 161,916 
|                                                    |         
|Total                                               | $ 50,000

Depreciation and amortization expense charged to operations for the year
ended June 30, 2003 was $24,960.

Depreciation and amortization expense charged to operations for the three
month period ended September 30, 2003 was zero.

Note 5

Canada Economic Development for Quebec Regions

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

|                                                                                                                                                                                                                                                                               |        |         
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------ | --------
|Loan repayable over five years
    commencing June 30, 2000and ending June 30, 2004,                                                                                                                                                                                           |       
|$ 34,300                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                               |        |         
|Loan repayable over five years
    commencing June 30, 2001and ending June 30, 2005,                                                                                                                                                                                           |       
|43,791                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                               |        |         
|Loan repayable in amounts
    equal to 1% of annual sales inSpain and / or Portugal throughout June 30, 2007, to a maximum of the
    balance of the loan outstanding. If no sales occur on or before this date in
    Spain and Portugal, the loanwill become non-repayable., |       
|                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                              
|14,000                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                               |        |         
|Loan repayable in amounts
    equal to 11/2% of annual sales inSpain and / or Portugal through June 30, 2004 to a maximum of the balance of
    the loan outstanding. If no sales occur before this date in Spain and
    Portugal, the loan will become non-repayable.        |       
|                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                              
|66,500                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                               |        |         
|                                                                                                                                                                                                                                                                               |        | 158,591 
|Less: Current
    portion                                                                                                                                                                                                                                                      |        | 71,511  
|                                                                                                                                                                                                                                                                               |        |         
|Long-term
    portion                                                                                                                                                                                                                                                          |        | $ 87,080
|                                                                                                                                                                                                                                                                               |        |         
|Principal
    repayments are as follows:,                                                                                                                                                                                                                                      |        |         
|June 30                                                                                                                                                                                                                                                                        | Amount
|                                                                                                                                                                                                                                                                               |        |         
|2004                                                                                                                                                                                                                                                                           |        | $71,511 
|2005                                                                                                                                                                                                                                                                           |        | 20,580  
|2006                                                                                                                                                                                                                                                                           |        | Nil     
|2007                                                                                                                                                                                                                                                                           |        | 66,500  
|                                                                                                                                                                                                                                                                               |        |         
|                                                                                                                                                                                                                                                                               |        | $158,591

Note 6CAPITAL LEASE OBLIGATIONS

The Company leases certain manufacturing equipment under agreements
classified as capital leases. The cost and the accumulated amortization for such
equipment as of June 30, 2002 was $62,400 and $37,440, respectively. The
accumulated amortization for such equipment as of June 30, 2003 and 2002 was
$62,400 and $37,440, 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 leased
equipment is not part of the Company's TCS System prototype.

|Years ended
    June 30,                                  |      |   |        | Amount 
|--------------------------------------------------------- | ---- | - | ------ | -------
|                                                          |      |   |        |        
|                                                          | 2004 |   |        | $11,635
|                                                          |      |   |        |        
|Total minimum lease payments                              |      |   | 11,635
|Less: Amount representing interest                        |      |   | 1,629 
|                                                          |      |   |        |        
|Total obligations under capital lease                     |      |   | 10,006
|Less: Current portion of obligations under capital leases |      |   | 10,006
|                                                          |      |   |        |        
|                                                          |      |   |        |        
|Long-term obligation portion of under capital leases,     |      |   |       
|with interest rate of 10%                                 | $    | - |       

Note 7 
CONVERTIBLE SUBORDINATED DEBENTURES

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

Note 8 
CONVERTIBLE NOTES

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

Balance at September 30,
      2003
      Niland June 30, 2003Interest rate
      8%, payable quarterly,
      commencing June 30, 2001Issue date
      February 26, 2001Maturity date
      February 26, 2003Redemption rights
      If not converted, the holder
      may require the Company toredeem at any time after
      maturity for the principal amountpus interest.


Conversion ratio
      Lower of (i) - 80% of the
      average of the three lowestclosing bid prices for the
      thirty trading days prior to theissue date, which equals
      $.073, or (ii) - 80% of theaverage of the three lowest
      closing bid prices for the sixtytrading days prior to the
      conversion date.Common stock warrants
      The Convertible Notes
      carried an option to purchaseCommon stock warrants at the
      rate of one Warrant foreach $1.25 of purchase
      price. The exercise price on thefirst tranche of $ 750,000
      is $ .077 per share.


Certain 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 withdrawn during Fiscal
2003.

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

Amount due including
      interest calculated to
      $586,356September 30, 2003 and
      penalties to date,and deducting proceeds from
      the sale ofcollateral shares and the
      conversion value of4,000,000 shares issued to
      the investorsInterest rate on the debt
      8%Repayment terms
      $1,000 on May 15, 2002$1,000 on June 15, 2002$38,843.33 each month for up
      to twenty-fourmonths starting August 1,
      2002Warrants for purchase of
      common shares
      500,000 three-year warrants
      exercisableimmediately at a price of
      $0.01 per share.500,000 two-year warrants
      exercisable oneyear from the date of the
      SettlementAgreement at a price of
      $0.05 per share.500,000 one-year warrants
      exercisable twoyears from the date of the
      SettlementAgreement at a price of
      $0.10 per share.Right to sell collateral
      shares and Rule 144
      The Investors have the right
      to sell up toshares
      600,000 collateral shares
      and / or Rule 144shares per month, with
      proceeds to be firstapplied against interest and
      fees andthereafter against
      principal.


Right of repayment
      The Company has the right to
      pay amounts inexcess of the prescribed
      monthly amount,without penalty.Collateral shares
      As of the date of signing of
      the SettlementAgreement, the Investors had
      10,790,885Collateral Shares in their
      possession. As ofSeptember 30, 2003, the
      investors had3,190,977 collateral shares
      in theirpossession plus 4,000,000
      shares issued tothem for debt conversion.


The Company is currently in default with respect to the Settlement Agreement.
The investors have continued to sell collateral shares and were issued 4,000,000
conversion shares during the fourth quarter of Fiscal 2003. No collateral shares
were sold during the first quarter of Fiscal 2004, the period ended September
30, 2003, and no additional conversion shares were issued. The Company does not
currently have a significant number of unissued authorized shares available to
be able to respond in a material fashion to any additional conversion requests.
As of September 30, 2003, the investors had 3,190,977 collateral shares and
4,000,000 conversion shares in their possession.

Note 9 
CONVERTIBLE NOTE

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

Balance as of September 30,
      2003
      $186,556Interest rate
      8%Issue date
      July 19, 2000Maturity date
      January 19, 2002Redemption rights
      If not converted, the holder
      may require theCompany to redeem at any
      time after maturityfor the principal amount
      plus interest.Conversion ratio
      Not convertible prior to
      July 19th, 2001, at 20%discount to market between
      July 19th, 2001and January 19th,
      2002 or at 25% to market ifheld to maturity, to a
      maximum of not morethan 2,500,000 shares.


Note 10 
RELATED PARTY TRANSACTIONS

Convertible loans include amounts primarily due to Directors, Officers and
employees.

Historically, such amounts due have been repaid through the issuance of
stock. At September 30, 2003 and June 30, 2003, the balances owing to Directors
and Officers was $1,013,212 and $919,462, respectively. These amounts are
without interest or terms of repayment.

Various Notes Receivable from Officers, separately reported
on the audited balance sheet as of June 30, 2000, plus accrued interest thereon,
were offset against amounts due to these Officers as of June 30, 2001.

Long-term deposits and notes included an amount of $118,500 at September 30,
2003, which is payable to Ocean Tire Recycling & Processing Co., Inc., a company
owned by a Director of the Company. Subsequent to June 30, 2000, the Company
modified an agreement with Ocean Tire Recycling & Processing Co., Inc. to
clarify various terms of the parties' prior agreements and to obtain a
commitment by Ocean Tire Recycling & Processing Co., Inc. to pay, when
necessary, lease payments on the prototype TCS System. As part of the agreement,
the Company will repay Ocean Tire Recycling & Processing Co., Inc. in cash or
through the issuance of stock. The lease payments, under the accounting
provisions for an operating lease, have been recorded as a Research and
Development expense and the debt obligation included in loans from related
parties.

During the year ended June 30, 2001, 6,500,000 common shares were issued
under the agreement as a partial Settlement. During the year period ended June
30, 2002, an additional 4,553,102 common shares were issued under the agreement
to a designated person assigned by Ocean Tire Recycling & Processing Co., Inc.

Note 11 
EXCHANGE OF DEBT FOR COMMON STOCK

During the year ended June 30, 2003, the Company recorded an increase in
common stock and paid-in capital of $456,583 representing issuances of stock in
lieu of cash payments for debts owed. During the three month period ended
September 30, 2003, the Company did not record any increase in common stock and
additional paid-in capital.

Note 12 
COMMON STOCK

During the year ended June 30, 2003, the Company issued common stock in
exchange for services performed totaling $136,375. The amount for the year ended
June 30, 2003 did not include any payments to Officers of the Company in
exchange for salary and expenses. During the three month period ended September
30, 2003, the Company issued common stock in exchange for services performed totaling zero. The amount for the three month period ended September 30, 2003
did not include any payments to Officers of the Company in exchange for salary
and expenses. The dollar amounts assigned to such transactions have been
recorded at the fair value of the services received.

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

As at September 30, 2003, the Company had 249,895,892 Common shares issued
and outstanding.

Note 13 
STOCK PLAN

The Company established a Stock Plan in June of 2000 whereby key personnel of
the Company, consultants and other persons who have made substantial
contributions to the Company may be issued shares as compensation and incentives
through Awards, Options or Grants under the terms set forth in the Stock Plan.
The Stock Plan originally called for the issuance of a maximum of 7,000,000
shares of stock as Awards, the issuance of a maximum of 7,000,000 shares of
stock to underlie Options and the issuance of a maximum of 7,000,000 shares of
stock that may be issued as Grants. Awards and Options can only be given to
individuals who have been either in the employ of the Company, an Officer,
Director or consultant for the preceding six months Awards are not fully vested
until the end of three years with one-twelfth of the aggregate award vesting at
the end of each quarter. If the Awardee is terminated for cause or resigns, the
unvested portion of the award is forfeited. Options can be exercised at any time
and upon exercise, the underlying stock is fully vested with the purchaser. The
Options are not transferable and are exercisable for two years after which time
they expire. If the Optionee is terminated for cause or resigns, all unexercised
options are forfeited. A Grant can only be given to persons who have made a
substantial contribution to the Company and the shares are not forfeitable. On
January 31, 2001, the Company amended the Stock Plan providing for an additional
3,000,000 shares being allocated as Grants and an additional 2,000,000 shares
allocated to be given as Options. On May 30, 2001, the Stock Plan was further
amended reallocating the 7,000,000 shares to be given as Awards to allow
5,000,000 of the shares to be used for Options and 2,000,000 of the shares to be
used as Grants. There were no stock issuances under the Stock Plan for the year
ended June 30, 2000.

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

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

Number of
      Avg. exercise
      AggregateShares
      price
      considerationGranted and unexercised at
      nil
      -
      -beginning of yearGranted and exercised during
      9,698,228
      $ 0.131
      $1,273,334Fiscal 2001Granted and unexercised at
      nil
      -
      -the end of Fiscal 2001


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

There were no Options granted or exercised during the year ended June 30,
2002. There were no Options granted or exercised during the year ended June 30,
2003, nor during the first quarter of Fiscal 2004 which ended on September 30,
2003.

Note 14
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.

Note 15 
ACQUISITION BY MERGER OF RPM INCORPORATED

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

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

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

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

Note 16 
GOVERNMENT ASSISTANCE

The Company is eligible for and has made claims for tax credits related to
scientific research and experimental development expenditures made in Canada.
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 has been recorded as an increase in stockholders' equity paid-in
capital. During the three month period ended September 30, 2003, the Company did
not receive any tax credits. Also, during the three month period ended September
30, 2003, the Company did not record any additional tax credits bringing the
reported receivable balance from these governments from $246,970 as of June 30,
2002 to zero as of June 30, 2003 and September 30, 2003.

Note 17 
COMMITMENTS

The Company leased office and warehouse space at an annual minimum rent of
$80,000 for the first year, $160,000 for the second year and $200,000 per year
for the third through the fifth years. The lease was cancelled in 2003. The
Company was responsible for its proportionate share of any increase in real
estate taxed and utilities. Also, under the terms of the lease, the Company was
required to obtain adequate public liability and property damage insurance.

The lease contained a second ranking moveable hypothec in the amount of
$300,000 on the universality of the Company's moveable property.

Rental expense for the year ended June 30, 2003 amounted to $124,442. Rental
expense for the three month period ended September 30, 2003 amounted to zero.

At September 30, 2003, the Company was in arrears of rent, including interest
and related charges, in the approximate amount of $560,000.

Note 17
LITIGATION

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

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

An action was instituted by a Plaintiff, the Company's landlord, against the
Company in June 2001 for arrears of rent in the amount of approximately
$113,900. As at June 30, 2003, the Company was in arrears of rent and property
taxes to its landlord in the amount of approximately $560,000. As noted in Note
16, during Fiscal 2003, the Company entered into a settlement agreement with its
former landlord in respect of amounts due. Under the terms of the settlement
agreement, the Company will pay to the former landlord a total of US$560,000 out
of the proceeds of the sale of the first four TCS systems, at the rate of
US$140,000 per system. This amount is non-interest bearing.

Note 18 
ACCUMULATED OTHER COMPREHENSIVE INCOME

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

Note 19 
PRIOR PERIOD ADJUSTMENT

Pursuant to discussions and negotiations with a consulting company previously
employed by the Company, it was agreed that the contractually agreed upon
services had not been performed satisfactorily. The consultant returned
4,000,000 shares of the Company

---

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion and analysis of significant factors
which have affected the Company's financial position and operations during the
three month period ended March 31, 2003. This discussion also includes events
which occurred subsequent to the end of the last quarter and contains both
historical and forward-looking statements. When used in this discussion, the
words "expect(s)", "feel(s)","believe(s)", "will", "may", "anticipate(s)" "intend(s)"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those projected.

As reported in the Company's Annual Report for the year ended June 30, 2003,
recently filed on Form 10-KSB, the Company's TCS Tire Recycling System has been
ready for market since March of 2000, although further refinements were made to
the technology during the remainder of Fiscal 2001 and throughout Calendar 2002.
Throughout that period the availability of funds necessary to permit
developmental stage companies, such as ours, to make the transition to the
commercial stage has been very restricted. The Company was late in filing its
September 10-Q on a timely basis, which resulted in our stock being removed from
the Bulletin Board to be shown as OTC-Other, in which category the "Bid" and
"Ask" are not shown. The Company has recently taken steps to attempt to rectify
this situation and hopes to be re-listed on the OTC Bulletin Board shortly.

On the business development side, entrepreneurial confidence in investing
into new ventures, such as tire recycling, has continued to manifest significant
strong uncertainty, and particularly on the part of financial backers to such
projects. For the past year, the Company has been working with a Puerto Rican
entrepreneur interested in purchasing a TCS-2, but having difficulty in finding
an investor partner, necessary to complete his project financing package. To
date, no appropriate investor partner has been found. Similarly, the Company was
working with a Canadian entrepreneur interested in setting up a tire recycling
facility in Quebec. However, during the first quarter of Fiscal 2003, this
entrepreneur informed us that that the facility he would establish would not
involve our technology, but rather a processing facility using hammer mills.
Such equipment is easily available on the used equipment market, permitting him
to reduce his capital cost outlay. However, they project initially conceived
remains viable and we are working with a Montreal-based consulting firm to bring
in investors to support a quebec-based facility. To date, no such investors have
committed to any project. We remain hopeful that such investors will be found,
but we cannot guarantee that this will occur.

Our Manufacturing Partner, Simpro S.p.A. of Turin. Italy, has received the
desired support from public sources and from a technical university, Polytecnico,
to proceed with the construction of a demonstration unit in Italy. Construction
has begun and the demonstration unit will be operational toward the end of this
fiscal year. While we will not receive any royalty on the construction of this
unit, we will receive a royalty on crumb rubber sales resulting from production
operations of this unit. We do not expect to see such royalties commence before
the first quarter of Fiscal 2005, however.

Simpro is currently in active negotiations with Brazilian interests for the
sale of one or more TCS Systems. We have been informed that this potential
Brazilian customer does have the financial capability to undertake this project.
Regardless, there cannot be any assurances that an unconditional sales contract
will result from these negotiations, and as of the date of this report, no such
contract had been concluded.. Simpro has also received a Letter of Intent
respecting a TCS-1 to be located in Botswana, a copy of which was provided to
us. While Simpro's current business practices would normally have had them
undertake due diligence examinations with respect to this potential customer as
a precursor to proceeding with negotiations, we have not received any documents
from Simpro attesting to the financial capability of the Botswanan entrepreneur.

We continue to respond to information requests with respect to our TCS
systems from numerous sources. While the volume of such requests would indicate
continued significant interest in our technology, there can be no assurances
that any of these requests will proceed to actual negotiations for a system
sale, nor that any sales contracts would actually be concluded.

With the suspension of rubber crumb production operations in January of 2002
and the concurrent reduction of R&D activity, we have devoted all of our efforts
to being able to conclude a sale of a TCS System and to the raising necessary
funds to keep the Company operational until revenue from sales can be realized.

In February of 2001, we concluded a private financing with an investor group
managed by a New York-based company. Under the terms of the Agreement, we drew
down $750,000 of the available $5,000,000 amount. The initial $750,000 was
provided in the form of a Convertible Note. We defaulted by not having an SB-2
Registration Statement declared effective within 150 days of the date of the
Note. Following lengthy negotiations, we reached a Settlement Agreement with the
investors on April 26, 2002 under which the Company agreed to a reimbursement
schedule and provided three series of warrants, 500,000 each, exercisable at
different prices to the investors. The lack of financial resources prevented us
from being able to honor the reimbursement schedule, and thus we are currently
in default with respect the Settlement Agreement. On March 5, 2003, the
Investors sent to us by FAX, demand letters of payments due for each of the
three investor funds involved in the initial transaction, these letters being
dated February 25 and February 26, 2003, being the two-year anniversary date of
their investment. The sum total due, including interest, penalties and fees, was
listed as $1,408,648.53. The Company is not in a position to pay this sum. The
Investors also requested that shares be issued to them to permit conversion of
some of the debt due. To respond to this request, and given the lack of shares
available for issuance, the Company cancelled financial consulting agreements,
with the consent of the consultants, and thus obtained 4,000,000 shares which
were re-issued to the Investors under the conversion request in May of 2003. In
addition, the Investors continue to hold 8,344,811 collateral shares as of May
12, 2003. The Company is working with the Investors to establish those
conditions, related to the development of the business, such that remaining cash
sums can be paid over time.

In connection with the original requirement of our having an SB-2
Registration Statement declared effective within 150 days, as noted in the
previous paragraph, the Company has withdrawn its filing.

Because of the lengthy delay preceding the commencement of commercial
operations, particularly insofar as regards the sale and manufacturing of TCS
Systems is concerned, we have had to, and in the foreseeable near future, will
be forced to continue to cover a substantial part of our overhead costs from
sources other than revenues from operations. Since relocating to our current
premises, our monthly cash requirements have been reduced to negligible amounts.
Most of the expenses listed on our Income Statement relate to salary accruals.

Liquidity and Capital Resources

The activities of the Company, since its formation in 1987, and the inception
of its current business in 1993 have been financed by sources other than
operations. Such financing was principally provided by the sale of securities in
private transactions and by additional capital investments by directors,
officers and employees. During the nine month period ended March 31, 2003,
directors, officers, employees and consultants did not make any direct cash
investments into the Company. During the Fiscal year ended June 30, 2002, direct
cash investments made by the directors, officers, shareholders and consultants
amounted to $950,713.

As of September 30, 2003, the Company had total assets of $233,333 as
compared to $687,676 at September 30, 2002 reflecting a decrease of $454,343,
and no change versus total assets as of the last fiscal year end, June 30, 2003,
which amounted to $233,333. Management attributes the decrease from September
31, 2002 to September 31, 2003 primarily to the following factors: (i) a
decrease of $169,876 in Tax Credits Receivable from the balance as of March 31,
2002 in the amount of $169,876 to the March September 30, 2003 balance of $0,
and (ii) a decrease of $29,362 in accounts receivable from the balance as of
September 30, 2002 in the amount of $29,397 to the September 30, 2003 balance of
$36, and (iii) a decrease of $30,648 in Prepaid Expenses and Deposits from the
balance as of September 30, 2002 to the amount of zero as of September 30, 2003
and a decrease of long-term deposits and prepaid expenses in the amount of
$209,000 from the balance as of September 30, 2002 to zero as of September 30,
2003. The was no difference in the total assets as of September 30m 2003 versus
the fiscal year-end balance as of June 30, 2003.

As of September 30, 2003, the Company had total liabilities of $3,916,298 as
compared to $4,124,819 at September 30, 2002, reflecting a decrease of $208,521,
and reflecting an decrease of $178,279 versus total liabilities as of the last
fiscal year end, June 30, 2003, which total amounted to $4,094,800. The decrease
in total liabilities from September 30, 2002 to September 30, 2003 is primarily
attributable to an increase of $324,212 in Accounts Payable and Accrued
Liabilities and by an decrease in Convertible Notes in the amount of $345,884,
and also offset by a decrease in Loans from Related Parties in the amount of
$173,482. The decrease in total liabilities from June 30, 2003 to September 30,
2003 is primarily attributable to an increase of $93,851 in Loans from Related
Parties and by an increase of $77,185 in Accounts Payable and Accrued
Liabilities.

Reflecting the foregoing, the financial statements indicate that as at
September 30, 2003, the Company had a working capital deficit (current assets
minus current liabilities) of $1,857,301 compared to a working capital deficit
of $1,243,475 as at September 30, 2002, reflecting an increase of $613,826. The
working capital deficit of $1,857,301 as at September 30, 2003 compares to a
working capital deficit of $1,783,669 as at June 30, 2002, reflecting an
increase of $73,633.

The financial statements which are included in this report reflect total
operations and other expenses of $168,752 for the three month period ended
September 30, 2003 versus $725,138 for the comparative three month period ended
September 30, 2002, reflecting a decrease of $556,386. This decrease is
attributed to a reduction of $450,000 in research and development expenses and a
decrease of $99,288 in General and Administrative expenses.

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 Quarterly Report on Form
10-QSB for the second quarter of Fiscal 2003.

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

The Plaintiffs, a Canadian resident and a Canadian corporation sued in the
Delaware, U.S. Federal District Court claiming fraud, breach of contract, unjust
enrichment and other allegations, that the alleged Defendants, which include
Tirex Corporation Canada and The Tirex Corporation, jointly conspired to profit
from their failure to comply with terms of a manufacturing agreement. The
monetary demand of this complaint was unspecified. We were prepared to move to
dismiss Plaintiffs' Complaint, but after consultations with the Plaintiffs'
Attorneys, the Plaintiffs' withdrew this complaint voluntarily. Plaintiffs later
filed a second action in the Chancery Court of Delaware alleging certain of the
same allegations; fraud, breach of contract, unjust enrichment, breach of
fiduciary duty and misrepresentation, but eliminated other counts including the
securities fraud allegations. The Defendants in the State Court action are the
same named in the Federal Court action, and again the monetary damages are
unspecified. We moved to dismiss the State Court Chancery case alleging
defective service of process and asserting that the Court had no jurisdiction
over the Defendants in Delaware and for removal of the case to Canada based on
forum non-convenience and other considerations. Our motion was granted and the
case dismissed.

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

Lefebvre Freres Limited v. The Tirex Corporation

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

Tri-Steel Industries Inc. v. The Tirex Corporation

Our former landlord Tri-Steel Industries Inc. instituted an action against
us, and our subsidiaries Tirex Corporation Canada Inc. and Tirex Canada R & D
Inc., on or about June 22, 2001 for arrears of rent in the amount of
Canadian$230,050 (approximately US$147,232 using the then prevailing approximate
exchange rate of $0.64 ). The premises were vacated by us as of November 2002.
The former landlord has accepted that he would be repaid out of future cash
flows and that the premises lease would be terminated effective December 31,
2002. As at December 31, 2002, the Company was in arrears of rent and property
taxes to its previous landlord in the amount of Cdn$876,268.79 (approximately
US$5690,000 at the then prevailing exchange rates). The Company came to an
agreement with the landlord under which the debt would be
fixed in US dollars at $560,000, thus cancelling exchange rate fluctuation
risks, and that this amount would not be interest-bearing providing Tirex would
direct the payment directly to the landlord of US$140,000 out of the Company's
share of the proceeds on the first four sales of TCS Systems. Each $140,000 will
be progressively paid out as a function of cash inflows from progress payments
made by the customers.

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: - Changes in Securities and Use of Proceeds

Share Issuance Continuity Schedule

Shares issued and
      outstanding as of June 30, 2003
      249,895,892Total Issuances in the First
      Quarter of FY 2004
      nilTotal Outstanding as of
      September 30, 2003
      249,895,892


Item 3 - Defaults Upon Senior Securities

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

As indicated above, in February of 2001, we concluded a private financing
with an investor group managed by a New York-based company. 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 and we drew down US$750,000, which was provided
in the form of a Convertible Note. Under the terms of the Agreement, we were
required to file and have declared effective a Registration Statement on Form
SB-2 within 150 days of the Closing Date of the Agreement. As of June 25, 2001,
we were in technical default for failing to have an effective Registration
Statement on record with the Securities and Exchange Commission. We were advised
of the default in mid-July 2001.

Following lengthy negotiations, we reached a Settlement Agreement with the
investors on April 26, 2002 under which we agreed to a reimbursement schedule
and provided three series of warrants, 500,000 each, exercisable at different
prices to the investors. The lack of financial resources prevented us from being
able to honor the reimbursement schedule, and thus we are currently in default
with respect the Settlement Agreement.

On March 5, 2003, the Investors sent to us by FAX, demand letters of payments
due for each of the three investor funds involved in the initial transaction,
these letters being dated February 25 and February 26, 2003, being the two-year
anniversary date of their investment. After taking into consideration the
proceeds of sales of collateral shares, share conversions and accumulating
interest, the sum total due, including interest, penalties and fees, as of
September 30, 2003 is $586,356, and the investors have in their possession
3,190,977 collateral shares plus 4,000,000 shares converted from the debt. The
Company is not in a position to pay this sum of cash due. The Company is working
with the Investors to establish those conditions, related to the development of
the business, such that these sums can be paid over time. The Investors also
sent a request to convert the debt. There can be no guarantee that the investors
will continue to not take legal recourse against the Company and that the
anticipated cash availability to support a re-negotiated Settlement Agreement
will actually be available

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

During the three-month period ended September 30, 2003, there were no
submissions of matters to a vote of Security Holders.

Item 6 - Exhibits and Reports on Form 8-K

Exhibits

No exhibits are filed with this report

Reports on Form 8-K

During the three month period ended September 30, 2003, there were no Reports
on Form 8-K filed by the Company.

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SIGNATURES

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

THE TIREX CORPORATIONDate:
      November 14, 2003
      By
      /s/ John L. Threshie,jr.John L. Threshie, Jr. PresidentDate:
      November 14, 2003
      By
      /s/ Michael AshMichael Ash, Treasurer andChief Accounting and Financial Officer




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Exhibit 99.1

CERTIFICATION OF PRINCIPAL EXECUTIVE, ACCOUNTING AND
FINANCIAL OFFICER 
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of The Tirex Corporation (the
"Company") on Form 10-QSB for the period ended September 30, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
John L. Threshie Jr., President of the Company, hereby certify pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

(1) the Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

/s/ JOHN L. THRESHIE JR.
John L. Threshie Jr. 
President 
November 14, 2003