<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 FORM 10-KSB/A1

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended January 31, 1999

                        Commission File Number 001-14503

                           DECTRON INTERNATIONALE INC.

                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

                               Quebec, Canada N/A
              -------------------------------- -------------------
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                       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 Act:

                           Common Stock, no par value
                    Redeemable Common Stock Purchase Warrants
                    -----------------------------------------
                                (Title of Class)

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-B 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-KSB or any amendment to
this Form 10-KSB. |X |

The Company's sales for the year ended January 31, 1999 were $20,215,849.



<PAGE>

As of April 29, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant (based on The Nasdaq Stock Market closing price
of $2 5/16 on April 29, 1999) was $2,163,315.

As of April 29, 1999, there were 2,795,000 shares of the registrant's common
stock outstanding.






<PAGE>

The Company's Annual Report on Form 10-KSB filed May 3, 1999, is being amended
to reflect changes to Part III: Item 10 - FINANCIAL STATEMENTS.

PART I

Item 10.     FINANCIAL STATEMENTS

The Financial Statements of the Company are as set forth below:


<PAGE>

SCHWARTZ LEVITSKY FELDMAN
Comptables Agrees
Chartered Accountants
Montreal, Toronto, Ottawa



                           DECTRON INTERNATIONALE INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                             AS AT JANUARY 31, 1999


                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                                               <C>
Report of Independent Auditors                                                                                      1

Consolidated Balance Sheet                                                                                      2 - 3

Consolidated Statement of Income                                                                                    4

Consolidated Statement of Cash Flows                                                                            5 - 7

Consolidated Statement of Stockholders' Equity                                                                      8

Notes to Consolidated Financial Statements                                                                     9 - 24
</TABLE>





<PAGE>

SCHWARTZ LEVITSKY FELDMAN
Comptables Agrees
Chartered Accountants
Montreal, Toronto, Ottawa




                         REPORT OF INDEPENDENT AUDITORS


To the Stockholders of
Dectron Internationale Inc.


We have audited the consolidated balance sheet of Dectron Internationale Inc. as
at January 31, 1999 and the statements of income, cash flows and changes in
stockholders' equity for the year then ended. These consolidated financial
statements are the responsibility of the companies' management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. 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 present fairly , in all
material respects, the consolidated financial position of Dectron Internationale
Inc. as at January 31, 1999 and the consolidated results of its operations and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles in the United States of America.







Montreal, Quebec
April 7, 1999                                              Chartered Accountants



<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED BALANCE SHEET
(AMOUNTS EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------

                                                                                            $                   $
<S>                                                                                   <C>                  <C>
     ASSETS

          Cash                                                                               389,702              28,155
          Accounts receivable (note 2)                                                     5,998,864           3,043,829
          Inventory (note 3)                                                               5,138,154           3,817,448
          Current portion of loans receivable (note 4)                                        43,018              87,306
          Prepaid expenses and sundry asset                                                  629,260             292,931
                                                                                      ---------------     ---------------

                                                                                          12,198,998           7,269,669

          Sinking funds (note 5)                                                              74,075               8,038
          Loans receivable (note 4)                                                           63,627              91,508
          Property, plant and equipment (note 6)                                           5,406,295           4,111,085
          Goodwill (note 7)                                                                1,888,400              44,528
                                                                                      ---------------     ---------------


                                                                                          19,631,395          11,524,828
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>





APPROVED ON BEHALF OF THE BOARD

                                            Director

                                            Director


<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED BALANCE SHEET
(AMOUNTS EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------

                                                                                            $                   $
<S>                                                                                        <C>                 <C>
     LIABILITIES

          Bank loans (note 8)                                                              2,831,015           3,127,340
          Accounts payable and accrued expenses
             (note 9)                                                                      4,098,077           1,964,280
          Income taxes payable                                                                 7,896             200,502
          Current portion of long-term debt (note 10)                                        440,523             427,116
          Notes payable (note 11)                                                            533,199                   -
          Other loan payable                                                                  64,553                   -
          Current portion of deferred revenue (note 14)                                      161,226             127,857
                                                                                      ---------------     ---------------

                                                                                           8,136,489           5,847,095

          Long-term debt (note 10)                                                         1,605,947           1,564,384
          Due to director (note 12)                                                           51,639              67,345
          Loan payable (note 13)                                                             259,052             355,336
          Deferred revenue (note 14)                                                         605,345             470,058
          Deferred income taxes                                                              426,300             410,643
                                                                                      ---------------     ---------------

                                                                                          11,084,772           8,714,861
                                                                                      ---------------     ---------------

          Minority interest in equity consolidated entity                                         --             352,469
                                                                                      ---------------     ---------------

     STOCKHOLDERS' EQUITY

          Capital stock (note 15)                                                          6,867,529           1,934,695
          Retained earnings                                                                1,746,761             617,580
          Cumulative translation adjustments                                                 (67,667)            (94,777)
                                                                                      ---------------     ---------------

          Total stockholders' equity                                                       8,546,623           2,457,498
                                                                                      ---------------     ---------------


          Total liabilities and stockholders' equity                                      19,631,395          11,524,828
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

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


<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED STATEMENT OF INCOME
(AMOUNTS EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                       YEAR                YEAR                YEAR
                                                                      ENDED               ENDED               ENDED
                                                                   JANUARY 31,         JANUARY 31,         JANUARY 31,
                                                                       1999                1998                1997
                                                                  ---------------     ---------------     ---------------
                                                                        $                   $                   $
<S>                                                                   <C>                 <C>                 <C>
     Net sales                                                        20,215,849          16,370,849          12,712,413

     Cost of sales                                                    13,697,877          10,777,360           8,478,285
                                                                  ---------------     ---------------     ---------------

      Gross profit                                                     6,517,972           5,593,489           4,234,128
                                                                  ---------------     ---------------     ---------------

     Operating expenses

          Selling                                                      2,527,915           2,272,053           1,332,843
          General and administrative                                   1,219,981           1,304,014           1,287,971
          Depreciation and amortization                                  733,744             461,100             289,256
          Interest expense                                               395,941             287,677             334,493
                                                                  ---------------     ---------------     ---------------

                                                                       4,877,581           4,324,844           3,244,563
                                                                  ---------------     ---------------     ---------------

     Income before income taxes and minority
          interest                                                     1,640,391           1,268,645             989,565

          Income taxes (note 16)                                         511,210             405,314             223,697
                                                                  ---------------     ---------------     ---------------

      Income before minority interest                                  1,129,181             863,331             765,868

     Minority interest in earnings of consolidated
             entity                                                           --                  --              69,090
                                                                  ---------------     ---------------     ---------------

     Net income                                                        1,129,181             863,331             696,778
                                                                  ---------------     ---------------     ---------------
                                                                  ---------------     ---------------     ---------------
     Net income per weighted
          average common stock                                              0.54                0.49                0.40
                                                                  ---------------     ---------------     ---------------
                                                                  ---------------     ---------------     ---------------
     Weighted average number of common stock
          outstanding                                                  2,082,781           1,750,000           1,750,000
                                                                  ---------------     ---------------     ---------------
                                                                  ---------------     ---------------     ---------------
</TABLE>

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


<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                       YEAR                YEAR                YEAR
                                                                      ENDED               ENDED               ENDED
                                                                   JANUARY 31,         JANUARY 31,         JANUARY 31,
                                                                       1999                1998                1997
                                                                  ---------------     ---------------     ---------------
                                                                        $                   $                   $
<S>                                                                    <C>                   <C>                 <C>
     Cash flows from operating activities:
          Net income                                                   1,129,181             863,331             696,778

     Adjustments to reconcile net income to net cash (used in) provided by
     operating activities:
          Depreciation and amortization                                  733,744             461,100             289,256
     Loss on disposal of property, plant and
             equipment                                                        --                  --               6,000
          Minority interest                                                   --                  --              69,090
          Increase in accounts receivable                             (2,955,035)           (385,013)           (527,956)
          Increase in inventory                                       (1,320,706)         (1,311,838)           (895,202)
          Increase in prepaid expenses and sundry
             assets                                                     (336,329)           (116,901)            (69,866)
          Increase in accounts payable and accrued
             expenses                                                  2,133,797             309,169              12,074
          Increase (decrease) in income taxes
             payable                                                    (192,606)            299,641             171,087
     Increase (decrease) in deferred income
             taxes                                                        15,657            (164,587)              8,640
          Increase in deferred revenue                                   168,656             110,279              91,749
                                                                  ---------------     ---------------     ---------------

     Net cash (used in) provided by operating
          activities                                                    (623,641)             65,181            (148,350)
                                                                  ---------------     ---------------     ---------------
</TABLE>





<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                       YEAR                YEAR                YEAR
                                                                      ENDED               ENDED               ENDED
                                                                   JANUARY 31,         JANUARY 31,         JANUARY 31,
                                                                       1999                1998                1997
                                                                  ---------------     ---------------     ---------------
                                                                        $                   $                   $
<S>                                                                   <C>                 <C>                   <C>
     Cash flows from investing activities:
          Purchase of property, plant and equipment                   (1,939,538)         (1,978,811)           (556,323)
          Proceeds from disposal of property, plant
             and equipment                                                     -             233,428               7,467
          Acquisition of Goodwill                                     (1,931,638)                 --             (60,147)
                                                                  ---------------     ---------------     ---------------

     Net cash used in investing activities                            (3,871,176)         (1,745,383)           (609,003)
                                                                  ---------------     ---------------     ---------------

     Cash flows from financing activities:
          Acquisition of minority interest in equity
             consolidated entity                                        (352,469)                 --             311,796
          Sinking funds                                                  (66,037)             (8,038)                 --
          Grant receivable                                                    --              25,019             (25,019)
          Advances to directors                                          (15,706)            (29,996)            118,732
          (Advances to) repayments from
             corporate shareholders                                       72,169            (110,089)                 --
          Repayments from loan receivable                                     --              47,950                  --
          Notes payable                                                  533,199                  --                  --
          Other loan payable                                              64,553                  --                  --
          Advances from long-term debt                                    54,970             453,346             (30,606)
          Advances from (repayment of)
             loan payable                                                (96,284)           (320,320)            626,406
          Advances (repayments) of bank
             loans                                                      (296,325)          1,504,150             294,224
          Issuance of common shares                                    4,932,834                  --            (509,115)
                                                                  ---------------     ---------------     ---------------

     Net cash provided by financing activities                         4,830,904           1,562,022             786,418
                                                                  ---------------     ---------------     ---------------

     Effect of foreign currency exchange rate
          changes                                                         25,460              94,334             (42,063)
                                                                  ---------------     ---------------     ---------------
</TABLE>


<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                       YEAR                YEAR                YEAR
                                                                      ENDED               ENDED               ENDED
                                                                   JANUARY 31,         JANUARY 31,         JANUARY 31,
                                                                       1999                1998                1997
                                                                  ---------------     ---------------     ---------------
                                                                        $                   $                   $
<S>                                                                      <C>                 <C>                 <C>
     Net increase (decrease) in cash and cash
          equivalents                                                    361,547             (23,846)            (12,998)

          Beginning of year                                               28,155              52,001              64,999
                                                                  ---------------     ---------------     ---------------

          End of year                                                    389,702              28,155              52,001
                                                                  ---------------     ---------------     ---------------
                                                                  ---------------     ---------------     ---------------
     Supplemental disclosure of cash
          flow information

          Interest                                                       450,324             317,784             279,004
                                                                  ---------------     ---------------     ---------------
                                                                  ---------------     ---------------     ---------------
          Income taxes                                                   398,091             358,315             116,460
                                                                  ---------------     ---------------     ---------------
                                                                  ---------------     ---------------     ---------------
</TABLE>




<PAGE>

DECTRON INTERNATIONALE INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
AS AT JANUARY 31, 1999



<TABLE>
<CAPTION>
                                                         COMMON STOCK                   CUMULATIVE
                                              -----------------------------------
                                                                                         RETAINED          TRANSLATION
                                                  NUMBER              AMOUNT             EARNINGS         ADJUSTMENTS
                                              --------------
                                                                        $                   $                   $
<S>                                                  <C>               <C>                <C>                    <C>
     Balance (deficit) January 31, 1995              91,292            1,934,713          (1,159,229)            45,108
     Foreign currency translation                        --                   --                  --                 25
     Net income for the year                             --                   --             726,397                 --
                                              --------------      ---------------     ---------------     ---------------

     Balance January 31, 1996                        91,292            1,934,713            (432,832)            45,133

     Foreign currency translation                        --                   --                  --             28,589
     Net income for the year                             --                   --             696,778                 --
     Redemption of shares over
          stated capital                                (25)                 (18)           (509,697)                --
                                              --------------      ---------------     ---------------     ---------------

     Balance January 31, 1997                        91,267            1,934,695            (245,751)            73,722
     Foreign currency translation                        --                   --                  --           (168,499)
     Net income for the year                             --                   --             863,331                 --
                                              --------------      ---------------     ---------------     ---------------

     Balance January 31, 1998                        91,267            1,934,695             617,580            (94,777)

     Redemption of shares                           (91,267)          (1,934,695)                 --                 --
     Issuance of common shares                    2,795,000            8,421,450                  --                 --
     Cost of issuance                                    --           (1,553,921)                 --                 --
     Foreign currency translation                        --                   --                  --             27,110
     Net income for the year                             --                   --           1,129,181                 --
                                              --------------      ---------------     ---------------     ---------------

     Balance January 31, 1999                     2,795,000            6,867,529           1,746,761            (67,667)
                                              --------------      ---------------     ---------------     ---------------
                                              --------------      ---------------     ---------------     ---------------
</TABLE>


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999




1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      a)     Basis of Consolidated Financial Statements Presentation

             These consolidated financial statements include the accounts of
             Dectron Internationale Inc., Dectron Inc. Consolidated and
             Circul-aire Group.

             Dectron Inc. Consolidated is comprised of Dectron Inc.'s accounts
             and of its wholly-owned subsidiaries, Refplus Inc., Thermoplus Air
             Inc., Fiber Mobile Ltd. and Dectron U.S.A. Inc.

             Circul-aire Group is comprised of 9048-3140 Quebec Inc. and
             Cascades Technologies Inc.'s accounts and of its wholly-owned
             subsidiaries, PM Wright Ltd., Purafil Canada Inc. and 122248 Canada
             Inc.

             All material inter-company accounts transactions have been
             eliminated.

      b)     Principal Activities

             The registrant 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 worldwide. The activities of Dectron
             Internationale Inc., Cascades Technologies Inc., 9048-3140 Quebec
             Inc. are immaterial in the aggregate, as their only activity is to
             hold the investments in the operating companies.

      c)     Cash and Cash Equivalents

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

      d)     Other Financial Instruments

             The carrying amount of the company's accounts receivables and
             payables approximates fair value because of the short maturity of
             these instruments.

      e)     Inventory

             Inventory is valued at the lower of cost and net realizable value.
             Cost is determined on the first-in, first-out basis.


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999




1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      f)     Property, Plant and Equipment

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

<TABLE>
          <S>                                             <C>              <C>
             Building                                         4 or 5%         Straight line
             Machinery and manufacturing equipment            10%             Straight line or 20% declining balance
             Furniture and fixtures                           15 or 20%       Straight line or 20% declining balance
             Computers                                        15 or 30%       Straight line 0r 30% declining balance
             Rolling stock                                    30%             Straight line or 30% declining balance
             Leasehold improvements                                           Straight line over term of the lease
             Equipment under capital lease                    20 or 30%       Declining balance
</TABLE>

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

      g)     Goodwill

             Goodwill is the excess of cost over the value of net assets
             acquired. It is amortized on the straight line basis over ten
             years.

      h)     Income Taxes

             The company accounts for income taxes under the provisions of
             statement of financial accounting standards No. 109, which requires
             recognition of deferred tax assets and liabilities for the expected
             future tax consequences of events that have been included in the
             financial statements and tax returns. Deferred income taxes are
             provided using the liability method. Under the liability method,
             deferred income taxes are recognized for all significant temporary
             differences between the tax and financial statements basis of
             assets and liabilities.

      i)     Deferred Revenue

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



<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999





1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      j)     Net Income Per Weighted Average Common Stock

             Net income per common stock is computed by dividing net income for
             the year by the weighted average number of common stock outstanding
             during the year.

      k)     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
             effect 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 these estimates.

      l)     Government Assistance and Investment Tax Credits

             Government assistance and investment tax credits are recorded on
             the accrual basis and are accounted for as a reduction of related
             current or capital expenditures.



2.    ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                 <C>
     Accounts receivable                                                                   6,073,650           3,105,239
     Less: Allowance for doubtful accounts                                                    74,786              61,410
                                                                                      ---------------     ---------------

     Accounts receivable - net                                                             5,998,864           3,043,829
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999




3.    INVENTORY

      Inventory is comprised of the following:

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                 <C>
     Raw materials                                                                         3,182,498           2,247,631
     Work-in-process                                                                         856,308             580,112
     Finished goods                                                                        1,099,348             989,705
                                                                                      ---------------     ---------------

                                                                                           5,138,154           3,817,448
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>


4.    LOANS RECEIVABLE

      The loans receivable consist of the following:

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                           <C>                 <C>
     Loan receivable - private company (secured)                                              61,138              63,467
     Loan receivable - corporate shareholder
          (unsecured)                                                                         45,507             115,347
                                                                                      ---------------     ---------------

                                                                                             106,645             178,814

     Current portion                                                                          43,018              87,306
                                                                                      ---------------     ---------------

                                                                                              63,627              91,508
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

      These loans are non-interest bearing with no specific terms of repayment
      except for the current portion which is expected to be repaid prior to
      January 31, 2000, and the balance is not expected to be received prior to
      February 1, 2000.


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999




5.    SINKING FUNDS

      The sinking funds are restricted in use since all amounts paid into them
      must be used to repay the immigration loans (see note 10-b and c).


6.    PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                          <C>                 <C>
     Land                                                                                    229,980             238,733
     Building                                                                              1,977,700           1,732,386
     Machinery and manufacturing equipment                                                 4,788,949           2,983,063
     Furniture and fixtures                                                                  513,720             322,367
     Computers                                                                             1,175,318             529,722
     Rolling stock                                                                            91,831              15,181
     Leasehold improvements                                                                  424,463             340,833
     Equipment under capital lease                                                           520,779              52,139
                                                                                      ---------------     ---------------

     Cost                                                                                  9,722,740           6,214,424
                                                                                      ---------------     ---------------

     Less accumulated depreciation and amortization:

     Building                                                                                244,168             174,779
     Machinery and manufacturing equipment                                                 2,309,951           1,005,575
     Furniture and fixtures                                                                  390,403             234,100
     Computers                                                                               854,833             381,279
     Rolling stock                                                                            24,760               2,087
     Leasehold improvements                                                                  320,582             287,696
     Equipment under capital lease                                                           171,748              17,823
                                                                                      ---------------     ---------------

                                                                                           4,316,445           2,103,339
                                                                                      ---------------     ---------------

     Net                                                                                   5,406,295           4,111,085
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>




<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999





7.    GOODWILL

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                    <C>
     Cost                                                                                  1,987,298              55,660
     Less: Accumulated amortization                                                           98,898              11,132
                                                                                      ---------------     ---------------

     Net                                                                                   1,888,400              44,528
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>



8.    BANK LOANS

      The bank loans bear interest at the prime lending rate plus 0.25% to 0.5%
per annum with interest payable monthly.

      As security, the company has provided a moveable hypothec on accounts
      receivable, inventories and commercial equipment, a $3,970,880 hypothec on
      all assets of the company, including a first ranking hypothec in the
      amount of $3,970,880 on the proceeds of all risks insurance on the
      property and a solidary guarantee in the amount of $3,309,067.

      The company finances its operations mainly through the use of Bankers
      Acceptance bearing an average lending rate of less than prime.






<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999


9.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                 <C>
     Accounts payable and accrued expenses are comprised of the following:


         Trade payables                                                                    2,723,858           1,285,294
         Accrued expenses                                                                  1,374,219             678,986
                                                                                      ---------------     ---------------

                                                                                           4,098,077           1,964,280
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

10.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                          <C>                 <C>
     a)    Balance of sale secured by land and building  plus rent,  present and
           future on the building, without interest, repayable in semi-annual
           repayments of $38,606 due April and October, maturing October 2000.               154,423             240,451

     b)    Immigration loan secured by a first ranking universal hypothec on the
           universality of the property, moveable and immovable, present and
           future and corporeal and incorporeal, bearing interest at 5.21% per
           annum due on November 2002.                                                       463,269             480,901


     c)    Immigration loan secured by a first ranking universal hypothec on the
           universality of the property, moveable and immoveable, present and
           future, corporeal and incorporeal, bearing interest at 5.59% per
           annum, due on September 2003.                                                     463,269                  --


     d) Bank loan, bearing interest at prime plus 1% per annum repayable in
           monthly capital repayments of $1,483, maturing April 2002.                         57,833              78,509
                                                                                      ---------------     ---------------

           Balance carried forward                                                         1,138,794             799,861
                                                                                      ---------------     ---------------
</TABLE>



<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999

10.   LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                   <C>
           Balance brought forward                                                         1,138,794             799,861

     e)    Bank loan, bearing interest at prime rate plus 1% per annum repayable
           in monthly capital repayments of $5,032 and a final
           repayment of $5,038 plus interest, maturing November 2001.                        171,107             240,308

     f)    Loan secured by providing land and a personal guarantee from a
           director as collateral bearing interest at prime plus 1% repayable by
           monthly capital repayments of $1,324. This loan was repaid
           during the year.                                                                       --              52,706

     g)    The loan from Societe Developpement Industriel du Quebec bearing
           interest at a rate of approximately prime plus 1.50% which is
           deferred and capitalized for the minimum of either 12 months or when
           the accumulated interest is greater than 10% of the loan advance,
           repayable in annual payments commencing June 30, 1997 at a rate of
           15% of the prior year's net income to a maximum of $33,091 per annum.
                                                                                              82,229             113,983

     h)    Bank term loan secured by machinery and equipment bearing interest at
           prime plus 1.75% repayable in monthly capital repayments of
           $2,758, maturing May 1999.                                                         11,030              45,800

     i)    Small business investment loan, secured by machinery and equipment,
           repayable in monthly instalments of $2,449 plus interest at prime
           plus 1.75%, maturing February 2000.                                                35,407              63,479

     j)    Small business investment loan secured by a hypothec on specific
           equipment plus a personal guarantee from a director of the company
           bearing interest at prime plus 1.75% repayable by monthly capital
           instalments of $1,970.  This loan was repaid during the year.                          --             103,652
                                                                                      ---------------     ---------------

           Balance carried forward                                                         1,438,567           1,419,789
                                                                                      ---------------     ---------------
</TABLE>


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999

10.   LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                 <C>
           Balance brought forward                                                         1,438,567           1,419,789

     k)    Bank term loan secured by a first ranking universal hypothec on the
           universality of the property, moveable and immoveable, present and
           future and corporeal and incorporeal, bearing interest at 7.99% per
           annum repayable in monthly capital repayments of $553 plus a final
           repayment of $66,668 in December 2002.
                                                                                              92,088             102,477

     l)    Loan secured by a universal hypothec on land and building, plus
           floating charge on all other assets bearing interest at prime plus 4%
           repayable by monthly capital repayments of $1,655. This loan was
           repaid during the year.                                                                --             147,705

     m)    Loan secured by a first and fixed mortgage charge on the land and
           building and a floating charge on all other assets, bearing interest
           at 9 1/2% repayable by monthly capital repayments of $6,618. This
           loan was repaid during the year.                                                       --             274,801

     n)    Obligation under capital lease for machinery and equipment subject to
           blended monthly instalments of $7,848 including imputed interest
           at 7.64% per annum to April 2000.                                                 159,609                  --

     0)    Obligation under capital lease for furniture and lab equipment
           subject to blended monthly instalments of $5,670 included imputed
           interest at 7.10% per annum to April 2001.                                        173,357                  --

     p)    Government loans, without guarantee nor interest, repayable 15 years
           after their date of receipt, the first portion of $30,443 received
           July 1989 is repayable in July 2004.                                               60,887                  --
                                                                                      ---------------     ---------------

           Balance carried forward                                                         1,924,508           1,944,772
                                                                                      ---------------     ---------------
</TABLE>


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999

10.   LONG-TERM DEBT (Continued)

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                 <C>
           Balance brought forward                                                         1,924,508           1,944,772

     q)    Government loan of an original amount of $205,083, without guarantee
           nor interest, repayable in 4 equal annual instalments starting at the
           latest on December 1, 1997, maturing in December 2000.                            102,542                  --


     r)    Other                                                                              19,420              46,728
                                                                                      ---------------     ---------------

                                                                                           2,046,470           1,991,500

           Less: Current portion                                                             440,523             427,116
                                                                                      ---------------     ---------------

                                                                                           1,605,947           1,564,384
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

      Future principal payment obligations are as follows:

<TABLE>
<S>                                                                                   <C>
     2000                                                                             $      440,523
     2001                                                                                    396,873
     2002                                                                                    145,015
     2003                                                                                    570,347
     2004                                                                                    493,712
                                                                                      ---------------

                                                                                      $    2,046,470
                                                                                      ---------------
                                                                                      ---------------
</TABLE>

11.   NOTES PAYABLE

      The notes payable are non-interest bearing for which a portion of $380,981
      is payable by 12 equal monthly payments of $31,748 beginning February 1,
      1999 and the balance of $152,218 is due prior to January 31, 2000.


12.   DUE TO DIRECTOR

      The amount due to director is unsecured, non-interest bearing and is due
on April 15, 2002.




<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999



13.   LOAN PAYABLE

      This loan payable is non-interest bearing and is owed to a private
company, due on April 15, 2002.


14.   DEFERRED REVENUE

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------

                                                                                            $                   $
<S>                                                                                          <C>                 <C>
     Deferred revenue                                                                        766,571             597,915
     Current portion                                                                         161,226             127,857
                                                                                      ---------------     ---------------

                                                                                             605,345             470,058
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

      Deferred revenue will be recognized as income as follows:


<TABLE>
<S>                                                                                   <C>
     2000                                                                             $      161,226
     2001                                                                                    216,524
     2002                                                                                    177,409
     2003                                                                                    136,867
     2004                                                                                     74,545
                                                                                      ---------------

                                                                                      $      766,571
                                                                                      ---------------
                                                                                      ---------------
</TABLE>





<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999



15.   CAPITAL STOCK

      a)  Authorized

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

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

      b)  Issued

<TABLE>
<CAPTION>
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $


<S>                                                                                        <C>              <C>
          2,795,000 common shares                                                          6,867,529                  --

          Thermoplus Air Inc.
                   91,242  Class A common shares                                                  --           1,934,525

          159653 Canada Inc.
                1,571,000  Class D shares                                                         --                 152
                       25  Class A shares                                                         --                  18
                                                                                      ---------------     ---------------

                                                                                           6,867,529           1,934,695
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

      c)  On October 5, 1998 the company issued 1,000,000 common shares in an
          Initial Public Offering (the "IPO") for gross proceeds of $6,000,000
          and 1,000,000 warrants for $125,000 less underwriting commission and
          other expenses of $1,443,533 ($866,120 net of income taxes
          recoverable).

          On November 15, 1998 the company issued an additional 45,000 common
          shares for gross proceeds of $270,000 and 150,000 warrants for $18,750
          less underwriting commission and other expenses of $37,400.

          Immediately prior to the "IPO" the company issued 1,750,000 common
          shares for a share for share exchange valued at $1,596,433.



<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999




16.   INCOME TAXES

      Provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                            YEAR               YEAR
                                                                                           ENDED               ENDED
                                                                                        JANUARY 31,         JANUARY 31,
                                                                                            1999               1998
                                                                                             $                   $
<S>                                                                                           <C>                 <C>
     a)   Current                                                                             480,064             531,383
          Deferred (recovered)                                                                 31,146            (126,069)
                                                                                       ---------------     --------------

                                                                                              511,210             405,314
                                                                                       ---------------     --------------
                                                                                       ---------------     --------------
     b)
          Current  income  taxes  consists  of  amount
          calculated  at basic  combined  federal  and                                        480,064            568,446
          provincial rates

          Increase (decrease) resulting from:
          Application of losses carried
            forward from prior year                                                                --            (20,224)
            Small business deduction                                                               --            (22,984)
          Manufacturing and processing                                                       (114,828)           (72,051)
          Timing differences                                                                  145,974             84,267
          Other                                                                                    --             (6,071)
                                                                                       ---------------     --------------

          Effective income taxes                                                              511,210            531,383
                                                                                       ---------------     --------------
                                                                                       ---------------     --------------
</TABLE>

      c)  Deferred income taxes represent the tax benefits derived from timing
          differences between depreciation of plant and equipment and
          recognition of warranty revenue charged to operations and amounts
          deducted from taxable income.




<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999

17.   COMMITMENTS AND CONTINGENCIES

      a)  The company is committed to payments under operating leases for its
          premises totalling $344,560. Annual payments for the next three years
          are as follows:

<TABLE>
<S>                                                                                   <C>
          2000                                                                        $      223,302
          2001                                                                               108,510
          2002                                                                                12,748
                                                                                      ---------------

                                                                                      $      344,560
                                                                                      ---------------
                                                                                      ---------------
</TABLE>

      b)   The company is committed to make monthly payments of $10,302 into
           sinking funds which are given as security against the immigration
           loans. The annual payments for the next five years are as follows:

<TABLE>
<S>                                                                                   <C>
           2000                                                                       $      123,630
           2001                                                                              123,630
           2002                                                                              123,630
           2003                                                                              123,630
           2004                                                                               58,450
</TABLE>

      c)   The company is in the process of constructing additional
           manufacturing facilities. The expected cost to complete the project
           is approximately $595,500 of which $284,500 has been incurred to
           date.
      d)   The company sells warranties on its products. Since there is no
           history of claims, no liability has been set up in the accounts.
           Payments under these warranties are accounted for as current
           expenditures.

18.   SEGMENTED INFORMATION
<TABLE>
<CAPTION>
                                                                                           YEAR                YEAR
                                                                                          ENDED               ENDED
                                                                                       JANUARY 31,         JANUARY 31,
                                                                                           1999                1998
                                                                                      ---------------     ---------------
                                                                                            $                   $
<S>                                                                                        <C>                 <C>

     The breakdown of sales by geographic area is as follows:

          Canada                                                                           9,531,130           5,698,411
          United States of America                                                        10,191,540          10,672,438
          International                                                                      493,179                   -
                                                                                      ---------------     ---------------

                                                                                          20,215,849          16,370,849
                                                                                      ---------------     ---------------
                                                                                      ---------------     ---------------
</TABLE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999


19.   ACQUISTIONS

      a)   Refplus Inc. and Thermoplus Air Inc.

           On February 1st, 1998 the company acquired 49.99% interest in Refplus
           Inc. for $430,180 and 100% interest in Thermoplus Air Inc. for
           $1,408,755. The allocation of purchase price is summarized as
           follows:

<TABLE>
<S>                                                                                   <C>
           Current assets                                                             $    1,161,885
           Property, plant and equipment                                                   1,852,492
           Goodwill                                                                          590,877
           Minority interest in Refplus Inc.                                                (352,469)
           Liabilities                                                                    (1,413,850)
                                                                                      ---------------

                                                                                      $    1,838,935
                                                                                      ---------------
                                                                                      ---------------
</TABLE>

      b)   Circul-aire Group

           On November 27, 1998 the company acquired 100% interest in Cascades
           Technologies Inc. and 9048-3140 Quebec Inc., corporate shareholders
           of the Circul-aire Group, for a total consideration of $2,377,895.
           The allocation of purchase price is summarized as follows:

<TABLE>
<S>                                                                                   <C>
           Current assets                                                             $    3,611,627
           Property, plant and equipment                                                     758,234
           Goodwill                                                                        1,340,761
           Investment                                                                        237,263
           Liabilities                                                                    (3,569,990)
                                                                                      ---------------

                                                                                      $    2,377,895
                                                                                      ---------------
                                                                                      ---------------
</TABLE>

      c)   Accounting for Acquisitions

           The acquisitions in a) and b) have been accounted for by the purchase
           method and the results of operations of Refplus Inc., Thermoplus Air
           Inc. and Circul-aire Group from their date of acquisition, have been
           included in these consolidated financial statements.


<PAGE>

DECTRON INTERNATIONALE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
JANUARY 31, 1999





20.   Uncertainty due to the Year 2000 Issue

      The Year 2000 Issue arises because many computerized systems use two
      digits rather than four to identify a year. Date-sensitive systems may
      recognize the year 2000 as 1900 or some other date, resulting in errors
      when information using the year 2000 is processed. In addition, similar
      problems may arise in some systems which use certain dates in 1999 to
      represent something other than a date. The effects of the Year 2000 Issue
      may be experienced before, on, or after January 1, 2000, and, if not
      addressed, the impact on operations and financial reporting may range from
      minor errors to significant systems failure which could affect an entity's
      ability to conduct normal business operations. It is not possible to be
      certain that all aspects of the Year 2000 Issue affecting the entity,
      including those related to the efforts of customers, suppliers, or other
      third parties, will be fully resolved.




<PAGE>

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.

May 13, 1999

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

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

<TABLE>
<CAPTION>
Name                                                          Position                                             Date
----                                                          --------                                             ----
<S>                                                <C>                                                          <C>
/s/ NESS LAKDAWALA                                   Chairman, Chief Executive  May 13, 1999
----------------                                     Officer
Ness Lakdawala

                                                     Executive Vice President                                  May 13, 1999
 ----------------------------                        and Director
       Reinhold Kittler

 /s/ ROSHAN KATRAK                                   Vice President of Human                                   May 13, 1999
 ----------------------------                        Relations and Director
        Roshan Katrak

/s/ MAURO PARISSI                                    Chief Financial Officer,                                  May 13, 1999
 ----------------------------                        Secretary and Director
        Mauro Parissi

                                                     Director                                                 May 13, 1999
 ----------------------------
          Guy Houle

/s/ LEENA LAKDAWALA                                  Executive Vice President                                 May 13, 1999
 ----------------------------                        and Director
       Leena Lakdawala


                                                     Director                                                 May 13, 1999
 ----------------------------
       Richard Ness
</TABLE>