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

                                   FORM 10-QSB
(Mark One)

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 
For the quarterly period ended March 31, 1998

[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 
For the transition period from ___________ to ___________

                       Commission File Number 33-17598-NY

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

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

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

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

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of May 18, 1998: 62,796,426 shares

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

<PAGE>

                              The Tirex Corporation
                          (A Development State Company)

                                   ----------

                                TABLE OF CONTENTS

PART I

Item 1 - Financial Information (unaudited)                                  Page
                                                                            ----

      The Tirex Corporation and Subsidiary
        Consolidated Balance Sheets as of
          March 31, 1998 and 1997 .........................................  3

      Consolidated Statements of Operations
        for the nine month period
          ended March 31, 1998 and three and
           nine month period 1998 .........................................  4

      Consolidated Statements of Cash Flows
        for the nine-month periods
          ended March 31, 1998 and 1997  ..................................  5

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

Item 2  Management's Discussion and Analysis of
        Financial Condition and Results of Operations......................  15

PART II

Item 2 - Changes in Securities.............................................  20

Item 6 - Exhibits and Reports on Form 8-K..................................  25

                                   ----------

      The financial statements are unaudited. However, the management of
registrant believes that all necessary adjustments (which include only normal
recurring adjustments) have been reflected to present fairly the financial
position of registrant at March 31, 1998 and the results of its operations and
changes in its financial position for the three and nine month periods ended
March 31, 1997 and for the period from inception (July 15, 1987).


                                        2
<PAGE>

                              THE TIREX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                           Consolidated Balance Sheet
                                   (Unaudited)

                                                               March 31
                                                         1998           1997
                                                     -----------    -----------
ASSETS
Current Assets                                       $   305,243    $    10,697

Accounts receivable                                      115,000           --
Notes receivable                                          39,729          1,158
Prepared expenses                                          1,558           --
Employee advances                                         93,199           --
Sales tax receivable                                      46,058           --
Income taxes receivable                                  639,762           --
                                                     -----------    -----------
Total current assets                                   1,240,549         11,855

Fixed Assets, at cost, net of accumulated
depreciation of $12,625                                   36,285         17,681

Other assets
Equipment development costs                              919,118        549,116
Deferred start-up costs                                   96,634           --
Organization costs, net of accumulated
amortization of $795                                         747            984
                                                     -----------    -----------
                                                       1,016,499        550,100
                                                     -----------    -----------
Total Assets                                           2,293,333        579,636
                                                     ===========    ===========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Bank indebtedness                                    $   504,689    $      --
Note payable                                              24,000         24,000
Accrued expenses                                         976,050        230,603
Loans Payable                                            479,138         45,796
Deposits payable                                         663,500        190,000
Total current liabilities                              2,647,377        490,399

Convertible subordinated debentures                      445,000           --
                                                     -----------    -----------
Total liabilities                                      3,092,377        490,399

Commitments and contingencies

Stockholder's equity (deficit)
Common stock, $.001 par value, authorized
50,000,000 shares, issued and outstanding
47,644,182 shares                                         47,644         28,029
Additional paid-in capital                             4,116,802      3,082,938
Deficit accumulated during the development stage      (4,963,490)    (3,021,730)
                                                     -----------    -----------
                                                        (799,044)        89,237
                                                     -----------    -----------
Total Liabilities and Stockholders' Equity           $ 2,293,333    $   579,636
                                                     ===========    ===========


                                       3
<PAGE>

                              THE TIREX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                      Consolidated Statement of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                 Nine months ending         Three months    
                                                      March 31             ending March 31,  
                                            ----------------------------   --------------- 
                                                1998            1997            1998
                                            ------------    ------------    ------------ 
<S>                                         <C>             <C>             <C>         
Revenues                                    $    415,000    $       --      $    415,000

Costs of sales                                   248,082            --           248,082

Gross profit                                     166,918            --           166,918

General and administrative expenses
Officers' salaries                               579,144         382,592         181,923
Consulting services                               79,571          70,771           9,385
Professional services                            211,447          58,761          91,443
Rent                                              29,270           5,056          13,096
Light, heat and power                              3,313            --             3,313
Travel and entertainment                         332,784          65,672         143,239
Telephone                                         12,775           6,031           4,012
Depreciation and amortization                      7,619           2,085           2,833
Office expenses                                   46,545          13,599          12,684
Miscellaneous                                     12,889           2,793          12,889
Franchise and other tax                            4,152            --             1,300
Interest and bank charges                         10,243           6,270           6,545
Investor relations                                   756           1,794          (2,073)
Transfer agent                                     7,089           5,009           5,394
Financing fee                                     65,719            --            65,719
Foreign exchange                                 (34,185)           --           (18,833)
Total general and administrative expenses      1,369,131         620,433         532,896

Net loss                                    $ (1,202,213)   $   (620,433)   $   (365,951)

Net loss per common share                   $      (0.03)   $      (0.02)   $      (0.01)

Weighted average shares of common
stock outstanding                             40,866,990      23,907,069      40,866,990

</TABLE>


                                        4

<PAGE>

                              THE TIREX CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                      Consolidated statement of cash flows
                                   (Unaudited)

                                                               March 31
                                                     --------------------------
                                                         1998           1997
                                                     -----------    ----------- 
Cash flows from operating activities:

Net loss                                             $(1,202,213)   $  (620,433)

Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization                              7,619          2,085
Stocks issued in exchange for services                   403,049        531,958

Change in assets and liabilities
Increase in accounts receivable                         (315,000)          --
Decrease in employee advances                             92,743           --
Decrease in sales tax receivable                           4,226           --
Increase in prepaid expenses                              (1,558)          --
Increase in notes receivable                             (30,000)          --
Decrease in loan-director                                 10,881           --
Increase (decrease) in accrued expenses                   83,796         (7,826)
Decrease in due to shareholder                              --           (5,000)
Increase in income taxes receivable                     (369,844)          --
Net cash used in operating activities                 (1,316,301)       (99,216)

Cash flows from investing activities:
Fixed assets                                             (28,956)        (1,740)
Equipment development costs                             (135,667)      (371,892)
Deferred start up costs                                  (21,951)          --
Net cash used in investing activities                   (186,574)      (373,632)

Cash flows from financing activities:
Repayment of notes  payable                              (98,551)          --
Proceeds form loans payable                              278,593         10,796
Proceeds form deposits payable                           383,500        125,000
Proceeds from issuance of common stocks                  139,850        347,509
Proceeds from issuance of convertible debentures         445,000           --
Net cash provided by financing activities              1,148,392        483,305

Net increase (decrease) in cash                         (354,483)        10,457

Cash and cash equivalents-beginning of period            155,037            240

Cash and cash equivalents-end of period              $  (199,446)   $    10,697


                                        5

<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)
                   Notes to Consolidated Financial Statements

Note 1   Summary  of  Accounting   Policies   Nature  of  Business:   The  Tirex
         Corporation  (the  "Company")  was  incorporated  under the laws of the
         State of Delaware on August 19, 1987. The Company originally planned to
         provide  comprehensive  health care  services to persons with  Acquired
         Immune  Deficiency  Syndrome,  however  due to its  inability  to raise
         sufficient  capital it was unable to implement its business  plan.  The
         Company had been inactive since it ceased  operations in November 1990.
         In the Fall of 1992, a group of  shareholders  lead by Edward Mihal and
         including 16 other shareholders  acting in concert with Mr. Mihal along
         with Patrick McLaren and George Fattell,  individuals without any prior
         affiliation  with the Company,  became  interested in the Company as an
         entity potentially  suitable for merger or similar  transaction with an
         operating private company seeking to become public in this manner. This
         group  approached the Company's  incumbent  management  with a proposal
         whereby they agreed to assume management  control,  make all delinquent
         filings with the Securities and Exchange Commission, restore service by
         transfer  agent  and pay all other  expenses  required  to  enable  the
         Company to begin  trading its stock and  completing a merger or similar
         transaction.  In furtherance of the foregoing,  on November 5, 1992, J.
         Richard  Goldstein,  MD, Peter R. Stratton and Robert Kopsack  resigned
         from their  positions  as officers and  directors of the Company.  From
         June 1989 until the date of such  resignations,  Dr.  Goldstein was the
         Company's  President  and Chief  Executive  Officer,  Mr.  Stratton was
         Vice-President,  Chief Operating Officer,  Secretary and Treasurer, and
         Mr.  Kopsack was the  Company's  Vice  President.  In  resigning  their
         positions,  Dr. Goldstein and Messrs. Stratton and Kopsack acknowledged
         that  they  acceded  to their  respective  positions  and had  received
         compensation in consideration of their representations that they would,
         and their best  efforts to,  implement a business  plan for the Company
         which  would  encompass,  among other  things,  the  establishment  and
         operating of skilled nursing care facilities for patients with Acquired
         Immune Deficiency Syndrome.  Compensation received by Dr. Goldstein and
         Messrs.  Stratton  and  Kopsack  consisted  of  cash  payments,   stock
         issuances,  and the  grants  of stock  options  and/or  stock  purchase
         warrants.  As part of their  resignations,  Dr.  Goldstein  and Messrs.
         Stratton and Kopsack  each  executed  releases  whereby the Company was
         released and forever discharged from all debts, obligations, covenants,
         agreements, contracts, claims or demands in law or in equity, including
         but not limited to any stock options or stock purchase warrants granted
         or  promised to them,  which  against  the  Company,  each ever had, or
         thereafter may have for or by reason of any matter, cause or thing up


                                        6

<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)
                   Notes to Consolidated Financial Statements

Note 1   Summary of Accounting Policies - Nature of Business (continued): to and
         through  November 5, 1992. Each of Dr.  Goldstein and Messrs.  Stratton
         and Kopsack also  acknowledged  the termination and rescission of their
         respective  employment  agreements  with the Company to such persons as
         the Company should direct for the purpose of satisfying  certain of the
         Company's  obligations  to  third  parties.  In  consideration  of  the
         resignations  and  releases  executed  by  Dr.  Goldstein  and  Messrs.
         Stratton and Kopsack, Edward Mihal and each of the sixteen shareholders
         of the Company  acting in concert with Mr. Mihal executed and delivered
         reciprocal  personal  releases  to and on behalf of Dr.  Goldstein  and
         Messrs.   Stratton  and  Kopsack.  In  connection  with  the  foregoing
         resignations, Dr. Goldstein and Messrs. Stratton and Kopsack appointed,
         as an interim board of directors,  Patrick McLaren, George Fattell, and
         Edward Mihal (the "Interim Management"). It was the goal of the Interim
         Management  to find  suitable  acquisition  and/or  development  by the
         Company. On December 29, 1992, Edward Mihal resigned his position as an
         officer and a director  of the Company and Louis V. Muro was  appointed
         as an officer and  director of the Company to fill the vacancy  created
         thereby.

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


                                        7
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)
                   Notes to Consolidated Financial Statements

Note 1   Summary   of   Accounting   Policies  -   Reorganization   (continued):
         requirements  of the Business Plan.  Effective with the March 26, 1993,
         closing date of the  Acquisition  Agreement (the "Closing  Date"),  the
         Company  authorized  an  increase  in the  number of  directors  of the
         Company  from three to six.  Pursuant  thereto,  the Company  appointed
         Messrs.  Kenneth Forbes,  Nicholas  Campagna,  and Alfred J. Viscido to
         fill the vacancies  created in the size of the board.  As an inducement
         to Messrs. Forbes, Campagna and Viscido to join the board of directors,
         the Company issued 250,000 shares of its common stock,  $.001 par value
         to each of them.  The  Acquisition  Agreement  also  provided for stock
         issuances in the form of finders fees.  Pursuant  thereto,  the Company
         issued  300,000 and  1,700,000  shares of its common  stock,  $.001 par
         value,  to Joseph  Territo and Edward  Mihal,  respectively.  Effective
         March 24, 1994,  George Fattell  resigned as an officer and director of
         the Company.  Per the terms of his resignation any future shares of the
         Company's  common  stock  issued  to  Mr.  Fattell  are  to be  equally
         distributed to Louis V. Muro and Patrick McLaren. Effective January 18,
         1995,  Louis V. Muro and Patrick  McLaren  resign  their  positions  as
         officers  and   directors   of  the  Company.   In  addition  to  their
         resignations they  acknowledged that none of the requisite  performance
         levels for the release of any of the 11,900,000  escrow shares had been
         met and renounced  all rights to such shares.  In May of 1995, in order
         to take advantage of various research and development  incentives,  the
         Company and officers of the Company formed a Canadian corporation named
         3143619  Canada,   Inc.  (Tirex  Canada).   All  of  the  research  and
         development  work on the first  production model of the TCS-1 System is
         being  completed by Tirex Canada and after the completion of the model,
         they will manufacture the product.  On July 11, 1997 the Company's name
         was  changed  to The  Tirex  Corporation.  Basis of  Consolidation  The
         consolidated  financial  statements  include the  accounts of The Tirex
         Corporation  and  its  subsidiary   Tirex  Canada.   All   intercompany
         transactions and accounts have been eliminated in  consolidation.  Cash
         and Cash  Equivalents  For purposes of the  statement of cash flows all
         certificates of deposit with maturities of 90 days or less, were deemed
         to be cash and cash equivalents.  Equipment  Development Costs Deferred
         development  costs are stated at cost net of any investment tax credits
         when there is reasonable  assurance  that the credits will be realized.
         Amortization  will begin once commercial  production of the product has
         commenced and will be computed based upon the estimated  useful life of
         related products as determined from management's future sales estimates
         and will not exceed  five years from the date of the  product's  market
         launching.  Deferred  Start-Up Costs Deferred  start-up costs represent
         pre-operating expenses and will be


                                        8

<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)
                   Notes to Consolidated Financial Statements

Note 1   Summary of Accounting Policies (continued) amortized on a straight-line
         basis  over  a  three  year  period  once  commercial  operations  have
         commenced.  Equipment  Equipment  is recorded at cost less  accumulated
         depreciation.  Depreciation is provided over the estimated useful lives
         of the  assets  by using  the  straight-line  method  of  depreciation.
         Repairs and maintenance  costs are expensed as incurred while additions
         and  betterments  are  capitalized.  The cost and  related  accumulated
         depreciation of assets sold or retired are eliminated from the accounts
         and any gain or losses are reflected in earnings. Estimates Preparation
         of  financial   statements  in  conformity   with  generally   accepted
         accounting   principles  requires  management  to  make  estimates  and
         assumptions  that affect the reported amounts of assets and liabilities
         and disclosures of contingent assets and liabilities at the date of the
         financial  statements and the reported amounts of revenues and expenses
         during the  reporting  period.  Actual  results could differ from those
         estimates. Organization Costs Organization costs are being amortized on
         a  straight-line  basis over a sixty month  period.  Per Share Data The
         primary income (loss) per share was computed on the weighted  number of
         shares of common  stock  outstanding  during the period.  Common  share
         equivalents  were not  included  as their  inclusion  would  have  been
         anti-dilutive.   Income  Taxes  The  Company  has  net  operating  loss
         carryovers  of  approximately  $4,900,000  as  of  March  31,  1998269,
         expiring in the years 2004 through  2011.  However,  based upon present
         Internal Revenue regulations governing the utilization of net operating
         loss carryovers where the corporation has issued substantial additional
         stock, most of this loss carryover may not be available to the Company.
         The Company  adopted  Statement  of  Financial  Accounting  - Standards
         (SFAS) No. 109, Accounting for Income Taxes,  effective July 1993. SFAS
         No.109  requires  the  establishment  of a  deferred  tax asset for all
         deductible  temporary  differences  and operating  loss  carryforwards.
         Because of the uncertainties discussed in Note 2, however, any deferred
         tax  asset  established  for  utilization  of the  Company's  tax  loss
         carryforwards  would  correspondingly  require a valuation allowance of
         the same amount pursuant to SFAS No. 109. Accordingly,  no deferred tax
         asset is  reflected  in these  financial  statements.  The  Company has
         research and development  investment tax credits receivable from Canada
         and  Quebec   amounting  to  $639,762.   Foreign  Exchange  Assets  and
         liabilities of the Company which are denominated in foreign  currencies
         are translated at exchange rates  prevailing at the balance sheet date.
         Revenues and expenses are  translated at average rates  throughout  the
         year.


                                        9

<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)
                   Notes to Consolidated Financial Statements

Note 2   Going Concern: As shown in the accompanying  financial statements,  the
         Company incurred a net loss of $1,202,212  during the nine months ended
         March 31, 1998 and as of that date, the Company's  current  liabilities
         exceeded its current  assets by  $1,406,828  and its total  liabilities
         exceeded  its total  assets by  $799,044.  In March 1993,  the Company,
         which was still in the  development  stage,  developed  a new  Business
         Plan.  The  Company is in the  process  of  constructing  a  production
         quality machine for the cryogenic  disintegration  of used tires. As at
         March 31, 1998,  the Company is still in the  development  stage.  Fees
         generated  from  tipping  and  culling  were  insufficient  to fund the
         current  operations  of the  Company.  All of these  factors  create an
         uncertainty about the Company's ability to continue as a going concern.
         On May 15, 1998,  subsequent to the period covered by this Report,  the
         Company  completed  three  private  placements  of its  securities to a
         limited  number of accredited  investors,  which yielded  aggregate net
         proceeds of $2,047,795. Management believes that these funds, (together
         with Canadian and Quebec government and governmental  agency grants and
         loans,  in various  forms) will be sufficient  for it to accomplish the
         following:  (i) complete,  and cover all of the Company's costs related
         to, the first TCS-1  production model (the  "Production  Model");  (ii)
         renovate the Company's new manufacturing and assembly facility to bring
         it into full  compliance  with all applicable  provincial and municipal
         regulations;  and (iii) cover the Company's overhead costs and expenses
         through the end of October  1998.  However  that the period of time for
         which these funds will be  available  to cover  normal  overhead  costs
         could be  significantly  reduced  if the  Company is  required  to make
         substantial,  presently unanticipated expenditures to correct any flaws
         or defects in the design or construction of the Production  Model which
         may become apparent  during the test phase  operations.  However,  such
         funds,  together  with cash flow from  sales of TCS-1  Systems  and the
         possibility of production  financing for the construction of subsequent
         TCS-1  Systems are not expected to be  sufficient  to provide the funds
         necessary  for  the  Company's  operations,  capital  expenditures  and
         anticipated  growth during the next twelve months. It will therefore be
         necessary  for the  Company to satisfy its  financial  needs by raising
         additional  equity  capital.  The ability of the Company to continue as
         going  concern is  dependent  on the  success  of its  ability to raise
         sufficient  financing to implement  its business  plan.  The  financial
         statements  do not include any  adjustments  that might be necessary if
         the Company is unable to continue as a going concern.


                                       10
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company)
                   Notes to Consolidated Financial Statements


Note 3   Notes  Payable:  The Company has available a line of credit which bears
         interest  at prime plus 3%.  Under this line of credit the  Company may
         borrow a maximum of 80% of their receivable balance from FORD-Q and the
         related  Rev  Canada  receivable.  At March 31,  1998,  $1,504,689  was
         outstanding  against this line of credit. The note is collateralized by
         the  receivable  from FORD-Q.  The  Canadian  prime rate of interest at
         March 31, 1998 was 6.5%. This line was paid in full in July,  1997. The
         Company also had a note payable in the amount of $24,000 outstanding as
         of March 31, 1998. The repayment terms were being negotiated as of that
         time.

Note 4   Loan Payable

                                                      June 30,
                          March 31,           ------------------------
      Creditor              1998                 1997           1996
      --------              ----              ---------      ---------

   FORD-Q                 $277,917             $178,806          --

   IDEA-SME                201,221               21,739          --

         TOTAL            $479,138             $200,545          --

         On April 11, 1996 the Company  entered into a loan  agreement  with the
         Federal Office of Regional  Development - Quebec (FORD-Q) which will be
         repayable  annually over a period of forty-eight  months  following the
         completion  of the  project.  The loan is being  contributed  under the
         Industrial  Recovery  Program  for  South-West  Montreal  and  will  be
         calculated  as the  lesser of  $362,319  or 20% of the  eligible  costs
         incurred for the  construction  of a commercial  scale prototype of the
         cryogenic scrap tire disintegration system. The loan is non-interesting
         bearing and unsecured. The Company received $178,806 under this program
         in fiscal  1997.  On April 30, 1997 the Company  received a  refundable
         contribution awarded under the terms of the Program for the Development
         of Quebec's SME'S (IDEA-SME).  The contribution is repayable in amounts
         equal to 1% of the annual gross sales in Spain and  Portugal  occurring
         after June 1, 1997.  $14,493 was received  under this program in fiscal
         1997. On March 26, 1997, the Company received a refundable contribution
         for the preparation of market  development  studies for India under the
         Quebec SME  development  assistance  program  (IDEA-SME).  The  maximum
         contribution  is $14,493 based on 50% of the approved  eligible  costs.
         The  contribution  is  repayable  in amounts  equal to 1% of the annual
         gross


                                       11
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company
                    Notes to Consolidated Financial Statement

Note 4   Loan Payable  (Continued)  sales in India occurring after June 1, 1997.
         As of June 30,  1997,  the  Company  had  received  $7,246  under  this
         program.  On June 6, 1997, the Company  entered into an agreement under
         the Quebec SME development  assistance  program (IDEA-SME) to receive a
         refundable  contribution  for  market  development  activities  for the
         Iberian Peninsula.  The maximum  contribution is $68,841 , based on 50%
         of approved  eligible costs.  The  contribution is repayable in amounts
         equal  to 1.5% of the  annual  gross  sales in  Spain  and in  Portugal
         occurring  after June 1, 1998 less amounts  repaid  through the amounts
         noted in the April 30, 1997  agreement.  During the nine  months  ended
         March 31, 1998, the Company  received  $278,593 (US) in loans under the
         foregoing programs.

Note 5   Related  Party  Transactions:  The Company has entered into  employment
         agreements  with all of its  executive  officers  and with its in-house
         corporate counsel. In addition to the employment services, the officers
         agree not to compete with the Company for the two year period following
         the  termination  of  employment.  With  respect to two such  executive
         officers and in-house  counsel,  if they are terminated  other than for
         cause or for "good reason",  the terminated  officer will be paid twice
         the amount of their base salary for twelve months.  Included in accrued
         expenses  at March 31,  1998 is  $153,191  of salary  to  officers  and
         counsel  which the company  subsequently  issued  common stock for. The
         Company  advanced  funds to its officers and directors  during the nine
         months ended March 31, 1998 in the amount of $387,648. All such amounts
         have been repaid during or subsequent to the  nine-month  period ending
         March 31, 1998.  Deposits  payable  include an amount of $638,000 which
         are payable to companies which are owned by a director of the Company.

Note 6   Government  Assistance:  The Company has entered into an agreement with
         Recyc-Quebec for financial  assistance  covering 50% of certain defined
         costs  incurred in developing the cryogenic  scrap tire  disintegration
         system to a maximum of $54,348.  $36,500 has been  received  during the
         year and this amount has reduced the equipment development costs on the
         balance sheet.


                                       12
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company
                    Notes to Consolidated Financial Statement

Note 7   Commitments:  The Company has entered into a property  lease  agreement
         for its corporate  headquarters  located at 740 St. Maurice,  Montreal,
         Canada, with a term from July 1, 1997 to June 30, 2000. The Company has
         an option to renew this lease for an  additional  three years.  Minimum
         rentals in each of the next three years is as follows:

               Year Ending
                 June 30
               -----------
                  1998                     $  18,967
                  1999                        18,967
                  2000                        18,967
                                           ---------
                                           $  56,901

         The  Company  has  entered  into a  property  lease  agreement  for its
         assembly plant located at 3828 St. Patrick,  Montreal,  Canada,  with a
         term from March 1, 1998 to April 30, 2003.  Minimum  rentals in each of
         the next three years is as follows:

               Year Ending
                April 30
               -----------
                  1999                     $  90,926
                  2000                       174,842
                  2001                       216,800
                                           ---------
                                           $ 482,568

Note 8   Contingency: The Company is a defendant in an action which commenced on
         June 18, 1997 entitled Great American  Commercial Funding Corp. vs. The
         Tirex Corporation.  The Company agreed to pay the plaintiff a placement
         fee of $250,000 and to grant them an option to acquire  400,000  shares
         of the company's common stock at a price of $.01 per share in the event
         that the plaintiff succeeded in obtaining  financing  acceptable to the
         Company. The amount and terms of the financing are not mentioned in the
         documents.  The  plaintiff  recommended  an equipment  lease  financing
         company who in turned introduced the Company to one of their customers.
         The customer ultimately entered into a lease financing arrangement with
         The  Tirex  Corporation.  Because  the  advances  made  to the  Company
         pursuant to that lease  financing  arrangement  did not  constitute the
         type of financing originally contemplated,  the Company believes it has
         no  financial  obligation  to  the  plaintiff.   The  Company  and  its
         litigation counsel believe


                                       13
<PAGE>

                      THE TIREX CORPORATION AND SUBSIDIARY
                         (A Developmental Stage Company
                    Notes to Consolidated Financial Statement

Note 8   Contingency  (Continues) that the plaintiffs complaint is without merit
         and that the Company will prevail in this litigation.

Note 9   Subsequent Event: Subsequent to March 31, 1998, the Company received an
         additional  $35,000  (approximate,  in US  dollars)  under  the  FORD-Q
         Industrial   Recovery   Program   and  $10,165   (approximate,   in  US
         dollarsunder the Program for the Development of Quebec SME'S.

         Subsequent  to March 31,  1998,  the  Company  received  an  additional
         $1,531,430  from sales of its  securities in three  private  placements
         effected  by the Company in  accordance  with the  requirements  of the
         exemption from the registration provisions of the Securities Act, which
         is  available  under Rule 506 of  Regulation  D, as  promulgated  under
         Section 4(2) thereof.


                                       14
<PAGE>

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

      The  following is  management's  discussion  and  analysis of  significant
factors  which have  affected the Company's  financial  position and  operations
during the  three-month  and nine  month  periods  ended  March 31,  1998.  This
discussion 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.   Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking statements,  which speak only as of the date hereof. Readers are
also urged to carefully review and consider the various disclosures elsewhere in
this Report which discuss factors which affect the Company's business.

      The Company is in the very early stages of the  business of  manufacturing
its patented cryogenic scrap tire recycling equipment (the "TCS-1 System").  The
Initial design and development  work on the first  production model of the TCS-1
System  (for  purposes  of this  discussion,  the  "Production  Model") has been
brought to approximately 90% completion,  and construction was begun in February
of 1997. In January 1997, the fully-automated front-end tire preparation module,
and in April 1998, the cryogenic tire freezing section,  of the Production Model
were completed, sold, and delivered to the purchaser.

      During  the  five-month  period,  which  commenced  on January 8, 1998 and
extended  beyond the period  covered by this  Report to May 15,  1998,  in three
private placements of the securities of the Company (the "Private  Placements"),
the Company  raised  capital,  in an amount which  management  believes  will be
sufficient to cover all costs expected to be required to complete constructions,
and testing operations, of the Production Model (see, the discussion below under
the  subcaption  "Liquidity  and  Capital  Resources").  As at the date  hereof,
Management is unable to predict with certainty the amount of time or money which
will be required to complete the final  assembly and testing,  or "debugging" of
the Production Model necessary to bring it into conformance with its anticipated
performance specifications. However, a test phase of an estimated two months has
been scheduled and is expected to begin on or about June 15, 1998. If after such
testing  operations  are complete,  the Production  Model meets all  anticipated
performance specifications, Management intends to begin manufacturing subsequent
systems immediately thereafter.

Liquidity and Capital Resources

      On May 15, 1998,  subsequent  to the period  covered by this  Report,  the
Company completed three private placements of its securities to a limited number
of accredited  investors,  which yielded  aggregate net proceeds of  $2,063,795.
Management  believes  that  these  funds,  (together  with  Canadian  and Quebec
government and  governmental  agency grants and loans, in various forms) will be
sufficient for it to accomplish the following:


                                       15
<PAGE>

(i) complete,  and cover all of the Company's  costs related to, the  Production
Model;  (ii) renovate the Company's new  manufacturing  and assembly facility to
bring it into full  compliance  with all  applicable  provincial  and  municipal
regulations;  and (iii) cover the Company's  overhead costs and expenses through
the end of October  1998. It should be noted however that the period of time for
which these funds will be  available  to cover  normal  overhead  costs could be
significantly reduced if the Company is required to make substantial,  presently
unanticipated  expenditures  to  correct  any flaws or  defects in the design or
construction  of the Production  Model which may become apparent during the test
phase operations.

      Management  believes that after the test phase of the Production  Model is
satisfactorily  completed,  the  Company  will  be  able  to  obtain  sufficient
"production  financing"  to cover the  costs of  constructing  subsequent  TCS-1
Systems.  This type of financing will allow the Company to borrow funds to cover
constructions  costs  and to use the  System,  which  is being  constructed,  as
collateral  for such  borrowings.  However,  the  Company's  ability  to  obtain
construction financing will be dependent upon the Production Model's meeting its
anticipated  performance  specifications  and, possibly,  other factors as well.
Because  assembly of the Production Model has not yet been completed and testing
operations have not yet commenced, management is unable at this time to give any
assurances that such performance  specifications will be met, on a timely basis,
without  undue  economic  costs,  if at all, or if the  Company  will be able to
obtain construction financing on beneficial terms, if at all.

      Management does not believe that,  even with the possible  availability of
production financing, such financing together with cash flow from sales of TCS-1
Systems will be  sufficient  to provide the funds  necessary  for the  Company's
operations,  capital  expenditures and anticipated growth during the next twelve
months.  It will therefore be necessary for the Company to satisfy its financial
needs by raising  additional  equity  capital.  In an effort to put such funding
into place,  the Company has entered into a non-binding  letter of intent with a
potential  underwriter  for a public  offering of its securities in an amount of
not  less  than  $8,000,000.  Management  is not  able at this  time to give any
assurances that the said non-binding  letter of intent will ultimately result in
a public  offering or that the Company will be successful  in obtaining  another
underwriter for such enterprise.  In all events,  no public offering is expected
to be effected during the current fiscal year.  Management  believes that If the
Company is not able to complete a public  offering of its securities  within the
next twelve  months,  or find other  sources of outside  funding,  the Company's
financial  position and its prospects for  beginning and  developing  profitable
business operations could be materially adversely affected.

      Prior to the recently  completed Private  Placements  described above, the
activities  of the Company  since its  inception  in 1987 have been  financed by
sources other than  operations.  Such financing was principally  provided by the
sale of securities in private transactions, as follows:


                                       16
<PAGE>

                                                     Proceeds From
                   Year Ended                          Sales of
                   June 30th                          Securities
                   ---------                          ----------

                     1998*                            $2,063,795*
                     1997                                345,391
                     1996                                 80,872
                     1995                                 22,316
                     1994                                237,430
                     1993                                 76,055
                     1990                                 80,812
                     1989                                 77,000


----------
* Includes $532,365 in proceeds from Private Placements received between January
1, 1998 and March 31, 1998

      As at March 31,  1998,  the  Company  had total  assets of  $2,293,333  as
compared  to  $1,555,620  at June 30,  1997  reflecting  an increase of $737,713
during the first nine-months of the year ending June 30, 1998 and an increase of
$1,713,697  in total  assets  since March 31, 1997.  Management  attributes  the
increases  in total  assets  during  the  nine  months  ended  March  31,  1998,
principally to (i) accrued design and  development  costs of the TCS-1 System of
$135,577; (ii) an increase in cash in the amount of $150,206;  (iii) an increase
in research and  development  tax credit  receivables in the amount of $369,844;
and (iv) deferred start up costs of $21,951.

      As at March 31, 1998,  the Company had total  liabilities of $3,092,377 as
compared to $2,601,978 at June 30, 1997 reflecting an increase in liabilities of
$1,397,627  during  the first  nine-months  of Fiscal  1998 and an  increase  of
$2,801,978 in total liabilities since March 31, 1997 when total liabilities were
$490,399.  Management attributes such increases in total liabilities since March
31, 1997, primarily to the recording of liabilities associated with the accruing
of various expenses,  including (i) 540,839 in officers' salaries accrued during
the nine  months  ended March 31,  1998,  $153,191 of which will be repaid as of
June 30, 1998 by way of the issuance of shares of Common Stock,  and $387,648 of
which  will be repaid in cash as at the end of the  current  fiscal  year;  (ii)
increase bank indebtedness in the amount of $504,869; (iii) $433,342 in advances
from the Federal Office of Regional Development - Quebec ("FORDQ") pursuant to a
loan contributed under the Industrial Recovery Program for South-West  Montreal;
(iv) $473,500 in refundable  deposits  and/or  prepayments  on TCS-1 Systems for
which  orders  have  been  taken,  and (v) the  issuance  in one of the  Private
Placements of 10% Convertible Subordinated debentures in the aggregate principal
amount of $445,000.

      Reflecting the foregoing,  as at March 31, 1998, the Company had a working
capital deficit (current assets minus current  liabilities) of ($1,406,828).  As
at March 31, 1997, the Company's  working  capital deficit was ($246,031) and as
at June 30, 1997, the end of the last fiscal year, the working  capital  deficit
was ($1,013,559).


                                       17
<PAGE>

      The  Company  currently  has limited  material  assets,  negative  working
capital,  and a negative net worth. The success of its tire recycling  equipment
manufacturing  business  and its ability to continue as a going  concern will be
dependent,   initially,   upon  the  Production   Model's  meeting   anticipated
performance  specifications  on a timely and economical  basis and the Company's
ability  to  obtain  adequate  financing  to  commence  profitable,   commercial
manufacturing  and sales  activities  following the test phase of the Production
Model.

Results of Operations

      As noted  above,  the Company is presently in the very early stages of the
business of  manufacturing  and selling its patented  cryogenic  tire  recycling
equipment,  referred  to herein as the  "TCS-1  System".  The  Company  recently
completed the initial  design and  development  stage of the TCS-1 System and it
intends to begin manufacturing on a commercial basis following the test phase of
the  Production  Model if such test phase  proves that the  Production  Model is
capable  of  meet  its  anticipated  performance  specifications.   The  Company
generated $415,000 in revenues in January of 1998 from the sale of the front-end
module of the Production  Model of the TCS-1 System.  However,  unless and until
the  Company  successfully  develops  and  commences   manufacturing  and  sales
operations on a full-scale commerical level, it will continue to generate no, or
only limited,  revenues from operations.  Except for the foregoing,  the Company
has  never  engaged  in any  significant  business  activities.  There  were  no
significant revenues from during the nine-month period ended March 31, 1997.

      The  financial  statements  which  are  included  in this  Report  reflect
increases in total general and  administrative  expenses,  which  increased from
$520,433 for the  nine-month  period ended March 31, 1997 to $1,369,130  for the
nine-month  period  ended  March  31,  1998.  The  great  bulk of such  increase
reflected  the  accrual,  as  expenditures,  of  $540,839  of  salaries  for the
Company's  executive officers and corporate  counsel.  Other expenses during the
nine-month  period ended March 31, 1998 were made  principally  for overhead and
operating costs.  Management believes that the amounts accrued in respect of the
shares issued to compensate the executive officers and corporate counsel reflect
the fair value of the  services  rendered  and not the value of the stock at the
time it was  issued.  In  respect of the value of the  shares  received  by such
persons in lieu of cash compensation, management believes that it was, as of the
dates when such shares were issued,  impossible to determine the actual  current
or potential  value, if any, of the such shares in light of the fact that, as of
such dates,  the shares had no or only very minimal  actual market value and the
actual potential market value of such shares,  if any, at such dates was, and as
at the date hereof remains,  highly  contingent  upon, and subject to, extremely
high risks  including  but not limited to the  following  factors:  (i) the very
early stage of development of the Company's business; (ii) the Company's lack of
sufficient  funds  to  implement  its  business  plan  and  the  absence  of any
commitments from potential investors to provide such funds; (iii) the absence of
a reliable,  stable,  or substantial  trading  market for such shares;  (iv) the
restrictions  on transfer  arising out of the  absence of  registration  of such
shares and, in some instances, to their being subject to certain stock


                                       18
<PAGE>

restriction agreements; and (v) the uncertainty respecting the Company's ability
to continue as a going concern.

      From  inception  (July 15, 1987) through  March 31, 1998,  the Company has
incurred  a  cumulative  net  loss  of  $4,963,490.  Approximately  21% of  such
cumulative  loss was incurred,  prior to the inception of the Company's  present
business plan, in connection  with the Company's  discontinued  proposed  health
care business and was due primarily to the  expensing of costs  associated  with
the  unsuccessful  attempt to establish such health care  business.  The Company
never commenced its proposed health care operations and therefore,  generated no
revenues therefrom.


                                       19
<PAGE>

                                     PART II

                                OTHER INFORMATION


Item 2. Changes in Securities

Recent Sales of Unregistered Securities

      During  the fiscal  quarter  ended  March 31,  1997,  Registrant  made the
following sales of its common stock, $.001 par value, per share ("Common Stock")
without  registration  under  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"). The following sets forth  information  respecting the dates,
purchasers,  and  consideration  involved  in  such  sales  and  the  bases  for
Registrant's  claim  that all  such  sales  were  exempt  from the  registration
provisions of Section 5 of the Securities Act.

1.  Securities Issued As Compensation Under Written Consulting Agreement

      On January 28, 1998  Registrant  authorized the issuance of 600,000 shares
of Common  Stock to Louis V.  Sanzaro  pursuant  to the terms of his  consulting
agreement (the "L.  Sanzaro  Consulting  Agreement"),  executed at such date and
deemed by the parties to be  effective  as of January 1, 1997.  The  retroactive
effectiveness  of  the  L.  Sanzaro  Consulting  Agreement  was  agreed  to  and
acknowledged  by the parties in recognition  of Mr.  Sanzaro's  having  provided
valuable  consulting  services to Registrant on a continuous basis since October
of 1995 without  receiving any compensation,  but on the  understanding  that he
would be fairly and equitably  compensated for such services beginning not later
than  January 1, 1997.  Pursuant to the L.  Sanzaro  Consulting  Agreement,  Mr.
Sanzaro  has  rendered,   and/or  will  render,  advice,  opinions,   "hands-on"
assistance,  and, in some cases,  effectuation of, the following: (i) developing
pro-forma  financial  projections  respecting  the  operations  of a TCS-1 Plant
("Plant") and marketing of rubber crumb  generated  thereby;  (ii) designing and
developing  a  complete  maintenance  program  for the  TCS-1  System  to insure
continuous  operation  in  compliance  with  specifications;   (iii)  developing
specialized  accounting  software  to be used  with all  TCS-1  Systems  for the
purpose on monitoring all financial aspects of operations and for calculation of
sales-based  royalties due and payable to the  Corporation;  (iv)  designing and
developing  logistics  respecting  Plant  configuration  necessary  for safe and
efficient  operations-flow and providing technical and mechanical adjustments to
plant set-ups  throughout  the United States during the Engagement  Period;  (v)
testing  new  equipment  at  construction  and  assembly  site,  adjusting,  and
designing  modifications  to new  equipment  as required by test  results;  (vi)
assisting Registrant with respect to TCS-1 System site-planning and installation
at operators' sites  throughout the United States during the Engagement  Period,
including  providing  personnel  to  "trouble-shoot"  and or  adjust  all  newly
installed  equipment,  as required during the Engagement Period;  (vii) advising
Registrant's  management of pertinent  changes and  developments  respecting new
emerging  technologies  in tire recycling  industry;  and (viii)  developing and
establishing  a training  program for the  instruction  of  operators  and their
personnel with respect to all aspects of Plant operations.


                                       20
<PAGE>

Total  compensation  under the L. Sanzaro  Consulting  Agreement consists of the
said  1,000,000  shares of Common Stock,  600,000 of which have been issued,  as
described above,  and the balance of 400,000 of which were issued  subsequent to
March 31, 1998.

      Registrant  claims the transactions  hereinabove  described,  to have been
exempt from the registration  requirements of Section 5 of the Securities Act by
reason of Section 4(2) thereof, for the reasons described below.

2.  Issuances Made Pursuant to Stock Bonuses
      Granted Under Written Employment Agreements

      On January 28, 1998, Registrant authorized the issuance of an aggregate of
4,000,000 shares to two of its executive officers and to its corporate attorney,
at a price of $.001 per share, as follows:  Terence C. Byrne - 2,000,000,  Louis
V. Muro - 1,000,000,  and Frances Katz Levine - 1,000,000.  Such sales were made
pursuant to the  exercise of options  granted to such  persons and  subsequently
amended, as follows:  On September 3, 1997,  Registrant granted to the foregoing
individuals  options to purchase the respective number of shares set forth above
at an exercise  price equal to the full market price of the Common Stock at such
date, as follows:  Terence C. Byrne - 2,000,000,  Louis V. Muro - 1,000,000, and
Frances Katz Levine - 1,000,000 (the "1997 Options").  Such bonuses were granted
for the  fiscal  year  ended  June  30,  1997  pursuant  to the  terms  of their
respective   employment   agreements   with   Registrant,   which   provide  for
discretionary bonuses for each year (or portion thereof) during the term of such
agreements,  with the actual  amount of any such bonus to be  determined  in the
sole  discretion  of the Board of  Directors  based upon its  evaluation  of the
Executive's  performance  during  such year.  On January  13,  1998,  Registrant
granted to each of these persons a bonus (the "1998 Bonus"),  under the terms of
their respective  employment  agreements,  for the fiscal year which will end on
June 30, 1998 (the "1998 Bonuses").  The 1998 Bonuses consisted of amendments to
the terms of the 1997  Options,  reducing  the option  exercise  price $.001 per
share.  Both  the  1997  and the  1998  bonuses  were  unanimously  approved  by
Registrant's  full six member Board of Directors,  which  includes Mr. Byrne and
Mr. Muro.

      Registrant  claims the transactions  hereinabove  described,  to have been
exempt from the registration  requirements of Section 5 of the Securities Act by
reason of Section 4(2) thereof, for the reasons described below.

Basis for Section 4(2) Exemption Claimed

      With respect to all sales and other issuances of securities as hereinabove
described,  which  Registrant  claims to have been exempt from the  registration
requirements  of  Section 5 of the  Securities  Act by reason  of  Section  4(2)
thereof :

(i)   Registrant did not engage in general  advertising or general  solicitation
      and paid no commission or similar  remuneration,  directly or  indirectly,
      with respect to such transactions.


                                       21
<PAGE>

(ii)  The persons who acquired these securities were current or former executive
      officers and  directors,  or  consultants,  all of whom are  sophisticated
      investors;  Such persons had continuing access to all relevant information
      concerning  the  Registrant  and/or have such  knowledge and experience in
      financial  and business  matters that they are capable of  evaluating  the
      merits and risks of such investment and are able to bear the economic risk
      thereof.

(iii) The persons who acquired  these  securities  advised  Registrant  that the
      Shares were purchased for investment and without a view to their resale or
      distribution  unless  subsequently  registered and acknowledged  that they
      were aware of the  restrictions on resale of the Shares absent  subsequent
      registration  and  that an  appropriate  legend  would  be  placed  on the
      certificates   evidencing  the  Shares   reciting  the  absence  of  their
      registration under the Securities Act and referring to the restrictions on
      their transferability and resale.

3. Sales Made Pursuant to Exemption From Registration Available Under Rule 506
   of the Securities Act.

      On January 8, 1998,  Registrant authorized the issuance of an aggregate of
3,305,000  shares of its Common Stock (the "Tirex  Merger  Share" to  thirty-six
persons (the "RPM  Shareholders")  in a  share-for-share  exchange for 3,305,000
Shares of the  Common  Stock of RPM  Incorporated,  a  privately  held  Delaware
Corporation  ("RPM").  Such  exchange was effected  under the terms of a certain
Plan  and  Agreement  of  Merger  (the  "Merger  Agreement")  by and  among  the
Registrant,  RPM, and Tirex Acquisition Corp., a wholly-owned  subsidiary of the
Registrant  ("TAC").  Pursuant  to the terms of the  Merger  Agreement,  RPM was
merged with and into TAC (the  "Merger")  with TAC  remaining  as the  surviving
entity after the Merger.

      The Merger was effected after an initial closing upon the sale of 31 units
of the RPM's securities (the "RPM Units") in a private placement in which 85 RPM
Units were offered at a price of $10,300 per RPM Unit.  Each RPM Unit  consisted
of one 10% Convertible Subordinated Debenture in the principal amount of $10,000
(the "RPM  Debentures")  and 10,000 shares of the common stock of RPM, $.001 par
value ("RPM Common Stock"). In effectuation of the Merger:

      (i)   Registrant   exchanged   one  Merger  Share  for  every  issued  and
            outstanding  share of the common stock of RPM, $.001 par value,  per
            share  ("RPM  Common  Stock")  and  assumed  RPM's  liabilities  and
            obligations  under the  outstanding  RPM Debentures in the aggregate
            principal amount of $305,000;

      (ii)  The Initial RPM Closing was held upon completion of the sale of 30.5
            RPM Units,  which yielded  gross  proceeds in the amount of $314,150
            and  all  of  such  proceeds,  net  of  the  placement  agent's  10%
            commission and


                                       22
<PAGE>

            certain other  offering  expenses in the aggregate  amount of $6,650
            (yielding  net proceeds in the amount of  $276,085)  remained in RPM
            and inured to the benefit of  Registrant  upon  effectuation  of the
            Merger.

      3,000,000 shares (the "Pre-Private Placement RPM Shares") of the 3,305,000
shares of RPM common  stock (the "RPM Merger  Shares")  for which  Tirex  Merger
Shares were  exchanged,  constituted all of the shares of RPM common stock which
were  issued  and  outstanding  prior  to the  commencement  of the RPM  Private
Placement.  These shares were  exchanged  for  3,000,000  Tirex Merger Shares in
consideration of RPM's waiver of certain consulting fees in the amount of $4,000
per month, accrued prior to, and accruable subsequent to, the Merger pursuant to
the terms of a certain five-year consulting agreement, dated June 9, 1997, among
RPM, the  Company,  and two  individuals  who were,  prior to the Merger,  RPM's
principal  shareholders,  officers, and directors.  None of the RPM Shareholders
had any  affiliation  of any kind with  Registrant  prior to or after the Merger
(except  insofar as they have become  shareholders  of Registrant as a result of
the said Merger).

      Based upon information provided by the recipients (the "RPM Shareholders")
of the above described 3,305,000 Tirex Merger Shares, advice from the principals
of RPM, and the opinion of RPM's counsel:

      (i)   all 3,000,000 of the Pre-Private  Placement RPM Shares were acquired
            by the RPM Shareholders prior to March 31, 1997;

      (ii)  all of the RPM Shareholders were "accredited investors" as that term
            is defined in Rule 501(a) of the Securities Act;

      (iii) all 3,305,000 of the RPM Merger Shares  (including  the  Pre-Private
            Placement  RPM  Shares  as well as the  RPM  Shares  sold in the RPM
            Private  Placement) were acquired in transactions  which were exempt
            from the  registration  requirements  of Section 5 of the Securities
            Act available  under Rule 506 of  Regulation D thereof,  which would
            not be  integrated,  as such term is defined  in  Section  502(a) of
            Regulation D under the Securities Act, with the  distribution of the
            Tirex  Merger  Shares  to  the  RPM  Shareholders,  so as to  render
            unavailable,   for  such   distribution,   the  exemption  from  the
            registration  provisions  of the  Securities  Act under  Rule 506 of
            Regulation D.

      RPM filed a Form D with the Commission  with respect to the offer and sale
of the RPM Units and Registrant  filed a Form D with the Commission with respect
to the distribution of the Tirex Merger Shares to the RPM Shareholders.

      After the Merger  until May 11,  1998,  Registrant  continued to offer and
sell the balance of the securities  which had originally  been offered by RPM in
the Private  Placement,  at the same per Unit Price of $10,300.  With respect to
RPM  Units  sold  after  the  Merger,  the  exchange  of RPM  common  stock  for
Registrant's common stock and Registrant's assumption of the RPM debentures were
deemed to have occurred


                                       23
<PAGE>

concurrently with the RPM Merger. On January 23, 1998 Registrant closed on sales
of an additional 8.5 RPM Units,  and issued an aggregate of 85,000 shares of its
Common Stock and eight 10%, convertible subordinated debentures in the aggregate
principal amount of $85,000; on February 19, 1998, Registrant closed on sales of
an additional 5.5 Units,  and issued an aggregate of 55,000 shares of its Common
Stock  and  six  10%,  convertible  subordinated  debentures  in  the  aggregate
principal amount of $55,000.

      The  offers  and  sales of the RPM Units  were  made  only to  "accredited
investors" as that term is defined in Rule 501(a) of the Securities Act of 1933,
as  amended  (the  "Securities  Act")  in  a  private  placement  (the  "Private
Placement"), through a placement agent, which is a broker dealer registered with
the National  Association  of  Securities  Dealers,  pursuant to a  Confidential
Private  Offering  Memorandum,  dated November 28, 1997 (the "Private  Placement
Memorandum) in a manner  consistent with the  requirements of the exemption from
the registration provisions of the Securities Act, which is available under Rule
506 of Regulation D, as promulgated under Section 4(2) thereof.  These sales are
claimed to have been exempt from registration  under the Securities Act pursuant
to Rule 506 as more fully described below.

Basis for Rule 506 Exemption Claimed

      With respect to all sales and other issuances of securities as hereinabove
described and claimed to have been exempt from the registration  requirements of
Section 5 of the Securities Act pursuant to Rule 506 thereof:

      (a)  Registrant   did  not  engage  in  general   advertising  or  general
solicitation  and  paid no  commission  or  similar  remuneration,  directly  or
indirectly, with respect to such transaction.

      (b) Registrant made reasonably  inquiry to determine the investment intent
of the  purchasers  (i.e.,  to  determine  that such Shares were  purchased  for
investment  and  without  a view to  their  resale  and  informed  them  that an
appropriate legend would be placed on certificates or documents  evidencing such
securities  reciting  the  absence  of  their  registration  under  the  Act and
referring to the restrictions on their transferability and resale).

      (c) The  Purchasers  have been  provided  with,  or have  access  to,  all
information  requested  by them  and with  what  Registrant  believes  to be all
relevant information concerning the Registrant, and Registrant believes such the
Purchasers are knowledgeable with respect to the affairs of Registrant.

      (d) The Company has good reason to believe  that each of such  persons is,
and  each  of  the  Purchasers  has  represented  himself  or  herself  to be an
accredited  investor,  as that term is defined in Rule 501(a) of the  Securities
Act, and that such person has such  knowledge  and  experience  in financial and
business matters that he or she is capable of evaluating the merits and risks of
such investments and is able to bear the economic risk thereof.


                                       24
<PAGE>

      (e) Registrant  made no sales of  unregistered  securities  during the six
month  preceding  the sales  made  pursuant  to Rule 506  except  for sales made
pursuant  to Employee  Benefit  Plans as that term is defined in Rule 405 of the
Securities Act.

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

      (a) Exhibits filed herewith:

      10(a) Consulting  Agreement,  dated January 28, 1998, effective of January
            1, 1997 between Registrant and Louis Sanzaro

      (b) Current Reports on Forms 8-K filed during quarter ended March 31, 1998

      Current  Report  on Form 8-K,  dated  February  3,  1998,  filed  with the
      Commission on February 17, 1998, reporting: Item 5. "Other Events".


                                       25
<PAGE>

                                   SIGNATURES

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

                                             THE TIREX CORPORATION

                                             By /s/ Terence C. Byrne
                                               ------------------------------
                                               Terence C. Byrne, President
                                                   and Treasurer

                                             THE TIREX CORPORATION

Date: May 18, 1998                           By /s/ Terence C. Byrne
                                               ------------------------------
                                               Terence C. Byrne, Chief Executive
                                                 and Chief Financial Officer


                                       26