UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                     ANNUAL REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the year ended January 31, 2005

                        Commission File Number 001-14503

                           DECTRON INTERNATIONALE INC.
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)





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                Quebec, Canada                                                  N/A
                --------------
----------------------------------------------------- --------------------------------------------------------
                                                   
State of Incorporation or other Jurisdiction of                (I.R.S. Employer Identification No.)
        Incorporation or Organization)
----------------------------------------------------- --------------------------------------------------------


----------------------------------------------------- --------------------------------------------------------
4300 Poirier Blvd., Montreal, Quebec, Canada                                  H4R 2C5
---------------------------------------------                                 -------
----------------------------------------------------- --------------------------------------------------------
   (Address of principal executive offices)                                 (Zip Code)
----------------------------------------------------- --------------------------------------------------------



                                 (514) 334-9609
                                 --------------
              (Registrant's telephone number, including area code)

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                           Common Stock, No Par Value


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X | No | |

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes  X       No 
    ---         ---

         The issuer's revenues for the most recent fiscal year were $40,910,601

         The aggregate market value of the voting stock held by non-affiliates
of the registrant based upon the closing price on July 31, 2004 of $3.50 was
approximately $4,279,278.

As of April 29, 2005, there were 3,155,000 shares of Common Stock, no par value
per share, outstanding.

Documents incorporated by reference: None.





DECTRON INTERNATIONALE, INC.
2005 ANNUAL REPORT ON FORM 10-K


TABLE OF CONTENTS




                                                                                                               Page

                                                                                                            
 PART I                                                                                                           1
       Item 1.  Business                                                                                          1
       Item 2.  Properties                                                                                        7
       Item 3.  Legal Proceedings                                                                                 7
       Item 4.  Submission of Matters to a Vote of Security Holders                                               8
              
 PART II

       Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
                of Equity Securities                                                                              8
       Item 6.  Selected Financial Data                                                                          10
       Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations            11
       Item 7A. Quantitative And Qualitative Disclosures About Market Risk                                       17
       Item 8.  Financial Statements And Supplementary Data                                                      18
       Item 9.  Changes In And Disagreements With Accountants On Accounting And Financial Disclosure             18
       Item 9A. Controls And Procedures                                                                          18
       Item 9B. Other Information                                                                                19

 PART III
       Item 10.  Directors and Executive Officers of the Registrant                                              20
       Item 11.  Executive Compensation                                                                          23
       Item 12.  Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder       
                 Matters                                                                                         27
       Item 13.  Certain Relationships And Related Transactions                                                  28
       Item 14.  Principal Accounting Fees and Services                                                          30
               
 PART IV
       Item 15.  Exhibits, Financial Statement Schedules                                                         30


 Signatures






                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


THE FEDERAL SECURITIES LAWS PROVIDE FOR A SAFE HARBOR FOR CERTAIN
FORWARD-LOOKING STATEMENTS. THIS SAFE HARBOR PROTECTS US FROM LIABILITY IN A
PRIVATE ACTION ARISING UNDER EITHER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, FOR FORWARD-LOOKING STATEMENTS THAT ARE
IDENTIFIED AS SUCH AND ACCOMPANIED BY MEANINGFUL CAUTIONARY STATEMENTS OR ARE
IMMATERIAL.

WHEN USED IN THIS FORM 10-K, THE WORDS OR PHRASES "ESTIMATE", "INTENDS", "MAY",
"EVALUATING" OR SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY "FORWARD LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, AS AMENDED. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, FUTURE EARNINGS AND OTHER
MEASUREMENTS OF FINANCIAL PERFORMANCE, FUTURE CASH FLOW AND USES OF CASH, THE
EFFECT OF ECONOMIC DOWNTURNS OR GROWTH IN PARTICULAR REGIONS, THE EFFECT OF
CHANGES IN THE LEVEL OF ACTIVITY IN PARTICULAR INDUSTRIES OR MARKETS, PRODUCT
DEVELOPMENTS AND NEW BUSINESS OPPORTUNITIES, RESTRUCTURING COSTS AND SAVINGS,
THE OUTCOME OF CONTINGENCIES, FUTURE LEVELS OF INDEBTEDNESS AND CAPITAL
SPENDING, THE SUCCESSFUL IDENTIFICATION OF STRATEGIC BUSINESS PARTNERS, THE
SUCCESSFUL EXECUTION OF AGREEMENTS WITH STRATEGIC BUSINESS PARTNERS REQUIRED FOR
THE IMPLEMENTATION OF BUSINESS PLANS AND THE SUCCESSFUL IDENTIFICATION,
ACQUISITION AND INTEGRATION OF ADDITIONAL TARGET BUSINESSES. SUCH FACTORS COULD
AFFECT OUR COMPANY'S, INCLUDING THAT OF OUR SUBSIDIARIES', FINANCIAL PERFORMANCE
AND COULD CAUSE OUR ACTUAL RESULTS FOR FUTURE PERIODS TO DIFFER MATERIALLY FROM
ANY OPINION OR STATEMENTS EXPRESSED HEREIN WITH RESPECT TO FUTURE PERIODS. AS A
RESULT, WE CAUTION READERS NOT TO PLACE UNDUE RELIANCE ON ANY SUCH
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE MADE.

THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE
AND, EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENT TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON
WHICH THE STATEMENT IS MADE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS. IN ADDITION, WE CANNOT ASSESS THE IMPACT OF EACH FACTOR ON OUR BUSINESS
OR THE EXTENT TO WHICH ANY FACTOR OR COMBINATION OF FACTORS MAY CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING
STATEMENTS.








FOREIGN EXCHANGE RATE DATA
Dectron Internationale, Inc. maintains its book of accounts in Canadian dollars.
The information provided in this Form 10-K is in the currency of the United
States (US Dollars), on the basis of generally accepted accounting principles
applying in the United States. Dectron Internationale, Inc.'s audit by external
parties has been conducted in accordance with United States generally accepted
auditing standards. Unless otherwise indicated, all references to dollar amounts
in this Form 10-K are in US dollars.

The following table sets forth, for the periods indicated, certain exchange
rates based on the noon buying rate in New York City for cable transfers in
Canadian dollars. Such rates are the number of United States dollars per one
Canadian dollar and are the inverse of rates quoted by the Federal Reserve Bank
of New York for Canadian dollars per US$1.00. The average exchange rate is based
on the average of the exchange rates on the last day of each month during such
periods. On April 28, 2005, the exchange rate was Cdn$0.80 per US$ 1.00.



         YEAR ENDED DECEMBER 31                2000        2001           2002         2003          2004
         ----------------------                ----        ----           ----         ----          ----
                                                                                       
         Rate at end of period               $ 0.67      $ 0.63         $ 0.66       $ 0.77        $ 0.83
         Average rate during period          $ 0.67      $ 0.64         $ 0.64       $ 0.71        $ 0.77
         High                                $ 0.70      $ 0.67         $ 0.66       $ 0.78        $ 0.85
         Low                                 $ 0.64      $ 0.62         $ 0.62       $ 0.63        $ 0.72




                                     PART I

ITEM 1.  BUSINESS


Unless otherwise indicated, references to "Dectron", "us", "our" and "we" refer
to Dectron Internationale, Inc. and its wholly-owned subsidiaries including: (i)
Dectron, Inc. (ii) Dectron USA, (iii) RefPlus, (iv) Thermoplus, (v) Circul-Aire
(vi) Tranzmetal (vii) IPAC 2000, and (viii) International Water Makers Inc.
("IWM").

GENERAL
We are a global provider of Custom and Semi-Custom HVAC products and services to
the Building Systems, Food Processing, Petrochemical and various industrial and
commercial - markets. Our core businesses are classified into five principal
areas: Dectron, Inc., RefPlus, Circul-Aire, Thermoplus and International Water
Makers. Dectron, Inc., Circul-Aire and Thermoplus serve customers in commercial
and residential buildings through a network of manufacturers' representatives,
dealers and each such subsidiary's internal sales force. Circul-Aire and
Dectron, Inc. also serve industrial customers. RefPlus serves commercial
refrigeration customers through a network of wholesalers in Canada and dealers
in the US.

The products manufactured and supplied include Energy Recycling Dehumidifiers,
Refrigeration Packages, Air Purification and Filtration Systems, Heating,
Ventilation and Air conditioning Equipment. More recently, we introduced
Moisture Recovery Systems currently used for on-line turbine cleaning
applications in offshore oil drilling operations. Demand for our products is
influenced by national, international and regional economic and demographic
factors. The commercial and industrial new construction market is subject to
cyclical fluctuations with a lag factor of 6-18 months.

We believe that we have structured our company to minimize absolute reliance on
external supplier for certain key components.

DESCRIPTION OF BUSINESS

Dectron Inc.
Dectron, Inc., the largest of the subsidiaries, was incorporated in 1977 to
develop, manufacture and market standard as well as custom design
dehumidification equipment for Indoor Pool applications. This product line has
experienced considerable success in North America and as a result has allowed us
to become a leader in North America's indoor pool dehumidification business. We
believe that Dectron is now one of North America's leading manufacturers of
dehumidification and closed looped energy recycling systems.


Dectron Inc., through its subsidiary Dectron USA, operates a sales office in the
United States located in Roswell, Georgia. This office supports the efforts of
Dectron Inc.'s network of trained manufacturer's representatives who sell
Dectron Inc.'s products throughout the United States. Dectron Inc. also has
sales representatives throughout Canada and overseas. We invite our independent
sales representatives and their technicians to be trained and certified by
Dectron Inc.'s own technical staff at no cost to the attendees at a training
school run by Dectron. We also use the training school both to market our
products and to demonstrate to potential buyers, first hand, the technical
qualifications our employees have to offer as a service to our customers. We
believe that customer service and technical expertise are a large part of what
sets us apart from our competitors. We also market our products in trade
magazines, through industry associations and by attending trade shows where we
display and demonstrate many of our products.

RefPlus Inc.
RefPlus was incorporated in 1993 to manufacture high quality modular commercial
and industrial refrigeration and air conditioning equipment for commercial and
special applications. Its products include refrigeration systems, condensers,
coils, walk-in storage coolers and freezers. RefPlus' primary customers are
supermarkets, food processors and large-scale food retail outlets. RefPlus also
supplies customized solution for niche applications such as in fruit storage
facilities, industrial baking and blast chillers for meat processing plants.

RefPlus markets its products through a network of agents in the US and a network
of independent wholesalers in Canada. We believe that our RefPlus product lines
offer an excellent opportunity for future expansion as RefPlus continues to gain
market share in the Canadian and US markets.[

Thermoplus Air Inc.
Established in 1987, as KeepKool Transfer de Chaleur Inc. ("KeepKool").
Thermoplus markets a variety of HVAC product lines through a network of Canadian
wholesalers.

Thermoplus' present product lines include dehumidification equipment, water
source air conditioners and heat pumps, portable or mobile air conditioning
equipment, industrial air handlers, air to fluid heat exchangers and IAQ
filtration products. These product lines are also sold through a network of
agents in the US.

Circul-Aire Inc.
In 1998, we acquired the Circul-Aire Group, consisting of Cascade Technologies
Inc. 9048-3140 Quebec, Inc. and its subsidiaries, and P.M. Wright Ltd.
(collectively referred to as "Circul-Aire"). Circul-Aire is considered one of
the pioneers of the air treatment industry and is a worldwide recognized leader
in the advanced technologies of gas-phase filtration and energy recovery.
Circul-Aire's reputation has been built on years of research and development and
growing numbers of satisfied customers. Circul-Aire has a laboratory and team of
experienced engineers that offer a systematic integrated approach in solving
difficult environmental control problems. Unique systems are designed and
manufactured in our facilities to suit specific applications.

Circul-Aire's Multi-Mix (TM) media and integrated systems are used to reduce the
odor and corrosion frequently associated with commercial, institutional, sewage
treatment and industrial environments. Combined with air-to-air heat exchanger
options, Circul-Aire's systems recuperate valuable energy from various air
streams. All Circul-Aire systems are engineered and manufactured to withstand
the most severe industrial environments, including those containing corrosive
gases.

Liberty Drive Property Inc. (formerly IPAC 2000)
IPAC 2000 was acquired in September 1999. IPAC 2000 specializes in the design
and manufacturing of compressed air products, industrial heat transfer products
and sheet metal fabrication. In March of 2004, IPAC 2000 signed a memorandum of
understanding regarding the industrial products and sheet metal divisions. On
April 22, 2004, IPAC 2000 signed a definitive agreement pursuant to which the
industrial products and sheet metal divisions were sold and consequently changed
its name to Liberty Drive Property, Inc. ("Liberty Drive Property"). In February
2005, Liberty Drive Property signed a real estate contract regarding the
building and land. The definitive agreement is presently being finalized.

                                       6


International Water Makers Inc. 
In July 2002, we acquired intellectual property and other assets of
International Water Makers Inc. ("IWM"), including a patented process to extract
significant amounts of moisture from the air. We believe that this technology
surpasses any other water-generation technology currently on the market, given
that it provides filtered, de-mineralized water to a variety of applications
while requiring minimal energy.

Tranzmetal Inc. 
In 2003, we acquired Tranzmetal, a manufacturer of Precision Sheet Metal
products. Tranzmetal's operations are currently being consolidated into
Circul-Aire.

OTHER MATTERS RELATING TO OUR BUSINESS AS A WHOLE

Employees
As of April 29, 2005, we employed a total of approximately 400 full-time
employees. Our subsidiary Thermoplus has an in-house union that represents 19
employees. Certain terms of their employment are part of a collective bargaining
agreement that expires in December 2005. Management considers its relations with
its employees to be satisfactory.

Patents and Trademarks
We have seven United States and two Canadian patents. The patents expire between
2007 and 2015. Three of the patents relate to swimming pool dehumidifiers, three
to the collection and dispensing of water from air and one relating to the
method and apparatus for controlling heat rejection in a refrigeration system.

We have trademarked the names "Dectron" and "Dry-O-Tron" in both the United
States and Canada. The trademarks come up for renewal between 2007 and 2016. We
also hold the trademark in "MultiMix" and "MM Multi-Mix" in the United States
and Canada. The MultiMix and MMMulti-Mix trademarks will be due for renewal in
the year 2014. In addition, we hold the trademark in "CIRCUL-AIRE" in the United
States and Canada, which was renewed in 1999.


ITEM 2.  PROPERTIES

SQUARE FOOT BY SUBSIDIARY



                 DECTRON    REFPLUS   CIRCUL-AIRE    THERMOPLUS      TRANZMETAL       IWM                    TOTALS
                 -------    -------   -----------    ----------      ----------       ---                    ------
                                                                                            
CANADA
Owned                       68,000                        50,000                                             118,000
Leased            65,000    43,000        98,000                         25,000                              231,000
USA
Owned                                                                                                            Nil
Leased             1,000                                                                650
                                                                                                               1,650
TOTALS            66,000   111,000        98,000          50,000         25,000         650                  350,650



We maintain executive offices and manufacturing facilities at leased and owned
premises. All of our manufacturing facilities are located in or near Montreal,
Quebec. The manufacturing facilities, which we own, are located in St. Jerome,
Quebec, and Boucherville, Quebec. The facilities are in good condition and do
not require any significant capital expenditure. We maintain property insurance
on the two owned manufacturing facilities in an amount that we believe to be
sufficient. Of the five leased facilities, two of the leases expire on January
31, 2011, one June 30, 2010, one October 31, 2016, and one December 31, 2006.


ITEM 3.  LEGAL PROCEEDINGS

There are no material legal proceedings pending or threatened against us.


                                       7



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to the vote of the security holders during the
period covered by this report.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER 
PURCHASES OF EQUITY SECURITIES

Our shares of common stock have traded on the Nasdaq Small Cap Market and the
Boston Stock Exchange since our initial public offering on October 5, 1998. Our
common stock trades under the symbol "DECT" on Nasdaq and on the Boston Stock
Exchange under the Symbol "DRN." The following table sets forth the high and low
sales prices for our common stock as reported on Nasdaq.



                                                                 COMMON STOCK
                                                                 ------------

                                                       HIGH                          LOW
                                                                                
      Fiscal year ended January 31, 2005:
                                                       $4.93                        $3.02
      First quarter (2/1/04 - 4/30/04)                 $4.93                        $3.02
      Second quarter (5/1/04 - 7/31/04)                $4.75                        $3.44
      Third quarter ( 8/1/04 - 10/31/04)               $4.16                        $3.30
      Fourth quarter ( 11/1/04 - 1/31/05)              $4.58                        $3.60

      Fiscal year ended January 31, 2004:
                                                       $7.50                        $2.92
      First quarter (2/1/03 - 4/30/03)                 $4.45                        $3.41
      Second quarter (5/1/03 - 7/31/03                 $4.32                        $2.92
      Third quarter ( 8/1/03 - 10/31/03)               $5.25                        $2.92
      Fourth quarter ( 11/1/03 - 1/31/04)              $7.50                        $3.83


As of April 28, 2005 there were 54 shareholders of record of the 3,155,000
shares of our common stock issued and outstanding.

On April 28, 2005, the last sale price of our common stock as reported by Nasdaq
was $3.81

DIVIDEND POLICY
Our policy does not currently provide for the declaration or payment of
dividends on our common stock. The payment of cash dividends, if any, in the
future, will be at the discretion of our board of directors and will depend on
our earnings, capital requirements, financial condition and other relevant
factors. We presently intend to retain future earning for use in our business.

CERTAIN MATERIAL CANADIAN INCOME TAX CONSEQUENCES

This summary of material Canadian federal income tax consequences is based on
the Income Tax Act (Canada) (the "Tax Act"), the Canada-U.S. Tax Convention (the
"Convention"), regulations, administrative rulings and practice and judicial
precedent, each as in effect at the date of this annual report, all of which are
subject to changes.

                                       8


The following discussion applies only to a holder of our shares of common stock
who, for purposes of the Tax Act is neither resident nor deemed to be resident
in Canada at any time does not use or hold, and is not deemed to use or hold our
shares of common stock in connection with a trade or business that the holder
carries on, or is deemed to carry on, in Canada at any time (each a
"non-resident holder").

The following discussions on Canadian federal income tax consequences of
ownership of our shares of common stock does not purport to be a complete
description of all potential tax consequences. This discussion does not address:
(i) any potential tax effects to non-U.S. Holders (as defined below); (ii) all
potential tax effects that may be relevant to U.S. Holders subject to special
Canadian tax treatment, or (iii) the effect of potentially applicable state,
provincial, local or foreign (other than Canadian) tax laws.

A "U.S. Holder" means a holder of our shares of common stock that is: (i) a
citizen or resident of the U.S.; (ii) a corporation or other entity taxable as a
corporation created or organized under the laws of the U.S. or any political
subdivision thereof; (iii) an estate the income of which is subject to U.S.
federal income tax regardless of its source, or; (iv) in general, a trust if a
U.S. court can exercise primary supervision over the administration of such
trust, and one or more U.S. persons have the authority to control all of the
substantial decisions of such trust. A "non-U.S. Holder" means a holder of our
shares of common stock who is not a "U.S. Holder".

Subject in its entirety to the foregoing, there are no governmental laws,
decrees or regulations in Canada, where the registrant is incorporated, that
restrict the export or import of capital, including but not limited to, foreign
exchange controls, or that affect the remittance of dividend or other payments
to non-resident holders of our shares of common stock.

Dividends
Dividends paid or credited or deemed to be paid or credited to a non-resident
will be subject to Canadian non-resident withholding tax at the rate of 25% of
the gross amount of such dividends under the Tax Act. This rate may be reduced
under an applicable income tax treaty between Canada and such non-resident
holder's country of residence. In the case of a non-resident holder which is the
beneficial owner of such dividends and a resident of the United States for the
purposes of the Convention, the rate of non-resident withholding tax in respect
of dividends will generally be reduced to a rate of 15% of the gross amount of
such dividends

Dispositions
A non-resident holder will not be subject to tax under the Tax Act in respect of
capital gains realized on the disposition or deemed disposition of our shares of
common stock unless such securities are "taxable Canadian property" (within the
meaning of the Tax Act) to the holder at the time of the disposition. Our shares
of common stock will generally not constitute taxable Canadian property to a
non-resident holder provided they are listed on a prescribed stock exchange
(which currently includes the Nasdaq) on the date of disposition and, at any
time during the five-year period immediately preceding the disposition or deemed
disposition of our shares of common stock, the non-resident holder, persons with
whom such holder did not deal at arm's length or the non-resident holder and
such persons has not owned or had an interest in or an option to acquire 25 per
cent or more of the issued shares of any class or series of the capital stock of
our company.

This summary does not discuss all aspects that may be relevant to any particular
investors in light of their particular circumstances. Investors are urged to
consult their own tax advisors with respect to their own particular
circumstances and with respect to the specific tax consequences of ownership of
our shares of common stock, including the applicability and effect of national,
federal, state, provincial, and local tax laws, estate tax laws and proposed
changes in applicable laws.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY PLANS



                                        Number of securities to    Weighted-average      Number of securities
                                        be issued upon exercise    exercise price of     remaining available for
                                        of outstanding options,    outstanding           future issuance under
                                          warrants and rights      options, warrants     equity compensation plans
                                                                   and rights
                                                                                    
Equity compensation plans approved
by security holders
2001 Stock Option Plan                 500,000                     $4.20                 500,000
Equity compensation plans not
approved by security holders
Total                                  500,000                     $4.20                 500,000



                                       9



RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, we have sold unregistered securities as described
below. There were no underwriters involved in the transactions and there were no
underwriting discounts or commissions paid in connection therewith, except as
disclosed below. The issuance of these securities was considered to be exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and the regulations promulgated thereunder. The purchasers of the securities in
such transactions represented their intention to acquire the securities for
investment purposes only and not with a view to or for sales in connection with
any distribution thereof and appropriate legends were affixed to the
certificates for the securities issued in such transactions. The purchasers of
the securities in the transactions below were each sophisticated investor who
were provided information about us and were able to bear the risk of loss of
their entire investment.

On July 15, 2002 we completed the acquisition of 100% of the assets of
International Water Makers Inc., a Florida corporation, in consideration of (i)
50,000 shares of our common stock and (ii) 60,000 warrants to purchase an
aggregate of 60,000 shares of our commons stock at a price of $3.6125 per share
exercisable for a period of 1 year. The warrants expired without having been
exercised.


ISSUER REPURCHASES OF EQUITY SECURITIES

None.


ITEM 6. SELECTED FINANCIAL DATA.



                                        YEAR ENDED JANUARY 31,
                                        
                                             2005            2004            2003            2002           2001
                                                                                               
Consolidated Statement of               
Operations Data:                        
                                        
Net revenues                            40,910,601      39,654,922      34,424,891      29,115,406     33,958,558
Costs of revenues                       29,260,966      25,283,942      22,032,358      16,967,803     21,937,386
Gross profit                            11,649,635      14,370,980      12,392,533      12,147,603     12,021,172
Selling, general and                    11,513,884      12,292,858       9,712,876       9,830,636     11,309,530
administrative, and amortization        
Income from operations                     135,751       2,078,122       2,679,657       2,316,967        711,642
(Benefit from)  provision for income    
taxes                                      584,839         235,104         577,410         351,389         82,503
(Loss) income before extraordinary      
gain and discontinued operations          (449,088)      1,843,018       2,102,247       1,965,578        629,139
Net (loss) income from  discontinued    
operations, net of tax                  (1,429,012)     (3,630,854)     (1,556,721)     (1,918,513)       228,287
Gain  on  disposal  of  discontinued    
operations, net of tax                     889,694          90,332         590,686               -              -
Net  (loss)   income   available  to    
common stockholders                       (988,406)     (1,697,504)      1,136,212          47,065        857,426
Basic (loss) income per share                (0.32)          (0.57)           0.40            0.02           0.31
(Loss)  income  per  share  assuming    
dilution                                     (0.32)          (0.57)           0.40            0.02           0.31
Weighted average shares outstanding      3,066,851       2,973,750       2,816,181       2,795,000      2,795,000
Weighted average shares outstanding     
assuming dilution                        3,066,851       2,973,750       2,848,729       2,795,000      2,795,000
Pro forma basic (loss) earnings per     
share assuming the accounting                (0.32)          (0.57)           0.40            0.02           0.31
change is applied retroactively         
Pro forma (loss) earnings per share     
assuming the accounting change is       
applied retroactively, assuming         
dilution                                     (0.32)          (0.57)           0.40            0.09           0.38
                                        
                                        2005            2004            2003            2002           2001
Consolidated Balance Sheet Data:        
                                        
Working capital                          4,417,339       4,285,338       5,073,305       3,985,574      4,849,309
Total assets                            35,687,918      39,129,450      34,330,195      30,560,638     35,159,985
Long-term debt                           2,370,913       5,154,607       5,322,309       5,170,364      6,722,601
Total liabilities                       24,370,551      27,309,281      22,497,289      20,710,292     24,814,040
Stockholders' equity                    11,317,367      11,820,169      11,832,906       9,850,346     10,345,945
                               


                                       10


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. The following discussion and analysis should be read in
conjunction with the selected historical financial data, financial statements
and notes thereto and the other historical financial information of Dectron
Internationale contained elsewhere in this Annual Report on Form 10-K. The
statements contained in this Annual Report on Form 10-K that are not historical
are forward looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934,
including statements regarding Dectron Internationale's expectations,
intentions, beliefs or strategies regarding the future. Forward-looking
statements include, but are not limited to, Dectron Internationale's statements
regarding liquidity, anticipated cash needs and availability and anticipated
expense levels. All forward-looking statements included in this annual report of
Form 10-K are based on information available to Dectron Internationale on the
date hereof, and Dectron Internationale assumes no obligation to update any such
forward-looking statement. Dectron Internationale's actual results could differ
materially from those in such forward-looking statements.

OVERVIEW
We are a global provider of Custom and Semi-Custom HVAC products and services to
the Building Systems, Food Processing, Petrochemical and various industrial and
commercial -markets. Our core businesses are classified into five principal
areas: Dectron, Inc., RefPlus, Circul-Aire, Thermoplus and International Water
Makers. Dectron, Inc., Circul-Aire and Thermoplus serve customers in commercial
and residential buildings through a network of manufacturers' representatives,
dealers and each such subsidiary's internal sales force. Circul-Aire and
Dectron, Inc. also serve industrial customers. RefPlus serves commercial
refrigeration customers through a network of wholesalers in Canada and dealers
in the US.

Demand for our products is influenced by national, international and regional
economic and demographic factors. The commercial and industrial new construction
market is subject to cyclical fluctuations in that it is generally tied to
housing starts, but has a lag factor of 6-18 months.

BUSINESS ENVIRONMENT
As an international business, our operations are affected by various industrial,
economic and political factors. The appreciation of the Canadian Dollar and
increase in the cost of various raw materials impacted economic conditions in
the indoor pool dehumidification and commercial heating, ventilating and air
conditioning industries, thus affecting our operations in 2005. However, the
diversity of our product sales, services and markets served to limit the
negative aggregate impact on our consolidated operating results. Our management
anticipates that strength in commercial and residential construction markets and
a recovery in commercial HVAC markets will contribute positively to our results
in 2006.

As part of our management's globalization strategy, our company is investing in
the commercial development of our products in various areas in the world,
including China, Europe and the Middle East.

                                       11


RESULTS OF OPERATIONS

FISCAL 2005

Consolidated Revenues increased 3.2% in fiscal year ended January 31, 2005
("Fiscal 2005") compared to 15.2% in Fiscal 2004. Revenues increased from
$39,654,922 to $40,910,601. Sales growth in 2005 reflects revenue contributed
primarily from a stronger presence in the Canadian market for commercial HVAC
products and related services. This increase was partially offset by unfavorable
foreign currency translations arising from the appreciation of the Canadian
versus the US Dollar.

Gross profit decreased to 28.5% in 2005 compared to 36.2% in 2004, decreasing
from $14,370,980 to $11,649,635. Gross margin was adversely affected by higher
cost in raw material and the use of aggressive pricing strategies in the
commercial HVAC markets.

Operating Expenses decreased by 2.8-percentage points in relation to sales for
fiscal 2005 primarily due to pre-tax restructuring charges in the amount of
$551,607 compared to $911,407 in fiscal 2004, restructuring charges arising from
the consolidation of manufacturing facilities.

Selling expenses decreased by $229,632 from $5,518,195 in 2004 to $5,288,563 in
2005. The decrease is primarily due to cost cutting efforts from management.

General and Administrative Expenses increased by $144,867 from $3,224,179 in
2004 to $3,369,046 in 2005. Overall, this represents an increase of 0.1
percentage point in 2005 in relations to sales from the previous period.

Net restructuring and other non-recurring items decreased from $911,407 in
fiscal 2004 to $551,607 in 2005 due to restructuring expenses incurred in
Tranzmetal. This is a decrease from 2.3% to 1.3%.

Amortization expenses decreased by $98,066 from $1,366,592 in 2004 to $1,268,526
in 2005, a decrease of 0.35 percentage points as compared to sales. The decrease
in depreciation expense in 2005 is due primarily to a low rate of acquisition of
capital assets during fiscal 2005.

Financing expenses decreased by $236,343 from $1,272,485 in 2004 to $1,036,142
in 2005, a decrease of 0.7 percentage points as compared to sales. The decrease
in interest expense in 2005 is due primarily to re-payment of long-term debt.

Net Earnings before discontinued operations decreased from $1,843,018 in 2004 to
a loss of $449,088 in 2005 after tax expenses of $584,839.

Losses from discontinued operations net of taxes in fiscal 2005 was $1,429,012
compared to $3,630,854 in fiscal 2004.

Net loss in fiscal 2005 was $988,406 compared to a loss of $1,697,504 in fiscal
2004. The decrease in Net Loss in 2005 represents primarily the effect of
restructuring charges and discontinuing of Operations of Liberty Drive Property,
Inc. described in the "Acquisitions, Divestitures and Restructuring Costs"
below.

FISCAL 2004

Consolidated Revenues increased 15.2% in fiscal year ended January 31, 2004
("Fiscal 2004") compared to 18.2% in Fiscal 2003. Revenues increased from
$34,424,891 to $39,654,922. Sales growth in 2004 reflects revenue contributed
primarily from a stronger presence in the Canadian market for commercial HVAC
products and related services. This increase was partially offset by unfavorable
foreign currency translations arising from the appreciation of the Canadian
versus the US Dollar.

Gross profit increased nominally by 0.24 percentage points resulting in 36.24%
in 2004 compared to 36.0% in 2003, increasing from $12,392,533 to $14,370,980.
Gross margin was adversely affected by higher cost in raw material and the use
of aggressive pricing strategies in the commercial HVAC-markets.

                                       12


Operating Expenses increased by 2.8-percentage points in relation to sales for
fiscal 2004 primarily due to pre-tax restructuring charges in the amount of
$911,407 arising from the consolidation of manufacturing facilities.

Selling expenses increased by $850,714 from $4,667,481 in 2003 to $5,518,195 in
2004. The increase is primarily the result of market development initiatives for
international markets.

General and Administrative Expenses increased by $92,361 from $3,131,818 in 2003
to $3,224,179 in 2004. Overall, this represents a decrease of one percentage
point in 2004 in relations to sales from the previous period.

Net restructuring and other non-recurring items increased from $132,342 in
fiscal 2003 to $911,407 in 2004 due to restructuring expenses incurred in
Tranzmetal. This is an increase from 0.4% to 2.3%.

Amortization expenses increased by $375,363 from $991,229 in 2003 to $1,366,592
in 2004, an increase of 0.6 percentage points as compared to sales. The increase
in depreciation expense in 2004 is due primarily to the acquisition of capital
assets.

Financing expenses increased by $482,479 from $790,006 in 2003 to $1,272,485 in
2004, an increase of 0.9 percentage points as compared to sales. The increase in
interest expense in 2004 is due primarily to additional banking facilities to
finance increasing backlogs.

Net Earnings before discontinued operations decreased by $259,229 from
$2,102,247 in 2003 to $1,843,018 in 2004; a decrease of 1.5 percentage points as
compared to sales.

Losses from discontinued operations net of taxes in fiscal 2004 was $3,630,854
compared to $ 1,556,721 in fiscal 2003.

Net loss in fiscal 2004 was $1,697,504 compared to earnings of $1,136,212 in
fiscal 2004. The decrease in Net Earnings in 2004 represents primarily the
effect of restructuring charges and discontinuing of Operations of IPAC 2000
described in the "Acquisitions, Divestitures and Restructuring Costs" below.

ACQUISITIONS, DIVESTITURES AND RESTRUCTURING COSTS

We recorded net restructuring and unusual charges of $551,607 in 2005 and
$911,407 in 2004. The 2005 charges are primarily the result of ongoing cost
reduction efforts, including the consolidation of the manufacturing facilities
of Tranzmetal, a manufacturer of Precision Sheet Metal equipment acquired in
February 2003. Those operations are in the process of being consolidated with
the manufacturing facility of Circul-Aire.

We also recorded net losses of $1,429,012 in 2005 and $3,630,854 in 2004
resulting from the discontinued operations of Liberty Drive Property, Inc.
During this year, we continued our plan to divest the assets of the industrial
products and sheet metal divisions of Liberty Drive Property. Additional assets
relating to the HVAC division are in the process of being consolidated with the
manufacturing facility of Circul-Aire.

On November 29, 2002, we completed the sale of the Electric Heat Products
Division for a total cash consideration of $961,640 plus a balance of sale of
$440,979. Consequently, one of the subsidiary's name changed from P.M. Wright
Ltd. to Circul-Aire Inc. The sale resulted in a net gain of $190,262 (2004:
$90332, 2003: $590,681) net of tax of $69,001 (2004: $20,770, 2003: $198,668).
As at January 31, 2005, the remaining balance of sale amounted to $221,562. This
balance of sale bears interest at the bank's prime rate plus 1%, repayable in 11
monthly installments of $20,142. Due to transaction risks, a reserve for the
full balance of sale has been charged.

                                       13


On May 29, 2004, we sold some selected assets related to the industrial products
and sheet metal divisions of our subsidiary IPAC 2000 Inc, for $1,200,996. In
connection with the sale, the subsidiary has changed its name to Liberty Driver
Property Inc. In exchange for the assets sold, we received $950,996 in cash and
$250,000 as a note receivable due in quarterly installments of interest only at
8% per annum through June 1, 2005. Commencing September 1, 2005 the note is due
in quarterly installments of $25,000 plus interest at 8% per annum. Commencing
September 1, 2006 the note is due in quarterly installments of $37,500 plus
interest at 8% per annum, due June 2007.

LIQUIDITY AND CAPITAL RESOURCES

Management assesses liquidity in terms of our company's ability to generate cash
to fund its operating, investing and financing activities. Significant factors
affecting the management of liquidity are: cash flows generated from operating
activities, capital expenditures, financing requirements, investments in
businesses, adequacy of available bank lines of credit and the ability to
attract long-term capital with satisfactory terms.


OPERATING ACTIVITIES

In Fiscal 2005, we generated positive cash flows from operating activities of
$2,146,473. The principal sources of cash were accounts receivable in the amount
of 1,370,407, depreciation and amortization in the amount of $1,268,526 and
accounts payable in the amount of $1,232,098. The principal use of cash was
inventories in the amounts of $836,129.

In Fiscal 2004, we generated positive cash flows from operating activities of
$584,257. The principal sources of cash were depreciation and amortization in
the amount of $ 1,366,592 and accounts payable in the amount of $825,796. The
principal uses of cash were accounts receivable and inventories in the amounts
of $1,521,309 and $1,469,116 respectively.

In Fiscal 2003, we generated positive cash flows from operating activities of
$2,158,091. The principal sources of cash were depreciation and amortization,
income taxes payables and accounts payables in the amount of $991,229, $684,578
and $453,816 respectively. The principal uses of cash were accounts receivable
and inventories in the amounts of $1,859,562 and $287,840 respectively.

INVESTING ACTIVITIES

In Fiscal 2005, we reported negative cash flows from investing activities of
$369,049 attributed to the acquisition of capital assets.

In Fiscal 2004, we reported negative cash flows from investing activities of
$1,307,302 attributed to the acquisition of capital assets.

 In Fiscal 2003, we reported negative cash flows from investing activities of
$733,963 attributed mainly the acquisition of capital assets in the amount of
$667,736 and intangibles in the amount of $66,227.

FINANCING ACTIVITIES

In Fiscal 2005, we reported negative cash flows from financing activities of
$4,726,960. The principal source of cash was issuance of shares in the amount of
$543,750 pursuant the exercise of some options. The principal uses of cash were
repayments of long-term debt in the amount of $1,927,663 and re-payments of bank
loans in the amount of $1.859,238.

In Fiscal 2004, we reported positive cash flows from financing activities of
$3,216,454. The principal source of cash was advances from bank loans of
$4,314,685. The principal use of cash was repayments of long-term debt in the
amount of $989,718.

In Fiscal 2003, we reported positive cash flows from financing activities of
$3,033,979. The principal sources of cash were advances from bank loans and
long-term debt in the amounts of $1,816,336 and $1,003,685 respectively. The
principal use of cash was repayments of loans payable and share purchase plan
receivable.

                                       14


Credit Agreement

In Fiscal 2005, our secured credit arrangement with National Bank of Canada
remained in place as follows. This facility included an aggregated credit line
of Cdn $ 16,500,000 of which Cdn $8,250,000 can be financed through a bankers'
acceptance. The amount available to our company is equal to 75% of "eligible
accounts receivable" as defined in the Line of Credit Agreement, plus 50% of the
inventory values, net of work in process, up to a maximum advance against
inventory of approximately Cdn $ 7,500,000. Dectron's borrowings under the line
of credit bear interest at Canadian prime plus 0.25%, which at January 31, 2005
amounted to 4.25%. Interest on any borrowings is payable monthly. We are in full
compliance with all of the banking covenants (including financial covenants and
ratios) and we are required to report to our bankers on a monthly basis. We
finance our operations mainly through the use of bankers' acceptances bearing an
average lending rate of prime. All borrowings are collateralized by our assets.

In April 2002, we renegotiated a mortgage note and an equipment note and
replaced them with a new loan of $1,983,330 with National Bank of Canada bearing
interest at 7.18%. In June 2002, we entered into a financial lease for an amount
of $ 400,000 bearing interest at 6.989%. In August 2002, we entered into a
financial lease for an amount of $ 97,925 bearing interest at 6.025%. In October
2002, we entered into a financial lease for an amount of $ 267,896 bearing
interest at 6.275%. All the above loans are still in place and are being repaid
according to schedules.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

We have contractual obligations arising from sales of certain businesses and
assets, as well as debt and operating leases. As of January 31, 2005, we had an
outstanding balance on our line of credit of $ 11,642,981 and do not have any
purchase obligations. We have not engaged in off-balance sheet financing or
commodity contract trading.

CONTRACTUAL COMMITMENTS AND OTHER OBLIGATIONS



CONTRACTUAL OBLIGATIONS                     PAYMENTS DUE BY PERIOD
                                TOTAL          0-1 YEARS        1-3 YEARS          4-5 YEARS        5+ YEARS
                                -----          ---------        ---------          ---------        --------
                                                                                     
Balance of Sale                  120,851         120,851               -                  -               -
Other Long Term Debt           4,598,932       2,228,019        1,659,016           439,185         272,712
Total Long term debt           4,719,783       2,348,870        1,659,016           439,185         272,712
Operating lease                4,035,719         909,060        1,558,648         1,568,011               -


Management believes that these commitments will be satisfied with current
operating cash flow.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States (GAAP). These accounting
principles require us to make certain estimates, judgments and assumptions. We
believe that the estimates, judgments and assumptions upon which we rely are
reasonable based upon information available to us at the time that these
estimates, judgments and assumptions are made. These estimates, judgments and
assumptions can affect the reported amounts of assets and liabilities as of the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the periods presented. To the extent there are material
differences between these estimates, judgments or assumptions and actual
results, our financial statements will be affected. The significant accounting
policies that we believe are the most critical to aid in fully understanding and
evaluating our reported financial results include the following:

Revenue Recognition

We recognize revenue for finished products when the goods are shipped and title
passes to the customer, provided that there are no uncertainties regarding
customer acceptance, persuasive evidence of an arrangement exist; the sales
price is fixed or determinable; and collectibility is deemed probable.

                                       15


Deferred Revenue

We have sold extended warranty contracts covering a period of four to nine years
beyond the one-year basic guarantee. The deferred revenue is recognized as
income over the four to nine year period on a straight-line basis commencing one
year from the sale of the contracts.

Intangible Assets and Goodwill

We account for intangible assets and goodwill in accordance with Statement of
Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible
Assets", which was adopted by we on February 1, 2002 in accordance with that
statement, goodwill and intangible assets with indefinite lives are no longer
amortized, but rather tested for impairment at least annually. Intangible assets
with estimable useful lives, consisting of patents, trademarks, and rights, are
amortized on a straight-line basis over the estimated useful lives of 5 to 15
years, and are reviewed for impairment in accordance with SFAS 144, "Accounting
for the Impairment of long-lived Assets".

Goodwill represents the excess of purchase price over the fair value of
identifiable assets acquired in a purchase business combination. For the years
2002, goodwill was amortized using the straight-line method, over a period of 10
years.

Goodwill and intangible assets with definite lives are tested at least annually
for impairment in accordance with the provisions of SFAS 142.

Impairment of goodwill is tested at the reporting unit level by comparing the
reporting unit's carrying amount, including goodwill, to the fair value of the
reporting unit. The fair values of the reporting units are estimated using a
combination of the income or discounted cash flows approach and the market
approach, which utilizes comparable companies' data. If the carrying amount of
the reporting unit exceeds its fair value, then a second step is performed to
measure the amount of impairment loss, if any. Any impairment loss would be
expensed in the consolidated statements of earnings. The impairment test for
intangibles with indefinite useful lives consists of a comparison of the fair
value of the intangible assets with its carrying amount. When the carrying
amount of the intangible assets exceeds its fair value, an impairment loss would
be recognized for the difference.

Intangible assets with estimable lives and other long-lived assets are reviewed
for impairment when events or changes in circumstances indicate that the
carrying amount of an asset or assets group may not be recoverable in accordance
with SFAS 144. Recoverability of intangible assets with estimable lives and
other long- lived assets is measured by a comparison of the carrying amount of
an assets or asset group to future net undiscounted pretax cash flows expected
to be generated by the assets or asset group. If these comparisons indicated
that an asset is not recoverable, the impairment loss recognized is the amount
by which the carrying amount of the asset or the asset group exceeds the related
estimated fair value.

Income Taxes

As part of the process of preparing our financial statements, we will be
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process will involve estimates of our actual current tax exposure
together with assessing temporary differences resulting from differing treatment
of items, such as depreciation and amortization, for tax and accounting
purposes.


RECENT ACCOUNTING PRONOUNCEMENTS

              On December 16, 2004, the FASB issued SFAS 123 (R), "Share-Based
Payment," which is a revision of SFAS 123, "Accounting for Stock-Based
Compensation." SFAS 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognised in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative. SFAS 123(R) must be adopted no later than August 1, 2005. Early
adoption is permitted. The Company expects to adopt SFAS 123(R) on August 1,
2005, utilising the modified retrospective method. The modified retrospective
method requires compensation costs to be recognised beginning with the effective
date based on the requirements of SFAS 123(R) for all (a) share-based payments
granted after the effective date and (b) awards granted to employees prior to
the effective date of SFAS 123(R) that remain unvested on the effective date.
Amounts for prior years will be restated based on the amounts previously
recognised under SFAS 123 for purposes of pro forma disclosures. As permitted by
SFAS 123, the Company currently accounts for share-based payments to employees
using APB Opinion 25's intrinsic value method and, as such, generally recognises
no compensation cost for employee stock options. Accordingly, the adoption of
SFAS 123(R)'s fair value method will have a significant impact on the Company's
results of operations, although it will have no impact on the Company's overall
financial position. The impact of the adoption of SFAS 123(R) cannot be
predicted at this time because it will depend on levels of share-based payments
granted in the future. However, when adopted, the impact of SFAS 123(R) on prior
periods will approximate the impact of SFAS 123 as described in the disclosure
of pro forma net earnings and earnings per share in the Summary of Significant
Accounting Policies note 1.

                                       16


         In November 2004, the FASB issued SFAS 151, "Inventory Costs - an
amendment of ARB No.43, Chapter 4," which requires companies to expense abnormal
freight, handling costs, or spoilage in the period incurred and to allocate
fixed overhead based on normal capacity, with adjustment if production is
abnormally high. This standard becomes effective for the Company on August 1,
2005, with early adoption permitted. The Company currently accounts for abnormal
freight, handling costs, and spoilage consistent with the standard. The Company
plans to adopt the provisions early, on a prospective basis, as they relate to
capitalization of fixed overhead expenses in the first quarter of 2006. The
Company is currently evaluating the effects of implementing this standard. Based
on a preliminary analysis, the Company does not expect that there will be a
material effect on 2006 total Company results. There may be an impact on the
results of certain quarters at the segment or total Company level.

FINANCIAL STATEMENTS AND INTERNAL CONTROLS

We believe it is critical to provide investors and other users of our financial
statements with information that is relevant, objective, understandable and
timely, so that they can make informed decisions. As a result, we have
established and we maintain accounting systems and practices and internal
control processes designed to provide reasonable assurance that transactions are
properly executed and recorded and that our policies and procedures are carried
out appropriately.

Financial Controls and Transparency
Our internal controls are designed to ensure that assets are safeguarded,
transactions are executed according to management authorization and our
financial systems and records can be relied upon for preparing our financial
statements and related disclosures. Our system of internal controls includes
continuous review of our financial policies and procedures to ensure accounting
and regulatory issues have been appropriately addressed, recorded and disclosed.
The independent auditors perform audits of our financial statements, in which
they examine evidence supporting the amounts and disclosures in our financial
statements, and also consider our system of internal controls and procedures in
planning and performing their audits.

Management Controls
Our management team is committed to providing high-quality, relevant and timely
information about our businesses. Management performs reviews of each of our
businesses throughout the year, addressing issues ranging from financial
performance and strategy to personnel and compliance.

In addition, see "Item 9A - Controls and Procedures" below.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Risk Management
We are exposed to fluctuations in foreign currency exchange rates and interest
rates. To manage certain of those exposures, we use futures, options and swaps.
The instruments we utilize in our hedging activities are viewed as risk
management tools, involve little complexity and are not used for trading or
speculative purposes. Management believes that we satisfactorily diversify the
counterparts used and monitor the concentration of risk to limit our counterpart
exposure.

Foreign Currency Translation
We maintain our books and records in Canadian dollars. Foreign currency
transactions are translated using the temporal method. Under this method, all
monetary items are translated into Canadian funds at the rate of exchange
prevailing at balance sheet date. Non-monetary items are translated at
historical rates. Income and expenses are translated at the rate in effect on
the transaction dates. Transaction gains and losses are included in the
determination of earnings for the year.

                                       17


The translation of the financial statements from Canadian dollars into United
States dollars is performed for the convenience of the reader. Balance sheet
accounts are translated using closing exchange rates in effect at the balance
sheet date and income and expense accounts are translated using an average
exchange rate prevailing during each reporting period. No representation is made
that the Canadian dollar amounts could have been, or could be, converted into
United States dollars at the rates on the respective dates and or at any other
certain rates. Adjustments resulting from the translation are included in the
accumulated other comprehensive income in stockholder's equity.

Interest Rate Risk
We are exposed to market risk related to fluctuations in interest rates on our
debt. Increase in prevailing interest rates could increase our interest payment
obligations relating to variable rate debt. For example, a 100 basis point
increase in interest rates would increase our annual interest expense by
$120,000.


ITEM 8.  FINANCIAL STATEMENTS

The financial statements are included at the end of this Annual Report on Form
10-K at the pages indicated below.



Financial Statements:                                                                        Page Number
---------------------                                                                        -----------
                                                                                   
Report of Independent Registered Public Accounting Firm                                            F - 1
Consolidated Balance Sheets for the years ended January 31, 2005 and                      F - 2 to F - 3
January 31, 2004
Consolidated Statements of Operations for the years ended January 31,
2005, 2004 and 2003                                                                         F - 4 to F-5
Consolidated Statements of Cash Flows for the years ended January 31,
2005, 2004 and 2003                                                                       F - 6 to F - 8
Consolidated Statements of Stockholders' Equity for the years ended
January 31, 2005 2004and 2003                                                                      F - 9
Notes to Consolidated Financial Statements                                              F - 10 to F - 26



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

During our two most recent fiscal years, we have had no disagreements with
Schwartz Levitsky Feldman, our independent accountants, on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Schwartz Levitsky Feldman would have caused it to make reference to the subject
matter thereof in its report on the financial statements of our company for such
periods.

ITEM 9A. CONTROLS AND PROCEDURES

We believe it is critical to provide investors and other users of our financial
statements with information that is relevant, objective, understandable and
timely, so that they can make informed decisions. As a result, we have
established and we maintain accounting systems and practices and internal
control processes designed to provide reasonable assurance that transactions are
properly executed and recorded and that our policies and procedures are carried
out appropriately.

                                       18


Our management team is committed to providing high-quality, relevant and timely
information about our businesses. Management performs reviews of each of our
businesses throughout the year, addressing issues ranging from financial
performance and strategy to personnel and compliance.

Management is responsible for implementing and maintaining adequate systems of
internal and disclosure controls and procedures and for monitoring their
effectiveness.

We evaluated the effectiveness of the design and operation of our "disclosure
controls and procedures" ("Disclosure Controls") pursuant to Rules 13a-14(c) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and our
"internal controls and procedures for financial reporting" (Internal Controls)
as of the end of the period covered by this Annual Report on Form 10-K. This
evaluation was done under the supervision and with the participation of
management.

o   Disclosure Controls are procedures that are designed with the objective of
    ensuring that information required to be disclosed in our reports filed
    under the Exchange Act is recorded, processed, summarized and reported
    within the time periods specified in the SEC's rules and forms. Disclosure
    Controls are also designed with the objective of ensuring that such
    information is accumulated and communicated to our management, including the
    Chief Executive Officer to allow timely decisions regarding required
    disclosure.

o   Internal Controls are procedures which are designed with the objective of
    providing reasonable assurance that (1) our transactions are properly
    authorized; (2) our assets are safeguarded against unauthorized or improper
    use; and (3) our transactions are properly recorded and reported, all to
    permit the preparation of our financial statements in conformity with
    generally accepted accounting principles in the United States Of America.

There are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives

Based upon our management's evaluation, our chief executive officer and chief
financial officer have concluded that, as of January 31, 2005, the disclosure
and internal accounting controls provide reasonable assurance that information
required to be disclosed in the reports that we file under the Exchange Act is
recorded, processed, summarized and reported as and when required, including
with specific reference that our assets are safeguarded, transactions are
executed in accordance with management's authorizations and the financial
records are reliable for the purpose of preparing financial statements.

There were no significant changes in our internal and disclosure controls or in
other factors that could significantly affect such internal and disclosure
controls subsequent to the date of their evaluation.

ITEM 9B  OTHER INFORMATION

         None



                                       19


PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT

The officers and directors of Dectron, and further information concerning them,
are as follows:




NAME                                             AGE     POSITION
----                                             ---     --------

                                                                                                    
Ness Lakdawala                                   71      Chairman of the Board of Directors, President and
                                                         Chief Executive Officer

Roshan Katrak                                    61      Vice President of Human Relations and Director

Mauro Parissi                                    39      Chief Financial Officer, Secretary and Director

Michel Lecompte                                  55      Vice-President of Operations of RefPlus

Leena Lakdawala                                  37      Executive Vice President and Director

Aurelio Useche                                   37      Vice-President Operations

Gilles Richard                                   67      Director

Rustom M. Ghadiali                               67      Director

Dick  Driggs                                     67      Director


Each director is elected for a period of one year at our annual meeting of
stockholders and serves until the next such meeting and until his or her
successor is duly elected and qualified. Directors may be re-elected annually
without limitation. Officers are appointed by, and serve at the discretion of,
our board of directors. Our board of directors met 2 times during the year ended
January 31, 2005.

Set forth below is a biographical description of each of our directors and
executive officers based on information supplied by each of them.

NESS LAKDAWALA has served as the President, Chief Executive Officer and Chairman
of Dectron since our inception, and has also served as the President and Chief
Executive Officer of Dectron Inc. since 1994. Prior to joining Dectron Inc., Mr.
Lakdawala was President of Blanchard Ness Limited, a company which he founded in
1976. From 1987 to present, Mr. Lakdawala has served as the President of
Thermoplus. In January 1996, Thermoplus filed a proposal under the provisions of
the Bankruptcy Act of Canada, which gave full payment to secured creditors who
filed a proof of claim. From 1987-1988, Mr. Lakdawala was Chairman of the
Heating Refrigeration Air Conditioning Institute of Canada. Mr. Lakdawala has
also served as the Governor of the American Society of Heating, Refrigeration
and Air Conditioning Engineers, Inc. ("ASHRAE"), the organization that sets
ventilation standards in Canada and the United States. Mr. Lakdawala is
currently a member of ASHRAE and the Refrigeration Service Engineers Society.
Ness Lakdawala is the husband of Roshan Katrak and the father of Leena
Lakdawala.

                                       20


ROSHAN KATRAK has served as Vice President of Human Relations of Dectron since
our inception, and has served in the same capacity with Dectron Inc. since 1994.
She has also served as a Director of Dectron since 1998. From 1976 to 1994, she
was a Director of Blanchard Ness Limited, and from 1987 to present has been Vice
President of Human Relations for Thermoplus. In January 1996, Thermoplus filed a
proposal under the provisions of the Bankruptcy Act of Canada, which gave full
payment to secured creditors who filed a proof of claim. Mrs. Katrak received
her Honors Degree in Psychology in 1964. Roshan Katrak is the wife of Ness
Lakdawala and the mother of Leena Lakdawala.

MAURO PARISSI, C.A. has served as the Chief Financial Officer, Secretary and a
Director of Dectron since our inception, and has also served as the Controller
of Dectron Inc. since 1996. From 1995-1996, Mr. Parissi was an auditor with the
firm of Mizgala & Cie. From 1990-1995, Mr. Parissi was an auditor with the firm
of Hart, David Lloyd, F.C.A., C.I.P. Mr. Parissi is currently a member of The
Canadian Institute of Chartered Accountants and The Order of Chartered
Accountants of Quebec. Mr. Parissi received his graduate diploma in Public
Accountancy from McGill University in 1995.

MICHEL LECOMPTE has served as the Vice President of Operations since our
inception and President of RefPlus since 1994. From 1977 to 1994, Mr. Lecompte
was with Blanchard Ness as both Chief Engineer and Estimator. Mr. Lecompte was
involved in estimating commercial and industrial HVAC systems as well as
updating operating and maintenance procedures to improve existing equipment
efficiency. Mr. Lecompte also provided technical guidance to construction
departments and identified evaluated and resolved problems. Mr. Lecompte is a
member of ASHRAE and is a voting member of ASHRAE's Technical Committee which
establishes worldwide acceptance of HVAC standards. In addition, Mr. Lecompte
conducts many HVAC seminars focusing on refrigeration and heat recovery. Mr.
Lecompte is also a member of the Refrigeration Service Engineers Society.

LEENA LAKDAWALA has served as Executive Vice President and a Director of Dectron
since our inception, and has also served as Vice President of Production and
Administration for Dectron Inc. since 1994. She is currently a member of the
Heating Refrigeration and Air Conditioning Institute. Mrs. Lakdawala received
her B.A from Concordia University in 1993. Leena Lakdawala is the daughter of
Ness Lakdawala and Roshan Katrak. Leena Lakdawala is the wife of Aurelio Useche.

AURELIO USECHE has served as Vice-President, Operations since 2001. Mr. Useche
also held various positions within several subsidiaries within Dectron between
1993 and 2000. Mr. Useche received his Masters of Business Administration from
Queens University in 2001 and his Bachelors of Applied Arts and Sciences from
Concordia University in 1992. Mr. Useche is the husband of Leena Lakdawala.


GILLES RICHARD has served as a Director of Dectron since 2001. Mr. Richard is a
semi-retired businessman who was previously the President of Le Circuit Lincoln
Mercury, the sixth largest dealership in Canada. Mr. Richard was also involved
with partners in a distributorship of lift-truck (Mitsubishi's M-Lift), two
computer companies which created software applications car dealership, and most
recently the construction of commercial and residential buildings. Over the
years, Mr. Richard was a director or officer of various organizations such as
the Nada (National Automobile Association) and CADA (Canadian Automobile
Association).

RUSTOM M. GHADIALI joined Dectron Internationale as director in 2004. Mr.
Ghadiali retired from International Rectifier S.E. A. PVT Ltd., a leader in
Power Management Technology, after more than thirty-five years in various
positions within the International Rectifier Group. From 2002-2004, he was
Vice-President-Director International Rectifier S.E. A. PVT Ltd., Administration
Asian Operations. From 1994 to 2002, he was Vice-President, International
Rectifier Offshore Assembly Operations, South East Asia, India and China. Mr.
Ghadiali is a Chartered Secretary & Administrator.

DICK W. DRIGGS joined Dectron Internationale as director in 2004. Mr. Driggs
retired in 2003 as Chairman of the Board of Heat Controller, Inc. and President
of Addison Products Co. where he was in position from 1996 to 2003. He
previously held various executive positions with Addison Products, AAF-McQuay
Corporation, and Snyder General Corporation. Mr. Driggs is still active as
member of the Board of Directors for Heat Controller, Inc., Airguide
Manufacturing, LLC and Thermoguard, Triple-E USA. Mr. Driggs is a member of the
following Professional Organizations ASQC, APICS, IIE and ISA and of the
following Military Professional Organizations: MCA, MCROA, ROA, TROA and MOAA,
MCL, NL, MCMA, USNI, American Legion and VFW. Mr. Driggs retired in 1995 from
USMCR after 41 years of service and held the unique position of being the first
CWO-5 (Chief Warrant Officer) ever appointed in the USMC.

                                       21


Mr. Ness Lakdawala is the husband of Roshan Katrak, father of Leena Lakdawala
and father-in-law of Aurelio Useche

Ms Roshan Katrak is the wife of Ness Lakdawala, mother of Leena Lakdawala and
mother-in law of Mr. Aurelio Useche.

Ms Leena Lakdawala is the daughter of Ness Lakdawala and Roshan Katrak and the
wife of Aurelio Useche.

Mr. Useche is the husband of Ms Leena Lakdawala and son-in-law of Ness Lakdawala
and Roshan Katrak

Except as set forth herein, no officer or director of our company has, during
the last five years: (i) been convicted in or is currently subject to a pending
a criminal proceeding; (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to any Federal or
state securities or banking laws including, without limitation, in any way
limiting involvement in any business activity, or finding any violation with
respect to such law, nor (iii) has any bankruptcy petition been filed by or
against the business of which such person was an executive officer or a general
partner, whether at the time of the bankruptcy of for the two years prior
thereto.

COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act, as amended (the "Exchange Act")
requires our executive officers and directors, and persons who beneficially own
more than ten percent of our common stock, to file initial reports of ownership
and reports of changes in ownership with the SEC and the National Association of
Securities Dealers, Inc. Executive officers, directors and persons who
beneficially own more than ten percent of our common stock are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely upon our review of the copies of reporting forms furnished to us,
we do not believe that all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934 applicable to our directors, officers and any
persons holding 10% or more of our common stock with respect to our fiscal year
ended January 31, 2005, were satisfied on a timely basis.

AUDIT COMMITTEE

Our board of directors has an audit committee comprised of Gilles Richard,
Rustom M. Ghadiali and Dick Driggs. The audit committee makes recommendations to
our board of directors regarding the independent auditors for our company,
approves the scope of the annual audit activities of our independent auditors,
review audit results and will have general responsibility for all of our
auditing related matters.

The purpose of the Audit Committee is to assist our board of directors in the
oversight of the integrity of the consolidated financial statements of our
company, our company's compliance with legal and regulatory matters, the
independent auditor's qualifications and independence, and the performance of
our company's independent auditors. The primary responsibilities of the Audit
Committee are set forth in its charter, and include various matters with respect
to the oversight of our company's accounting and financial reporting process and
audits of the consolidated financial statements of our company on behalf of our
board of directors. The Audit Committee also selects the independent certified
public accountants to conduct the annual audit of the consolidated financial
statements of our company; reviews the proposed scope of such audit; reviews
accounting and financial controls of our company with the independent public
accountants and our financial accounting staff; and reviews and approves
transactions between us and our directors, officers, and their affiliates.

Accordingly, the Audit Committee discusses with Schwartz Levitsky Feldman, our
auditors, our audited financial statements, including among other things the
quality of our accounting principles, the methodologies and accounting
principles applied to significant transactions, the underlying processes and
estimates used by our management in our financial statements and the basis for
the auditor's conclusions regarding the reasonableness of those estimates, in
addition to the auditor's independence.

                                       22


AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors has determined that Rustom M. Ghadiali is our financial
expert.

CODE OF ETHICS
Our board of directors adopted a Code of Ethics that covers all executive
officers of our company and its subsidiaries. The Code of Ethics requires that
senior management avoid conflicts of interest; maintain the confidentiality of
information relating to our company; engage in transactions in shares of our
common stock only in compliance with applicable laws and regulations and the
requirements set forth in the Code of Ethics; and comply with other requirements
which are intended to ensure that such officers conduct business in an honest
and ethical manner and otherwise act with integrity and in the best interest of
our company. All our executive officers are required to affirm in writing that
they have reviewed and understand the Code of Ethics.

Any amendment of our Code of Ethics or waiver thereof applicable to any of our
principal executive officer, principal financial officer and controller,
principal accounting officer or persons performing similar functions will be
disclosed on our website within 5 days of the date of such amendment or waiver.
In the case of a waiver, the nature of the waiver, the name of the person to
whom the waiver was granted and the date of the waiver will also be disclosed. A
copy of our Code of Ethics is attached hereto as Exhibit 14 to the Form 10K
filed for the fiscal year ended January 31, 2004 and is incorporated herein by
reference.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our Bylaws provide that we shall indemnify to the fullest extent permitted by
Canadian law our directors and officers (and former officers and directors).
Such indemnification includes all costs and expenses and charges reasonably
incurred in connection with the defense of any civil, criminal or administrative
action or proceeding to which such person is made a party by reason of being or
having been our officer or director if such person was substantially successful
on the merits in his or her defense of the action and he or she acted honestly
and in good faith with a view to our best interests, and if a criminal or
administrative action that is enforced by a monetary penalty, such person had
reasonable grounds to believe his or her conduct was lawful.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted, our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by us of
expenses, incurred or paid by one of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person, we will, unless our counsel
opines that the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by us is against public policy as expressed in the Securities Act of 1933, as
amended, and we will be governed by the final adjudication of such issue

ITEM 11.  EXECUTIVE COMPENSATION


The following table sets forth certain information regarding compensation paid
by Dectron during each of the last three fiscal years to our Chief Executive
Officer and to each of our executive officers who earned in excess of $100,000
during the year ended January 31, 2005.


                                       23


SUMMARY COMPENSATION TABLE



                                                            --------------------------------------------------------------------
NAME AND PRINCIPAL POSITION         YEAR         ANNUAL         BONUS       RESTRICTED STOCK    OPTIONS/SARS        OTHER
                                                 SALARY                          AWARDS                          COMPENSATION
--------------------------------------------------------------------------------------------------------------------------------

                                                                                                       
Ness Lakdawala                      2005           196,327        0                0                 0                0
Chairman of the Board               2004           191,727        0                0                 0                0
of Directors, President and         2003           142,380        0                0                 0                0
Chief Executive Officer (1)

Leena Lakdawala                     2005           117,679      77,635             0                 0                0
Executive Vice President and        2004           109,154      18,547             0                 0                0
Vice-President, Production and      2003            85,310      26,191             0                 0                0
Administration and Director (2)

Aurelio Useche                      2005           117,679      77,635             0                 0                0
Vice-President Operations (2)       2004           109,154      18,547             0                 0                0
                                    2003            85,310      26,191             0                 0                0
                                                            --------------------------------------------------------------------


(1)  This reflects the aggregate salaries paid to Mr. Lakdawala during the
     fiscal years presented by Dectron, RefPlus and Thermoplus.

(2)  This reflects the aggregate salaries paid to the above individuals each
     married to each other.



Employment Agreements

We entered into an employment agreement with Mr. Ness Lakdawala, our Chief
Executive Officer on October 5, 1998, the effective date of our initial public
offering. The employment agreement is for a term of two years, renewable for
additional one-year periods. The employment agreement entitled Mr. Lakdawala to
an annual salary of $200,000, adjusted annually for increases in the Consumer
Price Index. In the event that we are subject to a takeover or a change of
control event, Mr. Lakdawala is entitled to a bonus equal, on an after tax
basis, to five times his then current annual base salary. Mr. Lakdawala's
employment agreement contains a non-competition provision, which forbids him
from engaging in a competitive business during his employment and for a period
of one year thereafter. Mr. Lakdawala's employment agreement has been extended
for an additional two years at the same conditions as above in October 2000, for
an additional two years in October 2002 and for an additional two years in
October 2004.

We do not currently have employment agreements with any of our other officers or
directors.

BOARD COMPENSATION REPORT

EXECUTIVE COMPENSATION POLICY

Dectron's executive compensation policy is designed to attract, motivate, reward
and retain the key executive talent necessary to achieve our business objectives
and contribute to our long-term success. In order to meet these goals, Dectron's
compensation policy for our executive officers focuses primarily on determining
appropriate salary levels and providing long-term stock-based incentives. To a
lesser extent, the Dectron's compensation policy also contemplates
performance-based cash bonuses. Dectron's compensation principles for the Chief
Executive Officer are identical to those applicable to Dectron's other executive
officers.

                                       24


Cash Compensation. In determining our recommendations for adjustments to
officers' base salaries for Fiscal 2005 we focused primarily on the scope of
each officer's responsibilities, each officer's contributions to Dectron's
success in moving toward its long-term goals during the fiscal year, the
accomplishment of goals set by the officer and approved by our board of
directors for that year, our assessment of the quality of services rendered by
the officer, comparison with compensation for officers of comparable companies
and an appraisal of our financial position. In certain situations, relating
primarily to the completion of important transactions or developments, we may
also pay cash bonuses, the amount of which will be determined based on the
contribution of the officer and the benefit to Dectron of the transaction or
development.

Equity Compensation. The grant of stock options to executive officers
constitutes an important element of long-term compensation for the executive
officers. The grant of stock options increases management's equity ownership in
us with the goal of ensuring that the interests of management remain closely
aligned with those of our stockholders. Our board of directors believes that
stock options in Dectron provide a direct link between executive compensation
and stockholder value. By attaching vesting requirements, stock options also
create an incentive for executive officers to remain with us for the long term.

CHIEF EXECUTIVE OFFICER COMPENSATION

As indicated above, the factors and criteria upon which the compensation of Ness
Lakdawala, our Chief Executive Officer, is based are identical to the criteria
used in evaluating the compensation packages of the other executive officers of
Dectron. The Chief Executive Officer's individual contributions to Dectron
include his leadership role in establishing and retaining a strong management
team, developing and implementing our business plans and attracting investment
capital to Dectron. In addition, we have reviewed compensation levels of chief
executive officers at comparable companies within our industry.

OTHER COMPENSATION

Outside directors may be paid an honorarium for attending meetings of our board
of directors in an amount that management anticipates will not exceed $1,000 per
meeting.

STOCK OPTION PLAN

2001 Stock Option Plan

We also adopted the 2001 Stock Option Plan (the "2001 Plan") pursuant to which
500,000 shares of Common Stock are reserved for issuance, 108,500 options are
currently issued and outstanding.

On January 4, 2002, our board of directors granted options under our 2001 Stock
Option Plan to certain members of our Board and certain employees. Leena
Lakdawala, Roshan Katrak, Mauro Parissi, Liam Cheung, and Gilles Richard were
granted 15,000, 15,000, 5,000, 3,000 and 3,000 options, respectively. Subject to
certain limitations, the options granted are exercisable one year after
issuance. Subsequent to the one-year anniversary date of the grant, the option
holders may exercise the option up to 25% per year of the total options granted
for the following four years. Each of the options will be fully exercisable on
January 4, 2006, and expire on January 4, 20117. The exercise price of the
options is $4.20

The 2001 Plan is administered by our board of directors, who will determine,
among other things, those individuals who shall receive options, the time period
during which the options may be partially or fully exercised, the number of
shares of Common Stock issuable upon the exercise of the options and the option
exercise price.

The 2001 Plan is effective for a period of ten years, expiring in 2011. Options
may be granted to officers, directors, consultants, key employees, advisors and
similar parties who provide us with their skills and expertise. The 2001 Plan is
designed to enable management to attract and retain qualified and competent
directors, employees, consultants and independent contractors. Options granted
under the 2001 Plan may be exercisable for up to ten years, and shall be at an
exercise price all as determined by our board of directors. Options are
non-transferable except by the laws of descent and distribution or a change in
control of our company as defined in the 2001 Plan, and are exercisable only by
the participant during his or her lifetime. Change in control includes (i) the
sale of substantially all of the assets of Dectron and merger or consolidation
with another company, or (ii) a majority of our board of directors changes other
than by election by the stockholders pursuant to Board solicitation or by
vacancies filled by our board of directors caused by death or resignation of
such person.

                                       25


If a participant ceases affiliation with Dectron by reason of death, permanent
disability or retirement at or after age 70, the option remains exercisable for
one year from such occurrence but not beyond the option's expiration date. Other
types of termination allow the participant three months to exercise, except for
termination for cause, which results in immediate termination of the option.

The exercise price of an option may not be less than the fair market value per
share of Common Stock on the date that the option is granted in order to receive
certain tax benefits under the Income Tax Act of Canada (the "ITA"). The ITA
requires that the exercise price of all future options will be at least 85% of
the fair market value of the Common Stock on the date of grant of the options. A
benefit equal to the amount by which the fair market value of the shares at the
time the employee acquires them exceeds the total of the amount paid for the
shares or the amount paid for the right to acquire the shares shall be deemed to
be received by the employee in the year the shares are acquired pursuant to
paragraph 7(1) of the ITA. Where the exercise price of the option is equal to
the fair market value of the shares at the time the option is granted, paragraph
110(1)(d) of the ITA allows a deduction from income equal to one quarter of the
benefit as calculated above. If the exercise price of the option is less than
the fair market value at the time it is granted, no deduction under paragraph
110(1)(d) is permitted. Options granted to any non-employees, whether directors
or consultants or otherwise will confer a tax benefit in contemplation of the
person becoming a stockholder pursuant to subsection 15(1) of the ITA.

Options under the 2001 Plan must be issued within ten years from the effective
date of the 2001 Plan.

Any unexercised options that expire or that terminate upon an employee's ceasing
to be employed by Dectron become available again for issuance under the 2001
Plan.

The 2001 Plan may be terminated or amended at any time by the our board of
directors, except that the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the 2001 Plan may not be
increased without the consent of our stockholders.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

We do not have a compensation committee. While we have not yet been able to
identify and appoint suitable nominees as of the date of this annual report, our
management is currently diligently pursuing candidates therefor.


                                       26



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of April 29, 2005 with
respect to each beneficial owner of 5% or more of the outstanding shares of our
common stock, each of our officers and directors, and all of our officers and
directors as a group:




                                                                                                PERCENTAGE OF
NAMES AND ADDRESS OF BENEFICIAL  OWNER (1)                        AMOUNT AND NATURE OF             SHARES 
                                                                BENEFICIAL OWNERSHIP (2)        OUTSTANDING
-----------------------------------------------------------  -----------------------------------------------------

                                                                                             
Ness Lakdawala                                                             1,745,309   (3)                  55.3%

Roshan Katrak                                                              1,745,309   (4)                  55.3%

Leena Lakdawala                                                              149,650   (5)                   4.7%

Aurelio Useche                                                               149,650   (6)                   4.7%

Mauro Parissi                                                                 23,390   (7)                      *

Michel Lecompte                                                               23,000   (8)                      *

Gilles Richard                                                                 2,250   (9)                      *

Rustom M. Ghadiali                                                                 -                            *

Dick W. Driggs                                                                     -                            *

Total                                                                      1,932,349                        60.8%



* Less than one %.

(1) The address of each individual is c/o Dectron Internationale Inc., 4300
Poirier Blvd., Montreal, Quebec, Canada H4R 2C5.

(2) Based upon information furnished to us by the directors and executive
officers or obtained from our stock transfer books. We are informed that these
persons hold the sole voting and dispositive power with respect to the common
stock except as noted herein. For purposes of computing "beneficial ownership"
and the percentage of outstanding common stock held by each person or group of
persons named above as of the date of this annual report, any security which
such person or group of persons has the right to acquire within sixty (60) days
after such date is deemed to be outstanding for the purpose of computing
beneficial ownership and the percentage ownership of such person or persons, but
is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.

(3) Represents (i) 43,562 shares of Common Stock directly owned, (ii) 127,934
shares of Common Stock and 11,250 options to purchase Common Stock owned by
Roshan Katrak, Mr. Lakdawala's wife, (iii) 69,684 shares of Common Stock owned
by Roshaness Inc., a company owned by Mr. Lakdawala, and (iv) 1,492,879 owned by
3103-7195 Quebec Inc., a company owned by Mr. Lakdawala's spouse and children.

(4) Represents (i) 127,934 shares of Common Stock and 11,250 options to purchase
Common Stock directly owned, (ii) 43,562 shares of Common Stock owned by Ness
Lakdawala, Ms. Katrak's husband, (iii) 69,684 shares of Common Stock owned by
Roshaness Inc., a Company owned by Ness Lakdawala, and (iv) 1,492,879 shares
owned by 3103-7195 Quebec Inc., a company owned by Ms. Katrak and her children.

                                       27



(5)  Represents (i) 73,400 shares of Common Stock and 11,250 options to purchase
     Common Stock directly owned, and (ii) 63,500 shares of Common Stock and 750
     options owned by Aurelio Useche, Ms Lakdawala's husband.

(6)  Represents (i) 63,500 shares of Common Stock and 750 options to purchase
     Common Stock owned directly And (ii) 73,400 shares of Common Stock and
     11,250 options to purchase Common Stock owned by Leena Lakdawala, Mr.
     Useche's wife.


(7)  Represents (i) 18,500 shares of Common Stock and 3.750 options to purchase
     Common Stock directly owned, and (ii) 500 shares of common Stock and 750
     options owned by Suzie Lapointe, Mr. Parissi's wife.

(8)  Includes 3,000 options to purchase Common Stock

(9)  Includes 2,250 options to purchase Common Stock.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We lease our St. Hubert, Quebec manufacturing facility from Roshan Katrak, our
Vice President of Human Relations and the wife of Ness Lakdawala, our President,
Chairman and CEO, for a monthly rent of $ 3,958 per month. We believe that the
lease was made on terms no less favorable than could be obtained from
unaffiliated third parties.

We lease our Grande Allee manufacturing facilities from Investiness Inc., a
company owned by Ness Lakdawala's spouse and children, for an aggregate monthly
lease payment of $ 19,942. We believe that the lease was made on terms no less
favorable than could be obtained from unaffiliated third parties.

Immediately prior to the effective date of the Registration Statement for our
initial public offering (the i"Offering"), we restructured our corporate
structure ("Restructuring"). In order to complete the Restructuring, (i) Dectron
Inc., which prior to the Restructuring owned a majority interest in RefPlus,
acquired the minority interests in RefPlus, which included both common stock and
preferred stock (and assumed RefPlus' loan payables of approximately
Cdn$125,000) which is included in the Cdn$1,149,050 number mentioned below) in
exchange for 62,500 shares of Dectron's Common Stock and Cdn$102,503; (ii)
Dectron Inc. acquired all of the outstanding securities of Thermoplus, which
included both Common Stock and preferred stock, and assumed Thermoplus' parent
company's loan payables (approximately Cdn$497,000, which amount is included in
the Cdn$1,149,050 number mentioned below) in exchange for 194,621 shares of
Dectron's Common Stock and Cdn$423,738, and (iii) Dectron acquired all of the
issued and outstanding securities of Dectron Inc. in exchange for 1,492,879
shares of the Dectron's Common Stock. The shares of Dectron Inc. were owned by
159653 Canada, Inc. which was a holding company beneficially owned by Mr.
Lakdawala. The RefPlus and Thermoplus' parent company loans payable represent
the repayment of loans made to such companies. In connection with the
Restructuring, we issued 1,750,000 shares of Common Stock and promissory notes
in the aggregate amount of Cdn$1,149,050. Of this amount, Cdn$557,050 (or
approximately U.S.$400,000) were repaid out of the proceeds of the Offering. Of
these amounts, an aggregate amount of 1,674,059 shares of Common Stock and
promissory notes in the aggregate amount of Cdn$592,000 were issued to Ness
Lakdawala, and his affiliates. The Cdn$592,000 was repaid out of Dectron's cash
flow, without interest, in 12 equal monthly installments which repayment
commenced three months after the Offering.

Mr. Lakdawala and his affiliates received their 1,674,059 shares of Dectron for
contributing their interest in Dectron's subsidiaries. Specifically, Mr.
Lakdawala's affiliate received 1,492,879 shares in exchange for 100% of 159653
Canada Inc., which owned 100% of Dectron Inc. prior to the Restructuring;
156,808 shares for a portion of their shares of KeepKool which represented 86%
of KeepKool (KeepKool owned 94% of Thermoplus prior to the Restructuring); and
24,372 share for his shares of 3294242 Canada Inc. which represented 61% of
3294242 (3294242 owned 49.99% of RefPlus, Inc. prior to the Restructuring).
Dectron Inc. owned 50.01% of RefPlus Inc. prior to the Restructuring. The two
promissory notes totaling Cdn$592,000 were issued to Mr. Lakdawala and his
affiliates in exchange for Cdn$222,000 of debt owed to Mr. Lakdawala by KeepKool
and Cdn$370,000 for a portion of his shares of KeepKool.

                                       28


The terms of the Restructuring were negotiated between Mr. Lakdawala and the
other owners of the minority interest in RefPlus and Thermoplus. Mr. Lakdawala
and his affiliates held a majority interest in Thermoplus prior to the
Restructuring. Dectron owned a majority interest in RefPlus prior to the
Restructuring and Mr. Lakdawala owned a majority of the 49.99% interest in
RefPlus purchased by Dectron in the Restructuring. The value was arrived at
based on negotiations between Dectron and the sellers (other than Mr. Lakdawala
and his affiliates). Dectron did not have two independent disinterested
directors to ratify the transactions. There can be no assurance that such
transaction was on terms no less favorable than Dectron could have obtained from
other third parties, although management believes that they were as favorable.

Between March 1999 and January 2005, we made loans of $159,954 to Mauro Parissi,
our Chief Financial Officer, and $253,415 to Leena Lakdawala, our Executive
Vice-President. The loans were used to finance purchase of the Dectron's stock
and bore interest at the Canadian prescribed interest rate of five percent (5%).
As of Jan. 31, 2005, the loan balances of Mr. Parissi and Mrs. Lakdawala are
$264,400 and $326,305 respectively. Mrs. Lakdawala and Mr. Parissi are in the
process of financing these loans with an independent outside source.

All future material transactions, including any loans, between Dectron and its
officers, directors, principal stockholders or affiliates of any of them have
been and will be on terms no less favorable to Dectron than those that can be
obtained from unaffiliated third parties, and will be approved in advance by a
majority of the independent and disinterested directors who had access, at
Dectron's expense, to Dectron's independent legal counsel.



                                       29


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees 

The aggregate fees billed by Schwartz Levitsky Feldman LLP for the audit of our
annual financial statements for the fiscal year ended January 31, 2005 and the
reviews of the financial statements included in our Forms 10-Q for the fiscal
year ended January 31, 2005 were $108,075.

The aggregate fees billed by Schwartz Levitsky Feldman LLP for the audit of our
annual financial statements for the fiscal year ended January 31, 2004 and the
reviews of the financial information included in our Forms 10-Q for the fiscal
year ended January 31, 2004 were $100,953.

Audit Related Fees 

No fees were billed by Schwartz Levitsky Feldman LLP for the fiscal years ended
January 31, 2005 or January 31, 2004 for services related to the audit or review
of our financial statements that are not included under the caption "Audit
Fees".

No fees were billed by Schwartz Levitsky Feldman LLP for the fiscal years ended
January 31, 2005 or January 31, 2004 for designing, operating, supervising or
implementing any of our financial information systems or any hardware or
software systems for our financial information.

Tax Fees 

$15,143 in fees were billed by Schwartz Levitsky Feldman LLP for tax compliance,
tax advice and tax planning in the fiscal year ended January 31, 2005.

$10,140 in fees were billed by Schwartz Levitsky Feldman LLP for tax compliance,
tax advice and tax planning in the fiscal year ended January 31, 2004.

All Other Fees 

$5,199 and nil in fees were billed by Schwartz Levitsky Feldman LLP for any
other services rendered by them during the fiscal years ended January 31, 2005
and January 31, 2004.

Since January 1, 2004, the audit committee has adopted policies and procedures
for pre-approving all non-audit work performed by the auditors. Specifically,
the committee must pre-approve the use of the auditors for all such services.
The audit committee has pre-approved all non-audit work since that time and in
making its determination has considered whether the provision of such services
was compatible with the independence of the auditors.

Our audit committee believes that the provision by Schwartz Levitsky Feldman LLP
of services in addition to audit services in fiscal 2005 and 2004 were
compatible with maintaining their independence.


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements.


                                                                               
Financial Statements: 
Table of Contents                                                               F - 1
Consolidated Balance Sheets for the years ended January 31, 20053 and           F - 2 to F - 3 

January 31, 20042 Consolidated Statements of Operations for the years
ended January 31, 20053, 20042 and 20031                                        F - 4 to F-5 

Consolidated Statements of Cash Flows for the years ended 
January 31, 20053, 20042 and 20031                                              F - 6 to F - 8 

Consolidated Statements of Stockholders' Equity for the years ended 
January 31, 20053, 20042 and 20031                                              F - 9 

Notes to Consolidated Financial Statements                                      F - 10 to F - 26



                                       30


(b) Exhibits.


         
14          Code of Ethics (1)

21.1        Subsidiaries of Registrant. (1)

31.1        Certification of the Chief Executive  Officer pursuant to Section 302 of the  Sarbanes-Oxley  Act
            of 2002 ("Sarbanes-Oxley"). (2)

31.2        Certification of the Chief Financial  Officer pursuant to Section 302 of the  Sarbanes-Oxley  Act
            of 2002 ("Sarbanes-Oxley"). (2)

32.1        Certification  Pursuant  to 18 U.S.C.  Section  1350,  as Adopted  Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002. (2)


(1) Incorporated by reference from Form 10-K as filed with the SEC on May 7,
    2004. 
(2) Filed herewith.


                                       31


SIGNATURES



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                           DECTRON INTERNATIONALE INC.


                             By: /s/ Ness Lakdawala
                                 ----------------------
                                 Ness Lakdawala
                                 Chairman and Chief Executive Officer

Dated:   May 2, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.



                                                                                                      
/s/ Ness Lakdawala             Chairman, President, Chief Executive Officer                             May 2, 2005
------------------
Ness Lakdawala

/s/ Roshan Katrak              Vice President of Human Relations and Director                           May 2, 2005
-----------------
Roshan Katrak

/s/ Mauro Parissi              Chief Financial Officer, Secretary and Director                          May 2, 2005
-----------------
Mauro Parissi

Michel Lecompte                Vice President of Operations of RefPlus                                  May 2, 2005
-------------------
Michel Lecompte

/s/ Leena Lakdawala            Executive Vice President and Director                                    May 2, 2005
-------------------
Leena Lakdawala

Gilles Richard                 Director                                                                 May 2, 2005
------------------
Gilles Richard

Rustom Ghadiali                Director                                                                 May 2, 2005
------------------
Rustom Ghadiali

Dick Driggs                    Director                                                                 May 2, 2005
------------------
Dick Driggs





                                       32


                           DECTRON INTERNATIONALE INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2005



                           DECTRON INTERNATIONALE INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2005





                                TABLE OF CONTENTS


Report of Independent Registered Public Accounting Firm                   1
                                                                
Consolidated Balance Sheets                                           2 - 3
                                                                
Consolidated Statements of Operations                                 4 - 5
                                                                
Consolidated Statements of Cash Flows                                 6 - 8
                                                                
Consolidated Statements of Stockholders' Equity                           9
                                                                
Notes to Consolidated Financial Statements                          10 - 29



SCHWARTZ LEVITSKY FELDMAN  LLP
COMPTABLES AGREES
CHARTERED ACCOUNTANTS
MONTREAL, TORONTO, OTTAWA





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders of
Dectron Internationale Inc.


We have audited the consolidated balance sheets of Dectron Internationale Inc.
as at January 31, 2005 and 2004 and the related consolidated statements of
operations, cash flows and stockholders' equity for each of the years ended
January 31, 2005, 2004 and 2003. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dectron
Internationale Inc. as at January 31, 2005 and 2004 and the results of its
operations and its cash flows for each of the years ended January 31, 2005, 2004
and 2003, in conformity with generally accepted accounting principles in the
United States of America.

Since the accompanying financial statements have not been prepared and audited
in accordance with generally accepted accounting principles and generally
accepted auditing standards in Canada, they may not satisfy the reporting
requirements of Canadian statutes and regulations.

The company is not required to have, nor were we engaged to perform, an audit of
its internal controls over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's internal controls
over financial reporting. Accordingly we express no such opinion.





Montreal, Quebec
April 8, 2005                                           CHARTERED ACCOUNTANTS



1980, rue Sherbrooke Quest, 10e etage
Montreal, (Quebec) H3H 1E8
Tel: 514 937 6392
Fax: 514 933 9710



DECTRON INTERNATIONALE INC.

CONSOLIDATED BALANCE SHEETS

AS AT JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                             PAGE 2
-------------------------------------------------------------------------------





                                                                                       2005                 2004
                                                                                 ------------------   ------------------
                                                                                                             
 ASSETS

 CURRENT

      Cash                                                                       $      1,075,220     $      2,457,346
      Accounts receivable (note 4)                                                      9,680,250           11,050,657
      Income taxes receivable                                                              87,805                    -
      Inventory (note 5)                                                               10,044,194            9,208,065
      Prepaid expenses and sundry assets                                                  568,976              685,142
      Loans receivable (note 6)                                                            68,836               17,769
      Current assets held by discontinued operations (note 15)                          3,414,543            1,313,625
                                                                                 ------------------   ------------------
                                                                                       24,939,824           24,732,604


 LOANS RECEIVABLE (NOTE 6)                                                              1,210,989              576,816

 PROPERTY, PLANT AND EQUIPMENT (NOTE 7)                                                 7,541,579            7,904,410

 INTANGIBLES (NOTE 8)                                                                      79,963               91,310

 GOODWILL                                                                               1,661,144            1,556,319

 DEFERRED INCOME TAXES                                                                    254,419              375,613

 LONG-LIVED ASSETS HELD BY DISCONTINUED OPERATIONS (NOTE 15)                                    -            3,892,378
                                                                                 ------------------   ------------------

                                                                                 $     35,687,918     $     39,129,450
                                                                                 ==================   ==================




APPROVED ON BEHALF OF THE BOARD:

                                     Director
------------------------------------


                                     Director
------------------------------------


The accompanying notes are an integral part of these consolidated financial
statements.



DECTRON INTERNATIONALE INC.

CONSOLIDATED BALANCE SHEETS

AS AT JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                             PAGE 3
-------------------------------------------------------------------------------




                                                                                     2005                 2004
                                                                               ------------------   ------------------
                                                                                                          
 LIABILITIES

 CURRENT

      Bank loans (note 9)                                                      $    11,642,981      $    13,502,219
      Accounts payable and accrued expenses (note 10)                                6,184,170            4,952,072
      Income taxes payable                                                                   -              359,605
      Current portion of long-term debt (note 11)                                    2,348,870            1,226,865
      Deferred revenue                                                                   4,580                3,616
      Current liabilities held by discontinued operations (note 15)                    341,884              402,889
                                                                               ------------------   ------------------

                                                                                    20,522,485           20,447,266

 LONG-TERM DEBT (NOTE 11)                                                            2,370,913            5,154,607

 DEFERRED REVENUE                                                                    1,477,153            1,707,408
                                                                               ------------------   ------------------

                                                                                    24,370,551           27,309,281
                                                                               ------------------   ------------------

 STOCKHOLDERS' EQUITY

 CAPITAL STOCK (NOTE 12)                                                             6,873,335            7,128,154

 TREASURY STOCK                                                                        (88,780)             (88,780)

 ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)                                         2,304,495            1,564,072

 RETAINED EARNINGS                                                                   2,228,317            3,216,723
                                                                               ------------------   ------------------

                                                                                    11,317,367           11,820,169
                                                                               ------------------   ------------------

                                                                               $    35,687,918      $    39,129,450
                                                                               ==================   ==================



The accompanying notes are an integral part of these consolidated financial
statements.


DECTRON INTERNATIONALE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDING JANUARY 31

(Amounts Expressed in United States Dollars)                             PAGE 4
-------------------------------------------------------------------------------




                                                                  2005                  2004                  2003
                                                            -----------------     -----------------     -----------------
                                                                                                           
 SALES                                                      $    40,910,601       $    39,654,922       $    34,424,891

      Cost of sales                                              29,260,966            25,283,942            22,032,358
                                                            -----------------     -----------------     -----------------

 GROSS PROFIT                                                    11,649,635            14,370,980            12,392,533
                                                            -----------------     -----------------     -----------------

 OPERATING EXPENSES

      Selling                                                     5,288,563             5,518,195             4,667,481
      General and administrative                                  3,369,046             3,224,179             3,131,818
      Net restructuring and other unusual items (note 13)           551,607               911,407               132,342
      Depreciation and amortization                               1,268,526             1,366,592               991,229
      Interest                                                    1,036,142             1,272,485               790,006
                                                            -----------------     -----------------     -----------------

                                                                 11,513,884            12,292,858             9,712,876
                                                            -----------------     -----------------     -----------------


 EARNINGS BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS           135,751             2,078,122             2,679,657

      Income taxes (note 14)                                        584,839               235,104               577,410
                                                            -----------------     -----------------     -----------------

 EARNINGS (LOSS) BEFORE DISCONTINUED OPERATIONS                    (449,088)            1,843,018             2,102,247

      Loss from discontinued operations, net of tax
      (note 15)                                                  (1,429,012)           (3,630,854)           (1,556,721)
      Gain on disposal of discontinued operations, net
      of tax (note 15)                                              889,694                90,332               590,686
                                                            -----------------     -----------------     -----------------

 NET EARNINGS (LOSS)                                        $      (988,406)      $    (1,697,504)      $     1,136,212
                                                            =================     =================     =================


The accompanying notes are an integral part of these consolidated financial
statements.


DECTRON INTERNATIONALE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS ENDING JANUARY 31

(Amounts Expressed in United States Dollars)                             PAGE 5
-------------------------------------------------------------------------------




                                                                  2005                  2004                  2003
                                                            -----------------     -----------------     -----------------
                                                                                                           
 NET EARNINGS (LOSS) PER COMMON SHARE, BASIC AND DILUTED

       Continuing operations                                $         (0.14)      $          0.62       $          0.74
       Discontinued operations                                        (0.47)                (1.22)                (0.55)
       Disposal of discontinued operations                             0.29                  0.03                  0.21
                                                            -----------------     -----------------     -----------------

                                                            $         (0.32)      $         (0.57)      $          0.40
                                                            =================     =================     =================

 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

      Basic                                                       3,066,851             2,973,750             2,816,181
      Diluted                                                     3,066,851             2,973,750             2,848,729


The accompanying notes are an integral part of these consolidated financial
statements.


DECTRON INTERNATIONALE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING JANUARY 31

(Amounts Expressed in United States Dollars)                             PAGE 6
-------------------------------------------------------------------------------




                                                                    2005                  2004                  2003
                                                             -------------------    ------------------    ------------------
                                                                                                               
OPERATING ACTIVITIES

Net earnings (loss) from continuing operations               $        (449,088)     $       1,843,018     $       2,102,247

Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
     Depreciation and amortization                                   1,268,526              1,366,592               991,229
     Decrease (increase) in accounts receivable                      1,370,407             (1,521,309)           (1,859,562)
     Decrease (increase) in income taxes receivable                    (87,805)                     -                58,313
     Increase in inventory                                            (836,129)            (1,469,116)             (287,840)
     Decrease (increase) in prepaid expenses and 
       sundry assets                                                   116,166               (183,398)                7,334
     Decrease (increase) in deferred income taxes                      121,194               (215,836)              (95,749)
     Increase in accounts payable and accrued expenses               1,232,098                825,796               453,816
     Increase (decrease) in income taxes payable                      (359,605)              (324,973)              684,578
     Increase (decrease) in deferred revenue                          (229,291)               263,483               103,725
                                                             -------------------    ------------------    ------------------

Net cash provided by operating activities                            2,146,473                584,257             2,158,091
                                                             -------------------    ------------------    ------------------


The accompanying notes are an integral part of these consolidated financial
statements.


DECTRON INTERNATIONALE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDING JANUARY 31

(Amounts Expressed in United States Dollars)                             PAGE 7
-------------------------------------------------------------------------------




                                                                   2005                 2004                 2003
                                                             ------------------   ------------------   ------------------
                                                                                                            
  INVESTING ACTIVITIES

       Acquisition of property, plant and equipment                  (369,049)          (1,307,302)            (667,736)
       Acquisition of intangibles                                           -                    -              (66,227)
                                                             ------------------   ------------------   ------------------

  Net cash used in investing activities                              (369,049)          (1,307,302)            (733,963)
                                                             ------------------   ------------------   ------------------

  FINANCING ACTIVITIES

       Repayments from (advances to) loans receivable                (685,240)            (100,444)              23,023
       Advances from (repayments of) bank loans                    (1,859,238)           4,314,685            1,816,336
       Net advances from (repayments of) long-term debt            (1,927,663)            (989,718)           1,003,685
       Repayments of loans payable                                          -                    -             (192,355)
       Issuance of shares                                             543,750              162,750              502,300
       Repayments of (advances for) share purchase plan
       receivable                                                    (798,569)            (170,819)            (119,010)
                                                             ------------------   ------------------   ------------------

  Net cash provided by (used in) financing activities              (4,726,960)           3,216,454            3,033,979
                                                             ------------------   ------------------   ------------------

  EFFECT OF FOREIGN CURRENCY EXCHANGE RATE ON CASH AND CASH
  EQUIVALENTS                                                         376,273            1,030,652              183,299
                                                             ------------------   ------------------   ------------------

  EFFECT OF DISCONTINUED OPERATIONS (NOTE 15)                       1,191,137           (1,882,724)          (3,904,314)
                                                             ------------------   ------------------   ------------------


The accompanying notes are an integral part of these consolidated financial
statements.



DECTRON INTERNATIONALE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDING JANUARY 31

(Amounts Expressed in United States Dollars)                             PAGE 8
-------------------------------------------------------------------------------




                                                                  2005                 2004                 2003
                                                            ------------------   ------------------   ------------------
                                                                                                          
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             (1,382,126)           1,641,337              737,092

 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                      2,457,346              816,009               78,917
                                                            ------------------   ------------------   ------------------

 CASH AND CASH EQUIVALENTS, END OF YEAR                     $      1,075,220     $      2,457,346     $        816,009
                                                            ==================   ==================   ==================

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

      INTEREST PAID                                         $        991,630     $      1,272,059     $        928,851
                                                            ==================   ==================   ==================

      INCOME TAXES PAID                                     $        532,658     $        349,285     $        309,386
                                                            ==================   ==================   ==================



The accompanying notes are an integral part of these consolidated financial
statements.


DECTRON INTERNATIONALE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDING JANUARY 31

(Amounts Expressed in United States Dollars)                             PAGE 9
-------------------------------------------------------------------------------




                                                                        CUMULATIVE           OTHER
                                                                         RETAINED        COMPREHENSIVE        TREASURY
                                   NUMBER              AMOUNT            EARNINGS            INCOME             STOCK
                                ----------------   ---------------   -----------------  -----------------  ----------------
                                                                                                      
 Balance January 31, 2002            2,795,000     $    6,752,933    $    3,778,015     $      (591,822)   $     (88,780)
                                ================   ===============   =================  =================  ================

 Share purchase plan
   receivable                                -     $     (119,010)   $            -     $             -    $           -
 Issuance of shares                    124,500            502,300                 -                   -                -
 Foreign currency translation                -                  -                 -             463,058                -
 Net earnings for the year                   -                  -         1,136,212                   -                -
                                ----------------   ---------------   -----------------  -----------------  ----------------

 Balance January 31, 2003            2,919,500     $    7,136,223    $    4,914,227     $      (128,764)   $     (88,780)
                                ================   ===============   =================  =================  ================

 Share purchase plan           
   receivable                                -     $     (170,819)   $            -     $             -    $           -
 Issuance of shares                     54,250            162,750                 -                   -                -
 Foreign currency translation                -                  -                 -           1,692,836                -
 Net loss for the year                       -                  -        (1,697,504)                  -                -
                                ----------------   ---------------   -----------------  -----------------  ----------------

 Balance, January 31, 2004           2,973,750     $    7,128,154    $    3,216,723     $     1,564,072    $     (88,780)
                                ================   ===============   =================  =================  ================

 Share purchase plan           
   receivable                                -     $     (798,569)   $            -     $             -    $           -
 Issuance of shares                    181,250            543,750                 -                   -                -
 Foreign currency translation                -                  -                 -             740,423                -
 Net loss for the year                       -                  -          (988,406)                  -                -
                                ----------------   ---------------   -----------------  -----------------  ----------------

 Balance, January 31, 2005           3,155,000      $   6,873,335     $   2,228,317      $    2,304,495     $    (88,780)
                                ================   ===============   =================  =================  ================



The accompanying notes are an integral part of these consolidated financial
statements.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 10
-------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION

   These consolidated financial statements include the accounts of Dectron
   Internationale Inc., International Water Makers Inc., Dectron Inc.
   Consolidated and Circul-Aire Group.

   Dectron Inc. Consolidated is comprised of Dectron Inc. and of its
   wholly-owned subsidiaries, Refplus Inc., Thermoplus Air Inc., Dectron U.S.A.
   Inc., and Liberty Drive Property Inc. (formerly IPAC 2000 Inc.)

   Circul-Aire Group is comprised of Cascade Technologies Inc., and of its
   wholly-owned subsidiaries, Purafil Canada Inc. and Circul-aire Inc. and its
   wholly-owned subsidiary Tranzmetal Inc.

   All inter-company profits, transactions and account balances have been
   eliminated.

   PRINCIPAL ACTIVITIES

   The company Dectron Internationale Inc., was incorporated on March 30, 1998.
   These companies are principally engaged in the production of
   dehumidification, refrigeration, indoor air quality (IAQ), ventilation, air
   conditioning and air purification systems in Canada and its distribution
   world-wide. The activities of Dectron Internationale Inc. and Cascade
   Technologies Inc., are immaterial in the aggregate, as their only activity is
   to hold the investments in the operating companies.

   USE OF ESTIMATES

   The preparation of financial statements in conformity with generally accepted
   accounting principles in the United States of America requires management to
   make estimates and assumptions that affect certain 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.

   CASH AND CASH EQUIVALENTS

   Cash and cash equivalents include cash on hand, amounts due to banks and any
   other highly liquid investments purchased with a maturity of three months or
   less. The carrying amounts approximate fair value because of the short
   maturity of these instruments.

   REVENUE RECOGNITION

   Revenue from product sales is recognized when the goods are delivered to the
   customer provided that: title and risk of loss have passed to the customer;
   persuasive evidence of an arrangement exists; the sales price is fixed or
   determinable; and collectibility is deemed probable. Revenue is recorded net
   of estimated sales returns and allowances for trade promotions, coupons, and
   other discounts, which are recognized as a reduction of revenue at the time
   of sale.



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 11
-------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   SHIPPING AND HANDLING COSTS

   Shipping and handling costs are included in selling expenses.

   INVENTORY

   Inventory of raw materials is valued at the lower of cost and replacement
   cost and inventory of work-in-process and finished goods at the lower of cost
   and net realizable value. Cost is determined on the first-in, first-out
   basis.

   PROPERTY, PLANT AND EQUIPMENT

   Property, plant and equipment are recorded at cost and are depreciated or
   amortized on the basis of their estimated useful lives at the undernoted
   rates and methods:


                                                        
     Building                          4 or 5%                Straight line
     Machinery and equipment           10%                    Straight line or 20% declining balance
     Furniture and fixtures            15 or 20%              Straight line or 20% declining balance
     Computer equipment                15 or 30%              Straight line or 30% declining balance
     Rolling stock                     30%                    Straight line or 30% declining balance
     Leasehold improvements                                   Straight line over term of the lease


   Depreciation and amortization for assets acquired during the year are
   recorded at one-half of the indicated rates.

   INTANGIBLE ASSETS AND GOODWILL

   The company accounts for intangible assets and goodwill in accordance with
   Statement of Financial Accounting Standards (SFAS) 142, "Goodwill and Other
   Intangible Assets", which was adopted by the Company on February 1, 2002 in
   accordance with that statement, goodwill and intangible assets with
   indefinite lives are no longer amortized, but rather tested for impairment at
   least annually. Goodwill represents the excess of purchase price over the
   fair value of identifiable assets acquired in a purchase business
   combination. Intangible assets with estimable useful lives, consisting of
   patents, trademarks, and rights, are amortized on a straight-line basis over
   the estimated useful lives of 5 to 15 years, and are reviewed for impairment
   in accordance with SFAS 144, "Accounting for the Impairment of Long-Lived
   Assets".


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 12
-------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS

   Goodwill and intangible assets with definite lives are tested at least
   annually for impairment in accordance with the provisions of SFAS 142.

   Impairment of goodwill is tested at the reporting unit level by comparing the
   reporting unit's carrying amount, including goodwill, to the fair value of
   the reporting unit. The fair values of the reporting units are estimated
   using a combination of the income or discounted cash flows approach and the
   market approach, which utilizes comparable companies' data. If the carrying
   amount of the reporting unit exceeds its fair value, then a second step is
   performed to measure the amount of impairment loss, if any. Any impairment
   loss would be expensed in the consolidated statements of earnings. The
   impairment test for intangibles with indefinite useful lives consists of a
   comparison of the fair value of the intangible assets with its carrying
   amount. When the carrying amount of the intangible assets exceeds its fair
   value, an impairment loss would be recognized for the difference.

   Intangible assets with estimable lives and other long-lived assets are
   reviewed for impairment when events or changes in circumstances indicate that
   the carrying amount of an asset or assets group may not be recoverable in
   accordance with SFAS 144. Recoverability of intangible assets with estimable
   lives and other long- lived assets is measured by a comparison of the
   carrying amount of an assets or asset group to future net undiscounted pretax
   cash flows expected to be generated by the assets or asset group. If these
   comparisons indicated that an asset is not recoverable, the impairment loss
   recognized is the amount by which the carrying amount of the asset or the
   asset group exceeds the related estimated fair value.

   DEFERRED REVENUE

   The company has sold extended warranty contracts covering a period of four to
   nine years beyond the one year basic guarantee. The deferred revenue is
   recognized as income over the four to nine year period on a straight-line
   basis commencing one year from the sale of the contracts.

   RESEARCH AND DEVELOPMENT COSTS

   Research and development costs, net of investment tax credits, included in
   selling, general and administrative expenses amounted to $1,089,751 in 2005,
   $707,342 in 2004 and $565,153 in 2003.

   FOREIGN CURRENCY TRANSLATION

   The company maintains its books and records in Canadian dollars. Foreign
   currency transactions are translated using the temporal method. Under this
   method, all monetary items are translated into Canadian funds at the rate of
   exchange prevailing at balance sheet date. Non-monetary items are translated
   at historical rates. Income and expenses are translated at the rate in effect
   on the transaction dates. Transaction gains and losses are included in the
   determination of earnings for the year.



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 13
-------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   FOREIGN CURRENCY TRANSLATION (CONTINUED)

   The translation of the financial statements from Canadian dollars into United
   States dollars is performed for the convenience of the reader. Balance sheet
   accounts are translated using closing exchange rates in effect at the balance
   sheet date and income and expense accounts are translated using an average
   exchange rate prevailing during each reporting period. No representation is
   made that the Canadian dollar amounts could have been, or could be, converted
   into United States dollars at the rates on the respective dates and or at any
   other certain rates. Adjustments resulting from the translation are included
   in the accumulated other comprehensive income in stockholder's equity.

   INCOME TAXES

   Income taxes are accounted for under the asset and liability method. Under
   this method, deferred tax assets and liabilities are recognized for the
   future tax consequences attributable to differences between the financial
   statement carrying amounts of existing assets and liabilities and their
   respective tax bases and operating loss and tax credit carryforwards.
   Deferred tax assets and liabilities are measured using enacted tax rates
   expected to apply to taxable income in the years in which those temporary
   differences are expected to be recovered or settled. The effect on deferred
   tax assets and liabilities of a change in tax rates is recognized in
   operations in the period that includes the enactment date.

   STOCK BASED COMPENSATION

   The company has stock options plans, which are described in the Capital stock
   note 12. Stock-based compensation is accounted for under Accounting
   Principles Board (APB) Opinion No. 25., "Accounting for Stock Issued to
   Employees", and related Interpretations. The company has adopted the
   disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based
   Compensation". Accordingly, no compensation cost has been recognized for the
   company's stock option plans that were granted in fiscal year 1999 and 2002.
   The following table illustrates the effect on net earnings and net earnings
   per common share if the company had applied the fair-value based method of
   SFAS No. 123, "Accounting for Stock-based Compensation", to record expense
   for stock options.



                                                                  2005                 2004                 2003
                                                            ------------------   ------------------   ------------------
                                                                                                          
     Net earnings (loss), as reported                       $       (988,406)    $     (1,697,504)    $      1,136,212
     Less:  Compensation for option awards determined by
     the fair value-based method, net of related tax
     effects                                                         (25,602)             (66,838)            (158,019)
                                                            ------------------   ------------------   ------------------

     Pro forma net earnings (loss)                          $     (1,014,008)    $     (1,764,342)    $        978,193
                                                            ==================   ==================   ==================



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 14
-------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   STOCK BASED COMPENSATION (CONTINUED)



                                                                  2005                 2004                 2003
                                                            ------------------   ------------------   -----------------
                                                                                                            
     Net earnings (loss) per common shares
     Basic and diluted
          As reported                                       $            (0.32)  $            (0.57)  $             0.40
          Pro forma                                                      (0.33)               (0.59)                0.35



   The weighted average fair value of options granted was $2.51 in 2005, $1.48
   in 2004, and $1.90 in 2003. The fair value of each option grant for the
   company's plans is estimated on the date of the grant using the Black-Scholes
   option-pricing model, with the following weighted average assumptions.



                                                                  2005                 2004                 2003
                                                            ------------------   ------------------   ------------------
                                                                                                   
     Risk-free interest rates                                       3.70%                4.50%                4.53%
     Expected option lives                                      3.5 years            2.9 years            3.6 years
     Expected volatilities                                          57.9%                62.9%                67.7%
     Expected dividend risks                                           0%                   0%                   0%


   EARNINGS PER SHARE

   The company has adopted FAS No. 128, "Earnings per Share" which requires
   disclosure on the financial statements of "basic" and "diluted" earnings per
   share. Basic earnings per share are computed by dividing net income by the
   weighted average number of common shares outstanding for the year. Diluted
   earnings per share are computed by dividing net income by the weighted
   average number of common shares outstanding plus common stock equivalents (if
   dilutive) related to warrants for each year.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 15
-------------------------------------------------------------------------------


2. EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

   a)  On December 16, 2004, the FASB issued SFAS 123 (R), "Share-Based
       Payment," which is a revision of SFAS 123, "Accounting for Stock-Based
       Compensation." SFAS 123(R) requires all share-based payments to
       employees, including grants of employee stock options, to be recognized
       in the income statement based on their fair values. Pro forma disclosure
       is no longer an alternative. SFAS 123(R) must be adopted no later than
       August 1, 2005. Early adoption is permitted. The Company expects to adopt
       SFAS 123(R) on August 1, 2005, utilizing the modified retrospective
       method. The modified retrospective method requires compensation costs to
       be recognized beginning with the effective date based on the requirements
       of SFAS 123(R) for all (a) share-based payments granted after the
       effective date and (b) awards granted to employees prior to the effective
       date of SFAS 123(R) that remain unvested on the effective date. Amounts
       for prior years will be restated based on the amounts previously
       recognized under SFAS 123 for purposes of pro forma disclosures. As
       permitted by SFAS 123, the Company currently accounts for share-based
       payments to employees using APB Opinion 25's intrinsic value method and,
       as such, generally recognizes no compensation cost for employee stock
       options. Accordingly, the adoption of SFAS 123(R)'s fair value method
       will have a significant impact on the Company's results of operations,
       although it will have no impact on the Company's overall financial
       position. The impact of the adoption of SFAS 123(R) cannot be predicted
       at this time because it will depend on levels of share-based payments
       granted in the future. However, when adopted, the impact of SFAS 123(R)
       on prior periods will approximate the impact of SFAS 123 as described in
       the disclosure of pro forma net earnings and earnings per share in the
       Summary of Significant Accounting Policies note 1.

   b)  In November 2004, the FASB issued SFAS 151, "Inventory Costs - an
       amendment of ARB No.43, Chapter 4," which requires companies to expense
       abnormal freight, handling costs, or spoilage in the period incurred and
       to allocate fixed overhead based on normal capacity, with adjustment if
       production is abnormally high. This standard becomes effective for the
       Company on August 1, 2005, with early adoption permitted. The Company
       currently accounts for abnormal freight, handling costs, and spoilage
       consistent with the standard. The Company plans to adopt the provisions
       early, on a prospective basis, as they relate to capitalization of fixed
       overhead expenses in the first quarter of 2006. The Company is currently
       evaluating the effects of implementing this standard. Based on a
       preliminary analysis, the Company does not expect that there will be a
       material effect on 2006 total Company results. There may be an impact on
       the results of certain quarters at the segment or total Company level.

3. COMPREHENSIVE INCOME

   The company has adopted FAS No. 130 "Reporting Comprehensive Income" which
   requires new standards for reporting and display of comprehensive income and
   its components in the financial statements. However, it does not affect net
   income or total stockholders' equity. The components of comprehensive income
   are as follows:



                                                                   2005                 2004                 2003
                                                             -----------------    -----------------     ----------------
                                                                                                           
     Net income (loss)                                       $      (988,406)     $    (1,697,504)      $     1,136,212

     Other comprehensive income

          Foreign currency translation                               740,423            1,692,836               463,058
                                                             -----------------    -----------------     ----------------

     Comprehensive income (loss)                             $      (247,983)     $        (4,668)      $     1,599,270
                                                             =================    =================     ================



DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2005 AND JANUARY 31, 2004
(Amounts Expressed in United States Dollars)                            PAGE 16
-------------------------------------------------------------------------------



4. ACCOUNTS RECEIVABLE


                                                                                        2005                 2004
                                                                                  -----------------     ----------------

                                                                                                              
     Trade                                                                        $    10,020,318       $    12,000,243
     Allowance for doubtful accounts                                                     (340,068)             (949,586)
                                                                                  -----------------     ----------------

                                                                                  $     9,680,250       $    11,050,657
                                                                                  =================     ================



5.    INVENTORY


                                                                                        2005                 2004
                                                                                   ----------------    -----------------
                                                                                                             
     Raw materials                                                                 $     6,247,636     $     6,097,726
     Work-in-process                                                                     1,530,150           1,227,245
     Finished goods                                                                      2,266,408           1,883,094
                                                                                   ----------------    -----------------

                                                                                   $    10,044,194           9,208,065
                                                                                   ================    =================


6.    LOANS RECEIVABLE


                                                                                        2005                 2004
                                                                                  -----------------     ----------------
                                                                                                              
     Private companies                                                            $     1,247,588       $       564,383
     Corporate shareholder                                                                 32,237                30,202
                                                                                  -----------------     ----------------

                                                                                        1,279,825               594,585
     Current portion                                                                       68,836                17,769
                                                                                  -----------------     ----------------

                                                                                  $     1,210,989       $       576,816
                                                                                  =================     ================


   The above includes a loan receivable from a private company in the amount of
   $40,739 which is secured by equipment, repayable in annual instalments of
   $21,164 including interest at 6% per annum, maturing in April 2006.

   Also included in loans receivable from private companies is a note of
   $250,000 in connection with the sale of assets of IPAC 2000 Inc. as described
   in note 15a of these financial statements. The note is due in quarterly
   instalments of interest only at 8% per annum, thru June 1, 2005. Commencing
   September 1, 2005 the note is due in quarterly instalments of $25,000 plus
   interest at 8% per annum. Commencing September 1, 2006 the note is due in
   quarterly instalments of $37,500 plus interest at 8% per annum, due June
   2007.

   The other loans receivable from private companies and the loan to a corporate
   shareholder are non-interest bearing and are not expected to be repaid prior
   to February 1, 2006.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 17
-------------------------------------------------------------------------------



7. PROPERTY, PLANT AND EQUIPMENT


                                                                                        2005                 2004
                                                                                  -----------------    -----------------
                                                                                                             
     Cost
          Land                                                                    $       279,971      $       262,304
          Building                                                                      3,011,493            2,813,530
          Machinery and equipment                                                      12,637,567           11,728,112
          Furniture and fixtures                                                        1,049,243              915,839
          Computer equipment                                                            2,505,572            2,222,364
          Rolling stock                                                                   162,461              186,602
          Leasehold improvements                                                        1,253,242            1,161,666
                                                                                  -----------------    -----------------

                                                                                       20,899,549           19,290,417
                                                                                  -----------------    -----------------

     Accumulated depreciation and amortization
         Building                                                                       1,067,409              875,673
         Machinery and equipment                                                        8,712,273            7,420,783
         Furniture and fixtures                                                           802,626              691,322
         Computer equipment                                                             1,958,146            1,667,810
         Rolling stock                                                                    123,584              167,059
         Leasehold improvements                                                           693,932              563,360
                                                                                  -----------------    -----------------

                                                                                       13,357,970           11,386,007
                                                                                  -----------------    -----------------

     Net                                                                          $     7,541,579      $     7,904,410
                                                                                  =================    =================

     Capital leases included above                                                $     1,598,717      $     1,986,465
                                                                                  =================    =================

      Depreciation and amortization of property, plant and equipment for fiscal
      year 2005 amounted to $1,251,761 ($1,350,862 in 2004).



8.    INTANGIBLES



                                                                                      2005                   2004
                                                                                ------------------    -------------------
                                                                                                            
     Patents, trademarks and rights costs                                       $       141,608       $       132,672
     Accumulated amortization                                                           (61,645)              (41,362)
                                                                                ------------------    -------------------

                                                                                $        79,963       $        91,310
                                                                                ==================    ===================

      Amortization of intangibles for fiscal year 2005 amounted to $16,765
($15,730 in 2004).



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 18
-------------------------------------------------------------------------------



9. BANK LOANS

   The company has an available line of credit of $13,817,000 bearing interest
   at the Canadian prime lending rate plus 0.25% per annum and it is
   renegotiated annually. Bank loans are secured by a first ranking moveable
   hypothec on accounts receivable, inventory and a first ranking universal
   hypothec in the amount of $40,284,000 on the universality of the borrower's
   property, movable and immovable, present and future, corporeal and
   incorporeal. The company also provided a rider designating the Bank as loss
   payee of the proceeds of all-risk insurance on the property charged as
   security.

   The average cost of financing for fiscal year 2005 is 5.72% (7.38% in 2004).


10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES



                                                                                       2005                 2004
                                                                                 -----------------    -----------------
                                                                                                            
     Trade payables                                                              $     3,810,626      $     2,339,488
     Accrued expenses                                                                  2,373,544            2,612,584
                                                                                 -----------------    -----------------

                                                                                 $     6,184,170            4,952,072
                                                                                 =================    =================



11. LONG-TERM DEBT



                                                                                       2005                 2004
                                                                                 -----------------    ------------------
                                                                                                             
     a)    Balance of purchase payable on the acquisition of Tranzmetal
           Inc., non-interest bearing, unsecured, due in January 2006.           $        120,851     $        113,224

     b)    Bank term loans secured by a first ranking universal hypothec,
           bearing interest at various rates between prime rate plus 0.5% and
           prime rate plus 1%. As at January 31, 2005, these loans were
           in process of being refinanced.                                                717,150              738,204

     c)    Bank term loans secured by a first ranking universal hypothec,
           bearing interest at variable rates from prime to prime plus 0.75% and
           from 6.51% to 7.18% per annum, due on various dates from May
           2005 to June 2008.                                                           2,629,464            3,820,570

     d)    Obligations under capital leases for furniture and fixtures and
           machinery and equipments and rolling stock subject to various monthly
           repayments including imputed interest at variable rates between 5.65%
           and 9% per annum, up to various dates between April
           2005 and April 2009.                                                         1,239,588            1,656,911
                                                                                 -----------------    ------------------

     Balance carried forward                                                            4,707,053            6,328,009
                                                                                 -----------------    ------------------



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 19
-------------------------------------------------------------------------------


11. LONG-TERM DEBT (CONTINUED)



                                                                                       2005                 2004
                                                                                 -----------------    ------------------

                                                                                                             
     Balance brought forward                                                     $      4,707,053     $      6,328,009

     e)    Others                                                                          12,730               17,841

     f)    Long-term debt repaid during the year                                                -               34,722
                                                                                 -----------------    ------------------

                                                                                        4,719,783            6,381,472

           Current portion                                                              2,348,870            1,226,865
                                                                                 -----------------    ------------------

                                                                                 $      2,370,913     $      5,154,607
                                                                                 =================    ==================


      Future payment obligations are as follows:



                                                          Future minimal            Interest
                                  Future principal        lease payments           included in              Total
                                       payment             under capital         future minimal           principal
                                     obligations              leases             lease payments          repayments
                                  ------------------     ------------------     ------------------    ------------------

                                                                                                    
     2006                         $      1,861,084       $         559,608      $         (71,822)    $      2,348,870
     2007                                  396,186                 341,365                (37,691)             699,860
     2008                                  674,686                 301,852                (17,382)             959,156
     2009                                  151,863                 104,459                 (6,742)             249,580
     2010                                  123,664                  66,753                   (812)             189,605
     Thereafter                            272,712                       -                      -              272,712
                                  ------------------     ------------------     ------------------    ------------------

                                  $      3,480,195       $       1,374,037      $        (134,449)           4,719,783
                                  ==================     ==================     ==================    ==================



12.   CAPITAL STOCK

      Authorized

          An unlimited number of preferred shares, cumulative, voting, no par
          value

          An unlimited number of common shares, voting, no par value

      Issued


                                                                                      2005                 2004
                                                                                 ----------------     ----------------

                                                                                                            
               3,155,000 Common shares (2004:  2,973,750)                        $     6,873,335      $     7,128,154
                                                                                 ================     ================



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 20
-------------------------------------------------------------------------------


12. CAPITAL STOCK (CONTINUED)

    Issued (continued)

    During the fiscal year ended January 31, 2005, certain employees have
    exercised their options under the 1999 Stock Option Plan. Consequently,
    181,250 (2004: 54,250) common shares were issued for a total consideration
    of $543,750 (2004: $162,750)

    EMPLOYEE STOCK OPTION PLAN

    In 1999, the Company adopted a Stock Option Plan (the "1999 Plan") pursuant
    to which 650,000 shares of Common Stock are reserved for issuance, no
    options are currently issued and outstanding since the plan expired in
    November 2004.

    On September 2, 1999, the Board granted options under the Stock Option Plan
    to certain members of the Board and certain employees. Subject to certain
    limitations, the options granted are exercisable one year after issuance.
    Subsequent to the one-year anniversary date of the grant, the option holders
    may exercise the option up to 25% of the total options per year for the
    following four years. Each of the options were fully exercisable on November
    4, 2003, and expire on November 4, 2004. The exercise price of the option is
    $3.00.

    In 2001, the Company also adopted the 2001 Stock Option Plan (the "2001
    Plan") pursuant to which 500,000 shares of Common stock are reserved for
    issuance, 108,500 options are currently issued and outstanding.

    On January 4, 2002, the Board granted options under the 2001 Plan to certain
    members of the Board and certain employees. Subject to certain limitations,
    the options granted are exercisable one year after issuance. Subsequent to
    the one-year anniversary date of the grant, the option holders may exercise
    the option up to 25% per year of the total options granted for the following
    four years. Each of the options will be fully exercisable on January 4, 2006
    and expire on January 4, 2011. The exercise price of the option is $4.20.

    The Plans are administered by the Board of Directors, who will determine,
    among other things, those individuals who shall receive options, the time
    period during which the options may be partially or fully exercised, the
    number of shares of Common Stock issuable upon the exercise of the options
    and the option exercise price.

    The 1999 Plan is effective for a period of five years expiring in 2004 and
    the 2001 Plan is effective for a period of ten years expiring in 2011.
    Options may be granted to officers, directors, consultants, key employees,
    advisors and similar parties who provide the company with their skills and
    expertise. Options granted under the 1999 Plan may be exercisable for up to
    five years, and ten years for the 2001 Plan, and shall be at an exercise
    price as determined by the Board. Options are non-transferable except by the
    laws of descent and distribution or a change in control of Dectron, as
    defined in the Plans, and are exercisable only by the participant during his
    or her lifetime. Change in control include (i) the sale of substantially all
    of the assets of Dectron and merger or consolidation with another company,
    or (ii) a majority of the Board changes other than by election by the
    stockholders pursuant to Board solicitation or by vacancies filled by the
    Board caused by death or resignation of such person.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 21
-------------------------------------------------------------------------------


12. CAPITAL STOCK (CONTINUED)

    EMPLOYEE STOCK OPTION PLAN (CONTINUED)

    If a participant ceases affiliation with Dectron by reason of death,
    permanent disability or retirement at or after age 70, the option remains
    exercisable for one year from such occurrence but not beyond the option's
    expiration date. Other types of termination allow the participant three
    months to exercise, except for termination for cause, which results in
    immediate termination of the option.

    Option under the Plans must be issued within five years from the effective
    date of the 1999 Plan and ten years from the effective date of the 2001
    Plan.

    Any unexercised options that expire or that terminate upon an employee's
    ceasing to be employed by the company become available again for issuance
    under the Plans.

    The Plans may be terminated or amended at any time by the Board of
    Directors, except that the number of shares of Common Stock reserved for
    issuance upon the exercise of options granted under the Plans may not be
    increased without consent of the stockholders.

    A summary of the status of the company's stock option plans are as follows:



                                         2005                           2004                            2003
                              ---------------------------    ---------------------------    -----------------------------
                                              WEIGHTED                       WEIGHTED                        WEIGHTED
                                               AVERAGE                        AVERAGE                         AVERAGE
                               NUMBER OF      EXERCISE        NUMBER OF      EXERCISE        NUMBER OF        EXERCISE
                                OPTIONS         PRICE          OPTIONS         PRICE          OPTIONS           PRICE
                              ------------   ------------    ------------   ------------    ------------    -------------
                                                                                                  
      Outstanding,                295,750    $       3.44        357,000    $       3.39        455,000     $      3.32
      beginning of year
      Granted                           -               -              -               -              -               -
      Exercised                  (181,250)           3.00        (54,250)           3.00        (74,500)           3.00
      Cancelled                    (6,000)           3.00         (7,000)           4.20        (23,500)           3.28
                              ------------   ------------    ------------   ------------    ------------    -------------

      Outstanding, end of
      year                        108,500    $       4.20        295,750    $       3.44        357,000     $      3.39
                              ============   ============    ============   ============    ============    =============
      Options, exercisable,
      end of year                  81,375                        235,250                        194,000
                              ============                   ============                   ============



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 22
-------------------------------------------------------------------------------

12. CAPITAL STOCK (CONTINUED)

    EMPLOYEE STOCK OPTION PLAN (CONTINUED)

    The following table summarizes information about fixed stock options
    outstanding:



                                                                                2005
                                            -----------------------------------------------------------------------------
                                                        OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                                            --------------------------------------------    -----------------------------
                                                             WEIGHTED
                                                              AVERAGE
                                                             REMAINING        WEIGHTED                        WEIGHTED
                                                              YEARS OF        AVERAGE                         AVERAGE
      Exercisable price                      NUMBER OF       CONTRACTUAL      EXERCISE       NUMBER OF        EXERCISE
      -----------------                       OPTIONS           LIFE           PRICE          OPTIONS          PRICE
                                            ------------    -------------   ------------    ------------    -------------
                                                                                                   
      $       3.00                                    -           -                 -                 -             -
              4.20                              108,500         5.9              4.20            81,375          4.20
                                            ------------    ------------    ------------    ------------    -------------

                                                108,500         5.9         $    4.20            81,375     $    4.20
                                            ============    ============    ============    ============    =============


    SHARE PURCHASE PLAN RECEIVABLE

    The SEC staff Accounting Bulletins require that accounts or notes receivable
    arising from transactions involving capital stock should be presented as
    deductions from shareholders' equity and not as assets. Accordingly, in
    order to comply with U.S. GAAP, stockholders' equity has been reduced by
    $798,569 at January 31, 2005 (reduced by $170,819 - 2004), to reflect the
    loans due from certain employees and officers, which relate to the purchase
    of common shares of the company.


13. NET RESTRUCTURING AND OTHER UNUSUAL ITEMS

    In fiscal 2005, the company recorded $551,607 (2004: $911,407) of net
    restructuring and other unusual items which is comprised of a charge for
    consolidation and other costs related to restructuring of Tranzmetal Inc., a
    company acquired on February 1, 2003.

    In fiscal 2003, the company recorded $132,342 of unusual items in respect of
    a write-down of uncollectible loans receivable.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 23
-------------------------------------------------------------------------------



14. INCOME TAXES



                                                                   2005                 2004                 2003
                                                             -----------------    ------------------   ------------------
                                                                                                          
     a)   Current                                            $       482,179      $       439,646      $       611,869
          Deferred                                                   102,660             (204,542)             (34,459)
                                                             -----------------    ------------------   ------------------

                                                             $       584,839      $       235,104      $       577,410
                                                             =================    ==================   ==================

     b)   Income taxes at Canadian statutory rates:          $        42,110      $       645,257      $       834,981

          Increase (decrease) resulting from:
          Large corporation tax                                            -                    -               13,635
          Manufacturing and processing deduction                     (94,978)            (114,251)            (164,161)
          Non-deductible expenses                                     66,724               59,631               61,183
          Temporary differences                                      493,626             (142,437)             (44,668)
          Difference between Canadian statutory rates and
          those applicable to foreign subsidiaries                     8,678                8,412              (11,067)
          Adjustment for prior year's taxes                          100,494             (233,313)             (51,334)
          Other                                                      (31,815)              11,805              (61,159)
                                                             -----------------    ------------------   ------------------

          Effective income taxes                             $       584,839      $       235,104      $       577,410
                                                             =================    ==================   ==================

      c)  Deferred income taxes represent the tax charges derived from temporary
          differences between amortization of property, plant and equipment and
          recognition of deferred revenue, and the actual amounts deducted from
          or added to the taxable income.


          The component of deferred tax assets and deferred tax liabilities are
as follows:



                                                                  2005                                2004
                                                     --------------------------------    -------------------------------
                                                                Deferred                            Deferred
                                                     --------------------------------    -------------------------------
                                                          Tax               Tax               Tax              Tax
                                                         Assets         Liabilities          Assets        Liabilities
                                                     ---------------   --------------    --------------   --------------
                                                                                                   
           Non-current
              Deferred revenue                       $     458,213     $           -     $     530,150    $           -
              Operating loss and credit                    194,869                 -           411,719                -
           carryforwards
              Property, plant and equipment                      -           385,331                 -          543,039
              Intangibles and goodwill                           -            13,332                 -           23,217
                                                     ---------------   --------------    --------------   --------------

           Total non-current                               653,082     $     398,663     $     941,869    $     566,256
                                                     ---------------   --------------    --------------   --------------

           Total net deferred tax assets             $     254,419                       $     375,613
                                                     ===============   ==============    ==============   ==============



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 24
-------------------------------------------------------------------------------



14. INCOME TAXES (CONTINUED)

    In assessing the realizability of deferred tax assets, management considers
    whether it is more likely than not that some portion or all of the deferred
    tax assets will not be realized. Based upon the level of historical taxable
    income and projections for future taxable income over the periods for which
    the deferred tax assets are deductible, management believes it is more
    likely than not that the company will realize the benefits of these
    deductible differences.

    d)  The company has operating losses of $2,256,000, which can be used to
        reduce future taxable income. The potential tax benefits of $699,775
        relating to the losses have not been recognized in the company's
        accounts. The deductibility of these losses expire between 2006 and
        2012.

    e)  The company has unused investment tax credits of $212,645 which are
        deductible from the income taxes payable in future years. No deferred
        income tax asset regarding these investment tax credits has been
        accounted for.


15. DISCONTINUED OPERATIONS

    a)  In accordance with a plan initiated in fiscal year 2004, the
        corporation has sold selected assets related to the industrial
        products and sheet metal divisions of its subsidiary IPAC 2000 Inc.,
        for $1,200,996. As a result of the sale, the subsidiary has changed
        its name to Liberty Drive Property Inc.. The allocation of the sale
        price is summarized as follows:

        Current assets                                     $        370,996
        Property and equipment                                      330,000
        Goodwill                                                    500,000
                                                           ----------------
                                                        
                                                           $      1,200,996
                                                           ================
                                                    
        In exchange for the assets sold, the corporation received $950,996 in
        cash and $250,000 as a note described in detail under note 6 of these
        financial statements.

        On February 3, 2005, the corporation entered into a contract to sell
        the land, building and building improvements of its subsidiary Liberty
        Drive Property Inc. Based on the quoted market price in the contract
        of $2,500,000, its has been determined that an impairment exists. An
        adjustment of $414,991 has been made to write the assets down to its
        fair value, and a loss was recorded as the difference between the
        carrying value and the fair value.

b)      On November 29, 2002, the company completed the sale of the Electric
        Heat Products Division for a total cash consideration of $961,640 plus
        a balance of sale of $440,979. The sale resulted in a net gain of
        $190,262 (2004: $90,332; 2003: $590,686), net of tax of $69,001 (2004:
        $20,770; 2003: $198,668). As at January 31, 2005, the remaining
        balance of sale amounted to $221,562. This balance of sale bears
        interest at the bank's prime rate plus 1%, repayable in 11 monthly
        instalments of $20,142. Due to the uncertainty of the collectibility,
        a reserve for the full balance of sale has been accounted for.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 25
-------------------------------------------------------------------------------


15. DISCONTINUED OPERATIONS (CONTINUED)

    Net assets related to discontinued operations included in the consolidated
    balance sheets are as follows:



                                                                                      2005                 2004
                                                                                 ----------------     ----------------
                                                                                                            
      Cash                                                                       $          6,518     $         63,114
      Accounts receivable                                                                  58,871              434,160
      Inventory                                                                                 -              775,375
      Property, plant and equipment                                                     3,306,524                    -
      Other current assets                                                                 42,630               40,976
                                                                                 ----------------     ----------------

      Current assets held by discontinued operations                                    3,414,543            1,313,625

     Property, plant and equipment                                                              -            3,813,427
     Intangibles                                                                                -               78,951
                                                                                 ----------------     ----------------

     Long-lived assets held by discontinued operations                                          -            3,892,378
                                                                                 ----------------     ----------------

     Accounts payable                                                                    (341,884)            (402,889)
                                                                                 ----------------     ----------------

     Current liabilities held by discontinued operations                                 (341,884)            (402,889)
                                                                                 ----------------     ----------------

     Net assets of discontinued operations                                       $      3,072,659     $      4,803,114
                                                                                 ================     ================


      The results of discontinued operations included in the consolidated
      statements of operations are summarized as follows:



                                                                  2005                 2004                 2003
                                                            -----------------    -----------------     ----------------
                                                                                                          
      Sales                                                 $      1,347,101     $      2,722,094      $     3,597,245
      Cost of sales                                                1,798,692            3,982,440            4,023,058
                                                            -----------------    -----------------     ----------------

      Gross profit                                                  (451,591)          (1,260,346)            (425,813)
                                                            -----------------    -----------------     ----------------

      Operating expenses                                             152,185              746,011              863,339
      Depreciation and amortization                                  410,245              413,435              365,135
      Interest expense                                                     -               36,236              250,066
      Impairment loss                                                414,991                    -                    -
                                                            -----------------    -----------------     ----------------

                                                                     977,421            1,195,682            1,478,540
                                                            -----------------    -----------------     ----------------



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 26
-------------------------------------------------------------------------------



15. DISCONTINUED OPERATIONS (CONTINUED)



                                                                  2005                 2004                 2003
                                                            -----------------    -----------------     ----------------
                                                                                                           
      Loss before income taxes                                   (1,429,012)          (2,456,028)            (1,904,353)
      Income taxes (recovery)                                             -            1,174,826               (347,632)
                                                            -----------------    -----------------     ----------------

      Net loss                                                   (1,429,012)          (3,630,854)            (1,556,721)
      Gain on sale of discontinued operations (net of
      income taxes)                                                 889,694               90,332                590,686
                                                            -----------------    -----------------     ----------------

                                                            $      (539,318)     $    (3,540,522)      $       (966,035)
                                                            =================    =================     ================



    Cash flows from discontinued operations included in the consolidated
    statements of cash flows are as follows:



                                                                   2005                 2004                 2003
                                                              ----------------     ----------------     ----------------
                                                                                                            
      Operating activities                                    $       958,930      $    (1,299,420)     $    (1,160,705)
                                                              ----------------     ----------------     ----------------

      Investing activities                                            (95,295)              (1,333)             101,904
                                                              ----------------     ----------------     ----------------

      Financing activities                                                  -                    -           (2,843,613)
                                                              ----------------     ----------------     ----------------

      Net variation in cash                                            56,596              (40,650)             (14,654)
                                                              ----------------     ----------------     ----------------

      Effect of foreign currency exchange rate on cash               (222,693)            (541,321)            (159,532)
      Gain from discontinued operations, before taxes                (966,659)            (111,102)            (789,354)
      Proceeds from discontinued operations                         1,460,259              111,102              961,640
                                                              ----------------     ----------------     ----------------

      Total effect of discontinued operations                 $     1,191,137      $    (1,882,724)     $    (3,904,314)
                                                              ================     ================     ================



16. STATEMENT OF CASH FLOWS

    During the year, the company acquired capital assets for a total amount of
    $411,197 (2004: $1,798,908; 2003: $1,459,159), including capital assets
    acquired for an amount of $42,148 (2004: $491,606; 2003: $791,423) by means
    of capital leases. Cash payments of $369,049 (2004: $1,307,302; 2003:
    $667,736) were made to purchase the capital assets.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 27
-------------------------------------------------------------------------------



17. COMMITMENTS AND CONTINGENCIES

    a)  The company is committed to payments under operating leases for its
        premises totaling $4,035,179. Annual payments for the next five years
        are as follows:

       2006                                                $        909,060
       2007                                                         777,888
       2008                                                         780,760
       2009                                                         782,428
       2010                                                         785,583
                                                           -----------------

                                                           $      4,035,719
                                                           =================

    b)  As at January 31, 2005, the company is a defendant in various legal
        proceedings arising from actions of its clients or suppliers. Neither
        the possible outcome nor the amount of possible settlement can be
        foreseen. Therefore, no provision has been made in these consolidated
        financial statements.


18. SEGMENTED INFORMATION



                                                                 2005                 2004                 2003
                                                           -----------------    -----------------    -----------------
                                                                                                        
    a)  The breakdown of sales by geographic area is
        as follows:

        Canada                                             $    21,453,215      $    18,073,085      $    14,235,583
        United States of America                                18,180,705           19,799,256           18,164,927
        International                                            1,276,681            1,782,581            2,024,381
                                                           -----------------    -----------------    -----------------

                                                           $    40,910,601      $    39,654,922      $    34,424,891
                                                           =================    =================    =================

     b)   The breakdown of identifiable assets by geographic area is as follows:

          Canada                                           $    31,644,024      $    33,334,783      $    26,391,369
          United States                                          4,043,894            5,794,667            7,938,826
                                                           -----------------    -----------------    -----------------

                                                           $    35,687,918      $    39,129,450      $    34,330,195
                                                           =================    =================    =================



19. FINANCIAL INSTRUMENTS AND CREDIT RISK

    FAIR VALUE OF FINANCIAL INSTRUMENTS

    The fair value of cash, accounts receivable, bank loans and accounts payable
    approximately correspond to their book value given their short-term
    maturity. The carrying amount of long-term debt approximates fair value
    because interest rates are close to market value.


DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 28
-------------------------------------------------------------------------------



19. FINANCIAL INSTRUMENTS AND CREDIT RISK (CONTINUED)

    CREDIT RISK

    The company is exposed to credit risk on the accounts receivable from its
    customers. In order to reduce its credit risk, the company has adopted
    credit policies, which include the analysis of the financial position of its
    customers and the regular review of their credit limits. In some cases, the
    company may require bank letters of credit.


20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



                  2005                 FIRST QUARTER    SECOND QUARTER     THIRD QUARTER     FOURTH QUARTER         TOTAL
                                      ---------------  ----------------   ---------------   ----------------   ---------------
                                                                                                         
      Sales                           $  10,229,096    $   10,988,159    $   11,020,743    $   8,672,603     $   40,910,601
      Gross Profit                        3,270,439         2,745,525         2,894,036        2,739,635         11,649,635
      Operating earnings (loss)           1,067,636           461,526           632,945         (990,214)         1,171,893
      Earnings (loss) from                                                                                   
      continuing operations net                                                                              
      of taxes                              383,230           255,653            35,411       (1,123,382)          (449,088)
      Discontinued operations,                                                                               
      net of tax                           (270,577)         (679,228)           38,786         (517,993)        (1,429,012)
      Gain on disposal of                                                                                    
      discontinued operations,                                                                               
      net of tax                                  -           550,677           180,836          158,181            889,694
      Net earnings (loss)                   112,653           127,102           255,033       (1,483,194)          (988,406)
      Net earnings (loss) per                                                                                
      common share, basic and                                                                                
      diluted:                                                                                               
        Continuing operations                  0.13              0.08              0.01            (0.36)             (0.14)
        Discontinued operations               (0.09)           (0.21)              0.01            (0.18)             (0.47)
        Disposal of discontinued                                                                             
        operations                                -              0.17              0.06             0.06               0.29
        Net earnings (loss)                    0.04              0.04              0.08            (0.48)             (0.32)
      Average number of common                                                                               
      shares outstanding                  2,973,750         3,155,000         3,037,254        3,066,851          3,066,851



DECTRON INTERNATIONALE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2005 AND JANUARY 31, 2004

(Amounts Expressed in United States Dollars)                            PAGE 29
-------------------------------------------------------------------------------



20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



                  2005                 FIRST QUARTER    SECOND QUARTER     THIRD QUARTER     FOURTH QUARTER         TOTAL
                                      ---------------  ----------------   ---------------   ----------------   ---------------
                                                                                                         
      Sales                           $  10,147,331    $   12,343,154    $   11,144,889    $   6,019,548     $   39,654,922
      Gross Profit                        2,932,332         3,100,950         3,114,111        5,223,587         14,370,980
      Operating earnings                    135,782           311,003           214,580        2,689,242          3,350,607
      Earnings from continuing                                                                               
      operations net of taxes                86,825            99,831            28,868        1,627,494          1,843,018
      Discontinued operations,                                                                               
      net of tax                                  -                 -                 -       (3,630,854)        (3,630,854)
      Gain on disposal of                                                                                    
      discontinued operations,                                                                               
      net of tax                                  -                 -                 -           90,332             90,332
      Net earnings (loss)                    59,770            68,724            19,873       (1,845,871)        (1,697,504)
      Net earnings (loss) per                                                                                
      common share, basic and                                                                                
      diluted:                                                                                               
        Continuing operations                  0.02              0.02              0.01             0.57               0.62
        Discontinued operations                   -                 -                 -            (1.22)             (1.22)
        Disposal of discontinued                                                                           
        operations                                -                 -                 -             0.03               0.03
        Net earnings (loss)                    0.02              0.02              0.01            (0.62)             (0.57)
      Average number of common                                                                               
      shares outstanding                  2,938,129         2,944,561         2,919,500        2,973,750          2,973,750