<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------

                                    FORM 10-Q
                                   (Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For The Quarter Ended July 31, 2005, or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For The Transition Period from _______to_______


                         Commission File Number 1-14503




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

<TABLE>

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

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

</TABLE>


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

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ].


                      APPLICABLE ONLY TO CORPORATE ISSUERS

As of September 14, 2005, there were 3,155,000 shares of common stock
outstanding.


<PAGE>


DECTRON INTERNATIONALE INC.

<TABLE>

<S>                                                                                                            <C>
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.....................................................................      4
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations....      4
Item 3.  Quantitative and Qualitative Disclosures About Market Risk...............................     10
Item 4.  Controls and Procedures..................................................................     10

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.........................................................................     10
Item 2. Changes in Securities and Use of Proceeds.................................................     10
Item 3. Defaults Upon Senior Securities...........................................................     10
Item 4. Submission of Matters to a Vote of Security Holders.......................................     11
Item 5. Other Information.........................................................................     11
Item 6. Exhibits and Reports on Form 8-K..........................................................     11

SIGNATURES........................................................................................     12

</TABLE>

<PAGE>


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Certain statements contained herein including, without limitation,
those concerning (i) the strategy of Dectron Internationale Inc. ("Dectron"),
(ii) Dectron's expansion plans and (iii) Dectron's capital expenditures, contain
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") concerning Dectron's
operations, economic performance and financial condition. Because such
statements involve risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements. Factors that
could cause such differences include, but are not limited to, those discussed
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Dectron undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements that may be made
to reflect any future events or circumstances.


<PAGE>


                          PART I. FINANCIAL INFORMATION



ITEM 1...FINANCIAL STATEMENTS

See Pages F-1 through F-15.

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

FOR THE SIX MONTHS ENDED JULY 31, 2005
ALL FIGURES IN US DOLLARS UNLESS OTHERWISE SPECIFIED

Management's Discussions and Analysis of Financial Conditions and Results of
Operations ("MD&A") should be read in conjunction with the unaudited interim
consolidated financial statements for the six months ended July 31, 2005 and the
audited consolidated financial statements and MD&A for the year ended January
31, 2005. This MD&A is based on reported earnings in accordance with United
States generally accepted accounting principles (GAAP).

Dectron's interim consolidated financial statements have been prepared using the
same accounting policies as described in note 1 of Dectron's audited
consolidated financial statements for the year ended January 31, 2005. Please
refer to Note 2 of the interim consolidated financial statements for the six
months ended July 31, 2005 for further information.

Quarterly reports, the annual report and supplementary information filed with
the U.S. Securities and Exchange Commission, including the annual report on Form
10-K and the quarterly report on Form 10-Q and with the Canadian Securities
regulatory authorities, can be found on-line at www.sedar.com and www.sec.gov
respectively, as well as on our corporate Web site at www.dectron.com.

FORWARD-LOOKING INFORMATION

Certain statements contained in this MD&A constitute 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. 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 MD&A 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.

CRITICAL ACCOUNTING POLICIES

Dectron's 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:


                                       4
<PAGE>

o Revenue Recognition
o Deferred Revenue
o Intangible Assets and Goodwill
o Foreign currency translation
o Accounting for Income Taxes

REVENUE RECOGNITION

Dectron recognizes 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.

DEFERRED REVENUE

Dectron 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.

INTANGIBLE ASSETS AND GOODWILL

Dectron 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 Dectron 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".

Goodwill and intangible assets with definite lives are tested 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.

FOREIGN CURRENCY TRANSLATION

Dectron 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.


                                       5
<PAGE>

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.

ACCOUNTING FOR 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.

SELECTED FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                               July 31,       January 31,
                                                                2005             2005
                                                              ----------      ------------
<S>                                                           <C>            <C>
FINANCIAL POSITION

Cash and cash equivalents                                      1,190,041       1,075,220
Total Assets                                                  34,176,971      35,687,918
Total Debt                                                     2,093,570       4,719,783


Shareholder's equity                                          10,929,529      11,317,367
- per common share
                                                                    3.46            3.59

Working capital                                                3,045,476       4,417,339
Working capital ratio
                                                                   1.2:1           1.2:1

Weighted average number of common shares outstanding           3,155,000       3,066,851
(basic and diluted)
Common shares outstanding                                      3,155,000       3,155,000


</TABLE>

RESULTS OF OPERATIONS

Six-month period ended July 31, 2005 compared to six-month period ended July 31,
2004.

         Revenues for the six-month period ended July 31, 2005 were $
23,807,274, a 12,21% increase over prior year revenues of $ 21,217,255.
Dectron's sales growth reflects revenues arising primarily from its stronger
presence in the Canadian market for commercial HVAC products and related
services.

         Gross profit decreased by $ 453,449 to $ 5,562,515 over the same
period. As a percentage of revenues, gross profit decreased from 28.35% to
23.36%. Despite certain productivity gains, the gross profit margin was
adversely affected by higher raw material costs and aggressive pricing
strategies in certain HVAC markets.

         Selling expenses increased by $ 222,834 in the six-month period ended
July 31, 2005 from $ 2,411,180 to $2,634,014. As a percentage of revenues,
selling and marketing expenses decreased from 11.36% to 11.06%.


                                       6
<PAGE>

         General and administrative expenses increased by $ 116,104 to $
1,735,612 compared to $ 1,619,508 for the period ended July 31, 2004. As a
percentage of revenues, general and administrative decreased from 7.63% to
7.29%.
         Amortization expenses slightly increased to $ 644,290 in the six-month
period ending July 31, 2005 compared to $ 618,736 in the six-month period ending
July 31, 2004 following the acquisition of new machinery and equipment during
the last fiscal year. As a percentage of revenues, amortization expenses
decreased from 2.92% to 2.71%.

         Financing expenses decreased from $ 438,628 to $ 398,145, a decrease of
$ 40,483. As a percentage of revenues, financing expenses decreased from 2.07%
to 1.67%. The lower interest expense is due primarily to repayments of
short-term debt and long-term debt during the last fiscal year.

         Provisions for income tax as a percentage of taxable income decreased
from 31.15% for the six months ended July 31, 2004 to 26.88% for the six months
ended July 31, 2005. Tax expenses have decreased by $248,585 due to a decrease
in taxable revenue.

         Mostly as a result of a lower margin and higher selling and
administration expenses, net earnings before discontinued operation was $
110,010 for the six-month period ending July 31, 2005 compared to $ 638,883 for
the six-month period ending July 31, 2004. As a percentage of sales, net
earnings before discontinued operations decrease from 3.01% to 0.46%.

         Losses from discontinued operations net of taxes for the six-month
period ending July 31, 2005 was $ 777,058 compared to $ 949,805 in the
corresponding period in 2004, both resulting from the discontinued operations of
Liberty Drive Property, Inc.

         Gain on disposal of discontinued operations was $ 125,933 for the
six-month period ending July 31, 2005 compared to $ 550,676 for the
corresponding period in 2004.

         As a result of the above factors, net losses for the six-month period
ending July 31, 2005 was $ 541,115 compared to earnings of $ 239,754 for the
corresponding period in 2004. .

Three months ended July 31, 2005 compared to three-month period July 31, 2004.

         Revenues for the three-month period ended July 31, 2005 were $
12,896,631, at 17.37% increase over prior year revenues of $ 10,988,159.
Dectron's sales growth reflects revenues arising primarily from its stronger
presence in the Canadian market for commercial HVAC products and related
services.

         Gross profit decreased by $ 178,823 to $ 2,566,702 over the same
period. As a percentage of revenues, gross profit decreased from 24.99% to
19.90%. Despite certain productivity gains, the gross profit margin was
adversely affected by higher raw material costs and aggressive pricing
strategies in certain HVAC markets.

         Selling expenses increased by $ 114,743 in the three-month period ended
July 31, 2005, from $ 1,194,659 to $ 1,309,402 for the corresponding period
ended July 31, 2004. As a percentage of revenues, selling and marketing expenses
decreased from 10.87% to 10.15%.

         General and administrative expenses decreased by $ 54,086 to $ 731,096
compared to $ 785,182 for the period ended July 31, 2004. As a percentage of
revenues, general and administrative decreased from 7.15% to 5.67%.

         Amortization expenses slightly increased to $ 320,928 in the
three-month period ending July 31, 2005 compared to $ 304,158 in 2004 following
the acquisition of new machinery and equipment during the last fiscal year. As a
percentage of revenues, amortization expenses decreased from 2.77% to 2,49%.

         Financing expenses increased from $ 96,162 to $ 164,495 an increase of
$ 68,333. As a percentage of revenues, financing expenses decreased from 0.88%
to 1.28%.


                                       7
<PAGE>

         Provisions for Income tax as a percentage of taxable income increased
from 30.03% for the three months ended July 31, 2004 to $ 31.17% for the period
ended July 31, 2005. Tax expenses have decreased by $ 97,000 due to a decrease
in taxable revenue.

         Mostly as a result of a lower margin and higher selling and
administration expenses, net earnings before discontinued operation was $ 28,070
for the three-month period ending July 31, 2005 compared to $ 255,653 for the
three-month period ending July 31, 2004. As a percentage of sales net earnings
before discontinued operations decrease from 2.33% to 0.22%.

         Losses from discontinued operations net of taxes for the three-month
period ending July 31, 2005 was $678,731 compared to $ 679,228 in the
corresponding period in 2004, both resulting from the discontinued operations of
Liberty Drive Property, Inc.

         Gain on disposal of discontinued operations was $ 62,357 for the
three-month period ending July 31, 2005 compared to $ 550,677 for the
comparative period in 2004.

         As a result of the above factors, net losses in the three-month period
ending July 31, 2005 was $ 588,304 compared to earnings of $ 127,102 in the
corresponding period in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Dectron had a positive net change in cash of $ 114,821 for the six-month period
ended July 31, 2005. The principal sources of cash were from the disposal of
discontinued assets in the amount of $ 2,585,985, from accounts payables in the
amount of $ 1,359,352 and from inventory in the amount of $ 1,206,898. The
principal uses of cash were re-payment of long-term debt in the amount of $
2,626,213 and an increase in accounts receivables of $ 2,514,143.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Our significant contractual obligations as of July 31, 2005 are for debt and
operating leases. Debt by year of maturity and future rental payments under
operating lease agreements are presented below. As of July 31, 2005, we had an
outstanding balance on our line of credit of $ 11,854,748 and do not have any
purchase obligations. We have not engaged in off-balance sheet financing,
commodity contract trading or significant related party transactions.

<TABLE>
<CAPTION>

CONTRACTUAL OBLIGATIONS             PAYMENTS DUE BY PERIOD
-----------------------             ----------------------
                                   Total       Less than 1 year   1-3 years       4-5 years      After 5 years
                                   -----       ----------------   ---------       ---------      -------------
<S>                               <C>               <C>           <C>            <C>              <C>
Balance of Sale                   122,539           122,539               -               -               -
Other long term debt            1,971,031           422,591         959,210         293,415         295,815
Total Long term debt            2,093,570           545,130         959,210         293,415         295,815
Operating lease                 5,854,844           913,623       1,566,473       1,561,557       1,813,191

</TABLE>

                                       9

<PAGE>

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Risk Management
-------------------------------

Dectron is 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.

Interest Rate Risk
------------------

Dectron is exposed to market risk related to fluctuations in interest rates on
its debt. Increases 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 annual interest expense by
$125,000.

OUTLOOK

While the demand for its products has held steady due to a favorable economic
environment in recent years, the Company has nevertheless faced fierce
competition in the North American HVAC industry, a significant appreciation in
the Canadian dollar and a sharp rise in raw material costs. What's more, the
initially established manufacturing capacity based on greater demand notably
from the high-technology sector had to be reduced. Dectron's results have
therefore been adversely affected by several divestitures in recent years.

Management believes that the Canadian dollar and raw material prices have
stabilized and that progress has been made in regard to productivity. In fact,
various manufacturing operations have been consolidated and certain
non-strategic low-yielding assets have been sold and others will be sold
shortly. Accordingly, the Company does not expect to incur any significant
losses from discontinued operations for the current fiscal year.

Based on selective price increases and further improvements in efficiency,
management is confident that the Company will increase profit margins to
historical levels as of the current fiscal year (from 27.46% currently to
approximately 30%). In addition, Dectron's growth avenues, namely indoor air
security and water generation, are expected to bring substantial sales, which
would have a direct impact on the Company's overall profitability. All in all,
management feels that Dectron now benefits from a stronger foundation to drive
sustained growth and profitability.

ITEM 4. CONTROLS AND PROCEDURES

Dectron believes it is critical to provide investors and other users of its
financial statements with information that is relevant, objective,
understandable and timely, so that they can make informed decisions. As a
result, Dectron has 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.


                                       10
<PAGE>

Dectron's management team is committed to providing high-quality, relevant and
timely information about its businesses. Management performs reviews of each of
its 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.

Dectron's evaluate the effectiveness of the design and operation of its
"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 Quarterly Report
on Form 10-Q. 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 Dectron's 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
                  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) Dectron's
                  transactions are properly authorized; (2) its assets are
                  safeguarded against unauthorized or improper use; and (3)
                  transactions are properly recorded and reported, all to permit
                  the preparation of Dectron's 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 management's evaluation, Dectron's chief executive officer and chief
financial officer have concluded that, as of July 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 Dectron's 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 internal and disclosure controls or in
other factors that could significantly affect such internal and disclosure
controls subsequent to the date of their evaluation.

                            PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.


                                       10
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

ITEM 5. OTHER INFORMATION
None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

31.1     Certification of the Chief Executive Officer filed herewith pursuant to
         Section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification of the Chief Financial Officer filed herewith pursuant to
         Section 302 of the Sarbanes-Oxley Act of 2002.

32       Certification of the Chief Executive Officer and Chief Financial
         Officer furnished herewith pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.


(b) Reports on Form 8-K

None.



                                       11
<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.


September 14, 2005                      By: /s/ Mauro Parissi
                                            -----------------------------------
                                        Mauro Parissi
                                        Chief Financial Officer


                                       12
<PAGE>

                         [Dectron internationale Logo]


                   INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 JULY 31, 2005

<PAGE>

                           DECTRON INTERNATIONALE INC.
                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                  JULY 31, 2005



                                TABLE OF CONTENTS



Interim Consolidated Balance Sheets                                        2 - 3

Interim Consolidated Statements of Operations                              4 - 5

Interim Consolidated Statements of Cash Flows                              6 - 8

Interim Consolidated Statements of Stockholders' Equity                        9

Notes to Interim Consolidated Financial Statements                      10  - 15

<PAGE>

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED BALANCE SHEETS

AS AT JULY 31, 2005 AND JANUARY 31, 2005

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

<TABLE>
<CAPTION>
                                                           JULY 31,       JANUARY 31,
                                                            2005             2005
                                                         -----------      -----------
<S>                                                     <C>              <C>
ASSETS

CURRENT

     Cash                                                $ 1,190,041      $ 1,075,220
     Accounts receivable                                  12,194,393        9,680,250
     Income taxes receivable                                 251,683           87,805
     Inventory                                             8,837,296       10,044,194
     Prepaid expenses and sundry assets                      615,395          568,976
     Loans receivable                                         69,099           68,836
     Current assets held by discontinued operations           82,191        3,414,543
                                                         -----------      -----------

                                                          23,240,098       24,939,824

LOANS RECEIVABLE                                           1,762,943        1,210,989

PROPERTY, PLANT AND EQUIPMENT                              7,163,292        7,541,579

INTANGIBLES                                                   71,042           79,963

GOODWILL                                                   1,684,348        1,661,144

DEFERRED INCOME TAXES                                        255,248          254,419

                                                         -----------      -----------

                                                         $34,176,971      $35,687,918
                                                         ===========      ===========
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED BALANCE SHEETS

AS AT JULY 31, 2005 AND JANUARY 31, 2005

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

<TABLE>
<CAPTION>
                                                                JULY 31,          JANUARY 31,
                                                                  2005               2005
                                                              ------------       ------------
<S>                                                          <C>                <C>
  LIABILITIES

CURRENT

     Bank loans                                               $ 11,854,748       $ 11,642,981
     Accounts payable and accrued expenses                       7,543,522          6,184,170
     Current portion of long-term debt                             545,130          2,348,870
     Deferred revenue                                                4,580              4,580
     Current liabilities held by discontinued operations           246,642            341,884
                                                              ------------       ------------

                                                                20,194,622         20,522,485

LONG-TERM DEBT                                                   1,548,440          2,370,913

DEFERRED REVENUE                                                 1,504,380          1,477,153
                                                              ------------       ------------

                                                                23,247,442         24,370,551
                                                              ------------       ------------

STOCKHOLDERS' EQUITY

CAPITAL STOCK  (NOTE 3)                                          6,873,335          6,873,335

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

ACCUMULATED OTHER COMPREHENSIVE INCOME                           2,457,772          2,304,495

RETAINED EARNINGS                                                1,687,202          2,228,317
                                                              ------------       ------------

                                                                10,929,529         11,317,367
                                                              ------------       ------------

                                                              $ 34,176,971       $ 35,687,918
                                                              ============       ============
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTH PERIOD ENDED JULY 31, 2005 AND 2004

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

<TABLE>
<CAPTION>
                                                              SIX MONTH ENDED    SIX MONTH ENDED
                                                               JULY 31, 2005      JULY 31, 2004
                                                              ---------------    ---------------
<S>                                                            <C>                <C>
SALES                                                           $ 23,807,274       $ 21,217,255

     Cost of sales                                                18,244,759         15,201,291
                                                                ------------       ------------

GROSS PROFIT                                                       5,562,515          6,015,964
                                                                ------------       ------------

OPERATING EXPENSES

     Selling                                                       2,634,014          2,411,180
     General and administrative                                    1,735,612          1,619,508
     Depreciation and amortization                                   644,290            618,736
     Interest expense                                                398,145            438,628
                                                                ------------       ------------

                                                                   5,412,061          5,088,052
                                                                ------------       ------------


EARNING BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS              150,454            927,912

     Income taxes                                                     40,444            289,029
                                                                ------------       ------------

EARNINGS BEFORE DISCONTINUED OPERATIONS                              110,010            638,883

     Loss from discontinued operations, net of tax                  (777,058)          (949,805)
     Gain on disposal of discontinued operations, net of tax         125,933            550,676
                                                                ------------       ------------

NET EARNINGS (LOSS)                                             $   (541,115)      $    239,754
                                                                ============       ============

NET EARNINGS (LOSS) PER COMMON SHARE, BASIC AND DILUTED
     Continuing operation                                       $       0.03       $       0.21
     Discontinued operation                                            (0.24)             (0.31)
     Disposal of discontinued operations                                0.04               0.18

                                                                ------------       ------------
                                                                $      (0.17)      $       0.08
                                                                ============       ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
     Basic and Diluted                                             3,155,000          2,977,734
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH PERIOD ENDED JULY 31, 2005 AND 2004

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


<TABLE>
<CAPTION>
                                                                THREE MONTH ENDED  THREE MONTH ENDED
                                                                  JULY 31, 2005      JULY 31, 2004
                                                                   ------------       ------------
<S>                                                               <C>                <C>
SALES                                                              $ 12,896,631       $ 10,988,159

     Cost of sales                                                   10,329,929          8,242,634
                                                                   ------------       ------------

GROSS PROFIT                                                          2,566,702          2,745,525
                                                                   ------------       ------------

OPERATING EXPENSES

     Selling                                                          1,309,402          1,194,659
     General and administrative                                         731,096            785,182
     Depreciation and amortization                                      320,928            304,158
     Interest expense                                                   164,495             96,162
                                                                   ------------       ------------

                                                                      2,525,921          2,380,161
                                                                   ------------       ------------


EARNING BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS                  40,781            365,364

     Income taxes                                                        12,711            109,711
                                                                   ------------       ------------

EARNINGS BEFORE DISCONTINUED OPERATIONS                                  28,070            255,653

     Loss from discontinued operations, net of tax                     (678,731)          (679,228)
     Gain on disposal of discontinued operations, net of tax             62,357            550,677
                                                                   ------------       ------------

NET EARNINGS (LOSS)                                                $   (588,304)      $    127,102
                                                                   ============       ============

NET EARNINGS (LOSS) PER COMMON SHARE, BASIC AND DILUTED
     Continuing operation                                          $       0.01       $       0.08
     Discontinued operation                                               (0.22)             (0.21)
     Disposal of discontinued operations                                   0.02               0.17

                                                                   ------------       ------------
                                                                   $      (0.19)      $       0.04
                                                                   ============       ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
     Basic and Diluted                                                3,155,000          2,977,734
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIOD ENDED JULY 31, 2005 AND 2004

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


<TABLE>
<CAPTION>
                                                                           SIX MONTH ENDED   SIX MONTH ENDED
                                                                            JULY 31, 2005     JULY 31, 2004
                                                                           ---------------   ---------------
<S>                                                                         <C>               <C>
OPERATING ACTIVITIES

Net earnings from continuing operations                                      $   110,010       $   638,883

Adjustments to reconcile net earnings to net cash provided by operating
activities:
     Depreciation and amortization                                               644,290           618,736
     Increase in accounts receivable                                          (2,514,143)       (1,425,720)
     Decrease (increase) in inventory                                          1,206,898          (307,264)
     Increase in prepaid expenses and sundry assets                              (46,419)          (87,998)
     Decrease (increase) in deferred income taxes                                   (829)              829
     Increase in accounts payable and accrued expenses                         1,359,352         1,567,993
     Increase in income taxes receivable                                        (163,878)             --
     Increase in income taxes payable                                               --              97,649
     Increase in deferred revenue                                                 27,227            35,785
                                                                             -----------       -----------

Net cash provided by operating activities                                        622,508         1,138,893
                                                                             -----------       -----------
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE SIX MONTH PERIOD ENDED JULY 31, 2005 AND 2004

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


<TABLE>
<CAPTION>
                                                             SIX MONTH ENDED   SIX MONTH ENDED
                                                              JULY 31, 2005     JULY 31, 2004
                                                             ---------------   ---------------
<S>                                                           <C>                <C>
INVESTING ACTIVITIES

     Acquisition of property, plant and equipment                (154,970)          (228,687)
                                                               ----------         ----------

Net cash used in investing activities                            (154,970)          (228,687)
                                                               ----------         ----------

FINANCING ACTIVITIES

     Advances to loans receivable                                (552,217)           (18,075)
     Advances from (repayments of) bank loans                     211,767         (2,059,016)
     Repayments of long-term debt                              (2,626,213)        (1,166,513)
     Issuance of shares                                              --              543,750
     Advance from balance of sales                                   --             (250,000)
                                                               ----------         ----------

Net cash used in financing activities                          (2,966,663)        (2,949,854)
                                                               ----------         ----------

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE ON CASH AND CASH
EQUIVALENTS                                                        27,961            261,869
                                                               ----------         ----------

EFFECT OF DISCONTINUED OPERATIONS                               2,585,985          1,131,726
                                                               ----------         ----------
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE SIX MONTH PERIOD ENDED JULY 31, 2005 AND 2004

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


<TABLE>
<CAPTION>
                                                        SIX MONTH ENDED  SIX MONTH ENDED
                                                         JULY 31, 2005    JULY 31, 2004
                                                        ---------------  ---------------
<S>                                                      <C>              <C>
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS          114,821         (646,053)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                1,075,220        2,457,346
                                                          -----------      -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                  $ 1,190,041      $ 1,811,293
                                                          ===========      ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     INTEREST PAID                                        $   399,436      $   479,849
                                                          ===========      ===========

     INCOME TAXES PAID                                    $   281,380      $   187,969
                                                          ===========      ===========
</TABLE>


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

DECTRON INTERNATIONALE INC.

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE SIX MONTH PERIOD ENDED JULY 31, 2005

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


<TABLE>
<CAPTION>
                                                                       CUMULATIVE           OTHER
                                                                        RETAINED        COMPREHENSIVE       TREASURY
                                      NUMBER           AMOUNT           EARNINGS            INCOME            STOCK
                                    -----------      -----------       -----------      -------------      -----------
<S>                                 <C>             <C>               <C>               <C>               <C>
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)
                                    ===========      ===========       ===========       ===========       ===========


Share purchase plan receivable             --        $      --         $      --         $      --         $      --
Issuance of shares                         --               --                --                --                --
Foreign currency translation               --               --                --             153,277              --

Net loss for the period                    --               --            (541,115)             --                --
                                    -----------      -----------       -----------       -----------       -----------

Balance, July 31, 2005                3,155,000      $ 6,873,335       $ 1,687,202       $ 2,457,772       $   (88,780)
                                    ===========      ===========       ===========       ===========       ===========
</TABLE>


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

DECTRON INTERNATIONALE INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2005 AND JANUARY 31, 2005

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


1.    NOTICE OF NO AUDITOR REVIEW OF THE INTERIM CONSOLIDATED FINANCIAL

      The interim consolidated financial statements are the responsibility of
      the Company's management and have been approved by its Board of Directors.
      The Company's independent auditor has not performed a review of these
      Interim financial statements in accordance with the standards established
      by the Canadian Institute of Chartered Accountants for a review of interim
      financial statements by an entity's auditor.

2.    SIGNIFICANT ACCOUNTING POLICIES

      These unaudited interim consolidated financial statements have been
      prepared in accordance with United State generally accepted accounting
      principles, using the same accounting principles as those mentioned in
      Note 1 to the consolidated financial statements for the year ended January
      31, 2005. The unaudited interim consolidated financial statements should
      be read in conjunction with the consolidated financial statements and the
      notes thereto for the year ended January 31, 2005. These consolidated
      financial statements require management to make estimates and assumptions
      that affect the reported amounts in the consolidated financial statements
      and the notes thereto. Actual results could differ from these estimates.

      BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION

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

      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. (formely 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.

      FOREIGN CURRENCY TRANSLATION

      The company maintains its books and records in Canadian dollars. The
      operation of the company's subsidiary in the United States is an
      integrated corporation. As a result, monetary assets and liabilities in
      foreign currency are translated into Canadian dollars at exchange rates in
      effect at the balance sheet date, whereas non-monetary assets and
      liabilities are translated at the average exchange rates in effect at
      transaction dates. Income and expenses in foreign currency are translated
      at the average rate effective during the year with the exception of
      depreciation and amortization, which is translated at the historical rate.
      Gains and losses resulting from the translation of foreign currency
      transactions are included in earnings.

<PAGE>

DECTRON INTERNATIONALE INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2005 AND JANUARY 31, 2005

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


2.    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.

      RECENT ACCOUNTING CHANGES

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.

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.

<PAGE>

DECTRON INTERNATIONALE INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2005 AND JANUARY 31, 2005

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


3.    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

                                                JULY 31,       JANUARY 31,
                                                  2005            2005
                                               ----------      -----------
                  3,155,000 Common shares      $6,873,335      $6,873,335
                                               ==========      ==========

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

      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.

<PAGE>

DECTRON INTERNATIONALE INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2005 AND JANUARY 31, 2005

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


3.    CAPITAL STOCK (CONTINUED)

      EMPLOYEE STOCK OPTION PLAN (CONTINUED)

      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.

      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.

<PAGE>

DECTRON INTERNATIONALE INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2005 AND JANUARY 31, 2005

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


3.    CAPITAL STOCK (CONTINUED)

      EMPLOYEE STOCK OPTION PLAN (CONTINUED)

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

<TABLE>
<CAPTION>
                                                 JULY 31, 2005                 JANUARY 31, 2005                JANUARY 31, 2004
                                          --------------------------      --------------------------      --------------------------
                                                          WEIGHTED                        WEIGHTED                        WEIGHTED
                                                           AVERAGE                         AVERAGE                         AVERAGE
                                          NUMBER OF       EXERCISE        NUMBER OF       EXERCISE        NUMBER OF       EXERCISE
                                           OPTIONS          PRICE          OPTIONS          PRICE          OPTIONS          PRICE
                                          ---------      -----------      ---------      -----------      ---------      -----------
<S>                                        <C>          <C>              <C>            <C>              <C>            <C>
      Outstanding, beginning of year        108,500      $      4.20       295,750       $      3.44       357,000       $      3.39
      Granted                                  --               --            --                --            --                --
      Exercised                                --               --        (181,250)             3.00       (54,250)             3.00
      Cancelled                                --               --          (6,000)             3.00        (7,000)             4.20
                                           --------      -----------      --------       -----------      --------       -----------

      Outstanding, end of year              108,500      $      4.20       108,500       $      4.20       295,750       $      3.44
                                           ========      ===========      ========       ===========      ========       ===========
      Options, exercisable, end of year      81,375                         81,375                         235,250
                                           ========                       ========                        ========
</TABLE>


      The following table summarizes information about fixed stock options
      outstanding:

<TABLE>
<CAPTION>
                                                           JULY 31, 2005
                            -------------------------------------------------------------------------------
                                       OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                            ---------------------------------------------      ----------------------------
                                               WEIGHTED
                                               AVERAGE
                                              REMAINING        WEIGHTED                          WEIGHTED
                                               YEARS OF         AVERAGE                           AVERAGE
                             NUMBER OF       CONTRACTUAL       EXERCISE         NUMBER OF        EXERCISE
      Exercisable price       OPTIONS           LIFE             PRICE           OPTIONS           PRICE
      -----------------     -----------      -----------      -----------      -----------      -----------
<S>                        <C>              <C>              <C>              <C>              <C>
      $      3.00                  --               --               --               --               --
             4.20               108,500              5.9             4.20           81,375             4.20
                            -----------      -----------      -----------      -----------      -----------

                                108,500              5.9      $      4.20           81,375      $      4.20
                            ===========      ===========      ===========      ===========      ===========
</TABLE>

      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.

<PAGE>

DECTRON INTERNATIONALE INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2005 AND JANUARY 31, 2005

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


4.    SEGMENTED INFORMATION

<TABLE>
<CAPTION>
                                                                                  JULY 31,       JANUARY 31,
                                                                                   2005             2005
                                                                                -----------      -----------
<S>                                                                            <C>              <C>
      a)    The breakdown of sales by geographic area is as follows:

            Canada                                                              $14,504,081      $21,453,215
            United States of America                                              8,937,736       18,180,705
            International                                                           365,457        1,276,681
                                                                                -----------      -----------

                                                                                $23,807,274      $40,910,601
                                                                                ===========      ===========

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

            Canada                                                              $33,474,004      $31,644,024
            United States                                                           702,967        4,043,894
                                                                                -----------      -----------

                                                                                $34,176,971      $35,687,918
                                                                                ===========      ===========
</TABLE>