<PAGE>
 
    
 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997     
                                                     REGISTRATION NO. 333-34067
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
                                
                             AMENDMENT NO. 3     
                                      TO
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                               ----------------
 
                        GROUP MAINTENANCE AMERICA CORP.
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 
           TEXAS                     1711                   76-0535259
      (STATE OR OTHER    (PRIMARY STANDARD INDUSTRIAL    (I.R.S. EMPLOYER
      JURISDICTION OF     CLASSIFICATION CODE NUMBER)   IDENTIFICATION NO.)
     INCORPORATION OR
       ORGANIZATION)
 
                                                 RANDOLPH W. BRYANT
                                       SENIOR VICE PRESIDENT, GENERAL COUNSEL
   1800 WEST LOOP SOUTH, SUITE 1375                 AND SECRETARY
         HOUSTON, TEXAS 77027             1800 WEST LOOP SOUTH, SUITE 1375
            (713) 626-4778                      HOUSTON, TEXAS 77027
   (ADDRESS, INCLUDING ZIP CODE, AND               (713) 626-4778
      TELEPHONE NUMBER, INCLUDING        (NAME, ADDRESS, INCLUDING ZIP CODE,
 AREA CODE, OF REGISTRANT'S PRINCIPAL           AND TELEPHONE NUMBER,
          EXECUTIVE OFFICES)              INCLUDING AREA CODE, OF AGENT FOR
                                                      SERVICE)
 
                                  Copies to:
 
           GARY W. ORLOFF                          JOHN J. KELLEY III
    BRACEWELL & PATTERSON, L.L.P.                    KING & SPALDING
  711 LOUISIANA STREET, SUITE 2900             191 PEACHTREE STREET, N.E.
      HOUSTON, TEXAS 77002-2781                  ATLANTA, GEORGIA 30303
           (713) 223-2900                            (404) 572-4600
 
  Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
 
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
 
                               ----------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                  
               SUBJECT TO COMPLETION DATED OCTOBER 17, 1997     
 
                                7,500,000 SHARES
 
                [Logo of Group Maintenance America appears here]
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                                  COMMON STOCK
 
                                  -----------
 
  All of the 7,500,000 shares of Common Stock, par value $0.001 per share
("Common Stock"), offered hereby (the "Offering") are being sold by Group
Maintenance America Corp. ("GroupMAC" or the "Company").
 
  Prior to the Offering, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price per share of
Common Stock will be between $13.00 and $15.00. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price of the Common Stock. The Common Stock has been approved for listing on
the New York Stock Exchange ("NYSE") under the symbol "MAK."
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
 
THESE SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION NOR  HAS THE SECURITIES
 AND EXCHANGE COMMISSION  OR ANY  STATE SECURITIES COMMISSION  PASSED UPON  THE
 ACCURACY OR ADEQUACY  OF THIS PROSPECTUS. ANY  REPRESENTATION TO THE CONTRARY
 IS A CRIMINAL OFFENSE.
 
<TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
                                             PRICE TO   UNDERWRITING PROCEEDS TO
                                              PUBLIC    DISCOUNT(1)  COMPANY(2)
--------------------------------------------------------------------------------
<S>                                         <C>         <C>          <C>
Per Share.............................        $            $           $
--------------------------------------------------------------------------------
Total(3)................................... $           $            $
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(1) See "Underwriting" for a description of the indemnification arrangements
    with the Underwriters.
(2) Before deducting expenses of the Offering payable by the Company estimated
    to be $4,500,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
    to 1,125,000 additional shares of Common Stock solely to cover over-
    allotments, if any. If such option is exercised in full, the total Price to
    Public, Underwriting Discount and Proceeds to Company will be $          ,
    $           and $          , respectively. See "Underwriting."
 
                                  -----------
 
  The shares of Common Stock are offered severally by the Underwriters named
herein subject to prior sale when, as and if received and accepted by the
Underwriters, subject to their right to reject orders, in whole or in part, and
to certain other conditions. It is expected that delivery of the certificates
will be made against payment therefor at the office of The Robinson-Humphrey
Company, LLC, Atlanta, Georgia, on or about               , 1997.
 
THE ROBINSON-HUMPHREY COMPANY
 
                            WILLIAM BLAIR & COMPANY
 
                                                    ABN AMRO CHICAGO CORPORATION
 
     , 1997
<PAGE>
 
 
  [The inside front cover of the Prospectus is a gatefold containing a map of
the lower 48 United States with state boundaries depicted. The map is
captioned "Locations of GroupMAC Companies at closing" (with color dots
indicating locations). Opening the gatefold reveals a collage of 15
photographs and two maps of the lower 48 United States with state boundaries
depicted. The photographs are in color and depict the following: a worker
working on the electric component of a water heater, a worker preparing metal
for installation, a worker working at and inspecting a circuit breaker, an
employee working at a circuit board and utilizing a color monitor, an Airtron
six-wheel service truck, a worker installing ductwork, a worker being admitted
to a residence, a worker standing next to the open driver's door of a Hallmark
panel truck, an employee and a homeowner at the front door of the residence
looking at a hand-held computer, MacDonald-Miller workers working on an air
conditioning unit on a roof top, a worker on a step ladder installing ceiling
air conditioning duct work at a commercial site, an employee outside an A-ABC
service truck in the process of making a house call, a worker checking the
level of coolant in a residential air conditioner compressor, employees in a
dispatching room with job ticket postings on the wall, offices employees
working at work stations. Beneath the collage of photographs are the two maps.
The two maps carry the following captions and depict from left to right (i)
Clients of Callahan Roach, primarily involved in residential HVAC (with color
dots indicating locations), and (ii) Commercial HVAC affiliates of United
States Alliance (with color dots indicating locations).]
 
-------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
PRE-OFFERING COMPANIES                     YEAR FOUNDED HEADQUARTERS LOCATION
<S>                                        <C>          <C>
Airtron, Inc.                                  1970     Dayton, OH
K&N Plumbing, Heating, and Air Condition-
 ing, Inc.                                     1978     Arlington, TX
A-ABC Appliance, Inc./A-1 Appliance & Air
 Conditioning, Inc.                            1976     Dallas, TX
Sibley Services, Incorporated                  1974     Memphis, TN
Hallmark Air Conditioning, Inc.                1951     Houston, TX
Charlie Crawford, Inc. (dba "Charlie's
 Plumbing")                                    1979     Houston, TX
Costner Brothers, Inc.                         1985     Rock Hill, SC
AA JARL, Inc. (dba "Jarrell Plumbing")         1957     Houston, TX
Way Residential                                1977     Houston, TX
Callahan Roach                                 1989     Colorado Springs, CO
United Service Alliance, L.C.                  1988     Lakewood, CO
<CAPTION>
OFFERING ACQUISITION COMPANIES
<S>                                        <C>          <C>
MacDonald-Miller Industries, Inc.              1965     Seattle, WA
Masters, Inc.                                  1986     Gaithersburg, MD
Linford Service Company                        1960     Oakland, CA
Yale Incorporated                              1939     Minneapolis, MN
Central Carolina Air Conditioning Company      1967     Greensboro, NC
Willis Refrigeration, Air Conditioning &
 Heating, Inc.                                 1954     Cincinnati, OH
Paul E. Smith Co., Inc.                        1967     Indianapolis, IN
Southeast Mechanical Service, Inc.             1979     Hollywood, FL
Van's Comfortemp Air Conditioning, Inc.        1965     Delray Beach, FL
Arkansas Mechanical Services, Inc.             1988     North Little Rock, AR
Mechanical Services, Inc.                      1993     North Little Rock, AR
All Service Electric, Inc.                     1990     Jacksonville, FL
Evans Services, Inc.                           1901     Birmingham, AL
</TABLE>    
 
-------------------------------------------------------------------------------
 
  CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE,
PURCHASES OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION
MAINTAINED BY THE UNDERWRITERS IN THE COMMON STOCK, AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
                                       2
<PAGE>
 
                               PROSPECTUS SUMMARY
 
  The Company has acquired 11 companies (the "Pre-Offering Companies") and has
entered into definitive agreements to acquire an additional 13 companies (the
"Offering Acquisition Companies" and together with the Pre-Offering Companies,
the "GroupMAC Companies") upon the closing of the Offering. The following
summary is qualified in its entirety by reference to, and should be read in
conjunction with, the more detailed information and the financial statements,
including the related notes thereto, appearing elsewhere in this Prospectus.
Unless the context otherwise requires, (i) the "Company" or "GroupMAC" refers
to Group Maintenance America Corp. and the GroupMAC Companies, as well as to
the business and operations of their predecessors, (ii) the information in this
Prospectus assumes that the Underwriters' over-allotment option has not been
exercised and the Offering price is $14.00 per share and (iii) all information
in this Prospectus relating to the number of shares of Common Stock and per
share amounts reflects the 1-for-2.5 reverse stock split effected prior to the
date of this Prospectus. References to fiscal year financial information of the
Company refer to the fiscal year ended February 28 or 29 of the relevant year
or the respective fiscal year ends of the individual GroupMAC Companies, and
references to pro forma financial information of the Company or combined
financial information of any group of the GroupMAC Companies refer to a year
ending December 31 of the relevant year. After completion of the Offering, the
Company's fiscal year will be the calendar year.
 
                                  THE COMPANY
 
  The Company was founded in 1996 to create the leading nationwide provider of
heating, ventilation and air conditioning ("HVAC"), plumbing and electrical
services to residential and commercial customers. Since inception, the Company
has acquired 11 companies (the "Pre-Offering Companies") totaling $138.8
million in combined 1996 revenues and has definitive agreements to acquire an
additional 13 companies (the "Offering Acquisition Companies") upon the closing
of the Offering. After the Offering, the Company believes it will be one of the
largest diversified providers of HVAC, plumbing and electrical services in the
United States with operations in 37 cities in 21 states. The market for these
diversified services is approximately $100 billion. The Company's pro forma
1996 revenues and income from operations were $307.5 million and $20.9 million,
respectively, and combined historical revenues of the GroupMAC Companies grew
at an annual rate of 14.3% from 1994 through 1996.
   
  The Company offers a comprehensive range of services to residential and
commercial customers in both the new installation and the maintenance, repair
and replacement segments of the HVAC, plumbing and electrical service
industries. The Company's services include installing and maintaining,
repairing and replacing central air conditioning systems, furnaces, heat pumps
and plumbing and electrical systems. Approximately 74%, 23% and 3% of the
Company's pro forma 1996 revenues were derived from HVAC, plumbing and
electrical and other services, respectively. Approximately 59% of pro forma
1996 revenues were derived from residential services and 41% from commercial
services, while 54% of pro forma 1996 revenues were from the new installation
segment and 46% were from maintenance, repair and replacement services. Through
Callahan Roach and United Service Alliance, L.C. ("USA"), the Company also
provides consulting services and sells products to over 1,300 independent HVAC
and plumbing service companies. The Company believes that its broad service
offerings and geographic diversity provide several advantages, including the
ability to offer its customers a single source for a range of services, to
consolidate purchasing power with vendors, to capture business from customers
that operate on a regional and national basis, to mitigate the effects of
seasonality and to balance local or regional economic cycles.     
 
  The Company believes that it can maximize its long-term growth and
profitability by participating in both the new installation and the
maintenance, repair and replacement segments of the HVAC, plumbing and
electrical service industries. The new installation business is generally
characterized by higher volume sales to homebuilders, commercial developers and
other large customers. The maintenance, repair and replacement business
generally
 
                                       3
<PAGE>
 
produces higher margins from services provided to a broader customer base. The
Company intends to focus on growing its maintenance, repair and replacement
business, to capitalize on the higher margins and the more predictable nature
of revenues associated with this segment and to target a revenue mix of
approximately 60% maintenance, repair and replacement and 40% new installation
over time. The Company derives considerable profits and strategic value from
its new installation business, as this segment generates a database of
potential customers for maintenance, repair and replacement services. The
higher volumes associated with consolidating a number of new installation firms
provide purchasing economies of scale that increase the competitiveness of both
the new installation and the maintenance, repair and replacement segments.
   
  The Company believes that growth through acquisition is important and that
profits can be maximized through the efficient integration of acquired
companies. In order to provide the Company with integration, internal training
and management development capabilities, the Company acquired two leading
national HVAC consulting organizations, Callahan Roach and USA, in July 1997.
Callahan Roach serves HVAC and plumbing service companies across the United
States in such areas as advertising, marketing, business valuation, pricing
strategies, management information systems, acquisition planning and
integration and general consulting. Callahan Roach maintains relationships with
over 1,200 HVAC and plumbing service companies, principally in the residential
market. The Company estimates that aggregate revenues for these Callahan Roach
customers are in excess of $2 billion annually. USA provides training and other
products and services to 105 independent commercial HVAC service companies
across the United States. The Company estimates that aggregate revenues for
these USA customers are in excess of $1 billion annually. Of the 24 GroupMAC
Companies, 12 were clients of Callahan Roach and/or USA prior to their
acquisition. The Company intends to utilize these complementary customer bases
to advance its national marketing strategies and believes that these companies
will be a source of future acquisition prospects.     
 
  Available industry data indicate that the Company's markets are large and
fragmented. The HVAC service market is estimated to be approximately $65
billion in annual revenue, with over 40,000 service providers. Approximately
$26 billion of the total is represented by the residential market, with the
commercial market representing the balance. The plumbing service market is
estimated to be $19 billion and the electrical service market is estimated to
be $16 billion. The plumbing and electrical service markets each have over
30,000 participants. The vast majority of participants in the HVAC, plumbing
and electrical service industries are small, owner-operated businesses with
limited financial resources and limited access to capital for expansion. The
Company believes there is a significant opportunity for a well-capitalized,
nationwide provider of these services to consolidate a large number of
independent companies.
 
  The Company is implementing operating and acquisition strategies to maintain
and expand its position as a leading national provider of comprehensive HVAC,
plumbing and electrical services to the residential and commercial markets.
 
  Key elements of the Company's operating strategy are to:
 
  .  achieve operating efficiencies through volume purchasing, the
     implementation of "best practices" and the development of strong
     internal training capabilities;
 
  .  operate on a decentralized basis to allow entrepreneurial management to
     continue to capitalize on local market knowledge and existing customer
     relationships;
 
  .  attract, develop and retain high quality technicians to assure superior
     customer service; and
 
  .  establish national market coverage to provide full service to regional
     and national accounts.
 
  Key elements of the Company's acquisition strategy are to:
 
  .  acquire companies across multiple market segments to provide a balanced
     mix of revenues and foster internal growth through cross-selling of
     services;
 
                                       4
<PAGE>
 
 
  .  expand geographically by acquiring core businesses in new markets and
     "tucking in" smaller companies;
 
  .  utilize Common Stock to retain and provide incentives to the management
     and employees of acquired companies; and
 
  .  leverage its industry reputation and relationships to make future
     acquisitions.
 
  The Company is a Texas corporation with its principal executive offices
located at 1800 West Loop South, Suite 1375, Houston, Texas 77027, and its
telephone number is (713) 626-4778.
 
                                  THE OFFERING
 
<TABLE>
 <C>                                                    <S>
 Common Stock Offered..................................  7,500,000 Shares
 Common Stock to be Outstanding after the Offering (1). 19,961,706 Shares
 Use of Proceeds....................................... To redeem or repay
                                                        outstanding warrants,
                                                        preferred stock and
                                                        indebtedness used to
                                                        acquire the Pre-Offering
                                                        Companies, to fund the
                                                        cash portion of the
                                                        consideration for the
                                                        Offering Acquisition
                                                        Companies, to repay
                                                        indebtedness of the
                                                        Offering Acquisition
                                                        Companies and for other
                                                        general corporate
                                                        purposes including
                                                        working capital and
                                                        future acquisitions. See
                                                        "Use of Proceeds."
 NYSE Symbol........................................... MAK
</TABLE>
--------
   
(1) Includes 2,975,309 shares to be issued in connection with the acquisition
    of the Offering Acquisition Companies and Callahan Roach concurrently with
    the Offering and as acquisition consideration adjustments, but excludes
    609,461 shares of Common Stock issuable upon exercise of outstanding stock
    options and warrants issued in connection with certain acquisitions,
    378,800 shares of Common Stock issuable upon exercise of outstanding stock
    options held by employees and a former executive officer of the Company and
    1,976,734 shares available for issuance under the Company's stock plans at
    September 1, 1997. See "Management--Option Grants" and "--Stock Awards
    Plan."     
 
                                  RISK FACTORS
 
  An investment in the shares of Common Stock involves significant risks that a
potential investor should consider carefully. See "Risk Factors" beginning on
page 9 for certain information that should be considered by prospective
purchasers of the Common Stock offered hereby.
 
                                       5
<PAGE>
 
             SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
 
  The Company has previously acquired the Pre-Offering Companies and will
acquire the Offering Acquisition Companies simultaneously with the closing of
the Offering. The first and largest acquisition made by the Company was that of
Airtron, Inc. ("Airtron"). For accounting purposes, this transaction was
accounted for as a reverse acquisition, as if Airtron acquired the GroupMAC
Parent (Group Maintenance America Corp. parent only), because the former
shareholders of Airtron owned a majority of GroupMAC Parent's common stock upon
consummation of the transaction. As such, the summary historical financial data
set forth below as of and for the three-year period ended February 28, 1997
have been derived from the financial statements of Airtron, which have been
audited by KPMG Peat Marwick LLP, independent public accountants. The Financial
Statements of GroupMAC Parent and the Pre-Offering Companies are included in
the Financial Statements from their respective dates of acquisition. The
historical balance sheet data as of June 30, 1997 include A-ABC Appliance, Inc.
("A-ABC") and A-1 Appliance & Air Conditioning, Inc. ("A-1" and, together with
A-ABC, "A-ABC/A-1"), Hallmark Air Conditioning, Inc. ("Hallmark") and K&N
Plumbing, Heating and Air Conditioning, Inc. ("K&N"), which were acquired
effective June 1, 1997, and Charlie Crawford, Inc. (d/b/a Charlie's Plumbing)
("Charlie's"), Costner Brothers, Inc. ("Costner"), AA JARL, Inc. (d/b/a Jarrell
Plumbing) ("Jarrell") and the residential service assets of Way Service, Inc.
("Way Residential"), which were acquired effective June 30, 1997.
 
  The summary pro forma financial data of the Company as of and for the six
months ended June 30, 1996 and 1997 and the year ended December 31, 1996 are
derived from the Unaudited Pro Forma Combined Financial Statements of the
Company that appear elsewhere in this Prospectus. The pro forma financial data
listed below present certain information for the Company, as adjusted for (i)
the effects of the acquisitions of the GroupMAC Companies and (ii) the effects
of certain pro forma adjustments to the historical financial statements of the
GroupMAC Companies which are directly related to these acquisitions. The pro
forma as adjusted financial data give effect to consummation of the Offering
and the application of the net proceeds therefrom. The pro forma financial data
of the Company do not purport to represent what the Company's results of
operations or financial position actually would have been had these events, in
fact, occurred on the date or at the beginning of the period indicated, nor are
they intended to project the Company's results of operations or financial
position for any future date or period.
 
  The data presented below should be read in conjunction with the Selected
Historical and Pro Forma Financial Data, Management's Discussion and Analysis
of Financial Condition and Results of Operations, the Financial Statements and
the related notes thereto and the Unaudited Pro Forma Combined Financial
Statements and the notes thereto included elsewhere herein.
 
                                       6
<PAGE>
 
                             SUMMARY FINANCIAL DATA
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>   
<CAPTION>
                                                         PRO FORMA AS ADJUSTED
                                                     -------------------------------
                            FISCAL YEARS ENDED                       SIX MONTHS ENDED
                            FEBRUARY 28 OR 29,                           JUNE 30,
                          -------------------------- DECEMBER 31,  -------------------
                           1995       1996    1997     1996(2)     1996(2)  1997(2)
                          -------    ------- ------- ------------  -------- --------
<S>                       <C>        <C>     <C>     <C>           <C>      <C>         
INCOME STATEMENT
 DATA(1):
Revenues................  $72,226    $73,765 $81,880   $307,507    $151,396 $157,941
Gross Profit............   21,766     21,091  23,374     71,596      33,479   36,582
Selling, General and
 Administrative
 Expenses(3)............   20,282(4)  17,615  19,811     48,953(5)   24,068   26,978(6)
Goodwill
 Amortization(7)........       --         --      --      1,891         946      946
                          -------    ------- -------   --------    -------- --------
Income from Operations..    1,484      3,476   3,563     20,752       8,465    8,658
Interest Income
 (Expense), Net.........       76         68      89        154          39      181
Other Income, Net.......      140        246     256        297         240      508
                          -------    ------- -------   --------    -------- --------
Income Before Income Tax
 Provision..............    1,700      3,790   3,908     21,203       8,744    9,347
Income Tax Provision....      911      1,651   1,572      9,237       3,876    4,117
                          -------    ------- -------   --------    -------- --------
Net Income..............  $   789    $ 2,139 $ 2,336   $ 11,966    $  4,868 $  5,230
                          =======    ======= =======   ========    ======== ========
Net Income Per Share....                               $    .59    $    .24 $    .26
                                                       ========    ======== ========
Weighted Average Shares
 Outstanding(8).........                                 20,159      20,159   20,159
                                                       ========    ======== ========
OTHER DATA:
EBITDA(9)...............  $ 1,853    $ 3,960 $ 4,027   $ 26,061    $ 11,132 $ 11,843
                          =======    ======= =======   ========    ======== ========
</TABLE>    
 
<TABLE>   
<CAPTION>
                                                       JUNE 30, 1997
                                              ----------------------------------
                                                          PRO       PRO FORMA
                                               ACTUAL   FORMA(2)  AS ADJUSTED(2)
                                              --------  --------  --------------
<S>                                           <C>       <C>       <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents.................... $  5,875  $ 10,214     $  9,457
Working Capital..............................    7,425   (13,359)      29,303
Total Assets.................................   64,942   174,284      173,330
Total Debt...................................   31,045    46,022        2,107
Preferred Stock..............................   17,121    19,271           --
Shareholders' Equity.........................  (10,998)   25,468      118,618
</TABLE>    
-------
(1) Concurrent with the Offering, the Company intends to change its fiscal year
    end from February 28 to December 31.
(2) Pro forma financial data give effect to the completed and pending
    acquisitions that are described in Unaudited Pro Forma Combined Financial
    Statements, as if they had occurred at January 1, 1996 for the Income
    Statement Data and on June 30, 1997 for the Balance Sheet Data. Pro forma
    as adjusted data give effect to a reduction in interest expense as a result
    of reductions in indebtedness upon application of a portion of the net
    proceeds to the Company from the Offering and the redemption of preferred
    stock.
(3) Reflects a decrease of $11.1 million, $4.2 million and $5.2 million for the
    year ended December 31, 1996, six months ended June 30, 1996 and 1997,
    respectively, for pro forma reductions in salaries, bonuses and benefits to
    former owners of the GroupMAC Companies to which they have agreed
    prospectively. Also excludes non-recurring, non-cash compensation expense
    of $7.0 million related to the reverse acquisition of GroupMAC Parent
    during the second quarter of 1997.
(4) Includes $2.4 million for compensation expense resulting from revaluation
    of warrants.
(5) Includes $0.5 million of expenses for the formation and build-up of
    corporate management and infrastructure.
(6) Includes $1.6 million of expenses for the formation and build-up of
    corporate management and infrastructure.
(7) Consists of amortization recorded or to be recorded as a result of the
    acquisition of GroupMAC Companies over a 40-year period and computed on the
    basis described in the Notes to the Unaudited Pro Forma Combined Financial
    Statements.
(8) Computed on a basis described in Note 4 of Notes to Unaudited Pro Forma
    Combined Financial Statements.
(9) Represents earnings before interest, taxes, depreciation and amortization
    ("EBITDA"). Based on its experience in the industry, the Company believes
    that EBITDA is an important tool for measuring the performance of companies
    in the industry (including potential acquisition targets) in several areas
    such as liquidity, operating performance and leverage. In addition, lenders
    use EBITDA as a criterion in evaluating companies in the industry and the
    Company's financing arrangement contains covenants in which EBITDA is used
    as a measure of financial performance. The EBITDA measure for the Company
    may not be consistent with similarly titled measures for other companies.
    EBITDA should not be considered as an alternative to operating or net
    income (as determined in accordance with GAAP) as an indicator of the
    Company's performance or to cash flow from operations (as determined in
    accordance with GAAP) as a measure of liquidity. See the comparative
    historical statements of cash flows included herein and "Management's
    Discussion of Financial Condition and Results of Operations" and "--
    Liquidity and Capital Resources" for discussion of other measures of
    performance determined in accordance with GAAP and the Company's sources
    and applications of cash flow.
 
                                       7
<PAGE>
 
              SUMMARY INDIVIDUAL GROUPMAC COMPANIES FINANCIAL DATA
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                             SIX MONTHS ENDED
                                      FISCAL YEAR(1)             JUNE 30,
                                ---------------------------  -----------------
                                  1994     1995      1996      1996     1997
                                -------- --------  --------  -------- --------
<S>                             <C>      <C>       <C>       <C>      <C>
Group Maintenance America
 Corp. and Subsidiaries
 (Formerly Airtron)(2)
  Revenues....................  $ 72,226 $ 73,765  $ 81,880  $ 37,127 $ 38,676
  Gross Profit................    21,766   21,091    23,374    10,209   10,863
  Income from Operations......     1,484    3,476     3,563       739    1,039
MacDonald-Miller
  Revenues....................  $ 39,534 $ 45,508  $ 66,059  $ 36,382 $ 38,836
  Gross Profit................     7,278    8,581     9,686     4,792    5,385
  Income from Operations......     1,190    1,243     2,054     1,086    1,597
Masters
  Revenues....................  $ 30,327 $ 35,160  $ 39,826  $ 18,279 $ 19,318
  Gross Profit................     2,309    3,414     3,972     1,640    1,861
  Income from Operations......       645    1,041     1,488       631      664
K&N(2)
  Revenues....................  $ 21,458 $ 22,709  $ 24,279  $ 11,893 $ 12,355
  Gross Profit................     2,615    2,359     3,574     1,460    1,693
  Income from Operations......       340     (119)      936       111       88
Other Residential Services (11
 companies)(2)(3)
  Revenues....................  $ 38,481 $ 43,216  $ 48,964  $ 23,255 $ 24,886
  Gross Profit................    13,084   15,679    18,336     8,493   10,087
  Income from Operations......     1,652    1,469     1,830       411    1,810
Other Commercial Services (9
 companies)(3)
  Revenues....................  $ 33,208 $ 38,476  $ 46,499  $ 24,460 $ 23,870
  Gross Profit................     9,434   10,863    12,654     6,885    6,693
  Income from Operations......     1,765    1,734     2,287     2,182    1,495
GroupMAC Parent(4)
  Revenues....................  $     -- $     --  $     --  $     -- $     --
  Gross Profit................        --       --        --        --       --
  Income from Operations......        --       --      (724)       --   (9,384)
Total
  Revenues....................  $235,234 $258,834  $307,507  $151,396 $157,941
  Gross Profit................    56,486   61,987    71,596    33,479   36,582
  Income (loss) from
   Operations.................     7,076    8,844    11,434     5,160   (2,691)
  Pro Forma Income from
   Operations.................                       20,852     8,515    8,708
</TABLE>
-------
(1) Several of the individual GroupMAC Companies have fiscal year ends that
    differ from December 31, which is the year end all of the GroupMAC
    Companies will use concurrent with the Offering.
(2) The operating results of A-ABC/A-1, Hallmark and K&N include the activity
    of each of these companies for the six months ended June 30, 1997, although
    these companies were acquired, for accounting purposes, by Airtron on June
    1, 1997. A-ABC/A-1 and Hallmark results are included in the Other
    Residential Services group. Airtron results include Airtron on a stand
    alone basis without inclusion of the results of any acquired companies.
(3) The remainder of the GroupMAC Companies are classified by their primary
    revenue generating category.
(4) GroupMAC Parent's operating results include the six months ended June 30,
    1997, although the company was acquired, for accounting purposes, by
    Airtron in May 1997. Includes non-recurring compensation expense of $7.0
    million related to the reverse acquisition of GroupMAC Parent.
 
                                       8
<PAGE>
 
                                 RISK FACTORS
 
  In addition to the other information in this Prospectus, prospective
purchasers of the Common Stock offered hereby should consider carefully the
following factors before deciding to invest in the Common Stock. To the extent
this Prospectus contains certain forward-looking statements, actual results
could differ materially from those projected in the forward-looking statements
as a result of any number of factors, including the risk factors set forth
below and elsewhere in this Prospectus.
 
ABSENCE OF COMBINED OPERATING HISTORY
 
  The Company has conducted limited operations to date. See "The Company."
Prior to their acquisition by the Company, the Pre-Offering Companies operated
as separate, independent businesses. Further, the Offering Acquisition
Companies have operated, and will continue to operate prior to the closing of
the Offering, as separate, independent businesses. The Company will rely on
the separate systems of the GroupMAC Companies for the foreseeable future.
There can be no assurance that the Company will be able to integrate the
operations of the GroupMAC Companies successfully or to institute the
necessary systems and procedures, including accounting and financial reporting
systems, to manage the combined enterprise on a profitable basis. The
Company's management group has been assembled only recently, and a significant
number of the Company's management group has not worked in the HVAC, plumbing
and electrical service industries prior to joining the Company. There can be
no assurance that the management group will be able to manage the combined
entity or to implement effectively the Company's operating strategy, internal
growth strategy and acquisition program. The pro forma and combined historical
financial results of the GroupMAC Companies cover periods when the GroupMAC
Companies were not under common control or management and may not be
indicative of the Company's future financial or operating results. The
inability of the Company to integrate and manage the GroupMAC Companies and
such additional businesses as the Company may acquire as a cohesive, efficient
enterprise or to eliminate unnecessary duplication may have a material adverse
effect on the business, financial condition and results of operations of the
Company.
 
DEPENDENCE ON ACQUISITIONS FOR GROWTH
 
  The Company intends to grow primarily by acquiring residential and
commercial contracting businesses that install or maintain, repair and replace
HVAC, plumbing, electrical and other systems and equipment in existing homes
and commercial buildings and in homes and commercial buildings under
construction in its existing and new markets. The Company's acquisition
strategy presents risks that, singly or in any combination, could materially
adversely affect the Company's business, financial condition and results of
operations. These risks include the possibility of the adverse effect on
existing operations of the Company from the diversion of management attention
and resources to acquisitions, the possible loss of acquired customer bases
and key personnel, including service technicians and managers, possible
adverse effects on earnings resulting from amortization of goodwill created in
purchase transactions and the contingent and latent risks associated with the
past operations and other unanticipated problems arising in the acquired
businesses. The success of the Company's acquisition strategy will depend on
the extent to which it is able to acquire, successfully absorb and profitably
manage additional businesses, and no assurance can be given that the Company's
strategy will succeed. The increasing competition for suitable acquisition
targets could limit the Company's ability to locate suitable acquisition
targets and could increase the cost of purchasing such acquisition targets.
See "Business--Acquisition Strategy."
 
DEPENDENCE ON ADDITIONAL CAPITAL FOR FUTURE GROWTH
 
  The Company historically has financed capital expenditures and acquisitions
primarily through the issuance of equity securities, secured bank borrowings
and internally generated cash flow. The timing, size and success of the
Company's acquisition efforts and the associated capital commitments cannot be
readily predicted. The Company currently intends to finance future
acquisitions by using shares of its Common Stock for all or a
 
                                       9
<PAGE>
 
substantial portion of the consideration to be paid. If the Common Stock does
not maintain a sufficient market value, or if potential acquisition candidates
are otherwise unwilling to accept Common Stock as part of the consideration
for the sale of their businesses, the Company may be required to utilize more
of its cash resources, if available, in order to initiate and maintain its
acquisition program. The Company will have little, if any, net proceeds of
this Offering remaining for future acquisitions and working capital after
payment of Offering expenses, any indebtedness incurred or assumed by the
Company and the cash portion of the purchase price for the Offering
Acquisition Companies. There can be no assurance the Company will be able to
raise sufficient capital at reasonable rates, if at all. If the Company does
not have sufficient cash resources, its growth could be limited unless it is
able to obtain additional capital through debt or equity financing. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
 
EXPOSURE TO DOWNTURNS IN HOUSING STARTS OR NEW COMMERCIAL CONSTRUCTION
 
  A substantial portion of the Company's business involves installation of
HVAC and/or plumbing systems in newly constructed residences and commercial
buildings. The extent to which the Company is able to maintain or increase
revenues from new installation services in the residential market will depend
on the levels of housing starts from time to time in the geographic markets in
which it operates and likely will reflect the cyclical nature of the housing
industry. The housing industry is affected significantly by changes in general
and local economic conditions, such as employment and income levels, the
availability and cost of financing for home buyers (including the continued
deductibility of mortgage interest in determining federal income tax),
consumer confidence and housing demand. The level of new commercial
installation services is similarly affected by fluctuations in the level of
new construction of commercial buildings in the markets in which the Company
operates, due to local economic conditions, changes in interest rates and
other similar factors. Downturns in the levels of housing starts and/or new
commercial construction could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Seasonal and Cyclical Nature of Business."
 
FLUCTUATION IN QUARTERLY OPERATING RESULTS
 
  The Company's operations are subject to economic cycles and seasonal
variations. General and local economic conditions can cause fluctuations in
demand for the Company's services. Except in the Southeastern and Southwestern
United States, the demand for new installations of HVAC systems can be
substantially lower during the winter months. Demand for HVAC services,
especially in the residential sector, is generally higher in the second and
third calendar quarters. Commercial HVAC maintenance, repair and replacement
service is subject to seasonality as well. The Company expects that its
revenues and operating results generally will be lower in its first and fourth
calendar quarters. The HVAC, plumbing and electrical service industries are
also subject to fluctuations caused by periods of inclement weather. Prolonged
climate or weather conditions may cause unpredictable fluctuations in
operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Seasonal and Cyclical Nature of
Business."
 
AVAILABILITY OF TECHNICIANS
 
  The Company's ability to provide high-quality HVAC, plumbing and electrical
services on a timely basis requires an adequate supply of skilled technicians.
Accordingly, the Company's ability to increase its productivity and
profitability will be limited by its ability to employ, train and retain the
skilled technicians necessary to meet the Company's service requirements. From
time to time, there are shortages of qualified technicians, and there can be
no assurance that the Company will be able to maintain an adequate skilled
labor force necessary to operate efficiently, that the Company's labor
expenses will not increase as a result of a shortage in the supply of skilled
technicians or that the Company will not have to curtail its planned internal
growth as a result of labor shortages. See "Business--Centralized Support
Services--Employee Screening, Training and Development."
 
 
                                      10
<PAGE>
 
RISKS ASSOCIATED WITH DEVELOPMENT, IMPLEMENTATION, AND INTEGRATION OF
OPERATING SYSTEMS AND POLICIES
 
  As a rapidly growing provider of HVAC, plumbing and electrical services, the
Company is faced with the development, implementation and integration of
Company-wide policies and systems related to its operations. The Company plans
to implement and integrate certain information and operating systems and
procedures for the GroupMAC Companies including, but not limited to,
accounting systems, employment and human resources policies, uniform
purchasing programs and certain centralized marketing programs. Each of the
GroupMAC Companies and companies to be acquired in the future may need to
modify certain systems and policies they have utilized historically to
implement the Company's systems and policies. As a result of the Company's
decentralized operating strategy, there can be no assurance that the Company's
operating systems and policies will be successfully implemented at the
subsidiary level or that the Company will be successful in monitoring the
performance of the subsidiaries. The Company may experience delays,
complications and expenses in implementing, integrating and operating such
systems, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--
Operating Strategy."
 
FACTORS AFFECTING INTERNAL GROWTH
 
  The Company's ability to increase the revenues of the GroupMAC Companies and
any subsequently acquired company will be affected by various factors,
including demand for HVAC, plumbing and electrical services, the level of new
construction, the Company's ability to expand the range of services offered to
customers of individual GroupMAC Companies and other acquired businesses, the
Company's ability to develop national accounts and other marketing programs in
order to attract new customers and the Company's ability to attract and retain
a sufficient number of qualified technicians and other necessary personnel.
Many of these factors are beyond the control of the Company, and there can be
no assurance that the Company's operating and internal growth strategies will
be successful or that it will be able to generate cash flow adequate for its
operation and to support internal growth. Furthermore, there can be no
assurance that management can integrate acquired companies and reduce overhead
expenses. See "Business--Operating Strategy."
 
VALUATION OF ACQUISITIONS
   
  The initial public offering price will be determined based on negotiations
between the Company and the representatives of the Underwriters, and the
factors which will be considered in determining such price include, in
addition to prevailing market conditions, the expected results of operations
of the Company, estimates of the business potential and earnings prospects of
the Company and the economy as a whole. See "Underwriting." The valuation of
the Company has not been established on a company-by-company basis, and no
third party appraisals of the GroupMAC Companies were obtained by the Company
for purposes of the Offering nor has a fairness opinion been obtained. A
valuation of the Company determined solely by appraisal of the individual
GroupMAC Companies would likely result in a different valuation of the Company
than that reflected by the initial public offering price of the shares of
Common Stock offered hereby. At the assumed initial public offering price, the
aggregate consideration related to the Pre-Offering and Offering Acquisition
Companies would be approximately $204.6 million, which would consist of $123.7
million in Common Stock, $19.3 million in Preferred Stock (valued at its
redemption value of $1.00 per share) and $61.6 million in cash. There can be
no assurance that the consideration paid or to be paid by the Company for the
GroupMAC Companies accurately reflects the value of the assets of these
companies or that the percentage of Common Stock of the Company owned by the
former owners of the GroupMAC Companies reflects the value of the assets of
the GroupMAC Companies.     
 
PROCEEDS OF OFFERING PAYABLE FOR EXISTING OBLIGATIONS AND TO AFFILIATES
 
  The Company will use the net proceeds of the Offering to repay indebtedness
incurred to fund the cash portion of the consideration paid to acquire the
Pre-Offering Companies, to redeem warrants and preferred stock issued in
connection with the acquisition of the Pre-Offering Companies, to repay debt
assumed and certain obligations resulting from the acquisition of the GroupMAC
Companies and to fund the cash portion of the consideration to be paid to
acquire the Offering Acquisition Companies. Only a small portion, if any, of
the net
 
                                      11
<PAGE>
 
proceeds of the Offering will be available to meet the Company's cash
requirements following the closing of the Offering. In connection with the
closing of the purchase of the Offering Acquisition Companies, the Company
will pay, subject to adjustment, approximately $28.9 million in cash for the
stock of the Offering Acquisition Companies. The Company will also use $31.2
million to repay bank debt incurred to finance the acquisition of the Pre-
Offering Companies, approximately $19.3 million to redeem warrants and
preferred stock issued in connection with the acquisition of the Pre-Offering
Companies and approximately $13.4 million to repay debt assumed and certain
obligations resulting from the acquisition of the GroupMAC Companies. Some of
the warrants and preferred stock redeemed with the proceeds of the Offering
and the stock or assets purchased with the proceeds of the Offering are
beneficially owned by individuals who are or who may become directors of the
Company and/or executive officers of GroupMAC Companies. See "Use of
Proceeds," "The Acquisitions" and "Related Party Transactions."
 
COMPETITION
 
  The HVAC, plumbing and electrical service industries are highly competitive
and are served principally by small, owner-operated private companies. Certain
of these smaller competitors have lower overhead cost structures and may be
able to provide their services at lower rates than the Company. The Company
believes the HVAC, plumbing and electrical service industries are subject to
rapid consolidation on both a national and a regional scale. Three companies
have completed initial public offerings, have begun consolidation efforts and
have entered into some of the Company's markets. Other companies, including
unregulated affiliates of electric and gas public utilities and HVAC equipment
manufacturers, may enter the industry. These consolidators and other entrants
may have greater financial resources and name recognition than the Company and
may be willing to pay higher prices than the Company for the same
opportunities. Consequently, the Company may encounter significant competition
in its efforts to achieve its growth objectives. See "Business--Competition."
 
DEPENDENCE ON KEY PERSONNEL
   
  The Company's operations depend on the continuing efforts of its executive
officers and the senior management of the GroupMAC Companies, and the Company
will depend on the senior management of significant businesses it acquires in
the future. The business of the Company could be affected adversely if any of
these persons does not continue in his or her management role with the Company
or an acquired business and the Company is unable to attract and retain
qualified replacements. See "Business--Centralized Support Services--Employee
Screening, Training and Development" and "Management."     
 
REGULATION
 
  HVAC systems are subject to various environmental statutes and regulations,
including, but not limited to, (i) laws and regulations implementing the
federal Clean Air Act, as amended (the "Clean Air Act"), relating to minimum
energy efficiency standards of HVAC systems and the production, servicing and
disposal of certain ozone depleting refrigerants used in such systems and (ii)
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), which can impose strict, joint and several liability on past and
present owners or operators of facilities at, from, or to which a release of
hazardous substances has occurred, on parties who generated hazardous
substances that were released at such facilities and on parties who arranged
for the transportation of hazardous substances to such facilities. In
connection with its entry into new markets, the Company may become subject to
compliance with additional regulations, and there can be no assurance that the
regulatory environment in which the Company operates will not change
significantly in the future. Various local, state and federal laws and
regulations, including, but not limited to, laws and regulations implementing
the Clean Air Act impose licensing standards on technicians who service
heating and air conditioning units. While the installers and technicians
employed by the Company are duly certified by applicable local, state and
federal agencies and have been able to meet or exceed such standards to date,
there can be no assurance that they will be able to meet future standards. In
some states, warranties provided for in the Company's service agreements may
be deemed insurance contracts by applicable state insurance regulatory
agencies thereby subjecting the Company and the service agreements to the
insurance laws and regulations of such state. See "Business--Governmental
Regulation and Environmental Matters."
 
 
                                      12
<PAGE>
 
CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS
   
  Upon the closing of the Offering, the executive officers, directors and
certain founding shareholders of the Company will beneficially own in the
aggregate approximately 28.2% of the outstanding Common Stock. Accordingly,
such persons will have substantial influence on the Company, which influence
might not be consistent with the interests of other shareholders, and on the
outcome of any matters submitted to the Company's shareholders for approval.
In addition, although there is no current agreement, understanding or
arrangement for these shareholders to act together on any matter, these
shareholders may have economic and business reasons to act together, and would
be in a position to execute significant influence over the affairs of the
Company if they were to act together in the future. If these persons were to
act in concert, they might, as a practical matter, be able to exercise control
over the Company's affairs, including the election of the entire Board of
Directors and (subject to Article Thirteen of the Texas Business Corporation
Act (the "TBCA") which applies to transactions between the Company and certain
interested persons) any matter submitted to a vote of stockholders. See
"Security Ownership of Certain Beneficial Owners and Management."     
 
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK
   
  Upon the closing of the Offering, 19,961,706 shares of Common Stock will be
outstanding. The 7,500,000 shares sold in this Offering (other than shares
that may be purchased by affiliates of the Company) will be freely tradable.
Due to the high number of beneficial owners in the employee stock ownership
plan of MacDonald-Miller Industries, Inc. ("MacDonald-Miller"), the Company
registered under the Securities Act of 1933, as amended (the "Securities
Act"), and proposes to issue, 643,064 shares in connection with the
acquisition of MacDonald-Miller. The remaining shares outstanding may be
resold publicly only following their effective registration under the
Securities Act or pursuant to an available exemption (such as provided by Rule
144 following a holding period for previously unregistered shares) from the
registration requirements of the Securities Act. The holders of 3,575,586
shares of Common Stock have the right (subject to minimum participation
requirements) to require the Company to register such shares pursuant to the
Securities Act for the purpose of allowing them to effect a public offering of
all or a portion of such shares (a "Demand Registration"), and such holders
and substantially all of the other holders of Common Stock outstanding on the
date hereof also have the right to require the Company to register their
shares of Common Stock under the Securities Act in connection with a public
offering of Common Stock contemplated by the Company (a "Piggyback
Registration"). The number of Demand Registrations that may be requested is
limited, and the Company will not be obligated to effect a Demand Registration
within 60 days prior to the proposed filing date of a registration statement
relating to an offering by the Company of its securities (with certain
exceptions) or within 120 days after the effective date of such a registration
statement. Further, the Company may delay a Demand Registration for up to 120
days if the Company determines that such registration would be detrimental to
the Company. In connection with a Piggyback Registration involving an
underwritten offering, the number of shares to be registered by selling
shareholders may be limited or eliminated entirely if the managing underwriter
determines marketing factors require a limitation on the number of shares to
be underwritten. See "Shares Eligible for Future Sale." The holders of Demand
Registration rights have agreed with the Company and the Underwriters not to
exercise their respective demand rights for the two year period following the
Offering except for Gordon A. Cain who has agreed not to exercise his demand
rights for one year. In addition, such holders and the holders of Common Stock
issued in connection with the acquisition of the GroupMAC Companies have
agreed with the Company that they generally will not sell, transfer or
otherwise dispose of any of their shares for one year following the date of
acquisition of such shares and for one additional year will limit sales to no
more than 36% of their holdings. Sales made pursuant to Rule 144 must comply
with its applicable volume limitations and other requirements. Commencing
October 24, 1997, 1,211,200 "restricted" shares of Common Stock will be
eligible for resale pursuant to Rule 144, subject to the volume, manner of
sale and other limitations thereof. The remaining "restricted" shares will
become eligible for resale pursuant to Rule 144 from time to time thereafter.
    
  Upon the closing of the Offering, the Company also will have outstanding
options and warrants to purchase up to a total of 2,964,995 shares of Common
Stock, of which only warrants and options to purchase 709,994
 
                                      13
<PAGE>
 
shares will be exercisable immediately after the closing of the Offering. The
Company intends to register all the shares subject to these options and
warrants under the Securities Act for public resale.
   
  The Company, its directors and executive officers and certain other
shareholders have agreed not to offer or sell any shares for a period of 180
days following the date of this Prospectus without the prior written consent
of The Robinson-Humphrey Company, LLC, except that the Company may issue
Common Stock in the Offering, in connection with acquisitions generally, and
pursuant to the exercise of stock options or sale of Common Stock pursuant to
a "cashless exercise" of stock options which are either (i) outstanding on the
date of this Prospectus, (ii) issued under the Company's 1997 Stock Awards
Plan or (iii) issued under the Company's stock option plan for non-management
employees or a bona fide gift of Common Stock, provided that the donee agrees
to be bound by the terms of the donor's lockup agreement.     
 
  The Company intends to continue to acquire companies using Common Stock as
part of the consideration. Accordingly, the Company intends to register
7,000,000 additional shares of Common Stock under the Securities Act during
the fourth quarter of 1997 for its use in connection with future acquisitions.
These shares generally will be freely tradable after their issuance by persons
not affiliated with the Company unless the Company contractually restricts
their resale.
 
  The effect, if any, of the availability for sale, or sale, of the shares of
Common Stock eligible for future sale on the market price of the Common Stock
prevailing from time to time is unpredictable, and no assurance can be given
that the effect will not be adverse.
 
RESTRICTIONS ON DIVIDENDS; DEPENDENCE ON SUBSIDIARIES
 
  The Company will conduct its operations through subsidiaries, including
substantially all of the Pre-Offering Companies and the Offering Acquisition
Companies, and is therefore dependent upon the cash flow of and the transfer
of funds by those subsidiaries to the Company in the form of loans, dividends
or otherwise to meet its financial obligations. Each GroupMAC Company and any
future subsidiary of the Company will be distinct legal entities and will have
no obligation, contingent or otherwise, to transfer funds to the Company. The
Company's ability to pay dividends on the Common Stock is restricted by the
terms of the $75 million bank credit facility (the "Bank Credit Agreement")
and could be restricted by the terms of subsequent financings and subsequent
series of Preferred Stock that may be issued in future transactions. See
"Description of Capital Stock" and "Description of Capital Stock--Common
Stock." Additionally, the ability of the GroupMAC Companies to pay dividends
to the Company is limited by the terms of the Bank Credit Agreement. See
"Description of Bank Credit Agreement."
 
NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
 
  Prior to the Offering, no public market for the Common Stock has existed,
and the initial public offering price, which will be determined by negotiation
between the Company and representatives of the Underwriters, may not be
indicative of the price at which the Common Stock will trade after the
Offering. See "Underwriting" for the factors considered in determining the
initial public offering price. The Common Stock has been approved for listing
on the NYSE, subject to official notice of issuance, but no assurance can be
given that an active trading market for the Common Stock will develop or, if
it developed, that it will continue after the Offering. The market price of
the Common Stock after the Offering may be subject to significant fluctuations
from time to time in response to numerous factors, including variations in the
reported financial results of the Company and changing conditions in the
economy in general or in the Company's industry in particular. In addition,
stock markets generally experience significant price and volume volatility
from time to time which may affect the market price of the Common Stock for
reasons unrelated to the Company's performance.
 
POTENTIAL ANTI-TAKEOVER EFFECTS
 
  Provisions of the Company's Articles of Incorporation and Bylaws and the
TBCA may have the effect of delaying, discouraging, inhibiting, preventing or
rendering more difficult an attempt to obtain control of the Company by means
of a tender offer, business combination, proxy contest or otherwise. These
provisions include the authorization in the Company's Articles of
Incorporation of preferred stock having such preferences, powers and relative,
participating, optional and other rights (including preferences over the
Common Stock respecting dividends, distributions and voting rights) as the
Board of Directors may determine, classification of the Board
 
                                      14
<PAGE>
 
of Directors, a TBCA restriction on the ability of shareholders to take
actions by written consent and a TBCA provision imposing restrictions on
business combinations with certain interested parties. See "Description of
Capital Stock."
 
IMMEDIATE, SUBSTANTIAL DILUTION
 
  Purchasers of Common Stock in the Offering (i) will experience immediate,
substantial dilution in the net tangible book value of their stock of $11.85
per share and (ii) may experience further dilution in that value from
issuances of Common Stock in connection with future acquisitions. See
"Dilution."
 
ASSET ENCUMBRANCE
 
  The obligations of the Company under the Bank Credit Agreement are secured
by a first priority security interest on the accounts receivable and inventory
of the Company and its material subsidiaries and all the capital stock of its
domestic subsidiaries. In addition, borrowings under the Bank Credit Agreement
will be guaranteed by the material GroupMAC Companies, and any future material
subsidiaries. If the Company becomes insolvent or is liquidated, or if there
were a breach of the restrictions in the Bank Credit Agreement so as to result
in a default thereunder, or if the Company were unable to repay its borrowings
thereunder, lenders under the Bank Credit Agreement could declare all amounts
outstanding thereunder to be due and payable and the obligations of the
lenders to make further extensions of credit could be terminated. The lenders
under the Bank Credit Agreement also would be entitled to proceed against the
collateral securing such indebtedness. Accordingly, such lenders would have a
prior claim on certain assets of the Company and its subsidiaries. See
"Description of Bank Credit Agreement."
 
                                      15
<PAGE>
 
                                  THE COMPANY
 
  The Company was founded in 1996 to create the leading nationwide provider of
HVAC, plumbing and electrical services to residential and commercial
customers. The Company has completed the purchase of 11 Pre-Offering Companies
and has definitive agreements to acquire an additional 13 Offering Acquisition
Companies upon the closing of the Offering. The initial capitalization of the
Company was provided through private equity capital and a $35 million
acquisition and working capital borrowing facility. This initial financing
allowed the Company to acquire the Pre-Offering Companies, including Airtron,
a residential HVAC service company with new installation and maintenance,
repair and replacement services in 14 cities in six states. The Company
believes Airtron, with revenues in fiscal 1996 of $81.9 million, was the
largest independent residential HVAC service company in the United States. The
combined 1996 revenue of the Pre-Offering Companies was $138.8 million. With
the purchase of the 13 Offering Acquisition Companies, the Company will have
approximately 2,860 employees at operations in 37 cities in 21 states, with
combined 1996 revenues of $307.5 million, and will be among the largest
providers of HVAC, plumbing and electrical services in the United States.
 
  For a description of the transactions pursuant to which the businesses of
the Pre-Offering Companies were acquired and the Offering Acquisition
Companies will be acquired, see "The Acquisitions." The GroupMAC Companies are
described below.
<TABLE>
<CAPTION>
                          1996 REVENUES   YEAR
PRE-OFFERING COMPANIES:  ($ IN 000'S)(1) FOUNDED   HEADQUARTERS SITE                 PRIMARY SERVICES
-----------------------  --------------- ------- --------------------- ---------------------------------------------
<S>                      <C>             <C>     <C>                   <C>
Airtron(2).......            $81,880      1970   Dayton, OH            Residential & Commercial HVAC
K&N(2)...........             24,279      1978   Arlington, TX         Residential Plumbing & HVAC
A-ABC/A-1(2).....              8,546      1976   Dallas, TX            Residential HVAC & Plumbing
Sibley...........              6,962      1974   Memphis, TN           Commercial HVAC
Hallmark(2)......              6,516      1951   Houston, TX           Residential & Commercial HVAC
Charlie's........              3,058      1979   Houston, TX           Commercial & Residential Plumbing
Costner..........              3,042      1985   Rock Hill, SC         Residential HVAC & Electrical
Callahan                       
 Roach(2)(3).....              1,867      1989   Colorado Springs, CO  Residential Training, Products & Publications
Jarrell..........              1,236      1957   Houston, TX           Residential Plumbing
USA..............                763      1988   Lakewood, CO          Commercial Training & Member Services
Way Residential..                659      1977   Houston, TX           Residential HVAC
                            --------
 Total...........           $138,808
                            --------
OFFERING ACQUISITION COMPANIES:
---------------------------------
MacDonald-Mill-             
 er(2)...........           $ 66,059      1965   Seattle, WA           Commercial HVAC, Plumbing & Electrical 
Masters(2).......             39,826      1986   Gaithersburg, MD      Residential Plumbing & HVAC
Linford(2).......             11,305      1960   Oakland, CA           Commercial HVAC
Yale.............             10,065      1939   Minneapolis, MN       Commercial HVAC
Central Caroli-
 na(2)...........              8,161      1967   Greensboro, NC        Residential & Commercial HVAC
Willis...........              6,781      1954   Cincinnati, OH        Residential HVAC
Paul E. Smith....              5,573      1967   Indianapolis, IN      Residential Plumbing
Southeast Mechan-
 ical............              5,282      1979   Hollywood, FL         Commercial HVAC
Van's............              4,289      1965   Delray Beach, FL      Residential HVAC
Arkansas
 Mechanical(2)...              3,337      1988   North Little Rock, AR Commercial HVAC
Mechanical(2)....              2,900      1993   North Little Rock, AR Commercial HVAC
All Service......              2,826      1990   Jacksonville, FL      Commercial & Residential Electrical
Evans............              2,295      1901   Birmingham, AL        Residential Plumbing & HVAC
                            --------
 Total...........           $168,699
                            --------
Pro Forma Com-
 bined...........           $307,507
                            ========
<CAPTION>
                          SOURCE OF 1996 REVENUES
                         -------------------------
                                      MAINTENANCE,
                             NEW       REPAIR AND
PRE-OFFERING COMPANIES:  INSTALLATION REPLACEMENT
-----------------------  ------------ ------------
<S>                      <C>          <C>          <C>
Airtron(2).......             81%          19%
K&N(2)...........             89%          11%
A-ABC/A-1(2).....              0%         100%
Sibley...........              0%         100%
Hallmark(2)......              0%         100%
Charlie's........              0%         100%
Costner..........              0%         100%
Callahan                                       
 Roach(2)(3).....             N/A          N/A 
Jarrell..........              0%         100%
USA..............             N/A          N/A
Way Residential..              0%         100%
 Total...........
OFFERING ACQUISITION COMPANIES:
----------------------------------------
MacDonald-Mill-                                
 er(2)...........             41%          59% 
Masters(2).......            100%           0%
Linford(2).......              0%         100%
Yale.............             28%          72%
Central Caroli-
 na(2)...........             17%          83%
Willis...........             59%          41%
Paul E. Smith....             61%          39%
Southeast Mechan-
 ical............              0%         100%
Van's............              4%          96%
Arkansas
 Mechanical(2)...              0%         100%
Mechanical(2)....             14%          86%
All Service......             14%          86%
Evans............              0%         100%
 Total...........
Pro Forma Com-
 bined...........             54%          46%
                         ============ ============
</TABLE>
-------
(1) Several of the individual GroupMAC Companies have fiscal year ends that
    differ from December 31, which is the year end all of the GroupMAC
    Companies will use concurrent with the Offering.
(2) Operates through multiple locations.
(3) Includes Callahan/Roach Products & Publications, Inc. ("CRPP") and
    Callahan/Roach & Associates ("CRA" and, together with CRPP, "Callahan
    Roach").
 
                                      16
<PAGE>
 
  The Pre-Offering Companies (other than Costner and Way Residential) were
acquired using a combination of cash, warrants and preferred stock and
5,994,122 shares of Common Stock. All of the shares of preferred stock will be
redeemed for cash at the closing of the Offering. Costner and Way Residential
(effective as of June 30, 1997) and Callahan and Roach (effective July 1,
1997) were acquired, and the Offering Acquisition Companies are being
acquired, for a combination of cash and 2,975,309 shares of Common Stock,
before anticipated Subchapter S distributions and purchase price adjustments.
The aggregate consideration that was paid or will be paid by the Company to
acquire the GroupMAC Companies consists of (i) approximately $61.6 million in
cash ($32.6 million for the Pre-Offering Companies and $29.0 million for the
Offering Acquisition Companies), (ii) 8,834,889 shares of Common Stock, (iii)
17,557,973 shares of preferred stock and warrants to purchase 1,713,622 shares
of preferred stock (which are currently exercisable) issued to the Pre-
Offering Companies which will be redeemed for an aggregate of $19.3 million in
cash with proceeds of the Offering and (iv) warrants and options for 609,461
shares of Common Stock (which are currently exercisable). In addition, the
Company has assumed or will assume $14.9 million of indebtedness of the
GroupMAC Companies (which will be repaid promptly in its entirety with
proceeds from the Offering). See "Use of Proceeds." Shareholders of several of
the GroupMAC Companies have the opportunity to receive additional amounts of
purchase price, payable in cash and Common Stock in 1997 and 1998, contingent
upon the occurrence of future events. The Company believes this amount will be
approximately $5 million in cash and Common Stock. Prior to the closing of the
Offering, certain of the Offering Acquisition Companies that are corporations
which have elected to be taxed under Subchapter S of the Internal Revenue Code
("S Corporations") may distribute cash and certain non-operating assets to
their shareholders in an amount not to exceed the balances of their respective
accumulated adjustment accounts.
 
  The consideration paid or to be paid by the Company for each GroupMAC
Company was the result of arm's-length negotiations between representatives of
the Company and representatives of that company and was based generally on the
Company's evaluation of such company's operating results, assets and
capitalization. Certain shareholders and key managers of the GroupMAC
Companies were required to enter into employment agreements containing, among
other things, confidentiality and non-competition provisions.
 
                                USE OF PROCEEDS
 
  The net proceeds to the Company from the sale of the shares of Common Stock
in the Offering are estimated to be approximately $93.2 million ($107.8
million if the over-allotment option is exercised in full) after deduction of
underwriting discounts and Offering expenses payable by the Company. The
Company plans to use $19.3 million to redeem all the outstanding warrants for
and shares of preferred stock issued in connection with the acquisition of the
Pre-Offering Companies, $28.9 million to fund the cash portion of the
consideration to be issued in connection with the acquisition of the Offering
Acquisition Companies, $31.2 million to repay bank debt incurred to finance
the acquisition of the Pre-Offering Companies and $13.4 million to repay other
debt assumed and certain obligations resulting from the acquisition of the
GroupMAC Companies, with any remaining proceeds being used for general
corporate purposes, including working capital and future acquisitions. Any net
proceeds received from the exercise of the Underwriters' over-allotment option
will be used for future acquisitions and for working capital purposes. See
"The Acquisitions," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"Description of Bank Credit Agreement."
 
                                      17
<PAGE>
 
                                CAPITALIZATION
 
  The following table sets forth (i) the historical capitalization of the
Company as of June 30, 1997, (ii) the pro forma capitalization of the Company
as of June 30, 1997, giving effect to the acquisition of the GroupMAC
Companies, and (iii) the pro forma capitalization of the Company as of June
30, 1997, giving effect to such acquisitions and related financings, as
adjusted to reflect the application of the net proceeds from the Offering. For
a description of the adjustments, see Notes to Unaudited Pro Forma Combined
Financial Statements included elsewhere herein. This presentation should be
read in conjunction with the historical and pro forma combined financial
statements of the Company and related notes thereto included elsewhere herein.
 
<TABLE>   
<CAPTION>
                                                      AS OF JUNE 30, 1997
                                                        (IN THOUSANDS)
                                                 ------------------------------
                                                                     PRO FORMA
                                                 ACTUAL   PRO FORMA AS ADJUSTED
                                                 -------  --------- -----------
<S>                                              <C>      <C>       <C>
Short-Term Debt, Including Current Maturities... $ 4,577   $14,608   $  2,107
                                                 =======   =======   ========
Long-Term Debt, Net of Current Maturities....... $26,468   $31,414   $     --
Preferred Stock: $1.00 par value, 50,000,000
 shares authorized; 17,121,133 issued and
 outstanding; 19,271,595 shares issued and
 outstanding,  pro forma........................  17,121    19,271         --
Shareholders' Equity:
Common Stock: $.001 par value, 100,000,000
 shares authorized; 8,707,998 shares issued and
 outstanding; 12,461,706 shares issued and
 outstanding, pro forma; and 19,961,706 shares
 issued and outstanding, pro forma as
 adjusted(1)....................................       9        12         20
Additional Paid-In Capital......................  25,741    60,150    153,292
Retained Earnings (Deficit)..................... (34,694)  (34,694)   (34,694)
Subscriptions Receivable........................  (2,054)       --         --
                                                 -------   -------   --------
Total Shareholders' Equity...................... (10,998)   25,468    118,618
                                                 -------   -------   --------
 
Total Capitalization............................ $32,591   $76,153   $118,618
                                                 =======   =======   ========
</TABLE>    
--------
(1) Excludes (i) 609,461 shares of Common Stock issuable upon exercise of
    outstanding stock options and warrants issued in connection with certain
    acquisitions, (ii) 378,800 shares of Common Stock issuable upon exercise
    of outstanding stock options held by employees of the Company, and (iii)
    an aggregate of 1,976,734 shares of Common Stock subject to options to be
    granted upon consummation of the Offering at an exercise price equal to
    the initial public offering price. See "Management--Option Grants" and "--
    Stock Awards Plan."
 
                                DIVIDEND POLICY
 
  The Company has not paid a dividend on Common Stock since its incorporation
and does not anticipate paying any dividends on Common Stock in the
foreseeable future because it intends to retain earnings to finance the
expansion of its business, to repay indebtedness and for general corporate
purposes. Any payment of future dividends will be at the discretion of the
Board of Directors and will depend upon, among other things, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
relevant factors. The Bank Credit Agreement restricts the payment of
dividends. See "Description of Bank Credit Agreement."
 
                                      18
<PAGE>
 
                                   DILUTION
 
  The deficit in pro forma net tangible book value of the Company at June 30,
1997 was approximately $50.2 million, or $4.03 per share, after giving effect
to the completion of the purchase of the GroupMAC Companies and the related
financings therefor but before giving effect to the Offering. Pro forma net
tangible book value per share before the Offering represents the amount of the
Company's pro forma shareholders' equity as of June 30, 1997, less intangible
assets as of that date, after giving effect to the completion of the purchase
of the GroupMAC Companies and the related financings, divided by 12,461,726
shares of Common Stock outstanding (the pro forma number of shares of Common
Stock outstanding as of such date, after giving effect to such matters but
before giving effect to the Offering). Net tangible book value dilution per
share represents the difference between the amount per share paid by
purchasers of shares of Common Stock in the Offering and the pro forma net
tangible book value per share of Common Stock immediately after completion of
the Offering. After giving effect to the sale of 7,500,000 shares of Common
Stock by the Company in the Offering and the application of the estimated net
proceeds therefrom, the pro forma net tangible book value of the Company as of
June 30, 1997 would have been $42.9 million or $2.15 per share. This
represents an immediate increase in pro forma net tangible book value of $6.18
per share to existing shareholders and an immediate dilution in pro forma net
tangible book value of $11.85 per share to purchasers of Common Stock in the
Offering. The following table illustrates the dilution per share:
 
<TABLE>
<S>                                                              <C>     <C>
Assumed initial public offering price per share.................         $14.00
  Deficit in pro forma net tangible book value before the
   Offering..................................................... $(4.03)
  Increase in pro forma net tangible book value attributable to
   the Offering.................................................   6.18
Pro forma net tangible book value after the Offering............           2.15
                                                                         ------
Dilution per share to new investors.............................         $11.85
                                                                         ======
</TABLE>
 
  The following table shows, after giving effect to the Offering, the
difference between existing shareholders and new investors with respect to the
number of shares purchased from the Company and the total consideration and
average price per share paid to the Company, before deducting the underwriting
discounts and estimated Offering expenses (in thousands, except per share
amounts).
 
<TABLE>
<CAPTION>
                                              SHARES
                                            PURCHASED                  PURCHASE
                                          --------------     TOTAL     PRICE PER
                                          NUMBER PERCENT CONSIDERATION   SHARE
                                          ------ ------- ------------- ---------
<S>                                       <C>    <C>     <C>           <C>
Existing shareholders.................... 12,462   62.4%   $(50,202)    $(4.03)
New investors............................  7,500   37.6%    105,000      14.00
                                          ------  -----    --------
  Total.................................. 19,962  100.0%   $ 54,798
                                          ======  =====    ========
</TABLE>
 
  The foregoing tables assume no exercise of outstanding options and warrants.
As of the date of this Prospectus, there are 474,261 shares of Common Stock
issuable upon the exercise of stock options at an average exercise price of
$4.31 per share and warrants to purchase 514,000 shares of Common Stock at an
average purchase price of $17.50 per share. See "Management--Option Grants"
and "--Stock Awards Plan."
 
                                      19
<PAGE>
 
               SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
 
  The Company has previously acquired the Pre-Offering Companies and will
acquire the Offering Acquisition Companies simultaneously with the closing of
the Offering. The first and largest acquisition made by the Company was that
of Airtron. For accounting purposes, this transaction was accounted for as a
reverse acquisition, as if Airtron acquired the GroupMAC Parent, because the
former shareholders of Airtron owned a majority of GroupMAC Parent's Common
Stock upon consummation of the transaction. As such, the selected historical
financial data set forth below as of and for the three-year period ended
February 28, 1997 have been derived from the financial statements of Airtron,
which have been audited by KPMG Peat Marwick LLP, independent public
accountants. The financial statements of GroupMAC Parent and the Pre-Offering
Companies are included in the Financial Statements from their respective dates
of acquisition. The selected historical financial data set forth below as of
and for each of the four month periods ended June 30, 1996 and 1997 were
derived from the financial statements of Airtron. In addition to reflecting
the transaction discussed above, the historical balance sheet data as of June
30, 1997 include A-ABC/A-1, Hallmark and K&N, which were acquired effective
June 1, 1997, and Charlie's, Costner, Jarrell and the assets of Way
Residential, which were acquired effective June 30, 1997. The operations of
all of these companies have been included in the historical income statement
data from their respective dates of acquisition. In the opinion of the
Company's management, the selected historical financial data of the Company as
of and for the four months ended June 30, 1997 and 1996 include all adjusting
entries (consisting only of normal recurring adjustments) necessary to present
fairly the information set forth therein. The results of operations for the
four months ended June 30, 1997 should not be regarded as indicative of the
results that may be expected for the full year.
 
  The selected pro forma financial data of the Company as of and for the six
months ended June 30, 1996 and 1997 and the year ended December 31, 1996 are
derived from the Unaudited Pro Forma Combined Financial Statements of the
Company that appear elsewhere in this Prospectus. The pro forma financial data
listed below present certain information for the Company, as adjusted for (i)
the effects of the acquisitions of the GroupMAC Companies and (ii) the effects
of certain pro forma adjustments to the historical financial data statements
of the GroupMAC Companies directly related to those acquisitions. The pro
forma as adjusted financial data give effect to the consummation of the
Offering and the application of the net proceeds therefrom, as if they had all
occurred on the first day of each respective period. The pro forma financial
data of the Company do not purport to represent what the Company's results of
operations or financial position actually would have been had these events, in
fact, occurred on the date or at the beginning of the period indicated, nor
are they intended to project the Company's results of operations or financial
position for any future date or period.
 
  The data presented below should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
Financial Statements and the related notes thereto and the Unaudited Pro Forma
Combined Financial Statements and the notes thereto included elsewhere herein.
 
 
                                      20
<PAGE>
 
                            SELECTED FINANCIAL DATA
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>   
<CAPTION>
                                                               PRO FORMA        HISTORICAL            PRO FORMA AS
                   FISCAL YEAR ENDED FEBRUARY 28 OR 29,      AS ADJUSTED(2) FOUR MONTHS ENDED     ADJUSTED SIX MONTHS
                                    (1)                        YEAR ENDED        JUNE 30,            ENDED JUNE 30,
                  ------------------------------------------  DECEMBER 31,  -------------------  ----------------------
                   1993    1994    1995       1996    1997        1996         1996     1997(3)    1996(2)    1997(2)
                  ------- ------- -------    ------- ------- -------------- ----------  -------  ----------- ----------
                                                               (UNAUDITED)  (UNAUDITED)          (UNAUDITED) (UNAUDITED)
<S>               <C>     <C>     <C>        <C>     <C>     <C>            <C>         <C>      <C>         <C>
INCOME STATEMENT
 DATA:
Revenues........  $54,552 $66,281 $72,226    $73,765 $81,880    $307,507     $25,957    $31,086   $151,396    $157,941
Gross Profit....   15,565  18,977  21,766     21,091  23,374      71,596       7,031      8,399     33,479      36,582
Selling, General
 and
 Administrative
 Expenses(4)....   12,648  15,760  20,282(5)  17,615  19,811      48,953(6)    5,461     13,136     24,068      26,978(7)
Goodwill Amorti-
 zation(8)......       --      --      --         --      --       1,891          --         31        946         946
                  ------- ------- -------    ------- -------    --------     -------    -------   --------    --------
Income (Loss)
 from Opera-
 tions..........    2,917   3,217   1,484      3,476   3,563      20,752       1,570     (4,768)     8,465       8,658
Interest Income
 (Expense), Net.      152     127      76         68      89         154         (17)      (259)        39         181
Other Income,
 Net............      114      33     140        246     256         297          23          3        240         508
                  ------- ------- -------    ------- -------    --------     -------    -------   --------    --------
Income (Loss)
 Before Income
 Tax Provision..    3,183   3,377   1,700      3,790   3,908      21,203       1,576     (5,024)     8,744       9,347
Income Tax Pro-
 vision.........    1,332   1,300     911      1,651   1,572       9,237         634        800      3,876       4,117
                  ------- ------- -------    ------- -------    --------     -------    -------   --------    --------
Net Income
 (Loss).........  $ 1,851 $ 2,077 $   789    $ 2,139 $ 2,336    $ 11,966     $   942    $(5,824)  $  4,868    $  5,230
                  ======= ======= =======    ======= =======    ========     =======    =======   ========    ========
Net Income
 (Loss) Per
 Share..........                                                $    .59                          $    .24    $    .26
                                                                ========                          ========    ========
Weighted Average
 Shares
 Outstanding(9).                                                  20,159                            20,159      20,159
                                                                ========                          ========    ========
OTHER DATA:
EBITDA(10)        $ 3,074 $ 3,417 $ 1,853    $ 3,960 $ 4,027     $26,061     $ 1,665    $(4,570)  $ 11,132    $ 11,843
                  ======= ======= =======    ======= =======    ========     =======    =======   ========    ========
</TABLE>    
 
<TABLE>   
<CAPTION>
                          FISCAL YEAR ENDED FEBRUARY 28 OR 29,              JUNE 30, 1997
                         --------------------------------------- -------------------------------------
                                                                                PRO       PRO FORMA
                          1993    1994    1995    1996    1997   ACTUAL(3)   FORMA(2)   AS ADJUSTED(2)
                         ------- ------- ------- ------- ------- ---------  ----------- --------------
                                                                            (UNAUDITED)  (UNAUDITED)
<S>                      <C>     <C>     <C>     <C>     <C>     <C>        <C>         <C>
BALANCE SHEET DATA:
Cash and Cash Equiva-
 lents.................. $   700 $   186 $   650 $ 1,774 $ 4,339 $  5,875    $ 10,214      $  9,457
Working Capital.........   3,633   3,473   4,561   3,285   6,337    7,425     (13,359)       29,303
Total Assets............  12,438  15,221  23,528  28,282  27,153   64,942     174,284       173,330
Total Debt..............      --      --      --      --   1,290   31,045      46,022         2,107
Preferred Stock.........      --      --      --      --      --   17,121      19,271            --
Shareholders' Equity....   3,257   2,175   5,955   6,373   5,990  (10,998)     25,468       118,618
</TABLE>    
-------
(1) Concurrent with the Offering, the Company intends to change its fiscal
    year end from February 28 to December 31.
(2) Pro forma financial data give effect to the completed and pending
    acquisitions that are described in Unaudited Pro Forma Combined Financial
    Statements, as if they had all occurred at the beginning of each period
    presented. Such results are not necessarily indicative of the results the
    Company would have obtained had these events actually occurred on January
    1, 1996 for the Income Statement Data or on June 30, 1997 for the Balance
    Sheet Data. Pro forma as adjusted financial data give effect to a
    reduction in interest expense as a result of reductions in indebtedness
    upon application of a portion of the net proceeds to the Company from the
    Offering and the redemption of preferred stock.
(3) The Company's acquisitions of the Pre-Offering Companies and Group
    Maintenance America Corp. have been accounted for as purchases and,
    accordingly, the operations of these acquired businesses are included in
    the financial data from the effective date of their respective
    acquisition.
(4) Includes non-recurring, non-cash compensation expense of $7.0 million
    related to the reverse acquisition of GroupMAC Parent during the four
    months ended June 30, 1997, which is excluded in the Pro Forma As Adjusted
    six months ended June 30, 1997. Reflects a decrease of $11.1 million, $4.2
    million and $5.2 million for the Pro Forma As Adjusted year ended December
    31, 1996, and the Pro Forma As Adjusted six months ended June 30, 1996 and
    1997, respectively, for pro forma reductions in salaries, bonuses and
    benefits to former owners of the GroupMAC Companies to which they have
    agreed prospectively.
(5) Includes $2.4 million for compensation expense resulting from revaluation
    of warrants.
(6) Includes $0.5 million of expenses for the formation and build-up of
    corporate management and infrastructure.
(7) Includes $1.6 million of expenses for the formation and build-up of
    corporate management and infrastructure.
(8) Consists of amortization recorded or to be recorded, as a result of the
    acquisition of GroupMAC Companies, over a 40-year period and computed on
    the basis described in the Notes to the Unaudited Pro Forma Combined
    Financial Statements.
(9) Computed on a basis described in Note 4 of Notes to Unaudited Pro Forma
    Combined Financial Statements.
(10) Represents earnings before interest, taxes, depreciation and amortization
     ("EBITDA"). Based on its experience in the industry, the Company believes
     that EBITDA is an important tool for measuring the performance of
     companies in the industry (including potential acquisition targets) in
     several areas such as liquidity, operating performance and leverage. In
     addition, lenders use EBITDA as a criterion in evaluating companies in
     the industry and the Company's financing arrangement contains covenants
     in which EBITDA is used as a measure of financial performance. The EBITDA
     measure for the Company may not be consistent with similarly titled
     measures for other companies. EBITDA should not be considered as an
     alternative to operating or net income (as determined in accordance with
     GAAP) as an indicator of the Company's performance or to cash flow from
     operations (as determined in accordance with GAAP) as a measure of
     liquidity. See the comparative historical statements of cash flows
     included herein and "Management's Discussion of Financial Condition and
     Results of Operations" and "--Liquidity and Capital Resources" for
     discussion of other measures of performance determined in accordance with
     GAAP and the Company's sources and applications of cash flow.
 
                                      21
<PAGE>
 
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
  The following discussion should be read in conjunction with the historical
financial statements and related notes of the Company, all financial
statements of the GroupMAC Companies presented herein and Selected Historical
and Pro Forma Financial Data included elsewhere in this Prospectus.
 
INTRODUCTION
 
  The Company's revenues are derived from providing new installation services
and maintenance, repair and replacement services for HVAC, plumbing,
electrical and other systems to residential and commercial customers.
Approximately 54% of the company's pro forma combined 1996 revenues of $307.5
million were derived from new installation services and 46% were attributable
to maintenance, repair and replacement services. Maintenance, repair and
replacement revenues are recognized as the services are performed, except for
service contract revenue which is recognized ratably over the life of the
contract. Revenues from fixed price installation and retro-fit contracts are
generally accounted for on a percentage-of-completion basis, using the cost-
to-cost method.
 
  Cost of services consists primarily of components, parts and supplies
related to the Company's new installation and maintenance, repair and
replacement services, salaries and benefits of service and installation
technicians, subcontracted services, depreciation, fuel and other vehicle
expenses and equipment rentals. Selling, general and administrative expenses
consist primarily of compensation and related benefits for owners,
administrative salaries and benefits, advertising, office rent and utilities,
communications and professional fees. Certain owners and certain key employees
of the GroupMAC Companies have agreed to reductions totaling $11.1 million in
fiscal 1996 in their compensation and related benefits in connection with
their acquisition by the Company, which have been reflected as a pro forma
adjustment in the Unaudited Pro Forma Combined Statement of Operations. Such
reductions in salaries, bonuses and benefits are in accordance with the terms
of employment agreements.
 
  The Company's diversified business mix is reflected to varying degrees in
its gross margins. The Company's businesses performing primarily maintenance,
repair and replacement services in the residential markets tend to have higher
gross margins, averaging 37.4% for fiscal 1996. The combined gross margin for
GroupMAC Companies providing primarily maintenance, repair and replacement
services in the commercial markets during fiscal 1996 was 27.2%. On the
average, GroupMAC Companies primarily engaged in residential new installation
services have lower gross margins. Such companies' combined gross margin for
fiscal 1996 was 21.2%. The company primarily providing HVAC services in the
residential new installation market had a gross margin of 28.5%, which was
somewhat offset by the companies providing primarily plumbing service to this
market at gross margins ranging from 10.0% to 14.7%. Future consolidated gross
margins may vary depending on, among other things, shifts in the business mix
within the GroupMAC Companies as well as the impact of future acquisitions on
the business mix.
 
  The Company believes that it will, and in certain cases has already begun
to, realize savings from (i) greater volume discounts from suppliers of
components, parts and supplies; (ii) consolidation of insurance and bonding
programs; (iii) other general and administrative expenses such as training and
advertising; and (iv) the Company's ability to borrow at lower interest rates
than most, if not all, of the GroupMAC Companies. Offsetting these savings
will be costs related to the Company's new corporate management, costs
associated with being a public company and integration costs.
 
  The Company recorded a non-recurring, non-cash compensation charge of
$206,000 during the fourth quarter of 1996 relating to certain shares of
Common Stock sold to management, representing the difference between the
amount paid for the shares and the estimated fair value of the shares on the
date of sale. This non-recurring compensation charge is not included in the
Pro Forma Combined Financial Statements.
 
 
                                      22
<PAGE>
 
   
  As a result of the acquisition of the GroupMAC Companies, $75.7 million,
representing the excess of the fair value of the consideration paid over the
fair value of the net assets to be acquired, will be recorded as goodwill on
the Company's balance sheet. Goodwill will be amortized as a non-cash charge
to the income statement over a 40-year period. The pro forma impact of this
amortization expense, which is substantially non-deductible for tax purposes,
is $1.9 million per year on an after-tax basis.     
 
COMBINED RESULTS OF OPERATIONS
 
  The combined results of operations of the GroupMAC Companies for the periods
presented do not represent combined results of operations presented in
accordance with generally accepted accounting principles, but are only a
summation of the revenues, cost of services and selling, general and
administrative expenses of the individual GroupMAC Companies on an historical
basis. The combined results of operations assume that each of the GroupMAC
Companies was combined from the beginning of each period presented. The
combined results also exclude the effect of pro forma adjustments and may not
be comparable to, and may not be indicative of, the Company's post-combination
results of operations because (i) the GroupMAC Companies were not under common
control or management during the periods presented; (ii) the Company will
incur incremental costs for its corporate management and the costs of being a
public company; (iii) the Company will use the purchase method to record the
acquisitions of the GroupMAC Companies at different points in time, resulting
in the recording of goodwill that will be amortized over 40 years; and (iv)
the combined data does not reflect the potential benefits and cost savings the
Company expects to realize when operating as a combined entity.
 
  The following table sets forth certain unaudited combined financial data for
the periods indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                                         FISCAL YEAR(1)                     SIX MONTHS ENDED JUNE 30,
                          ----------------------------------------------  -------------------------------
                               1994            1995            1996            1996            1997
                          --------------  --------------  --------------  --------------  ---------------
<S>                       <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>    <C>       <C>
Revenues................  $235,234 100.0% $258,834 100.0% $307,507 100.0% $151,396 100.0% $157,941  100.0%
Cost of Services........   178,748  76.0   196,847  76.1   235,911  76.7   117,917  77.9   121,359   76.8
                          -------- -----  -------- -----  -------- -----  -------- -----  --------  -----
Gross Profit............    56,486  24.0    61,987  23.9    71,596  23.3    33,479  22.1    36,582   23.2
Selling, General and Ad-
 ministrative
 Expenses...............    49,410  21.0    53,143  20.5    60,162  19.6    28,319  18.7    39,273   24.9
                          -------- -----  -------- -----  -------- -----  -------- -----  --------  -----
Income (Loss) from Oper-
 ations.................     7,076   3.0     8,844   3.4    11,434   3.7     5,160   3.4    (2,691)  (1.7)
</TABLE>
--------
(1) Several of the individual GroupMAC Companies have fiscal year ends that
    differ from December 31, which is the year end all of the GroupMAC
    Companies will use concurrent with the Offering.
 
 Unaudited Six Months Ended June 30, 1997 Compared to Unaudited Six Months
Ended June 30, 1996
 
  Revenues. Revenues increased $6.5 million, or 4.3%, from $151.4 million for
the six months ended June 30, 1996 to $157.9 million for the six months ended
June 30, 1997. The increase in revenues was primarily volume driven and was
attributable to continuing strength in the Seattle, Washington and Portland,
Oregon commercial markets with respect to MacDonald-Miller Industries, Inc.
("MacDonald-Miller"), increased market penetration in certain Ohio markets by
Airtron, incremental business from existing customers at Masters and
incremental service agreements secured by Linford. Of the 24 GroupMAC
Companies, 18 reported an increase in revenues from the six month period ended
June 30, 1996 to the corresponding period in 1997.
 
  Gross Profit. Gross profit increased $3.1 million, or 9.3%, from $33.5
million for the six months ended June 30, 1996 to $36.6 million for the six
months ended June 30, 1997. Gross margin increased from 22.1% to 23.2% from
the six month period ended June 30, 1996 to the corresponding period in 1997.
The increase in gross profit was primarily attributable to the overall revenue
increase coupled with lower material costs at Airtron, an increase in higher
margin special project and tenant improvement work at MacDonald-Miller and an
increase in higher margin replacement sales at Willis.
   
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $11.0 million, or 38.9%, from $28.3 million
for the six months ended June 30, 1996 to $39.3 million for the six months
ended June 30, 1997. The increase was primarily attributable to (i) a non-
recurring, non-cash compensation expense of $7.0 million related to the
reverse acquisition of GroupMAC parent, (ii) $844,000 of     
 
                                      23
<PAGE>
 
additional compensation paid to owners of the individual companies and (iii)
$2.4 million related to the formation and build-up of the corporate management
infrastructure necessary to build the Company through acquisitions and manage
the consolidated GroupMAC Companies. As a percentage of revenues, selling,
general and administrative expenses increased from 18.7% to 24.9% from the six
month period ended June 30, 1996 compared to the corresponding period in 1997.
 
 Unaudited Fiscal Year 1996 Compared to Unaudited Fiscal Year 1995
 
  Revenues. Revenues increased $48.7 million, or 18.9%, from $258.8 million in
fiscal 1995 to $307.5 million for fiscal 1996. The increase in revenues was
primarily volume driven and was attributable to an increase in all sectors of
MacDonald-Miller's business, particularly contracted "design and build"
projects, retrofits, remodeling and technical services; increased residential
HVAC new installation revenue at Airtron; and increased residential HVAC and
plumbing installation revenues at Masters. Additionally, other companies
providing primarily commercial services increased revenues by $8.0 million, or
20.8%, for the period and companies providing primarily residential services
increased revenues by $5.8 million or 13.4% for the period. Of the 24 GroupMAC
Companies, 22 reported an increase in revenues from fiscal 1995 to 1996, most
of which were due to increases in volume.
 
  Gross Profit. Gross profit increased $9.6 million, or 15.5%, from $62.0
million in fiscal 1995 to $71.6 million in fiscal 1996. Gross margin declined
slightly from 23.9% to 23.3% from fiscal 1995 to fiscal 1996. Approximately
54% of the increase in gross profit was attributable to increased sales volume
at Airtron, Masters and K&N at consistent or slightly higher gross margins
between the periods coupled with an increase in sales volume at MacDonald-
Miller, although at lower gross margins. The decline in gross margin at
MacDonald-Miller largely resulted from a higher mix of larger contracts that
typically have lower margins. The remaining residential and commercial service
companies contributed 28% and 19%, respectively, to the increase in gross
profit which resulted from both volume increases and, in the residential
services group, margin increases.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $7.1 million, or 13.4%, from $53.1 million
in fiscal 1995 to $60.2 million in fiscal 1996. Approximately $2.7 million of
the increase was due to additional compensation paid to owners of the
individual businesses, $724,000 was due to the formation and building of the
corporate management infrastructure and the remainder was due to an overall
build-up of administrative infrastructure to manage and control the
significant growth at various companies. As a percentage of revenues, selling,
general and administrative expenses decreased from 20.5% to 19.6% from fiscal
1995 to fiscal 1996.
 
 Unaudited Fiscal Year 1995 Compared to Unaudited Fiscal Year 1994
 
  Revenues. Revenues increased $23.6 million, or 10.0%, from $235.2 million in
fiscal 1994 to $258.8 million in fiscal 1995. The increase in revenues was
primarily attributable to higher volumes in each sector of MacDonald-Miller's
business, particularly in "design and build" projects, retrofits and
remodeling; increased market penetration and additional revenues from existing
customers at Masters; incremental revenues from the purchase of A-1 by A-ABC
during fiscal 1994; a higher volume of "design and build" work at Yale;
increased market share captured at Airtron and the start-up of two new offices
in Austin, Texas and Las Vegas, Nevada by K&N.
 
  Gross Profit. Gross profit increased $5.5 million, or 9.7%, from $56.5
million in fiscal 1994 to $62.0 million in fiscal 1995. The increase in gross
profit was primarily attributable to the higher sales volumes at MacDonald-
Miller, Masters, A-ABC/A-1, Yale, Airtron and K&N. Gross margin remained
fairly consistent at 24.0% in fiscal 1994 and 23.9% in fiscal 1995.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $3.7 million, or 7.6%, from $49.4 million in
fiscal 1994 to $53.1 million in fiscal 1995. The increase in selling, general
and administrative expense was largely due to a $2.2 million increase in
compensation paid to owners of the individual businesses. As a percentage of
revenues, selling, general and administrative expenses decreased from 21.0% to
20.5%.
 
                                      24
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Historically, the operations and growth of the GroupMAC Companies have been
financed through internally generated working capital and borrowings from
commercial banks or other lenders. These borrowings are generally secured by
substantially all of the assets of the respective GroupMAC Companies, as well
as personal guarantees of the respective owners. With respect to the Pre-
Offering Companies, a substantial portion of their existing indebtedness was
repaid and refinanced through the Company's borrowing facility immediately
following the closing of each of the transactions. The Company believes that
$12.4 million of the net proceeds of the Offering will be used to repay debt
assumed and certain obligations resulting from the acquisition of the GroupMAC
Companies.
   
  In May 1997, the Company entered into a $35 million credit agreement (as
modified to date, the "Original Credit Agreement") with a group of banks
providing for secured facilities consisting of an 18 month revolving credit
line of $3 million, a six-year term loan of $20 million used in connection
with the acquisition of Airtron, and a $12 million term loan facility, having
a final maturity six years after the date of the Original Credit Agreement,
which was used to acquire the Pre-Offering Companies. All of the Company's
loan obligations bear interest at the prime rate. The Original Credit
Agreement contains covenants which, among other matters, restrict or limit the
ability of the Company to pay dividends, incur indebtedness, make capital
expenditures and repurchase capital stock. The Company must also maintain (i)
a minimum level of net worth (deficit) of ($10,111,467) plus 100% of any
increase in net worth resulting from the issuance of any capital stock plus
75% of the consolidated after tax income (adjusted semi-annually), (ii) a
ratio of indebtedness to earnings before interest, taxes, depreciation and
amortization not greater than 3.0 to 1.0, (iii) a ratio of indebtedness to net
worth of 3.25 to 1.0 (decreasing to 2.60 in 1998 and 1.50 in 1999) and (iv) a
fixed charge coverage ratio of at least 1.25 to 1.0. As of the date hereof,
the Company is in compliance with these requirements. As of September 30,
1997, available borrowing capacity under the Original Credit Agreement was
$3.0 million.     
 
  The Company has received a commitment from Texas Commerce Bank National
Association to provide a new credit facility with an initial borrowing
capacity of up to $75 million upon completion of the Offering and is currently
negotiating the definitive documentation for such facility. There is no
assurance, however, that such facility will be in place prior to the closing
of the Offering. Under the Bank Credit Agreement, the Company must maintain
(i) a minimum level of net worth equal to the net worth at the closing date of
the Bank Credit Agreement less $750,000 plus 100% of the net proceeds of any
equity issued plus 75% of cumulative net income after the closing date, (ii) a
ratio of indebtedness to earnings before interest, taxes, depreciation and
amortization of less than 2.5 to 1.0, (iii) a ratio of indebtedness to
capitalization of not greater than 55%, (iv) a fixed charge coverage ratio of
at least 1.20 to 1.0 and (v) a positive tangible net worth. If such financial
covenants were in place on the date hereof and assuming the Offering and the
Acquisitions had been completed, the Company would be in compliance with those
covenants. For additional information about the proposed terms of this credit
facility, see "Description of Bank Credit Agreement." Management expects to
repay all amounts outstanding under the Original Credit Agreement with net
proceeds of the Offering. The Company may also utilize proceeds of the
Offering to pay additional amounts, if any, due to the former owners of the
Offering Acquisition Companies under working capital adjustments to the
purchase prices. See "Use of Proceeds."
 
  Prior to the closing of the Offering, certain of the Offering Acquisition
Companies that are S corporations may distribute cash and certain non-
operating assets to their shareholders in an amount not to exceed the balances
of their respective accumulated adjustment accounts. In addition, several
former owners of the GroupMAC Companies have the ability to receive additional
amounts of purchase price, payable in cash and Common Stock in 1998,
contingent upon the occurrence of future events. The Company's best estimate
of this amount is approximately $5 million, payable in a combination of cash
and shares of Common Stock.
 
  The Company's primary requirements for capital (other than those related to
acquisitions) consist of purchasing vehicles, inventory and supplies used in
the operation of the business. During fiscal 1996 and the six months ended
June 30, 1997, capital expenditures aggregated $4.0 million and $2.4 million,
respectively.
 
 
                                      25
<PAGE>
 
  The Company anticipates that its cash flow from operations will provide cash
in excess of the Company's normal working capital needs, debt service
requirements and planned capital expenditures for property and equipment.
 
  The Company intends to pursue aggressively acquisition opportunities and to
fund future acquisitions through a combination of operating cash flow,
borrowings under the Bank Credit Agreement and the issuance of Common Stock.
 
SEASONAL AND CYCLICAL NATURE OF BUSINESS
 
  The HVAC industry is subject to seasonal variations. Specifically, the
demand for new installations is generally lower during the winter months due
to reduced construction activities during inclement weather and less use of
air conditioning during the colder months. Demand for HVAC services is
generally higher in the second and third quarters. Accordingly, the Company
expects its revenues and operating results generally will be lower in the
first and fourth quarters. Historically, the construction industry has been
highly cyclical. As a result, the Company's volume of business may be
adversely affected by declines in new installation projects in various
geographic regions of the United States. See "Risk Factors--Exposure to
Downturns in Housing Starts or New Commercial Construction" and "--Fluctuation
in Quarterly Operating Results."
 
INFLATION
 
  Inflation did not have a significant effect on the results of operations of
the GroupMAC Companies for 1994, 1995, 1996 or the six months ended June 30,
1997.
 
GROUPMAC AND SUBSIDIARIES (FORMERLY AIRTRON)
 
  Airtron was founded in 1970 and custom designs, installs, maintains and
repairs HVAC systems in new and existing homes and businesses from 14
locations in six states. Airtron's revenues for fiscal 1996 were $81.9 million
and income from operations was $3.6 million. Airtron derived 81% of its 1996
revenues from new installation services and 19% from maintenance, repair and
replacement services. Airtron is headquartered in Dayton, Ohio and has its
facilities in New Port Richey and Clearwater, Florida, Indianapolis, Indiana,
Wichita, Kansas, Louisville and Erlanger, Kentucky, Cincinnati, Cleveland,
Columbus and Dayton, Ohio, and Austin, Dallas, Houston and San Antonio, Texas.
Airtron acquired GroupMAC in May 1997 and acquired A-ABC/A-1, Charlie's,
Costner, Hallmark, Jarrell and K&N and the assets of Way Residential in June
1997.
 
RESULTS OF OPERATIONS--GROUPMAC AND SUBSIDIARIES (FORMERLY AIRTRON)
 
  The following table sets forth certain financial data for the periods
indicated. For comparative purposes, for the six month period ended June 30,
1997, the "Historical Airtron" column excludes the effects of the acquisitions
in May and June 1997. The "GroupMAC and Subsidiaries" column reflects the
consolidated operations of Airtron and such companies from their respective
dates of acquisition (dollars in thousands):
 
<TABLE>
<CAPTION>
                           FISCAL YEAR ENDED FEBRUARY 28 OR 29,               SIX MONTHS ENDED JUNE 30,
                         -------------------------------------------  --------------------------------------------
                                                                                      HISTORICAL    GROUPMAC AND
                                                                                        AIRTRON     SUBSIDIARIES
                                                                                     -------------  --------------
                             1995           1996           1997           1996           1997           1997
                         -------------  -------------  -------------  -------------  -------------  --------------
<S>                      <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>      <C>
Revenues................ $72,226 100.0% $73,765 100.0% $81,880 100.0% $37,127 100.0% $38,676 100.0% $42,844  100.0%
Cost of Services........  50,460  69.9   52,674  71.4   58,506  71.5   26,918  72.5   27,813  71.9   30,920   72.2
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----  -------  -----
Gross Profit............  21,766  30.1   21,091  28.6   23,374  28.5   10,209  27.5   10,863  28.1   11,924   27.8
Selling, General and
 Administrative
 Expenses...............  20,282  28.0   17,615  23.9   19,811  24.1    9,470  25.5    9,824  25.4   18,056   42.1
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----  -------  -----
Income from Operations..   1,484   2.1    3,476   4.7    3,563   4.4      739   2.0    1,039   2.7   (6,132) (14.3)
</TABLE>
 
 
                                      26
<PAGE>
 
 Unaudited Six Months Ended June 30, 1997 Compared to Unaudited Six Months
Ended June 30, 1996
 
  Revenues. Revenues for Historical Airtron increased $1.6 million, or 4.3%,
from $37.1 million for the six months ended June 30, 1996 to $38.7 million for
the six months ended June 30, 1997. Revenues for GroupMAC and Subsidiaries
increased $5.7 million, or 15.4%, from $37.1 million for the six months ended
June 30, 1996 to $42.8 million for the six months ended June 30, 1997. The
increase in revenues with respect to historical Airtron comparisons was
attributable to Airtron's market penetration in the Columbus, Ohio and Dayton,
Ohio markets, resulting in a larger volume of new home starts. The increase in
revenues for GroupMAC and Subsidiaries resulted from the above-mentioned
growth in Historical Airtron and the inclusion of $4.1 million in revenues
from the acquisitions completed during the period.
 
  Gross Profit. Gross profit for Historical Airtron increased $655,000, or
6.4%, from $10.2 million for the six months ended June 30, 1996 to $10.9
million for the six months ended June 30, 1997. Gross margin increased
slightly from 27.5% to 28.1% for the six-month periods ending June 30, 1996
and 1997, respectively. The gross margin increase with respect to Historical
Airtron was primarily due to a reduction in material costs, partially offset
by increased labor costs. Gross profit for GroupMAC and Subsidiaries increased
$1.7 million, or 16.7%, from $10.2 million to $11.9 million. As a percentage
of revenues, gross margin increased from 27.5% to 27.8%. The margin increase
resulted from increased gross margin at Historical Airtron partially offset by
somewhat lower gross margin from K&N.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses for Historical Airtron increased $354,000, or 3.7%,
from $9.5 million for the six months ended June 30, 1996 to $9.8 million for
the six months ended June 30, 1997. The overall increase in selling, general
and administrative expenses was primarily due to an increase in compensation,
professional fees and office rent partially offset by a decline in selling
expenses. As a percentage of revenues, selling, general and administrative
expenses remained relatively constant at 25.5% and 25.4% for the six month
periods ending June 30, 1996 and 1997, respectively. Selling, general and
administrative expenses for GroupMAC and Subsidiaries increased $8.6 million,
or 90.5%, from $9.5 million for the six months ended June 30, 1996 to $18.1
million for the six months ended June 30, 1997. This increase resulted from
(i) a non-recurring, non-cash compensation expense of $7.0 million related to
the reverse acquisition of GroupMAC Parent and (ii) increased expenses for
Historical Airtron and the inclusion of $1.3 million of selling, general and
administrative expenses related to the companies acquired during the period.
As a percentage of revenues, selling, general and administrative expenses
increased from 25.5% to 42.1% for the six months ended June 30, 1996 and 1997,
respectively, as a result of the inclusion of two months of the corporate
overhead expenses of GroupMAC Parent, higher selling, general and
administrative expenses as a percentage of revenues for the companies acquired
during the period and the non-recurring, non-cash compensation expense
discussed above.
 
 Year Ended February 28, 1997 Compared to Year Ended February 29, 1996
 
  Revenues. Revenues increased $8.1 million, or 11.0%, from $73.8 million for
the year ended February 29, 1996 to $81.9 million for the year ended February
28, 1997. The increase in revenues was attributable to increased market
penetration in new residential construction in the Indianapolis, Indiana and
Dallas, Texas markets, resulting in a larger volume of new home starts.
 
  Gross Profit. Gross profit increased $2.3 million, or 10.9%, from $21.1
million for the year ended February 29, 1996 to $23.4 million for the year
ended February 28, 1997. Gross margin remained relatively constant at 28.6%
and 28.5% for the years ending February 29, 1996 and February 28, 1997,
respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.2 million, or 12.5%, from $17.6 million
for the year ended February 29, 1996 to $19.8 million for the year ended
February 28, 1997. Such increase was primarily attributable to an increase in
compensation, vehicle leases and professional fees of the Company. As a
percentage of revenues, selling, general and administrative expenses remained
relatively constant at 23.9% and 24.1% for the years ending February 29, 1996
and February 28, 1997, respectively.
 
 
                                      27
<PAGE>
 
 Year Ended February 29, 1996 Compared to Year Ended February 28, 1995
 
  Revenues. Revenues increased $1.6 million, or 2.2%, from $72.2 million for
the year ended February 28, 1995 to $73.8 million for the year ended February
29, 1996. The increase in revenues was attributable to increased sales volume
from new residential construction through the capture of additional market
share in the Indianapolis, Indiana and Dallas, Texas markets.
 
  Gross Profit. Gross profit decreased $675,000, or 3.1%, from $21.8 million
for the year ended February 28, 1995 to $21.1 million for the year ended
February 29, 1996. Gross margin declined from 30.1% to 28.6%. The decrease in
gross profits was primarily attributable to higher material costs.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $2.7 million, or 13.3%, from $20.3 million
for the year ended February 28, 1995 to $17.6 million for the year ended
February 29, 1996. As a percentage of revenues, selling, general and
administrative expenses decreased from 28.0% to 23.9% due to a significantly
higher non-cash compensation charge in fiscal 1995 to accrue for the change in
market value of stock appreciation rights and warrants.
 
LIQUIDITY AND CAPITAL RESOURCES--GROUPMAC AND SUBSIDIARIES (FORMERLY AIRTRON)
 
  From March 1, 1994 through the six months ended June 30, 1997, Historical
Airtron generated a net $9.7 million from operating activities. Net income,
depreciation, deferred taxes and non-cash compensation generated $12.4 million
and changes in asset and liability accounts utilized a net $2.7 million,
principally due to a $3.3 million increase in accounts receivable partially
offset by increases in accounts payable and accrued expenses.
 
  Cash used in investment activities by Historical Airtron from March 1, 1994
through the six months ended June 30, 1997, was primarily attributable to
purchases of property and equipment of $1.0 million and was partially offset
by proceeds from sales of property and equipment. Cash used in financing
activities by Historical Airtron was primarily attributable to purchases of
stock and warrants from selling shareholders totaling $5.5 million.
 
  Historical Airtron had working capital of $7.1 million as of June 30, 1997
and no long-term debt outstanding. GroupMAC and Subsidiaries had working
capital of $7.4 million as of June 30, 1997 and had outstanding long-term debt
of $26.5 million, which primarily resulted from the financing of the
acquisitions of GroupMAC Parent, A-ABC/A-1, Hallmark, K&N, Costner, Charlie's,
Jarrell and Way. See "Combined Results of Operations--Liquidity and Capital
Resources."
 
MACDONALD-MILLER
 
  MacDonald-Miller was founded in 1965 and provides a full range of HVAC
services to commercial and industrial customers in the Northwestern United
States including design and engineering; fabrication and installation of sheet
metal, piping, plumbing and controls; and HVAC service and maintenance.
MacDonald-Miller's revenues for fiscal 1996 were $66.1 million and income from
operations was $2.1 million. MacDonald-Miller derived 59% of its 1996 revenues
from maintenance, repair and replacement services and 41% from new
installation services. MacDonald-Miller is headquartered in Seattle,
Washington and has facilities in Seattle and Portland, Oregon.
 
                                      28
<PAGE>
 
RESULTS OF OPERATIONS--MACDONALD-MILLER
 
  The following table sets forth certain financial data for the periods
indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                               FISCAL YEAR ENDED DECEMBER 31,           SIX MONTHS ENDED JUNE 30,
                          -------------------------------------------  ----------------------------
                              1994           1995           1996           1996           1997
                          -------------  -------------  -------------  -------------  -------------
<S>                       <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>
Revenues................  $39,534 100.0% $45,508 100.0% $66,059 100.0% $36,382 100.0% $38,836 100.0%
Cost of Services........   32,256  81.6   36,927  81.1   56,373  85.3   31,590  86.8   33,451  86.1
                          ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Gross Profit............    7,278  18.4    8,581  18.9    9,686  14.7    4,792  13.2    5,385  13.9
Selling, General and Ad-
 ministrative
 Expenses...............    6,088  15.4    7,338  16.2    7,632  11.6    3,706  10.2    3,788   9.8
                          ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Income from Operations..    1,190   3.0    1,243   2.7    2,054   3.1    1,086   3.0    1,597   4.1
</TABLE>
 
 Six Months Ended June 30, 1997 Compared to Unaudited Six Months Ended June
30, 1996
   
  Revenues. Revenues increased $2.4 million, or 6.6%, from $36.4 million for
the six months ended June 30, 1996 to $38.8 million for the six months ended
June 30, 1997. The increase in revenues was attributable to continuing
strength in the company's Northwest commercial markets, principally Seattle,
Washington and Portland, Oregon, including a $20 million contract with a large
software company to be completed in 1997, a 32% increase in revenues from the
company's Special Projects and Tenant Improvement operations, and a 9%
increase in revenues from the company's Commercial Service operations.     
 
  Gross Profit. Gross Profit increased $593,000, or 12.4%, from $4.8 million
for the six months ended June 30, 1996 to $5.4 million for the six months
ended June 30, 1997. Gross margin increased from 13.2% for the first six
months of 1996 to 13.9% for the same period of 1997. The gross profit increase
was attributable principally to higher volume and realized gross margins in
the MacDonald-Miller's Special Projects and Tenant Improvement operations.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $82,000, or 2.2%, from $3.7 million for the
six months ended June 30, 1996 to $3.8 million for the six months ended June
30, 1997. Both the dollar and percentage of revenue changes were attributable
to the higher revenue levels in 1997 compared to 1996. As a percentage of
revenues, selling, general and administrative expenses decreased slightly from
10.2% for the six months of 1996 to 9.8% for the same period of 1997.
 
 Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
   
  Revenues. Revenues increased $20.6 million, or 45.3%, from $45.5 million for
the year ended December 31, 1995 to $66.1 million for the year ended December
31, 1996. The increase in revenues was attributable to a 15%, or $1.6 million,
increase in revenues from Service and Maintenance operations, and a 23%, or
$2.0 million, increase in revenues from the company's Special Projects and
Tenant Improvement operations. The $17 million balance of the increase was
attributable to contracted design and build projects, HVAC system retrofits
and remodels, lighting energy retrofits and technical services, together
representing a revenue increase of 65.4% over 1995. This increase was
primarily volume driven and directly related to the company's effort to
increase its market presence in the Seattle, Washington and Portland, Oregon
metropolitan areas, fueled by continued strength of commercial activity in the
Northwest.     
 
  Gross Profit. Gross profit increased $1.1 million, or 12.8%, from $8.6
million for the year ended December 31, 1995 to $9.7 million for the year
ended December 31, 1996. Gross margin decreased from 18.9% to 14.7% due to the
acceptance of certain lower margin projects and increased direct costs related
to the rapid revenue growth experienced in 1996.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $294,000, or 4.0%, from $7.3 million for the
year ended December 31, 1995 to $7.6 million for the year ended December 31,
1996. The increase in these expenses was directly attributable to incremental
costs incurred to
 
                                      29
<PAGE>
 
implement a job cost and accounting software conversion and other management
information systems processes and infrastructure. As a percentage of revenues,
selling, general and administrative expenses decreased from 16.2% to 11.6% due
to the increased revenue levels.
 
 Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
 
  Revenues. Revenues increased $6.0 million, or 15.2%, from $39.5 million for
the year ended December 31, 1994 to $45.5 million for the year ended December
31, 1995. The increase in revenues was attributable to a $1.2 million, or
10.5%, increase in revenues from Service and Maintenance operations, a $1.9
million, or 27.8%, increase in revenues from the company's Special Projects
and Tenant Improvement operations, and a $2.9 million, or 12.6%, increase in
revenues from installation operations, including design and build projects,
retrofits and remodeling. The broad-based increase in revenues was primarily
volume driven and attributable to generally increasing activity in the Seattle
area, the Company's principal market, and continued efforts to increase the
underlying base of service and maintenance business.
 
  Gross Profit. Gross profit increased $1.3 million, or 17.8%, from $7.3
million for the year ended December 31, 1994 to $8.6 million for the year
ended December 31, 1995. Gross margin increased from 18.4% to 18.9% for the
years ending December 31, 1994 and 1995, respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.2 million, or 19.7%, from $6.1 million
for the year ended December 31, 1994 to $7.3 million for the year ended
December 31, 1995. The increase was attributable generally to the higher level
of revenues and an approximate $200,000 increase relating to the initial
stages of the aforementioned job cost and accounting software conversion and
other management information system processes and infrastructure that
continued into 1996. As a percentage of revenues, selling, general and
administrative expenses increased from 15.4% to 16.2% for the years ending
1994 and 1995, respectively.
 
LIQUIDITY AND CAPITAL RESOURCES--MACDONALD-MILLER
 
  From January 1, 1994 through the six months ended June 30, 1997, MacDonald-
Miller utilized a net $315,000 from operating activities. Net income and
depreciation generated $4.1 million and changes in asset and liability
accounts utilized a net $4.4 million, principally due to a $7.7 million
increase in accounts receivable partially offset by corresponding increases in
accounts payable and accrued expenses.
 
  Net cash used in investment activities of $2.6 million was primarily
attributable to equipment and to real estate held for investment.
 
  Net cash provided by financing activities of $2.9 million was primarily
attributable to the issuance and redemptions of common stock, long-term bank
financing related to capital expenditures and real estate held for investment
and short-term bank financing utilized to increase working capital.
   
  As of June 30, 1997, MacDonald-Miller had working capital of $3.0 million
and $708,000 of long-term debt outstanding.     
 
MASTERS
 
  Masters, Inc. ("Masters") was founded in 1986 and provides HVAC and plumbing
services in the Washington, D.C. area. Masters' revenues for fiscal 1996 were
$39.8 million and income from operations for fiscal 1996 was $1.5 million.
Masters derived 100% of its 1996 revenues from new installation services.
Masters is headquartered in Gaithersburg, Maryland and has its facilities in
Gaithersburg and Chantilly, Virginia.
 
                                      30
<PAGE>
 
RESULTS OF OPERATIONS--MASTERS
 
  The following table sets forth certain financial data for the periods
indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                               FISCAL YEAR ENDED DECEMBER 31,           SIX MONTHS ENDED JUNE 30,
                          -------------------------------------------  ----------------------------
                              1994           1995           1996           1996           1997
                          -------------  -------------  -------------  -------------  -------------
<S>                       <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>
Revenues................  $30,327 100.0% $35,160 100.0% $39,826 100.0% $18,279 100.0% $19,318 100.0%
Cost of Services........   28,018  92.4   31,746  90.3   35,854  90.0   16,639  91.0   17,457  90.4
                          ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Gross Profit............    2,309   7.6    3,414   9.7    3,972  10.0    1,640   9.0    1,861   9.6
Selling, General and Ad-
 ministrative
 Expenses...............    1,664   5.5    2,373   6.7    2,484   6.3    1,009   5.5    1,197   6.2
                          ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Income from Operations..      645   2.1    1,041   3.0    1,488   3.7      631   3.5      664   3.4
</TABLE>
 
 Six Months Ended June 30, 1997 Compared to Unaudited Six Months Ended June
30, 1996
 
  Revenues. Revenues increased $1.0 million, or 5.5%, from $18.3 million for
the six months ended June 30, 1996 to $19.3 million for the six months ended
June 30, 1997. The increase in revenues was primarily attributable to an
additional volume of housing starts generated from existing customers.
 
  Gross Profit. Gross profit increased $221,000, or 13.8%, from $1.6 million
for the six months ended June 30, 1996 to $1.9 million for the six months
ended June 30, 1997. Gross margin increased from 9.0% for the six months ended
June 30, 1996 to 9.6% for the six months ended June 30, 1997. The increase was
primarily attributable to a higher mix of fire sprinkler installations that
typically produce higher margins.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $188,000, or 18.8%, from $1.0 million for
the six months ended June 30, 1996 to $1.2 million for the six months ended
June 30, 1997. The increase in selling, general and administrative expenses
was primarily due to staff additions to keep pace with the growth of the
company, increased bad debts and an increase in professional fees. As a
percentage of revenues, selling, general and administrative expenses increased
from 5.5% to 6.2% over the respective periods.
 
 Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
 
  Revenues. Revenues increased $4.6 million, or 13.1%, from $35.2 million for
the year ended December 31, 1995 to $39.8 million for the year ended December
31, 1996. The increase was attributable to an additional volume of housing
starts generated from existing customers and increased market penetration.
 
  Gross Profit. Gross profit increased $558,000, or 16.4%, from $3.4 million
for the year ended December 31, 1995 to $4.0 million for the year ended
December 31, 1996. Gross margins increased slightly from 9.7% to 10.0% for the
years ending 1995 and 1996, respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $111,000, or 4.6%, from $2.4 million for the
year ended December 31, 1995 to $2.5 million for the year ended December 31,
1996. As a percentage of revenues, selling, general and administrative
expenses decreased from 6.7% to 6.3% over the same period. This decrease was
primarily attributable to the net increase in revenue and the relatively fixed
nature of these expenses.
 
 Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
 
  Revenues. Revenues increased $4.9 million, or 16.2%, from $30.3 million for
the year ended December 31, 1994 to $35.2 million for the year ended December
31, 1995. The increase was attributable to an additional volume of housing
starts generated from existing customers, increased market penetration and a
greater volume of HVAC new installations resulting from management efforts to
further expand this service line.
 
                                      31
<PAGE>
 
  Gross Profit. Gross profit increased $1.1 million, or 47.8%, from $2.3
million for the year ended December 31, 1994 to $3.4 million for the year
ended December 31, 1995. Gross margin increased from 7.6% to 9.7% due to a
greater volume of higher margin HVAC new installations coupled with margin
expansion in plumbing new installations from more efficient production.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $709,000, or 41.7%, from $1.7 million for
the year ended December 31, 1994 to $2.4 million for the year ended December
31, 1995. As a percentage of revenues, selling, general and administrative
expenses increased from 5.5% to 6.7% due to an increase in bad debt expense,
an increase in personnel necessary to effectively manage the Company's rapid
growth and the addition of an executive incentive program.
 
LIQUIDITY AND CAPITAL RESOURCES--MASTERS
 
  From January 1, 1994 through the six months ended June 30, 1997, Masters
generated $4.2 million in cash from operating activities. Net cash used in
investment activities was primarily attributable to capital expenditures of
$1.8 million. Net cash used in financing activities was primarily attributable
to $2.1 million in dividends paid to the shareholder.
 
  Masters had working capital of $4.0 million as of June 30, 1997 and $765,000
of long-term debt outstanding.
 
K&N
 
  K&N was founded in 1978 and provides plumbing services to the residential
new construction market in the Dallas, Fort Worth and Austin, Texas and Las
Vegas, Nevada markets. K&N also designs, sells, installs and services HVAC
systems in Dallas and Fort Worth. K&N's revenues for fiscal 1996 were $24.3
million and income from operations was $936,000. K&N derived 89% of its 1996
revenues from new installation services and 11% from maintenance, repair and
replacement services. K&N is headquartered in Arlington, Texas and has
facilities in Arlington and Austin, Texas and Las Vegas, Nevada.
 
RESULTS OF OPERATIONS--K&N
 
  The following table sets forth certain unaudited financial data for the
periods indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                                 FISCAL YEAR ENDED MARCH 31,             SIX MONTHS ENDED JUNE 30,
                          --------------------------------------------  ----------------------------
                              1995           1996            1997           1996          1997(1)
                          -------------  --------------  -------------  -------------  -------------
<S>                       <C>     <C>    <C>      <C>    <C>     <C>    <C>     <C>    <C>     <C>
Revenues................  $21,458 100.0% $22,709  100.0% $24,279 100.0% $11,893 100.0% $12,355 100.0%
Cost of Services........   18,843  87.8   20,350   89.6   20,705  85.3   10,433  87.7   10,662  86.3
                          ------- -----  -------  -----  ------- -----  ------- -----  ------- -----
Gross Profit............    2,615  12.2    2,359   10.4    3,574  14.7    1,460  12.3    1,693  13.7
Selling, General and Ad-
 ministrative
 Expenses...............    2,275  10.6    2,478   10.9    2,638  10.8    1,349  11.4    1,605  13.0
                          ------- -----  -------  -----  ------- -----  ------- -----  ------- -----
Income from Operations..      340   1.6     (119)  (0.5)     936   3.9      111    .9       88    .7
</TABLE>
--------
(1) The operating results of K&N represent six months of activity, even though
    K&N was acquired, for accounting purposes, by Airtron on June 1, 1997.
 
 Unaudited Six Months Ended June 30, 1997 Compared to Unaudited Six Months
Ended June 30, 1996
 
  Revenues. Revenues increased $462,000, or 3.9%, from $11.9 million for the
six months ended June 30, 1996 to $12.4 million for the six months ended June
30, 1997. The increase in revenues was attributable to a higher volume of new
home construction in the Austin and Las Vegas markets.
 
                                      32
<PAGE>
 
  Gross Profit. Gross profit increased $233,000, or 15.5%, from $1.5 million
for the six months ended June 30, 1996 to $1.7 million for the six months
ended June 30, 1997. Gross margin increased from 12.3% to 13.7% due to
increases in operational efficiency.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $256,000, or 19.7%, from $1.3 million for
the six months ended June 30, 1996 to $1.6 million for the six months ended
June 30, 1997. The increase in selling, general and administrative expenses
was primarily attributable to additional owners' compensation expense. As a
percentage of revenues, selling, general and administrative expenses increased
from 11.4% to 13.0% for 1996 and 1997 respectively.
 
 Year Ended March 31, 1997 Compared to Unaudited Year Ended March 31, 1996
 
  Revenues. Revenues increased $1.6 million, or 7.0%, from $22.7 million for
the year ended March 31, 1996 to $24.3 million for the year ended March 31,
1997. The increase in revenues was primarily volume driven and attributable to
the expansion of the Company's customer base to include several new home
builders in the Austin and Las Vegas markets.
 
  Gross Profit. Gross profit increased $1.2 million, or 50.0%, from $2.4
million for the year ended March 31, 1996 to $3.6 million for the year ended
March 31, 1997. The increase was due to a decline in production labor and
material costs for start ups in Austin, Texas and Las Vegas, Nevada, and the
savings from the closing during fiscal 1996 of an unsuccessful operation in
Palmdale, California. Gross margin increased from 10.4% to 14.7% for the years
ending March 31, 1996 and 1997, respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $160,000, or 6.4%, from $2.5 million for the
year ended March 31, 1996 to $2.6 million for the year ended March 31, 1997.
As a percentage of revenues, selling, general and administrative expenses
remained relatively constant at 10.9% and 10.8% for the years ending March 31,
1996 and 1997, respectively.
 
 Unaudited Year Ended March 31, 1996 Compared to Unaudited Year Ended March
31, 1995
 
  Revenues. Revenues increased $1.2 million, or 5.6%, from $21.5 million for
the year ended March 31, 1995 to $22.7 million for the year ended March 31,
1996. The increase in revenues was primarily volume driven and attributable to
the new operating facilities in Austin, Texas and Las Vegas, Nevada and a
higher level of new home construction in the Dallas and Fort Worth
metropolitan area.
 
  Gross Profit. Gross profit decreased $256,000, or 9.8%, from $2.6 million
for the year ended March 31, 1995 to $2.4 million for the year ended March 31,
1996. Gross margin decreased from 12.2% to 10.4% for the years ending March
31, 1995 and 1996, respectively. The gross margin decline was primarily
attributable to aggressive pricing and start-up labor costs for the two new
divisions in Austin, Texas and Las Vegas, Nevada.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $203,000, or 8.8% from $2.3 million for the
year ended March 31, 1995 to $2.5 million for the year ended March 31, 1996.
The increase in selling, general and administrative expenses was primarily
attributable to incremental costs relating to the closing of the Palmdale,
California operation and the implementation of a new management information
system. As a percentage of revenues, selling, general and administrative
expenses increased slightly from 10.6% to 10.9%.
 
LIQUIDITY AND CAPITAL RESOURCES--K&N
 
  From April 1, 1994 through the six months ended June 30, 1997, K&N utilized
$269,000 in cash from operating activities, essentially funding its working
capital needs from operations.
 
  Net cash used in investment activities from April 1994 through June 30, 1997
was attributable to capital expenditures of $2.2 million, primarily relating
to the consolidation of offices in the Dallas-Fort Worth
 
                                      33
<PAGE>
 
metropolitan area, the start up of the Austin, Texas and Las Vegas, Nevada
operations and fleet expansion. Financing activities generated a net increase
of $2.4 million from the issuance of long-term debt and net borrowings from
shareholders. The funds were utilized to finance the capital expenditures
noted above and for working capital.
 
  As of June 30, 1997, K&N had working capital of $731,000 and $291,000 of
long-term debt outstanding.
 
OTHER RESIDENTIAL SERVICE COMPANIES
 
 Pre-Offering Companies
 
  A-ABC and A-1, founded in 1976 and 1994, respectively, provide maintenance,
repair and replacement services for HVAC equipment, as well as home
appliances, to residential customers in the Dallas and Garland, Texas areas.
A-ABC also offers plumbing repair and replacement services. Combined revenues
for fiscal 1996 totaled $8.5 million and combined income from operations
totaled $333,000. A-ABC and A-1 are headquartered in Dallas, Texas.
 
  Callahan Roach and its affiliates provide training and consulting services,
marketing products and pricing programs nationally to over 1,300 independent
service companies, manufacturers and associations. Callahan Roach's revenues
for fiscal 1996 were $1.9 million and income from operations for fiscal 1996
was $8,257. Callahan Roach, founded in 1989, is headquartered in Colorado
Springs, Colorado and has facilities in Atlanta, Georgia, Dublin, Ohio and
Colorado Springs, Colorado.
 
  Costner was founded in 1985 and provides HVAC maintenance, repair and
replacement services to residential customers in the Rock Hill, South Carolina
and Charlotte, North Carolina areas. Costner's revenues for fiscal 1996 were
$3.0 million, and income from operations was $7,487. Costner is headquartered
in Rock Hill, South Carolina.
 
  Hallmark was founded in 1951 and provides HVAC maintenance, repair and
replacement services to residential customers in the Houston and San Antonio,
Texas areas. Hallmark's revenues for fiscal 1996 were $6.5 million, and income
from operations was $8,749. Hallmark is headquartered in Houston, Texas and
has facilities in Houston and San Antonio, Texas.
 
  Jarrell was founded in 1959 and provides plumbing repair services to
residential customers in the Houston, Texas area. Jarrell's revenues for the
fiscal year ended February 28, 1997 were $1.2 million and it had income from
operations of $34,547 during that year. Jarrell is headquartered in Houston,
Texas.
 
  Way Residential was founded in 1977 and provides HVAC services to
residential customers in Houston, Texas. Way Residential's revenues for fiscal
1996 were $659,000 and income from operations was $123,000. Way Residential's
operations have been combined with Hallmark's operations.
 
 Offering Acquisition Companies
 
  Central Carolina Air Conditioning Company ("Central Carolina") was founded
in 1967 and provides HVAC maintenance, repair and replacement services to
residential and commercial customers in the Greensboro and Winston Salem,
North Carolina areas. Central Carolina's revenues for fiscal 1996 were $8.2
million and income from operations was $381,000. In addition, Central Carolina
has deferred $967,000 of service contract revenues due to five-year extended
service contracts. Other GroupMAC Companies typically do not have extended
service contracts in excess of one year. Central Carolina is headquartered in
Greensboro, North Carolina.
 
  Evans Services, Inc. ("Evans") was founded in 1901 and provides plumbing and
HVAC services to residential customers in the Birmingham, Alabama area. Evans'
revenues for fiscal 1996 were $2.3 million and income from operations was
$86,000. Evans is headquartered in Birmingham, Alabama.
 
                                      34
<PAGE>
 
  Paul E. Smith Co., Inc. ("Paul E. Smith") was founded in 1967 and installs
and maintains, repairs and replaces plumbing systems in new and existing
residences in the Indianapolis, Indiana area. Paul E. Smith's revenues for
fiscal 1996 were $5.6 million and income from operations was $297,000. Paul E.
Smith is headquartered in Indianapolis, Indiana.
 
  Van's Comfortemp Air Conditioning, Inc. ("Van's") was founded in 1965 and
provides HVAC services to residential and light commercial customers in the
Palm Beach-Ft. Lauderdale, Florida area. Van's revenues for fiscal 1996 were
$4.3 million and income from operations was $7,000. Van's is headquartered in
Delray Beach, Florida.
 
  Willis Refrigeration, Air Conditioning & Heating, Inc. ("Willis") was
founded in 1954 and installs, maintains and repairs HVAC systems in new and
existing residences in the greater Cincinnati and northern Kentucky areas.
Willis' revenues for fiscal 1996 were $6.8 million and income from operations
was $542,000 Willis is headquartered in Cincinnati, Ohio.
 
RESULTS OF OPERATIONS--OTHER RESIDENTIAL SERVICE COMPANIES
 
  The GroupMAC Companies included in the Other Residential Services Companies
derive a majority of their revenues from residential new installation and
maintenance, repair and replacement services. In the aggregate, these 11
companies derived 84% of their revenue in fiscal 1996 from residential
services and 16% from light commercial service. The following table sets forth
certain unaudited financial data for the periods indicated (dollars in
thousands).
 
<TABLE>
<CAPTION>
                                       FISCAL YEAR(1)                   SIX MONTHS ENDED JUNE 30,
                          -------------------------------------------  ----------------------------
                              1994           1995           1996           1996          1997(2)
                          -------------  -------------  -------------  -------------  -------------
<S>                       <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>
Revenues................  $38,481 100.0% $43,216 100.0% $48,964 100.0% $23,255 100.0% $24,886 100.0%
Cost of Services........   25,397  66.0   27,537  63.7   30,628  62.6   14,762  63.5   14,799  59.5
                          ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Gross Profit............   13,084  34.0   15,679  36.3   18,336  37.4    8,493  36.5   10,087  40.5
Selling, General and Ad-
 ministrative
 Expenses...............   11,432  29.7   14,210  32.9   16,506  33.7    8,082  34.7    8,277  33.2
                          ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Income from Operations..    1,652   4.3    1,469   3.4    1,830   3.7      411   1.8    1,810   7.3
</TABLE>
--------
(1) Several of the individual GroupMAC Companies have fiscal year ends that
    differ from December 31, which is the year end all of the GroupMAC
    Companies will use concurrent with the Offering.
(2) The operating results of the Other Residential Service Companies,
    including Hallmark and A-ABC/A-1, represent six months of activity, even
    though Hallmark and A-ABC/A-1 were acquired, for accounting purposes, by
    Airtron on June 1, 1997.
 
 Unaudited Six Months Ended June 30, 1997 Compared to Unaudited Six Months
Ended June 30, 1996
 
  Revenues. Revenues increased $1.6 million, or 6.9%, from $23.3 million for
the six months ended June 30, 1996 to $24.9 million for the six months ended
June 30, 1997. The increase in revenues was primarily volume driven and
attributable to expansion of Central Carolina's commercial service and
replacement business, an increase in replacement sales at Willis and the
occurrence of a significant light commercial job at Jarrell.
 
  Gross Profit. Gross profit increased $1.6 million, or 18.8%, from $8.5
million for the six months ended June 30, 1996 to $10.1 million for the six
months ended June 30, 1997. Gross margin increased from 36.5% to 40.5% from
the six month period ended June 30, 1996 to the corresponding period in 1997.
The increase in gross margin was attributable to higher margins at Central
Carolina from operational efficiencies and from increased higher margin
replacement sales at Willis.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $196,000, or 2.4%, from $8.1 million for the
six months ended June 30, 1996 to $8.3 million for the six months
 
                                      35
<PAGE>
 
ended June 30, 1997. As a percentage of revenues, selling, general and
administrative expenses decreased from 34.7% to 33.2% for the six month period
ended June 30, 1996 compared to the corresponding period in 1997.
 
 Unaudited Fiscal 1996 Compared to Unaudited Fiscal 1995
 
  Revenues. Revenues increased $5.8 million, or 13.4%, from $43.2 million in
fiscal 1995 to $49.0 million in fiscal 1996. The increase in revenues was
primarily volume driven and attributable to the continued internal expansion
of HVAC services to an appliance company acquired by A-ABC in late 1994, an
acquisition made during early 1996 by Hallmark of an operation in San Antonio
and an aggressive advertising campaign at Costner. Also, revenues increased
significantly at Van's and Willis due to a higher level of replacement sales.
 
  Gross Profit. Gross profit increased $2.6 million, or 16.6%, from $15.7
million in fiscal 1995 to $18.3 million in fiscal 1996. The increase in gross
profit was attributable to the continued internal expansion of HVAC services
at A-1, which was acquired by A-ABC in 1994, an acquisition by Hallmark of a
high margin operation in San Antonio and revenue increases at Costner and
other higher margin companies. Gross margin increased from 36.3% to 37.4% for
fiscal 1995 and 1996, respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.3 million, or 16.2%, from $14.2 million
in fiscal 1995 to $16.5 million in fiscal 1996. The increase in selling,
general and administrative expenses was mainly due to the acquisition of an
operation in San Antonio by Hallmark during the period, a higher level of
spending on advertising at Costner and an increase in owner compensation among
all of the residential service companies of $129,000. As a percentage of
revenues, selling, general and administrative expenses increased from 32.9% to
33.7% for fiscal 1995 and 1996, respectively.
 
 Unaudited Fiscal 1995 Compared to Unaudited Fiscal 1994
 
  Revenues. Revenues increased $4.7 million, or 12.2%, from $38.5 million in
fiscal 1994 to $43.2 million in fiscal 1995. The increase in revenues was
primarily volume driven and attributable to incremental revenues from an
acquisition made by A-ABC in late 1994, the expansion of the customer base at
Central Carolina to include the commercial sector and an increased emphasis on
the selling of service agreements and a higher level of replacement revenues
at Van's.
 
  Gross Profit. Gross profit increased $2.6 million, or 19.8%, from $13.1
million in fiscal 1994 to $15.7 million in fiscal 1995. The increase in gross
profits was primarily attributable to the expanded revenue volumes. Gross
margin increased from 34.0% to 36.3% for fiscal years 1994 and 1995,
respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.8 million, or 24.6%, from $11.4 million
in fiscal 1994 to $14.2 million in fiscal 1995. As a percentage of revenues,
selling, general and administrative expenses increased from 29.7% to 32.9% due
to incremental overhead at the company acquired in late 1994 by A-ABC,
incremental owners' compensation of $378,000 across the residential service
companies and an overall increase in infrastructure to keep pace with the
internal growth at each company within the group.
 
OTHER COMMERCIAL SERVICE COMPANIES
 
 Pre-Offering Companies
 
  Charlie's was founded in 1979 and provides plumbing maintenance, repair and
replacement services to commercial and residential customers in the Houston,
Texas area and specializes in the high-rise condominium market in Houston.
Charlie's revenues for fiscal 1996 were $3.1 million, and income from
operations was $65,000. Charlie's is headquartered in South Houston, Texas.
 
  Sibley Services, Incorporated ("Sibley") was founded in 1974 and provides
HVAC and refrigeration maintenance, repair and replacement services to
commercial and industrial customers in the greater Memphis,
 
                                      36
<PAGE>
 
Tennessee area which includes northern Mississippi and northeast Arkansas.
Sibley also offers design and build services, including facility automation.
Sibley's revenues for fiscal 1996 were $7.0 million and income from operations
was $130,018. Sibley is headquartered in Memphis, Tennessee.
 
  USA was founded in 1988 and provides marketing products and training
materials to over 100 member companies across the country. USA's revenues for
fiscal 1996 were $763,000 and income from operations was $33,000. USA is
headquartered in Lakewood, Colorado.
 
 Offering Acquisition Companies
 
  All Service Electric, Inc. ("All Service") was founded in 1990 and provides
electrical contracting services (including new installation and repair
services) primarily to commercial customers in the Jacksonville, Florida area.
All Service's revenues for fiscal 1996 were $2.8 million and income from
operations was $687,000. All Service is headquartered in Jacksonville,
Florida.
 
  Arkansas Mechanical Services, Inc. ("Arkansas Mechanical") was founded in
1988 and provides HVAC maintenance, repair and replacement services to
commercial and industrial customers in the greater Little Rock and
Fayetteville, Arkansas areas. Arkansas Mechanical also provides engineering
services for retrofit upgrades and replacements. Arkansas Mechanical's
revenues were $3.3 million and income from operations was $325,000. Arkansas
Mechanical is headquartered in North Little Rock, Arkansas and has facilities
in the North Little Rock and Fayetteville, Arkansas areas.
 
  Linford Service Company ("Linford") was founded in 1960 and provides HVAC
maintenance, repair and replacement to commercial customers throughout
California. Linford's revenues for fiscal 1996 were $11.3 million and the loss
from operations was $267. Linford is headquartered in Oakland, California and
has facilities in Oakland, Ontario, Sacramento, San Diego and San Jose,
California.
 
  Mechanical Services, Inc. ("Mechanical") was founded in 1993 and provides
design and build, engineering and installation services in the mechanical
trades industry in the Little Rock and Fayetteville, Arkansas areas.
Mechanical Services' revenues for fiscal 1996 were $2.9 million and income
from operations was $56,000. Mechanical Services is headquartered in North
Little Rock, Arkansas and has facilities in North Little Rock and
Fayetteville, Arkansas.
 
  Southeast Mechanical Service, Inc. ("Southeast Mechanical") was founded in
1979 and provides HVAC maintenance, repair and replacement services in the
Miami and Fort Lauderdale, Florida areas. Southeast Mechanical's revenues for
fiscal 1996 were $5.3 million and income from operations was $585,000.
Southeast Mechanical is headquartered in Hollywood, Florida.
 
  Yale Incorporated ("Yale") was founded in 1939 and provides HVAC services to
commercial customers throughout Minnesota. Yale's revenues for fiscal 1996
were $10.1 million and income from operations was $405,000. Yale is
headquartered in Minneapolis, Minnesota.
 
                                      37
<PAGE>
 
RESULTS OF OPERATIONS--OTHER COMMERCIAL SERVICE COMPANIES
 
  The GroupMAC Companies included in the Other Commercial Services Companies
derive a majority of their revenues from commercial new installation and
maintenance, repair and replacement services. In the aggregate, these nine
companies derive 96% of their revenue from commercial services and 4% of their
revenues from residential services. The following table sets forth certain
unaudited financial data for the periods indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                                      FISCAL YEAR(1)                   SIX MONTHS ENDED JUNE 30,
                         -------------------------------------------  ----------------------------
                             1994           1995           1996           1996           1997
                         -------------  -------------  -------------  -------------  -------------
<S>                      <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>
Revenues................ $33,208 100.0% $38,476 100.0% $46,499 100.0% $24,460 100.0% $23,870 100.0%
Cost of Services........  23,774  71.6   27,613  71.8   33,845  72.8   17,575  71.9   17,177  72.0
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Gross Profit............   9,434  28.4   10,863  28.2   12,654  27.2    6,885  28.1    6,693  28.0
Selling, General and
 Administrative
 Expenses...............   7,669  23.1    9,129  23.7   10,367  22.3    4,703  19.2    5,198  21.7
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Income from Operations..   1,765   5.3    1,734   4.5    2,287   4.9    2,182   8.9    1,495   6.3
</TABLE>
--------
(1) Several of the individual GroupMAC Companies have fiscal year ends that
    differ from December 31, which is the year end all of the GroupMAC
    Companies will use concurrent with the Offering.
 
 Unaudited Six Months Ended June 30, 1997 Compared to Unaudited Six Months
Ended June 30, 1996
 
  Revenues. Revenues declined $590,000, or 2.4%, from $24.5 million for the
six months ended June 30, 1996 to $23.9 million for the six months ended June
30, 1997. The decrease in revenues was primarily volume driven and
attributable to a $2.0 million decline in revenues at Sibley which resulted
from an internal decision to discontinue a large, low margin customer
relationship. Such decline was offset by growth at Linford from incremental
service agreements and at Mechanical Services from incremental "design and
build" project work.
 
  Gross Profit. Gross profit declined $192,000, or 2.9%, from $6.9 million for
the six months ended June 30, 1996 to $6.7 million for the six months ended
June 30, 1997. The decline in gross profit primarily resulted from the
discontinuance of the customer relationship discussed above. Gross margin
remained consistent at 28.1% and 28.0% for the six month periods ended June
30, 1996 and 1997, respectively.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $494,000, or 10.6%, from $4.7 million for
the six months ended June 30, 1996 to $5.2 million for the six months ended
June 30, 1997. The increase in selling, general and administrative expenses
was primarily attributable to incremental owners' compensation and additional
personnel to support the growth in sales at Linford and an intentional shift
in business mix at Yale toward higher margin service contract work. As a
percentage of revenues, selling, general and administrative expenses increased
from 19.2% to 21.7% over the six month periods ended June 30, 1996 and 1997,
respectively.
 
 Unaudited Fiscal 1996 Compared to Unaudited Fiscal 1995
 
  Revenues. Revenues increased $8.0 million, or 20.8%, from $38.5 million in
fiscal 1995 to $46.5 million in fiscal 1996. The increase in revenues was
primarily volume driven and attributable to incremental service agreements at
Linford, incremental design and build projects at Mechanical Services and an
increase in maintenance, repair and replacement sales at Southeast Mechanical
and Sibley Services.
 
  Gross Profit. Gross profit increased $1.8 million, or 16.5%, from $10.9
million in fiscal 1995 to $12.7 million in fiscal 1996. The largest factor
impacting the increase in gross profit was volume growth in revenues at
Linford, although the growth was at slightly lower margins. Additionally,
significant increases in gross profit were due to rapid service revenue growth
combined with margin expansion at All Service and Yale. Gross margin decreased
slightly from 28.2% to 27.2% between fiscal 1995 and fiscal 1996.
 
 
                                      38
<PAGE>
 
  Selling, General and Administrative Expense. Selling, general and
administrative expenses increased $1.3 million, or 14.3%, from $9.1 million in
fiscal 1995 to $10.4 million in fiscal 1996. The overall increase in selling,
general and administrative expenses was due to the expansion and relocation of
facilities as well as an increase in administrative and sales personnel at
Linford. As a percentage of revenues, selling, general and administrative
expenses decreased slightly from 23.7% to 22.3% in fiscal 1996.
 
 Unaudited Fiscal 1995 Compared to Unaudited Fiscal 1994
 
  Revenues. Revenues increased $5.3 million, or 16.0%, from $33.2 million in
fiscal 1994 to $38.5 million in fiscal 1995. The increase in revenues was
primarily volume driven and attributable to an increase in design and build
jobs at Yale and Mechanical and an increase in service agreement volumes at
Linford.
 
  Gross Profit. Gross profit increased $1.5 million, or 16.0%, from $9.4
million in fiscal 1994 to $10.9 million in fiscal 1995. The increase in gross
profit was primarily attributable to a $2.0 million increase in revenues at
Linford at slightly higher margins, volume increases at Yale and Mechanical
and gross margin expansion at Charlie's and Arkansas Mechanical. As a
percentage of revenues, gross margin declined slightly from 28.4% in fiscal
1994 to 28.2% in fiscal 1995.
 
  Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.4 million, or 18.2%, from $7.7 million in
fiscal 1994 to $9.1 million in fiscal 1995. As a percentage of revenues,
selling, general and administrative expenses increased from 23.1% to 23.7% due
primarily to an increase in owners' compensation of $503,000 and personnel
additions necessary to adequately manage the revenue growth at Linford.
 
                                      39
<PAGE>
 
                                   BUSINESS
 
GENERAL
 
  The Company was founded in 1996 to create the leading nationwide provider of
HVAC, plumbing and electrical services to residential and commercial
customers. Since inception, the Company has acquired 11 Pre-Offering Companies
totaling $138.8 million in combined 1996 revenues and has definitive
agreements to acquire the 13 Offering Acquisition Companies upon the closing
of the Offering. After the Offering, the Company believes it will be one of
the largest diversified providers of HVAC, plumbing and electrical services in
the United States with operations in 37 cities in 21 states. The market for
these diversified services is approximately $100 billion. The Company's pro
forma 1996 revenue and income from operations were $307.5 million and $20.9
million, respectively, and combined historical revenues of the GroupMAC
Companies grew at an annual rate of 14.3% from 1994 through 1996.
   
  The Company offers a comprehensive range of services to residential and
commercial customers in both the new installation and the maintenance, repair
and replacement segments of the HVAC, plumbing and electrical service
industries. The Company's services include installing and maintaining,
repairing and replacing central air conditioning systems, furnaces, heat pumps
and plumbing and electrical systems. Approximately 74%, 23% and 3% of the
Company's pro forma 1996 revenues were derived from HVAC, plumbing and
electrical and other services, respectively. Approximately 59% of pro forma
1996 revenues were derived from residential services and 41% from commercial
services, while 54% of pro forma 1996 revenues were from the new installation
segment and 46% were from the maintenance, repair and replacement services.
Through Callahan Roach and USA, the Company also provides consulting services
and sells products to over 1,300 independent HVAC and plumbing service
companies. The Company believes that its broad service offering and geographic
diversity provide several advantages, including the ability to offer its
commercial and residential customers a single source for a range of services,
to consolidate purchasing power with vendors, to capture business from
customers that operate on a regional and national basis, to mitigate the
effects of seasonality and to balance local or regional economic cycles.     
 
  The Company believes that it can maximize its long-term growth and
profitability by participating in both the new installation and the
maintenance, repair and replacement segments of the HVAC, plumbing and
electrical service industries. The new installation business is generally
characterized by higher volume sales to homebuilders, commercial developers
and other large customers. The maintenance, repair and replacement business
generally produces higher margins from services provided to a broader customer
base. The Company intends to focus on growing its maintenance, repair and
replacement business, to capitalize on the higher margins and the more
predictable nature of revenues associated with this segment and to target a
revenue mix of approximately 60% maintenance, repair and replacement and 40%
new installation over time. The Company derives considerable profits and
strategic value from its new installation business, as this segment generates
a database of potential customers for maintenance, repair and replacement
services. The higher volumes associated with consolidating a number of new
installation firms provide purchasing economies of scale that increase the
competitiveness of both the new installation and the maintenance, repair and
replacement segments.
 
INDUSTRY OVERVIEW
 
  Based on available industry data, the Company believes the HVAC, plumbing
and electrical service industries in the United States represent a market with
annual revenues of approximately $100 billion. The HVAC service industry is
believed to generate approximately $65 billion in annual revenues, the
plumbing service industry generates approximately $19 billion in annual
revenues and the electrical service industry generates approximately $16
billion in annual revenues. The Company also believes these industries are
highly fragmented with over 100,000 businesses, consisting predominantly of
small, owner-operated companies focusing on a single local geographic area and
providing a limited range of services. The Company believes that the majority
of owners in its industry have limited access to adequate capital for
modernization, training and expansion and limited opportunities for liquidity
in their business. As a result of this fragmentation, three
 
                                      40
<PAGE>
 
publicly traded consolidators have emerged in these markets. The combined
revenues of these consolidators and the Company represent less than 2% of the
revenues for the HVAC, plumbing and electrical markets.
 
  Growth in the HVAC service industry is affected by a number of factors,
particularly (i) the aging of the installed base of equipment, (ii) the
increasing efficiency, sophistication and complexity of HVAC systems and (iii)
the increasing restrictions on the use of refrigerants commonly used in older
HVAC systems. These factors also mitigate the effect on the HVAC service
industry of economic cycles inherent in the traditional construction industry.
An aging installed base has also positively affected growth in the plumbing
service industry. Industry sources report that 75% of the kitchen market and
65% of the bath market now consist of remodeling rather than new construction.
Growth in electrical services is closely tied to the new construction markets,
although the retrofitting of existing structures is driven by increased demand
for computer networks and other modernization.
   
  The HVAC, plumbing and electrical service industries can be broadly divided
into the new installation segment and the maintenance, repair and replacement
segment. The new installation segment includes the installation of HVAC,
plumbing and electrical systems in new homes and commercial buildings for
contractors, builders, developers and other users. The maintenance, repair and
replacement segment includes the maintenance, repair, replacement and
reconfiguration of existing systems in residential homes and commercial
buildings. In the HVAC industry, the new installation segment represents
approximately 34% of industry revenues, while the maintenance, repair and
replacement segment represents 66% of industry revenues.     
 
  The Company believes significant opportunities are available to a well
capitalized, national company employing professionally trained, customer-
oriented service technicians and providing a full complement of high quality
residential and commercial services in an industry that has been characterized
by inconsistent quality, reliability and pricing. In addition, the increasing
complexity of HVAC systems has led to a need for better trained technicians to
install, monitor and service these systems. The cost of recruiting, training
and retaining a sufficient number of qualified technicians makes it more
difficult for smaller HVAC companies to expand their businesses. The Company
also believes the highly fragmented nature of the residential and commercial
service industries will provide it with significant opportunities to
consolidate a large number of existing residential and commercial service
businesses.
 
OPERATING STRATEGY
 
  The goal of the Company's operating strategy is to increase the revenues and
profitability of the GroupMAC Companies and subsequently acquired businesses,
while maintaining the highest level of service to its customers. The key
elements of the Company's operating strategy are as follows:
 
    ACHIEVE OPERATING EFFICIENCIES. The Company intends to pursue significant
  cost savings through the consolidation of purchasing power and to obtain
  additional operating efficiencies through the implementation of a variety
  of "best practices." It expects to achieve substantial purchasing economies
  in the areas of equipment and supplies, service vehicles (including fuel
  and maintenance), insurance and benefits, marketing and advertising, long
  distance services and a variety of professional services. Callahan Roach
  and USA, leading providers of integration, training and business consulting
  services to the HVAC industry, will assist the Company in identifying and
  refining its best practices and implementing such practices across the
  GroupMAC Companies and future acquisitions through a systematic program of
  training and consulting. In addition, the Company has recently established
  a Council of Presidents consisting of the key operating management of
  acquired companies, which will meet regularly to facilitate the sharing of
  operating practices, synergies and strategies across the Company.
 
    OPERATE ON A DECENTRALIZED BASIS. The Company intends to retain the
  managers of the businesses it acquires, allow them to maintain substantial
  responsibility for the day-to-day operations, profitability and growth of
  those businesses and provide them with incentives based upon performance.
  This will allow the Company to capitalize on the local market knowledge and
  customer relationships at each acquired company. The Company believes that
  the operating autonomy provided by this decentralized structure, together
  with
 
                                      41
<PAGE>
 
  the implementation of reporting systems and financial controls at the
  corporate level, will give it a competitive advantage in growing market
  share and in attracting additional acquisition candidates.
 
    ATTRACT, DEVELOP AND RETAIN HIGH QUALITY TECHNICIANS. The Company
  believes operational success in this industry results from attracting and
  retaining a highly trained and motivated workforce in order to deliver
  consistently high-quality service at a fair price and to reduce re-work and
  other costs. The Company's strategy is to become the employer of choice in
  its industry by offering to its employees and managers a market-leading
  combination of training, compensation and employee benefits, career
  development opportunities and an equity participation in the Company's
  success. Over time, the Company intends to develop an internal technical
  training program to enhance the skill level of its employees.
 
    ESTABLISH NATIONAL MARKET COVERAGE. The Company intends to expand its
  existing relationships with home builders, commercial real estate
  developers and property managers and other enterprises by offering
  comprehensive HVAC, plumbing and electrical new installation and
  maintenance, repair and replacement services on a national or regional
  basis. The Company believes that significant demand exists from these
  customers to utilize the services of a single company capable of providing
  these services and that the GroupMAC Companies' many geographic locations
  allow it to respond to this demand. Many of the GroupMAC Companies already
  provide local or regional coverage to companies with nationwide operations.
  In addition, the Company plans to utilize the customer bases of Callahan
  Roach and USA, which are nationwide in scope, to establish an affiliate
  network to market services on a national basis.
 
  The Company began to implement its operating strategy following its
acquisition of the Pre-Offering Companies and has already entered into
negotiations with vendors in the areas of equipment and supplies, service
vehicles, casualty insurance, employee benefits, fuel supply arrangements,
Yellow Pages advertising, business forms and uniforms. Callahan Roach
personnel have conducted field visits with the GroupMAC Companies to assess
each company's operating strengths and weaknesses and to identify operating
best practices for use throughout the organization and are currently
developing customized training programs for the management and staff personnel
of these companies. Based on a study of the GroupMAC Companies' existing
benefit plans, the Company intends to implement a program that will preserve
or enhance the overall level of benefits resulting in projected cost savings
to the Company. The Compensation Committee has approved the issuance, after
the Offering, of up to 1,976,734 stock options covering all eligible employees
of the GroupMAC Companies. In preparation for creation of a national account
marketing program, the Company is conducting a study of the national and
regional companies currently serviced by one or more of the GroupMAC
Companies.
 
ACQUISITION STRATEGY
 
  The Company's acquisition program is designed to enhance its position in
existing markets and to expand its operations into new markets. The key
elements of the Company's acquisition strategy are as follows:
 
    ACQUIRE COMPANIES ACROSS MULTIPLE MARKET SEGMENTS. The Company intends to
  acquire profitable businesses with well-developed market positions that are
  engaged in the new installation and the maintenance, repair and replacement
  segments of the HVAC, plumbing and electrical service industries in order
  to develop synergies from the combined operations. For example, the Company
  believes that new installation companies can be successfully teamed with
  companies providing maintenance, repair and replacement services in the
  same geographical markets, providing the latter with a new source of
  service customers (purchasers of new homes) before these customers have a
  chance to develop service relationships with other competitors. Likewise,
  the combination of two or more companies providing complementary services
  within a geographical market will enable the Company to offer to the
  combined customer bases a wider range of services from a single supplier.
 
    EXPAND GEOGRAPHIC PRESENCE. In new geographic markets, the Company will
  target for acquisition one or more of the leading local or regional
  companies in each market segment. Important criteria for these acquisition
  candidates will be a reputation as a high quality provider and superior
  operational management and systems. Once the Company has entered a market
  it will seek to acquire other high quality service
 
                                      42
<PAGE>
 
  providers operating within the region in order to expand its market
  penetration and the range of services it offers in that market. The Company
  will also pursue "tuck in" acquisitions of smaller companies whose customer
  bases, operating assets and service personnel can be incorporated into the
  Company's existing operations without a significant increase in selling,
  general and administrative costs.
 
    RETAIN AND PROVIDE INCENTIVES TO EXISTING MANAGEMENT. The Company will
  seek acquisitions of successful companies whose senior managers will remain
  as employees of the Company and continue to operate their respective
  businesses on a local level. The Company intends to motivate these managers
  and align their interests with those of the Company by utilizing Common
  Stock as a significant portion of the purchase consideration, by
  establishing a key manager stock option plan for their benefit and by
  implementing a cash bonus plan that rewards managers and key employees for
  improvement in after-tax earnings that exceeds the cost of capital
  employed.
 
    LEVERAGE INDUSTRY REPUTATION AND CONTACTS. The Company intends to utilize
  existing industry relationships established by its acquired companies and
  Company management, as well as the industry-wide contacts of Callahan Roach
  and USA, to develop a broad base of potential acquisitions. The Company
  believes that its ability to acquire additional high quality companies will
  be influenced by the level of success enjoyed by companies that have
  previously joined with the Company, as well as the continuing efforts of
  the Company and its operating subsidiaries to maintain a high profile in
  the industry. The Company intends to remain actively involved in industry
  organizations on the local and national level, working with independent
  companies to support issues of interest to the Company and its operating
  subsidiaries.
   
  The Company began implementing the above strategies with the acquisition of
Airtron in May 1997 and has since acquired 8 other companies providing both
new installation and maintenance, repair and replacement services in the
residential and commercial HVAC, plumbing and electrical markets. The Pre-
Offering Companies have combined fiscal 1996 revenues of $138.8 million. After
the acquisition of the 13 Offering Acquisition Companies, the Company will
have operations in 37 cities in 21 states with combined 1996 revenues of
$307.5 million. The Company will have two or more companies offering
complementary services in four geographical markets (Houston, Dallas, Austin
and Indianapolis). Within certain of its markets (Dallas, Houston, San Antonio
and Cincinnati), the Company has acquired or is acquiring at the Offering
companies with a primary focus on maintenance, repair and replacement services
to augment its new installation businesses in these areas.     
 
BEST PRACTICES
 
  The Company believes that one of the most significant competitive advantages
of a consolidation company is its ability to identify the best marketing,
sales and operating practices within individual acquired companies and to
spread those best practices across all of its operating locations. The key to
successful implementation is having a disciplined approach to identifying the
desired practices, developing the procedures and related training to ensure
these practices are understood and implemented properly in the field
locations, and measuring systematically the operating performance of the
companies against benchmarks or standards to ensure that the practices are
effective.
 
  The Company believes it enjoys a distinct competitive advantage in this area
resulting from its purchase of Callahan Roach and USA in July 1997. These two
organizations provide the Company with professional level capabilities in the
areas of integration, training and management development for both the
residential and commercial segments of its business. The Company intends to
utilize the expertise of these two industry-recognized GroupMAC Companies in
developing, implementing and monitoring its best practices. Both of these
organizations have extensive industry-wide experience from which to draw best
practices, in addition to the ideas and procedures that come from existing
GroupMAC Companies and future acquisitions. The Company believes that this
expertise, and the exploitation of best practices in this manner, will enable
the Company to accelerate the integration of acquired companies.
 
 
                                      43
<PAGE>
 
   
  Callahan Roach serves HVAC and plumbing contractors across the United States
in such areas as advertising, marketing, business valuation, pricing
strategies, management information services, acquisition planning and
integration and general consulting. It provides the Customer Assurance
Pricing(TM) models to over 1,300 HVAC and plumbing service companies. Callahan
Roach has been an industry leader in the development and commercialization of
this flat rate pricing best practice known as Customer Assurance Pricing(TM),
successfully marketing it to over 2,800 independent contractors across the
United States. Callahan Roach has developed and is currently field testing a
flat rate pricing software product (derived from its manual Customer Assurance
Pricing(TM) systems) that will run on hand-held computers for use by sales and
service personnel in the field. USA provides training and other products and
services to a network of 105 independent service companies focused on
maintenance, repair and replacement of commercial HVAC systems. The Company
believes that its acquisition of USA adds significant commercial HVAC
expertise to complement the residential HVAC and plumbing expertise provided
by Callahan Roach.     
 
  In order to ensure that best practices are shared among each of the
individual GroupMAC Companies, the Company has created a Council of Presidents
composed of the president or senior executive of each of the GroupMAC
Companies. The Council will meet on a regular basis, as well as divide into
smaller working committees, to share operating practices and develop
additional means to improve the overall performance of the Company and the
individual GroupMAC Companies. Best practices that result from the work of the
Council will be included in the training and monitoring programs developed and
disseminated through Callahan Roach and USA.
 
SERVICES PROVIDED
 
  The Company provides a broad variety of maintenance, repair and replacement
services for HVAC, plumbing, electrical and other systems to both residential
and commercial customers. These services include preventive maintenance
(periodic checkups, cleaning and filter change-outs); emergency repairs; and
the replacement (in conjunction with the retrofitting or remodeling of a
residence or commercial building, or as a result of an emergency repair
request) of HVAC systems and associated parts, plumbing fixtures, pipes, water
feed and sewer lines, water heaters, softeners, filters and controls, and
electrical control systems, wiring, data cabling, switches and panels. The
Company also acts as a subcontractor for a variety of national, regional and
local residential home builders in the installation of HVAC, plumbing,
electrical and other systems in new residential construction, as well as
designing and installing HVAC, plumbing, electrical and other systems on
behalf of owners or general contractors in commercial buildings. In a few of
its operating locations, the Company provides certain specialized services,
including repair of home appliances, duct cleaning, installation and repair of
fireplaces, installation of fire sprinkler systems and the provision of
technical facilities management services to commercial building owners or
building managers. In connection with both its new installation business and
its maintenance, repair and replacement services, the Company sells a wide
range of HVAC, plumbing and electrical equipment, parts and supplies.
 
  The following table shows the approximate percentages of the revenues of the
combined GroupMAC Companies during fiscal 1996 represented by new installation
services and maintenance, repair and replacement services, respectively.
 
<TABLE>
<CAPTION>
                                                                ELECTRICAL
                                                  HVAC PLUMBING  & OTHER   TOTAL
                                                  ---- -------- ---------- -----
<S>                                               <C>  <C>      <C>        <C>
Residential Services:
  New Installation............................... 26%    16%       --%      42%
  Maintenance, Repair and Replacement............ 13%     2%        2%      17%
                                                  ---    ---       ---      ---
    Total Residential............................ 39%    18%        2%      59%
Commercial Services:
  New Installation............................... 10%     2%       --%      12%
  Maintenance, Repair and Replacement............ 25%     3%        1%      29%
                                                  ---    ---       ---      ---
    Total Commercial............................. 35%     5%        1%      41%
</TABLE>
 
                                      44
<PAGE>
 
  The Company intends to make additional acquisitions across the three main
technical disciplines (HVAC, plumbing and electrical) within the residential
and commercial markets. The Company's long term objective is to develop
maintenance, repair and replacement capabilities (both residential and
commercial) in the top 100 markets within the United States, while offering
new installation services across a more limited range of markets where new
construction in the residential and/or commercial sectors is expected to out-
pace the national average over the long term. Over time, this objective is
expected to shift the revenues of the Company to an increased percentage of
service revenue. See "--Operating Strategy" and "--Acquisition Strategy."
 
FIELD OPERATIONS
 
  The Company's field operations are conducted out of the individual operating
locations of the various GroupMAC Companies. Typically, the GroupMAC Companies
specialize in one of the technical disciplines in either the residential or
commercial market. However, a few of the GroupMAC Companies that operate
principally in the residential new installation or residential maintenance,
repair and replacement markets also engage to a limited extent in projects or
service work for "light commercial" customers (i.e., smaller commercial
buildings where systems are similar in design to residential systems). In
addition, six of the GroupMAC Companies offer services in more than one
technical discipline. The Company permits the GroupMAC Companies to function
in a largely autonomous manner in delivering products and services to their
respective markets. The Company believes this flexible operating strategy
improves each location's ability to respond quickly to opportunities and
competition.
 
 New Installation
 
  New installation service in the residential market begins with the home
builder providing architectural plans or mechanical drawings for the
particular type or types of residences within the tract to be developed, and
requesting a bid or contract proposal for the work (often broken into phases
within the tract). Company personnel analyze the plans and drawings and
estimate the equipment, materials and parts and the direct and supervisory
labor required for the project. The company delivers a written bid or
negotiates the written agreement for the job. In HVAC installations, a portion
of the required air ducts are fabricated and pre-assembled with other
components in the company's own facilities prior to delivery to the job site.
Other equipment and materials for the particular project are ordered from
manufacturers, distributors or other suppliers for delivery in time for the
scheduled onsite construction work. The installation work is coordinated by
the company's field supervisors along with the builder's construction
supervisors. Draw payments for the project are generally obtained within 30
days of completing the installation, at which time any mechanics' and
materialmen's liens securing such payments are released. Interim payments are
often obtained to cover labor and materials costs on larger installation
projects. During 1996, the GroupMAC Companies were involved in the
installation of approximately 18,000 HVAC systems and 6,500 plumbing systems
in new residences.
 
  Commercial new installation work begins with a design request from the owner
or general contractor. Initial meetings with the parties allow the contractor
to prepare preliminary and then more detailed design specifications,
engineering drawings and cost estimates. Once a project is awarded, it is
conducted in pre-agreed phases and progress billings are rendered to the owner
for payment, less a retainage. Actual field work (ordering of equipment and
materials, fabrication or assembly of certain components, delivery of such
materials and components to the job site, scheduling of work crews with the
necessary skills, and inspection and quality control) is coordinated in these
same phases. During 1996, the GroupMAC Companies were involved in the
installation of approximately 480 HVAC systems and 95 plumbing systems in new
commercial facilities. The Company has established a policy to review and
approve any new installation project by a GroupMAC Company which exceeds 5% of
the projected annual revenue of that GroupMAC Company.
 
  Substantially all the equipment and component parts the Company sells or
installs are purchased from manufacturers and other outside suppliers. The
Company is not materially dependent on any of these outside sources.
 
                                      45
<PAGE>
 
 Maintenance, Repair and Replacement
 
  The GroupMAC Companies engaged in maintenance, repair and replacement
services use specialized systems to log service orders, schedule service
calls, identify and ready the necessary repair parts or equipment, track the
work order, provide information for communication with the service technicians
and customers, and prepare accurate invoices. Service histories and specific
product information are generally accessible to the dispatcher in a database
that may be searched by customer name or address. Maintenance, repair and
replacement service calls are initiated when a customer requests emergency
repair service or the Company calls the client to schedule periodic service
agreement maintenance. Service technicians are scheduled for the call or
routed to the customer's residence or business by the dispatcher via a
scheduling board or daily work sheet (for non-emergency service) or through
cellular telephone, pager or radio. Service personnel work out of the
Company's service vehicles, which carry an inventory of equipment, tools,
parts and supplies needed to complete the typical variety of jobs. The
technician assigned to a service call travels to the residence or business,
interviews the customer, diagnoses the problem, prepares and discusses a price
quotation, performs the work and often collects payment from the customer.
Service technicians of GroupMAC Companies that are existing clients of
Callahan Roach carry a Customer Assurance Pricing(TM) manual which lists labor
and equipment parts required to fulfill certain tasks and the associated
prices. This manual is custom generated for each company from a database
containing over 15,000 different repair operations and which is updated for
price changes periodically. This "flat rate pricing" strategy allows the
Company to monitor margins and labor productivity at the point of sale, while
increasing the level of customer satisfaction by demonstrating greater
fairness and objectivity in pricing. Payment for maintenance, repair and
replacement services not covered by a warranty or service contract is
generally requested in cash or by check or credit card at the service
location. During fiscal 1996, the GroupMAC Companies performed approximately
150,000 service calls for periodic maintenance under existing service
contracts, and approximately 175,000 emergency or other service calls.
 
  A portion of the Company's service work is done to satisfy factory
warranties. For such services, the Company is generally compensated by the
manufacturer responsible for the defective equipment under warranty. The
Company attempts to enter into service contracts whereby the customer pays an
annual or semi-annual fee for periodic diagnostic services. The customers
under service contracts receive specific discounts from standard prices for
repair and replacement service.
 
CENTRALIZED SUPPORT SERVICES
 
  The Company provides certain management, financial, accounting and
logistical support services for all of the GroupMAC Companies, including the
following:
 
 Purchasing
 
  The Company believes it will be able to structure volume purchasing
arrangements or otherwise achieve purchasing economies of scale in the
following areas: (i) HVAC, plumbing and electrical equipment, parts and
supplies, (ii) purchase or lease and maintenance of service vehicles, (iii)
casualty and liability insurance, (iv) health insurance and related benefits,
(v) retirement benefits administration, (vi) office equipment, (vii) marketing
and advertising (including Yellow Pages), (viii) long distance services and
(ix) a variety of accounting, financial management, marketing and legal
services. The principal manufacturers or suppliers of the products sold by the
Company include Carrier Air Conditioning, Inc., The Trane Company, Lennox
Industries, Inc., Goodman Manufacturing Corp. and Ferguson Enterprises, Inc.
Each GroupMAC Company will have the opportunity to order products from the
manufacturers or distributors at the discounted rate negotiated by the Company
and therefore, benefit from the Company's purchasing power while maintaining
existing supplier relationships.
 
 Management Information Systems
 
  With limited exceptions, the Company intends to continue to operate for the
near-term with the existing accounting and other computer systems currently in
place at the various GroupMAC Companies. The Company
 
                                      46
<PAGE>
 
will, however, cause each of the GroupMAC Companies to adopt a uniform chart
of accounts and to standardize their budgeting process and reports so that
results among the GroupMAC Companies more easily can be compared and
integrated. In addition, where a GroupMAC Company or a future acquired company
has a system in place that is inadequate for its existing or near term needs,
the Company will begin the migration to a standard that will allow for greater
consistency (and a longer term change to a Company-wide, integrated system).
The Company has implemented regular financial and operational "flash reports"
and other mechanisms to allow for management control and oversight. The
Company will utilize this information to establish and monitor performance of
individual GroupMAC Companies against operating benchmarks and ratios.
 
 Employee Screening, Training and Development
 
  The Company is committed to providing the highest level of customer service
through the development of a highly trained workforce. Prior to employment,
the Company makes an assessment of the technical competence level of all
potential new employees, confirms background references and conducts criminal
and driving record checks. In addition, all employees of the Company are
subject to random drug testing. Once hired, employees of the Company are
required to complete a progressive training program to advance their technical
competencies and to ensure that they understand and follow the Company's
safety practices and other internal policies. Both technical and customer
service personnel are given intensive training in customer communication,
sales and problem-solving skills.
 
  The Company also conducts a detailed internal evaluation of each acquired
company's strengths, weaknesses and compliance with recognized industry or
Company "best practices," and then designs a training program to develop and
enhance the communication, sales, management and other relevant skills of its
employees and management to bring about continuous improvement in these areas.
The Company acquired Callahan Roach and USA in part for their professional
training and consulting capabilities and intends to implement their market-
leading training programs within the GroupMAC Companies.
 
 Advertising and Marketing
 
  The Company intends to capitalize on cross-marketing and business
development opportunities that it believes will be available to the Company as
a national provider of comprehensive residential and commercial HVAC, plumbing
and electrical services. The Company will leverage the diverse technical and
marketing strengths of individual GroupMAC Companies to expand the overall
penetration of services within those local markets in which two or more
GroupMAC Companies are located. Eventually, the Company intends to offer
comprehensive services from all of its operating locations.
 
  The GroupMAC Companies use both general advertising and a direct sales force
to market their residential and commercial services (both new installation and
repair services) in their respective geographic markets. The Company is
developing a marketing and advertising program to establish a national brand
identity while preserving and enhancing the value of the unique and long-
standing trade names and customer identification enjoyed by the individual
GroupMAC Companies. The GroupMAC logo and identifying marks will be featured
on service trucks, marketing materials and advertising of the GroupMAC
Companies, but in a manner that does not detract from the local brand. The
Company proposes to develop (initially for the GroupMAC Companies, but
ultimately for delivery to the market through licensed affiliates developed by
Callahan Roach and USA) market-leading warranty and service programs for the
residential and commercial markets, as well as an aggressive national account
sales program focused on national and large regional home builders, as well as
major corporations, governmental and private institutions, real estate
investment trusts, real estate management firms and other multi-location
commercial property owners and managers. In 1996, advertising and marketing
expenditures represented 0.9% of the Company's combined revenue.
 
 
                                      47
<PAGE>
 
PROPERTIES AND VEHICLES
 
  The Company operates a fleet of approximately 1,580 owned or leased service
trucks, vans and support vehicles. It believes these vehicles generally are
well-maintained, ordinary wear and tear excepted, and adequate for the
Company's current operations.
 
  The Company has a total of 54 facilities, one of which it owns and 53 of
which are under leases with remaining terms ranging from four months to 15
years from the date hereof on terms the Company believes to be commercially
reasonable. The aggregate of the leased or owned space at the Company's
facilities is approximately 600,000 square feet. A majority of the Company's
facilities are leased from certain former shareholders (or entities controlled
by certain former shareholders) of the GroupMAC Companies. None of these
leases expire prior to 2000. The provisions of the leases are on terms the
Company believes to be at least as favorable to the Company as could have been
negotiated by the Company with unaffiliated third parties. The Company
believes the owned and leased facilities are adequate to serve its current
level of operations.
   
  The Company believes that it has generally satisfactory title to the
property owned by it, subject to the liens for current taxes, liens incident
to minor encumbrances and easements and restrictions that do not materially
detract from the value of such property or the interests therein or the use of
such property in its business.     
 
COMPETITION
   
  The market for HVAC, plumbing and electrical services is highly competitive.
The Company believes that the principal competitive factors in the residential
and commercial services industry are (i) timeliness, reliability and quality
of services provided, (ii) range of services offered, (iii) market share and
visibility and (iv) price. The Company believes its strategy of creating a
leading national provider of comprehensive services directly addresses these
factors. The ability of the Company to employ, train and retain highly
motivated service technicians to provide quality services should be enhanced
by its ability to utilize professionally managed recruiting and training
programs. In addition, the Company expects to offer compensation, health and
savings benefits that are more comprehensive than most offered in the
industry, including a stock option plan for all employees. Service quality
should be enhanced by the implementation and continuous reinforcement of best
practices across the GroupMAC Companies. Competitive pricing is possible
through purchasing economies and other cost saving opportunities that exist
across each of the service lines offered and from productivity improvements.
    
  Most of the Company's competitors are small, owner-operated companies that
typically operate in a single market. Certain of these smaller competitors may
have lower overhead cost structures and may be able to provide their services
at lower rates. Moreover, many homeowners have traditionally relied on
individual persons or small repair service firms with whom they have long-
established relationships for a variety of home repairs. There is currently a
limited number of public companies focused on providing residential or
commercial services in some of the same service lines provided by the Company.
 
  In addition, there are a number of national retail chains that sell a
variety of plumbing fixtures and equipment, and HVAC equipment for residential
use and offer, either directly or through various subcontractors,
installation, warranty and repair services. Other companies or trade groups
engage in franchising their names and marketing programs in some service
lines. In the future, competition may be encountered from, among others, HVAC
equipment manufacturers, the unregulated business segments of regulated gas
and electric utilities or from newly deregulated utilities entering into
various residential service areas. Certain of the Company's competitors and
potential competitors have greater financial resources than the Company to
finance residential services acquisition and development opportunities, to pay
higher prices for the same opportunities or to develop and support their own
residential services operations if they decide to enter the field.
 
 
                                      48
<PAGE>
 
EMPLOYEES
 
  As of August 1, 1997, the Company and the GroupMAC Companies had
approximately 2,860 full and part-time employees, approximately 1,825 of which
are installation/service technicians. In the course of performing installation
work, the Company may utilize the services of subcontractors. Approximately
500 employees (in five of the commercial GroupMAC Companies) are members of
the Bridge, Structural and Ornamental Iron Workers, Construction Building
Material, Ice and Coal Drivers, Helpers and Inside Employees, Mechanical
Contractors, Mechanical Services, Pipe-fitters, Plumbing and Pipe-fitters and
Sheet Metal Workers, Air Conditioning Contractors, Stationary Engineers and
Electrical Contractors unions, and work under collective bargaining
agreements. Two of such agreements recently expired and are now on a year-to-
year basis and may be renegotiated after either side gives the requisite
notice (90 days in one case and 120 days in the other). The other collective
bargaining agreements have expiration dates between April 30, 1998 and August
16, 2000. Employees at K&N's operations in Las Vegas, Nevada, are currently
being solicited to join a union, and from time to time other operating
locations of the Company may experience union organizing effort. The Company
believes its relationship with its employees is satisfactory.
 
LEGAL PROCEEDINGS
 
  The Company and its subsidiaries are parties to various legal proceedings,
most of which pertain to contract installation, service and employee matters
arising in the ordinary course of business. Although no assurance can be
given, the Company believes that the outcome of these proceedings,
individually and in the aggregate, will not have a material adverse effect on
its financial condition or results of operations.
 
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
 
  Many aspects of the Company's operations are subject to various federal,
state and local laws and regulations, including, among others, (i) permitting
and licensing requirements applicable to service technicians in their
respective trades, (ii) building, HVAC, plumbing and electrical codes and
zoning ordinances, (iii) laws and regulations relating to consumer protection,
including laws and regulations governing service contracts for residential
services, and (iv) laws and regulations relating to worker safety and
protection of human health and the environment. In Florida, warranties
provided for in the Company's service agreements subject the Company and such
agreements to some aspects of that state's insurance laws and regulations.
Specifically, the Company is required to maintain funds on deposit with the
Florida Office of Insurance Commissioner and Treasurer, the amount of which is
not material to the Company's business. The Company is in compliance with
these deposit requirements.
 
  The Company believes it has all required permits and licenses to conduct its
operations and is in substantial compliance with applicable regulatory
requirements relating to its operations. Failure of the Company to comply with
the applicable regulations could result in substantial fines or revocation of
the Company's operating permits.
 
  A large number of state and local regulations governing the residential
services trades require various permits and licenses to be held by
individuals. In some cases, a required permit or license held by a single
individual may be sufficient to authorize specified activities for all the
Company's service technicians who work in the geographic area covered by the
permit or licenses.
 
  The Company's operations are subject to numerous federal, state and local
environmental laws and regulations, including those governing vehicle
emissions and the use and handling of refrigerants. These laws are
administered by the United States Environmental Protection Agency, the Coast
Guard, the Department of Transportation and various state and local
governmental agencies. The technical requirements of these laws and
regulations are becoming increasingly complex, stringent and expensive.
Federal and state environmental laws include statutes intended to allocate the
cost of remedying contamination among specifically identified parties. CERCLA
(or "Superfund") can impose strict, joint and several liability on past and
present owners or operators of facilities at, from, or to which a release of
hazardous substances has occurred, on parties who generated hazardous
substances that were released at such facilities and on parties who arranged
for the transportation of
 
                                      49
<PAGE>
 
hazardous substances to such facilities. A majority of states have adopted
"Superfund" statutes comparable to, and in some cases more stringent than,
CERCLA. If the Company were to be found to be a responsible party under CERCLA
or a similar state statute, the Company could be held liable for all
investigative and remedial costs associated with addressing such
contamination, even though the releases were caused by a prior owner or
operator or third party. In addition, claims alleging personal injury or
property damage may be brought against the Company as a result of alleged
exposure to hazardous substances resulting from the Company's operations.
 
  Prior to entering into the agreements relating to the acquisition of the
GroupMAC Companies, the Company evaluated the properties owned or leased by
such companies and in some cases engaged an independent environmental
consulting firm to conduct or review assessments of environmental conditions
at certain of those properties. No material environmental problems were
discovered in these reviews, and the Company is not otherwise aware of any
actual or potential environmental liabilities that would be material to the
Company. There can be no assurance that all such liabilities have been
identified, that such liabilities will not occur in the future, that a party
could not assert a material claim against the Company with respect to such
liabilities, or that the Company would be required or able to answer for such
claim.
 
  The Company's operations are subject to federal, state and local laws and
regulations protecting the health and safety of workers. These laws are
administered by the federal Occupational Safety & Health Administration and
state and local health and safety governmental agencies. The Company's
operations are subject to the Clean Air Act, Title VI of which governs air
emissions and imposes specific requirements on the use and handling of
substances known or suspected to cause or contribute significantly to harmful
effects on the stratospherical ozone layer, such as chlorofluorocarbons and
certain other refrigerants ("CFCs"). Clean Air Act regulations require the
certification of service technicians involved in the service or repair of
systems, equipment and appliances containing these refrigerants and also
regulate the containment and recycling of these refrigerants. These
requirements have increased the Company's training expenses and expenditures
for containment and recycling equipment. The Clean Air Act is intended
ultimately to eliminate the use of CFCs in the United States and require
alternative refrigerants to be used in replacement HVAC systems. The
implementation of the Clean Air Act restrictions has also increased the cost
of CFCs in recent years and is expected to continue to increase such costs in
the future. As a result, the number of conversions of existing HVAC systems
that use CFCs to systems using alternative refrigerants is expected to
increase.
 
  The Company's operations in certain geographic regions are subject to laws
that will, over the next few years, require specified percentages of vehicles
in large vehicle fleets to use "alternative fuels," such as compressed natural
gas or propane, and meet reduced emissions standards. The Company does not
anticipate that the cost of fleet conversion that may be required under
current laws will be material. Future costs of compliance with these laws will
be dependent upon the number of vehicles purchased in the future for use in
the covered geographic regions, as well as the number and size of future
business acquisitions by the Company in these regions. The Company cannot
determine to what extent its future operations and earnings may be affected by
new regulations or changes in existing regulations relating to vehicle
emissions.
 
  Capital expenditures related to environmental matters during fiscal 1996
were not material. The Company does not currently anticipate any material
adverse effect on its business or consolidated financial position as a result
of future compliance with existing environmental laws and regulations
controlling the discharge of materials into the environment. Future events,
however, such as changes in existing laws and regulations or their
interpretation, more vigorous enforcement policies of regulatory agencies or
stricter or different interpretations of existing laws and regulations may
require additional expenditures by the Company which may be material.
 
                                      50
<PAGE>
 
                                  MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
  The following table sets forth certain information concerning the directors
and executive officers of the Company upon completion of the Offering.
 
<TABLE>
<CAPTION>
NAME                         AGE                     POSITION
----                         ---                     --------
<S>                          <C> <C>
James P. Norris.............  58 Chairman of the Board; Director
J. Patrick Millinor, Jr.....  52 Chief Executive Officer; Director
Donald L. Luke..............  60 President and Chief Operating Officer; Director
William Michael Callahan....  51 Executive Vice President-Training, Technology
                                  and Field Support
Chester J. Jachimiec........  42 Executive Vice President-Acquisitions; Director
Alfred R. Roach, Jr.........  53 Executive Vice President-Marketing, Sales and
                                  Product Support
Richard S. Rouse............  51 Executive Vice President-Corporate Development
                                  and Administration; Director
Randolph W. Bryant..........  46 Senior Vice President, General Counsel and
                                  Secretary
Darren B. Miller............  37 Senior Vice President and Chief Financial
                                  Officer
James D. Jennings...........  55 President and Chief Executive Officer of
                                  Airtron; Director
Timothy Johnston............  41 Senior Vice President of Airtron; Director
John M. Sullivan............  61 Director
James D. Weaver.............  48 Director
Ronald D. Bryant............  50 Director
David L. Henninger..........  53 Director
Andrew Jeffrey Kelly........  43 Director
Thomas B. McDade............  74 Director
Lucian Morrison.............  60 Director
Fredric Sigmund.............  56 Director
</TABLE>
 
  JAMES P. NORRIS became a Director and Chairman of the Board of the Company
in June 1997. From 1969 to May 1997, he served as Executive Vice President of
Air Conditioning Contractors of America ("ACCA"), an industry trade
association based in Washington, D.C.
 
  J. PATRICK MILLINOR, JR. became a Director and Chief Executive Officer of
the Company upon its formation in 1997. From April 1997 to August 1997, he
served as President of the Company. From October 1996 through April 1997, he
served as Chief Executive Officer of the Company's predecessor, GroupMAC
Management Co. ("Management Co."). From September 1994 to October 1996, Mr.
Millinor worked directly for Gordon Cain, a major stockholder in the Company,
assisting in the formation and management of Agennix Incorporated and Lexicon
Genetics, two biotechnology companies. From March 1993 to September 1994, he
served as Chief Executive Officer of UltrAir, Inc., a start-up passenger
airline. From October 1992 to March 1993, he served as Chief Financial Officer
of UltrAir, Inc. From 1991 to 1992, he served as Chief Financial Officer of
Lifeco Travel Services, a travel management company. From 1986 to 1991, Mr.
Millinor served as Chief Operating Officer and Senior Vice President,
respectively, of Commonwealth Savings Association and Bank United. From 1979
to 1986, Mr. Millinor was a partner with KPMG Peat Marwick LLP. He currently
serves as a director of Agennix Incorporated, Haelan Health(R) Corporation and
Lexicon Genetics.
 
  DONALD L. LUKE became a Director and President and Chief Operating Officer
of the Company in August 1997. From November 1996 to July 1997, he served as
Chairman of Arriva Air International, Inc. a start-up commercial air cargo
business. From September 1996 to August 1997, he served as a consultant to
Batteries Batteries, Inc., a consolidator of specialty battery distribution
companies which completed its initial public offering in April 1996. From 1995
to September 1996, he served as President, Chief Executive Officer and
 
                                      51
<PAGE>
 
Director of Batteries Batteries, Inc. From 1991 to 1995, Mr. Luke served as
President and Chief Executive Officer of Miracle Ear New York City. From 1989
to 1991, he served as President and Chief Executive Officer of Senior Service
Corporation. From 1988 to 1989, he served as Chairman and Chief Executive
Officer of Cuisinarts, Inc. From 1987 to 1988, he served as President and
Chief Operating Officer of Aetmedia, Inc. From 1981 to 1987, he served as
President and Chief Operating Officer and a director of Chemlawn Services
Corporation. He is currently the Chief Executive Officer of CTW, Inc. a
privately held acquisitions and management company, and a partner in McFarland
Grossman Capital Ventures, L.C., a consolidator of fastener distribution
companies.
 
  WILLIAM MICHAEL CALLAHAN became Executive Vice President-Training,
Technology and Field Support of the Company in August 1997. From 1989 to July
1997, Mr. Callahan was a partner in Callahan Roach & Associates. From 1972 to
1989, Mr. Callahan served as President of Capital City Heating & Cooling, a
company he founded. In 1988, Mr. Callahan served as President of ACCA.
 
  CHESTER J. JACHIMIEC became a Director and Executive Vice President-
Acquisitions of the Company upon its formation in 1997. From October 1996 to
April 1997, he served as Executive Vice President-Acquisitions at the
Company's predecessor, Management Co. From February 1994 to October 1996, Mr.
Jachimiec served as the Director of Acquisitions & Investments for Tenneco
Energy. From 1990 to 1994, he was an investor in or consultant to various
private ventures engaged in natural gas gathering, processing and exploration
as well as computer software development. Prior to 1990, Mr. Jachimiec
practiced securities law and public accounting with several professional
firms.
 
  ALFRED R. ROACH, JR. became Executive Vice President-Marketing, Sales and
Product Support of the Company in August 1997. From 1989 to July 1997, Mr.
Roach was a partner in Callahan Roach & Associates. From 1986 to 1989, he
served as President and General Counsel of Service America Corporation, an
HVAC franchise company. From 1970 to 1986, Mr. Roach engaged in the private
practice of law.
 
  RICHARD S. ROUSE became a Director and Executive Vice President-Corporate
Development and Administration of the Company upon its formation in 1997. From
October 1996 to April 1997, he served as Executive Vice President-Corporate
Development and Administration of the Company's predecessor, Management Co.
From July 1994 to July 1996, Mr. Rouse served as Vice President and General
Manager of Southcoast Services, a privately held landfill operating company.
From 1992 to 1994, he served as Vice President and General Manager of SWS, an
industrial services company. From 1990 to 1991, he was a co-founder and Senior
Vice President-Corporate Development for Republic Waste Industries, Inc. From
1984 to 1990, he was Marketing Manager of Lubripac, a blender and packager of
lubricants and specialty chemicals. Prior to 1984, Mr. Rouse served in various
marketing and management capacities with the Exxon Chemical Company.
 
  RANDOLPH W. BRYANT became Senior Vice President, General Counsel and
Secretary of the Company upon its formation in 1997. From December 1996 to
April 1997, Mr. Bryant served as Associate General Counsel of El Paso Natural
Gas Company. From 1984 to 1996, he was an attorney with Tenneco Inc. and
Tenneco Energy Inc., last serving as Associate General Counsel.
 
  DARREN B. MILLER became Senior Vice President and Chief Financial Officer of
the Company upon its formation in 1997. From October 1996 to April 1997, he
served as Senior Vice President and Chief Financial Officer of the Company's
predecessor, Management Co. From 1989 to 1996, Mr. Miller served in several
capacities at Allwaste, Inc., a consolidator of industrial service companies,
including Vice President-Treasurer and Controller from 1995 to 1996. Prior to
1989, he was employed in the audit practice of Arthur Andersen LLP.
   
  JAMES D. JENNINGS became a Director of the Company in May 1997 in connection
with the acquisition of Airtron. Since 1985, Mr. Jennings has served as
President, Chief Executive Officer and a director of Airtron. Prior to 1985,
Mr. Jennings was employed by Airtron in various other capacities.     
 
  TIMOTHY JOHNSTON became a Director of the Company in May 1997 in connection
with the acquisition of Airtron. Since 1995, Mr. Johnston has served as a
Senior Vice President of Airtron. Mr. Johnston has served as
 
                                      52
<PAGE>
 
Secretary/Treasurer of Airtron since 1991 and as Chief Financial Officer of
Airtron since 1988. Prior to 1987, Mr. Johnston was employed by Airtron in
various other capacities.
 
  JOHN M. SULLIVAN became a Director of the Company upon its formation in
1997. From October 1996 to April 1997, he served as a Director of the
Company's predecessor, Management Co. Since 1994, Mr. Sullivan has been
engaged as an independent financial and tax consultant. From 1992 through
1994, he was an International Tax Director for General Motors Corporation.
Prior to 1992, Mr. Sullivan was a tax partner with Arthur Andersen LLP. He
currently serves as a director of Atlantic Coast Airlines, Inc.
   
  JAMES D. WEAVER became a Director of the Company upon its formation in 1997.
From October 1996 to April 1997, he served as a Director at the Company's
predecessor, Management Co. Mr. Weaver has been the President of the Gordon
and Mary Cain Foundation, a nonprofit organization, since 1988 and the
Director of the Good Samaritan Foundation, a nonprofit organization, since
1986.     
 
  RONALD D. BRYANT will become a Director upon consummation of the Offering.
He founded Masters in 1986 and has served as its president since that time and
will continue in that capacity after consummation of the Offering.
 
  DAVID L. HENNINGER will become a Director upon consummation of the Offering.
He acquired Van's in 1975, has served as its president since that time and
will continue in that capacity after consummation of the Offering.
 
  ANDREW JEFFREY KELLY will become a Director upon consummation of the
Offering. He founded K&N in 1979, has served as its president since that time
and will continue in that capacity after consummation of the Offering.
 
  THOMAS B. MCDADE will become a Director upon consummation of the Offering.
He has been engaged in consulting and managing his personal investments since
1985. From 1957 to 1985, he was employed by Texas Commerce Bancshares, last
serving in the capacity of Vice Chairman. He has been Chairman of the Board of
TransTexas Gas Corp. since 1993. He served as a director and trustee of eleven
registered investment companies from 1985 to 1995 for which John Hancock Funds
serves as investment advisor in Boston, Massachusetts. He currently serves as
a director of Bankers Trust Co. of the Southwest, TransAmerican Energy Corp.
and TransAmerican Refining Corp.
 
  LUCIAN MORRISON will become a Director upon consummation of the Offering. He
has been engaged as a trustee and consultant with respect to trust, estate,
probate and qualified plan matters since 1992. From 1979 until 1990, he served
as Chief Executive Officer of Heritage Trust Company. From 1990 through 1991,
he served as Chief Fiduciary Officer of Northern Trust Company.
 
  FREDRIC SIGMUND will become a Director upon consummation of the Offering.
Since 1986, he has served as Chief Executive Officer of MacDonald-Miller. From
1967 to 1986, he served in various positions with MacDonald-Miller.
 
  Effective upon the consummation of the Offering, the Board of Directors of
the Company will consist of 15 members divided into three classes of five
directors serving staggered three-year terms expiring at the annual meeting of
shareholders in 1998, 1999 and 2000, respectively. At each annual meeting of
shareholders, one class of directors will be elected for a full term of three
years to succeed the class of directors whose terms are expiring.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
  The Board of Directors has established three committees--the Audit
Committee, the Compensation Committee and the Acquisition Committee. Pursuant
to resolutions of the Board, these committees have the following described
responsibilities and authority.
 
                                      53
<PAGE>
 
  The Audit Committee has the responsibility, among other things, of (i)
recommending the selection of the Company's independent public accountants,
(ii) reviewing and approving the scope of the independent public accountants'
audit activity and extent of non-audit services, (iii) reviewing with
management and such independent public accountants the adequacy of the
Company's basic accounting system and the effectiveness of the Company's
internal audit plan and activities, (iv) reviewing with management and the
independent public accountants the Company's financial statements and
exercising general oversight of the Company's financial reporting process and
(v) reviewing with the Company litigation and other legal matters that may
affect the Company's financial condition, and monitoring compliance with the
Company's business ethics and other policies. As of the date of this
Prospectus, no members have been appointed to the Audit Committee.
 
  The Compensation Committee has the responsibility, among other things, of
(i) establishing the salary rates of officers and employees of the Company and
its subsidiaries, (ii) examining periodically the compensation structure of
the Company and (iii) supervising the welfare and pension plans and
compensation plans of the Company. The members of the Compensation Committee
are Messrs. Sullivan (Chair) and Weaver.
 
  The Acquisition Committee has the authority to approve the terms and
conditions of acquisitions by the Company of businesses having less than $40
million of revenues and $20 million of assets, including the authority to
approve the issuance of debt and equity securities of the Company in
connection with such acquisitions, provided that the consideration paid by the
Company for each such business is less than $20 million. The members of the
Acquisition Committee are Messrs. Millinor (Chair), Jachimiec and Rouse.
 
  The Company's Board may also establish other committees.
 
DIRECTOR COMPENSATION
 
  In October 1996, the Company granted to each of Messrs. Sullivan and Weaver
options to purchase 10,000 shares of Common Stock at a price of $3.08 per
share. Between the grant of such options and the date of this Prospectus,
directors of the Company have not received compensation for their services as
directors nor have they received compensation for attending the Company's
board meetings. After the Offering, the Company intends to grant to directors
of the Company who are not employees of the Company or its subsidiaries an
option to purchase 4,000 shares of Common Stock at a purchase price per share
equal to the fair market value of one share of Common Stock on the date of
grant. Such options will remain in effect for five years after the date of
grant and 800 shares of each such grant will become exercisable each year. If
a director ceases to serve in such capacity because of his death, disability
or retirement, the options granted to that director will become exercisable
for a one-year period. Each director also will be reimbursed for travel
expenses incurred for each meeting of the Board or for each Board Committee
meeting attended.
 
EXECUTIVE COMPENSATION
 
  The Company did not conduct any operations other than activities related to
the acquisition of the GroupMAC Companies prior to May 2, 1997 and did not pay
any compensation prior to October 1996. The Company anticipates that during
1997 its most highly compensated executive officers (the "Named Executive
Officers") and their annualized base salaries will be: Mr. Norris--$150,000;
Mr. Millinor--$150,000; Mr. Luke--$150,000; Mr. Jennings--$150,000; Mr.
Johnston--$150,000; Mr. Callahan--$150,000; and Mr. Roach--$150,000. Pursuant
to the terms of their employment agreements with the Company, the annual base
salaries of each of the Named Executive Officers named above are subject to
upward adjustment effective one year from the effective date of the employment
agreement. The effective dates of the employment agreements of the Named
Executive Officers are as follows: Mr. Millinor, October 24, 1996; Messrs.
Jennings and Johnston, April 30, 1997; Mr. Norris, June 1, 1997; and Messrs.
Luke, Callahan and Roach, August 1, 1997. Each of the Named Executive Officers
is eligible to earn additional performance based incentive compensation for
1997. None of the executive officers is expected to receive perquisites the
value of which exceeded the lesser of $50,000 or 10% of the salary and bonus
of such executive.
 
 
                                      54
<PAGE>
 
OPTION GRANTS
 
  The following table sets forth the number of options to purchase shares of
Common Stock that have been granted to the Named Executive Officers since the
formation of the Company:
<TABLE>
<CAPTION>
                                                                                            
                                                                                            
                                                                                            
                                                                              POTENTIAL     
                                                                           REALIZABLE VALUE 
                                                                              AT ASSUMED    
                                      INDIVIDUAL GRANTS                    ANNUAL RATES OF  
                                    ---------------------                    STOCK PRICE    
                          OPTIONS    % OF TOTAL  EXERCISE                  APPRECIATION FOR 
                          GRANTED     OPTIONS     PRICE                     OPTION TERM(3)  
                          (NO. OF    GRANTED TO    PER                     ---------------- 
                         SHARES)(1) EMPLOYEES(2)  SHARE   EXPIRATION DATE    5%     10%     
                         ---------- ------------ -------- ---------------- ------- -------- 
<S>                      <C>        <C>          <C>      <C>              <C>     <C>
James P. Norris.........   28,000        7.4%     $3.08     June 1, 2007   $54,236 $137,444
J. Patrick Millinor,
 Jr.....................   50,000       13.2       3.08   October 24, 2006  96,850  245,436
Donald L. Luke..........   14,000        3.7       3.08    August 1, 2007   27,118   68,722
James D. Jennings.......       --         --         --          --             --       --
Timothy Johnston........       --         --         --          --             --       --
W. Michael Callahan.....       --         --         --          --             --       --
Alfred R. Roach, Jr.....       --         --         --          --             --       --
</TABLE>
 
--------
(1) The options reported in this column consist of Non-Qualified Options
    granted under Stock Option Agreements between the Company and each of the
    Named Executive Officers. The options will become exercisable on each of
    the first, second and third anniversaries of the date of grant with
    respect to one-third of the shares subject to the option. In the case of
    Mr. Millinor's options, the three annual vesting periods are accelerated
    in the event the closing price of the Common Stock over ten consecutive
    trading days exceeds $17.50, $22.50 and $27.50 per share, respectively.
(2) Based on outstanding options to purchase an aggregate of 378,800 shares of
    Common Stock.
(3) The dollar amounts under these columns are the result of calculations at
    the 5% and 10% appreciation rates set by the Securities and Exchange
    Commission (the "Commission") and, therefore, are not intended to forecast
    possible future appreciation, if any, in the price of the Common Stock. In
    order to realize the potential values set forth in the 5% and 10% columns
    of this table, the per share price of the Common Stock would be $5.02 and
    $7.99, respectively, or 63% and 159% respectively, above the base exercise
    price. Because the Common Stock was not publicly traded prior to the
    Offering, these amounts were calculated based on the assumption that the
    fair market value of one share of Common Stock on the date of grant was
    equal to the exercise price.
 
  The following table sets forth the number of options to purchase shares of
Common Stock held, as of August 1, 1997, by the Named Executive Officers.
 
<TABLE>
<CAPTION>
                                  NUMBER OF SECURITIES
                                 UNDERLYING UNEXERCISED   VALUE OF UNEXERCISED
                                       OPTIONS AT        IN-THE-MONEY OPTIONS AT
                                     AUGUST 1, 1997         AUGUST 1, 1997(1)
                                 ----------------------- -----------------------
                                                 NOT                     NOT
NAME                             EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
----                             ----------- ----------- ----------- -----------
<S>                              <C>         <C>         <C>         <C>
James P. Norris.................      --       28,000         --      $305,760
J. Patrick Millinor, Jr.........      --       50,000         --       546,000
Donald L. Luke..................      --       14,000         --       152,880
James D. Jennings...............      --           --         --            --
Timothy Johnston................      --           --         --            --
W. Michael Callahan.............      --           --         --            --
Alfred R. Roach, Jr.............      --           --         --            --
</TABLE>
--------
(1) Based on the mid-point of the range of estimated initial public offering
    prices set forth on the cover of this Prospectus.
 
 
                                      55
<PAGE>
 
EMPLOYMENT AGREEMENTS
   
  In 1997, Mr. Norris entered into an employment agreement with the Company
which provides for an annual base salary of $150,000 and an annual cash bonus
depending on the actual annual performance of the Company. The agreement
expires on June 1, 2000. In the event of Mr. Norris' death, the agreement will
terminate. In the event of Mr. Norris' disability, the Company will continue
payment of compensation during the first 12 month period of such disability to
the extent not covered by the Company's disability insurance policies. In the
event his employment is terminated, Mr. Norris will receive compensation for
the periods described in the agreement. In addition, Mr. Norris has agreed not
to compete with the Company during the six-month period following his
termination of employment.     
   
  In 1996, Mr. Millinor entered into an employment agreement with the Company
which provides for an annual base salary of $150,000 and an annual cash bonus
of up to 100% of Mr. Millinor's annual base salary depending on the actual
annual performance of the Company. The agreement expires on October 24, 1999.
In the event of Mr. Millinor's death, the agreement will terminate. In the
event of Mr. Millinor's disability, the Company will continue payment of
compensation during the first 12 month period of such disability to the extent
not covered by the Company's disability insurance policies. In the event his
employment is terminated, Mr. Millinor will receive compensation for the
periods described in the agreement. In addition, Mr. Millinor has agreed not
to compete with the Company during the six-month period following his
termination of employment.     
   
  In 1997, Mr. Luke entered into an employment agreement with the Company
which provides for an annual base salary of $150,000 and an annual cash bonus
depending on the actual annual performance of the Company. The agreement
expires on August 1, 2000. In the event of Mr. Luke's death, the agreement
will terminate. In the event of Mr. Luke's disability, the Company will
continue payment of compensation during the first 12 month period of such
disability to the extent not covered by the Company's disability insurance
policies. In the event his employment is terminated, Mr. Luke will receive
compensation for the periods described in the agreement. In addition, Mr. Luke
has agreed not to compete with the Company during the six-month period
following his termination of employment.     
   
  In 1997, Mr. Jennings entered into an employment agreement with Airtron
which provides for an annual base salary of $150,000. Mr. Jennings also
participates in the Airtron incentive bonus plan (which provides him an award
equal to 3.55% of Airtron's EBITDA before corporate bonus not to exceed
$366,000 annually). The agreement expires on April 30, 2000. In the event of
Mr. Jennings' death, the agreement will terminate. In the event of Mr.
Jennings' disability, Airtron will continue payment of compensation during the
first six month period of such disability to the extent not covered by
Airtron's disability insurance policies. In the event his employment is
terminated, Mr. Jennings will receive compensation for the periods described
in the agreement. In addition, Mr. Jennings has agreed not to compete with
Airtron until the later to occur of (i) April 30, 2002 or (ii) one year
following his termination of employment.     
   
  In 1997, Mr. Johnston entered into an employment agreement with Airtron
which provides for an annual base salary of $150,000. Mr. Johnston also
participates in the Airtron incentive bonus plan (which provides him an award
equal to 1.50% of Airtron's EBITDA before corporate bonus, not to exceed
$154,000 annually). The agreement expires on April 30, 2000. In the event of
Mr. Johnston's death, the agreement will terminate. In the event of Mr.
Johnston's disability, Airtron will continue payment of compensation during
the first six month period of such disability to the extent not covered by
Airtron's disability insurance policies. In the event his employment is
terminated, Mr. Johnston will receive compensation for the periods described
in the agreement. In addition, Mr. Johnston has agreed not to compete with
Airtron until the later to occur of (i) April 30, 2002 or (ii) one year
following his termination of employment.     
   
  In 1997, Mr. Callahan entered into an employment agreement with the Company
which provides for an annual base salary of $150,000 and an annual cash bonus
depending on the actual annual performance of the Company. The agreement
expires on August 1, 2000. In the event of Mr. Callahan's death, the agreement
will terminate. In the event of Mr. Callahan's disability, the Company will
continue payment of compensation during     
 
                                      56
<PAGE>
 
the first 12 month period of such disability to the extent not covered by the
Company's disability insurance policies. In the event his employment is
terminated, Mr. Callahan will receive compensation for the periods described
in the agreement. In addition, Mr. Callahan has agreed not to compete with the
Company during the six-month period following his termination of employment.
   
  In 1997, Mr. Roach entered into an employment agreement with the Company
which provides for an annual base salary of $150,000 and an annual cash bonus
depending on the actual annual performance of the Company. The agreement
expires on August 1, 2000. In the event of Mr. Roach's death, the agreement
will terminate. In the event of Mr. Roach's disability, the Company will
continue payment of compensation during the first 12 month period of such
disability to the extent not covered by the Company's disability insurance
policies. In the event his employment is terminated, Mr. Roach will receive
compensation for the periods described in the agreement. In addition, Mr.
Roach has agreed not to compete with the Company during the six-month period
following his termination of employment.     
 
  Each of the foregoing employment agreements, except the employment
agreements applicable to Messrs. Jennings and Johnston, grants the executive
certain rights in the event of a change in control of the Company. Under the
terms of each agreement, the Company must pay the executive an amount equal to
twelve months compensation at the executive's current salary and provide
benefits to the executive for twelve months if the Company terminates the
executive's employment without "cause." In addition, if an executive's
employment terminates within six months after a sale of all or substantially
all of the assets of the Company or a merger, consolidation, liquidation or
reorganization of the Company, the Company shall pay the executive an amount
equal to three times the executive's severance benefits otherwise available
under the employment agreement.
 
STOCK AWARDS PLAN
 
  The Group Maintenance America Corp. 1997 Stock Awards Plan (the "Stock
Awards Plan") was adopted by the Company's Board of Directors to further
promote and align the interests of Directors, key employees and other persons
providing services to the Company with those of its shareholders. Pursuant to
this plan and a stock option plan for non-management employees, the Company
intends to grant options to purchase up to 1,976,734 shares of Common Stock
upon consummation of the Offering at an exercise price equal to the initial
public offering price.
 
  Purpose. The purpose of the Stock Awards Plan is to promote the long-term
success of the Company and its subsidiaries for the benefit of the Company's
shareholders by encouraging its officers, employees, Directors and consultants
to have meaningful investments in the Company so that, as shareholders
themselves, those individuals will be more likely to represent the views and
interests of other shareholders and by providing incentives to such
individuals for continued services. The Company believes that the possibility
of participation under the Stock Awards Plan will provide this group of
individuals with an incentive to perform more effectively and will assist the
Company and its subsidiaries in attracting and retaining people of outstanding
training, experience and ability.
 
  Term. The Stock Awards Plan will expire on June 30, 2007.
 
  Administration. The Stock Awards Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"), which has exclusive
authority to make all interpretations and determinations affecting the Stock
Awards Plan. The Committee has the power to determine which officers,
employees, Directors and consultants will receive an award, the time or times
when such award will be made, the type of award and the number of shares of
Common Stock to be issued under an award or the value of an award.
 
  Participation. All officers, key employees, Directors and consultants of the
Company and its subsidiaries are eligible to participate in the Stock Awards
Plan, subject to the discretion of the Committee. Participants in the Stock
Awards Plan are also eligible to participate in other incentive plans of the
Company.
 
 
                                      57
<PAGE>
 
  Shares Available for Awards. The number of shares of Common Stock that may
be issued under the Stock Awards Plan may not exceed 9% of the number of
shares outstanding (determined quarterly), subject to adjustment for corporate
transactions and changes that affect the Company, its shares or share status.
The number of shares of Common Stock that may be issued to employees of the
GroupMAC Companies and companies acquired in the future under the Stock Awards
Plan and the stock option plan for non-management employees will equal 12% of
the number of shares outstanding (determined quarterly), subject to adjustment
for corporate transactions and changes that affect the Company, its shares or
share status. Such shares may consist in whole or in part of authorized and
unissued shares or treasury shares. If an award lapses or is terminated or
settled in cash in lieu of Common Stock, the shares of Common Stock previously
covered by such awards will be available for future awards under the Stock
Awards Plan.
 
  Awards. The Stock Awards Plan permits grants of the following types of
awards: (i) options, including incentive stock options ("ISOs"), non-qualified
stock options, and reload stock options; (ii) stock appreciation rights
("SARs"); (iii) restricted stock; (iv) performance awards; (v) phantom stock
awards; or (vi) any combination thereof. Under the Stock Awards Plan, ISOs,
non-qualified stock options and SARs may not vest in less than six months from
the award date; provided, however, that the Committee may, in its sole
discretion, shorten or terminate restrictions with respect to an award. Upon
the occurrence of a change of control of the Company, all outstanding awards
under the Stock Awards Plan shall immediately vest and become exercisable.
 
  Stock Options. The Stock Awards Plan provides that the option price pursuant
to which Common Stock may be purchased will be determined by the Committee,
provided that the option price of an ISO will not be less than 100% of the
fair market value of a share of Common Stock on the date of grant. The term of
each option will be fixed by the Committee. Payment of the option price may be
made in cash, through the delivery of shares of Common Stock having a fair
market value on the exercise date equal to the option exercise price or such
other method as may be permitted by the Committee.
 
  In conjunction with non-qualified stock options awarded under the Stock
Awards Plan or otherwise, the Committee may award an additional option to
purchase a number of shares of Common Stock as determined by the Committee if
a holder exercises all or part of an original option within five years of the
date of grant of the original option. The additional option is deemed to be
granted upon delivery of payment upon exercise of the original option without
further action by the Committee (a "Reload Option"). Reload Options are
subject to all of the terms and conditions of stock options generally, except
that their term ends upon termination of the stock options with respect to
which they are granted.
 
  Stock Appreciation Rights. The Committee may award SARs either separately as
an additional right (the "Additional Right SAR") or in conjunction with a
stock option as an alternative right (the "Alternative Right SAR"). The
exercise of a stock option granted in conjunction with an Alternative Right
SAR terminates the Alternative Right SAR to the extent of the shares acquired
upon exercise of the award. Conversely, the exercise of an Alternative Right
SAR terminates the associated stock option to the extent of the shares with
respect to which such right is exercised. The exercise of an Additional Right
SAR has no effect on the exercisability of any other award and the exercise of
any other award has no effect on the exercisability of an Additional Right
SAR.
 
  Upon the exercise of an SAR, the participant will receive an amount equal to
the excess of the fair market value of a share of Common Stock on the date the
SAR is exercised over the award price. The award price for SARs will be
determined by the Committee, provided that the award price will not be less
than 100% of the fair market value of a share of Common Stock on the date such
award was made. For purposes of the limitation on the aggregate number of
shares of Common Stock that may be issued under the Stock Awards Plan, only
the number of shares actually issued in connection with the exercise of an SAR
is to be considered.
 
  Restricted Stock. The Committee may make awards of restricted Common Stock
on such terms, conditions and restrictions (which may include, but are not
limited to, continuous employment with the Company, achievement of specific
business objectives, and other measurements of individual, business unit or
Company
 
                                      58
<PAGE>
 
performance), as it determines. Such terms and conditions may include the
manner in which such restricted stock is held, the extent to which the holder
of such stock has rights of a shareholder and the circumstances under which
such shares will be forfeited. None of the shares subject to a restricted
stock award may be assigned, transferred, pledged or sold by the participant
until the termination or earlier lapse of restrictions relating thereto.
 
  Performance Awards. The Committee may make awards of performance awards,
which are based on future performance of the officer, employee, Director or
consultant, the Company or any business unit in which he is employed or
providing services to during the performance period. The Committee will
establish the performance measures applicable to such performance prior to the
beginning of the performance period but subject to such later revisions as the
Committee may deem appropriate to reflect significant unforeseen events or
changes.
 
  Phantom Stock. Phantom stock awards are awards of Common Stock or rights to
receive amounts equal to stock appreciation over a specified period of time.
The Committee may make awards of phantom stock on such terms, conditions and
restrictions as it determines. Such terms and conditions may include the
manner in which such phantom stock is held and the circumstances under which
such units will be forfeited. Phantom stock is an award unit having a value
equivalent to the fair market value of one share of Common Stock, the value of
which fluctuates with that of the Common Stock from which such unit derives
its value. Each phantom stock award will have a maximum value established by
the Committee at the time of the award.
 
  Settlement of Awards. At the Committee's discretion, awards may be settled
in cash, shares of Common Stock, other awards, or in combinations thereof. The
Committee may also require or permit participants to defer the issuance or
vesting of shares or the settlement of awards in cash. The Committee may also
provide that deferred settlements include the payment or crediting of interest
on the deferral amounts or the payment or crediting of dividend equivalents on
deferred settlements denominated in shares of Common Stock. The Committee may
determine the manner in which federal, state or local tax withholding
obligations of the Company will be satisfied including, but not limited to,
the reduction in the amount of stock or cash to be delivered or paid to the
participant or reimbursement by the participant in cash or with shares of
Common Stock, at the fair market value on the settlement date.
 
INCENTIVE BONUS PROGRAM
 
  The Company has implemented a cash bonus program for the key employees of
its subsidiaries under which awards will be determined based upon the
performance of each subsidiary. The size of the bonus pool will be equal to a
defined percentage of the amount by which the subsidiary's after-tax net
operating profit (as defined) less a charge for capital allocated to the
subsidiary exceeds a similar calculation of the previous year's results. A
certain percentage of earned bonuses are carried over to the following year
for retention purposes and to promote long-term goal achievement. Messrs.
Jennings and Johnston participate in such program in 1997. Messrs. Bryant,
Henninger, Kelly and Sigmund will participate in 1998.
 
                          RELATED PARTY TRANSACTIONS
 
  Airtron leases its headquarters offices in Dayton, Ohio and its operating
facilities in Cincinnati and Cleveland, Ohio, Indianapolis, Indiana,
Clearwater, Florida, Dallas, Houston and San Antonio, Texas and Wichita,
Kansas from entities controlled by certain former shareholders of Airtron,
including Messrs. Jennings, Johnston, Seifring and Wilkerson. None of these
leases expire prior to 2008. The aggregate annual base rent to be paid under
these leases is approximately $678,500 with annual increases based on the
consumer price index. The Company believes that the terms of such leases are
no less favorable to the Company than could have been negotiated by the
Company with unaffiliated third parties.
 
  In the Company's acquisition of Airtron, Mr. Jennings received $3,729,653,
together with 848,074 shares of Common Stock and 2,711,344 shares of Series A
Preferred Stock and Mr. Johnston received $1,393,474,
 
                                      59
<PAGE>
 
together with 330,764 shares of Common Stock and 1,057,473 shares of Series A
Preferred Stock. Also in the Airtron acquisition, Richard M. Siefring, a
holder of more than 5% of the outstanding Common Stock, received $4,345,177,
together with 985,431 shares of Common Stock and 3,150,484 shares of Series A
Preferred Stock, and Dale M. Wilkerson, another holder of more than 5% of the
outstanding Common Stock, received, together with his spouse, $3,244,206,
together with 739,744 shares of Common Stock and 2,365,007 shares of Series A
Preferred Stock. All of such shares of preferred stock will be redeemed at a
redemption price of $1.00 per share out of the net proceeds of the Offering.
 
  In the Company's acquisition of CRPP, each of Messrs. Callahan and Roach
received consideration in the form of 18,400 shares of Common Stock and
230,000 shares of Series H Preferred Stock. In the Company's acquisition of
CRA, each of Messrs. Callahan and Roach received $500,000, together with
250,000 shares of Series H Preferred Stock. All of such shares of preferred
stock will be redeemed at a redemption price of $1.00 per share out of the net
proceeds of the Offering. Each of them may receive additional cash of
$500,000, 25,629 shares of Common Stock and warrants to purchase 257,000
shares of Common Stock at $17.50 per share depending on the occurrence of
certain events.
 
  In the Company's acquisition of K&N, Andrew Jeffrey Kelly, who will become a
Director of the Company, received $1,568,000, together with 403,111 shares of
Common Stock and 1,568,000 shares of Series D Preferred Stock. All of such
shares of preferred stock will be redeemed at a redemption price of $1.00 per
share out of the net proceeds of the Offering. Mr. Kelly may receive
contingent consideration based on the operating results of K&N for the 15
month period ended June 30, 1998. The Company estimates that such payments
will be $640,000. K&N entered into a new five year renewable lease with Sigma
Management, a company owned by Mr. Kelly, to replace the existing lease for
the Company's Arlington, Texas facility. The annual base rent to be paid under
this lease is approximately $94,800. The Company believes that the terms of
such lease are no less favorable to the Company than could have been
negotiated by the Company with unaffiliated third parties.
 
  In the Company's pending acquisition of MacDonald-Miller, Fredric J.
Sigmund, who will become a director of the Company, will receive approximately
$1,752,564 and 187,775 shares of Common Stock. Mr. Sigmund may receive a
portion of the contingent consideration payable to the former shareholders of
MacDonald-Miller based on the operating results of MacDonald-Miller for the 12
month period ended December 31, 1997. The Company estimates that such payments
will be approximately $425,000. MacDonald-Miller will enter into a new ten
year renewable lease with F&V Investments, a company owned by Mr. Sigmund, to
replace the existing lease for MacDonald-Miller's Seattle, Washington
facility. The annual base rent to be paid under this lease is approximately
$475,000. The Company believes that the terms of such lease are no less
favorable to the Company than could have been negotiated by the Company with
unaffiliated third parties.
 
  In the Company's pending acquisition of Masters, Ronald D. Bryant, who will
become a director of the Company, will receive approximately $6,254,000 and
464,921 shares of Common Stock. Additionally, Masters will enter into a new
six year renewable lease with Mr. Bryant to replace the existing lease for
Masters' Gaithersburg, Maryland facility. The annual base rent to be paid
under this lease is approximately $233,700, with annual increases of 4%. The
Company believes that the terms of such lease are no less favorable to the
Company than could have been negotiated by the Company with unaffiliated third
parties.
 
  In the Company's pending acquisition of Van's, David L. Henninger, who will
become a director of the Company, will receive, together with his spouse,
approximately $1,559,125 and 113,033 shares of Common Stock. Additionally,
Van's will enter into a new five-year renewable lease with Mr. Henninger to
replace the existing lease for Van's Delray Beach, Florida facility. The
initial annual base rent to be paid under this lease is approximately $69,000
with annual increases of 3%. The Company believes that the terms of such lease
are no less favorable to the Company than could have been negotiated by the
Company with unaffiliated third parties.
 
                                      60
<PAGE>
 
                         SECURITY OWNERSHIP OF CERTAIN
                       BENEFICIAL OWNERS AND MANAGEMENT
 
  The following table sets forth, as of the date of this Prospectus, certain
information known by the Company with respect to the ownership of shares of
Common Stock as to (i) all persons who are expected to be the beneficial
owners of 5% or more of the outstanding shares of Common Stock upon
consummation of the Offering, (ii) each director and each person who has
consented to be named as a director (the "named directors"), (iii) each Named
Executive Officer, and (iv) all executive officers and directors of the
Company as a group. Unless otherwise indicated, each of the following persons
may be deemed to have sole voting and dispositive power with respect to such
shares. Information set forth in the table with respect to beneficial
ownership of the Common Stock has been provided to the Company by such
holders. Unless otherwise indicated, each person's address is c/o the
Company's principal executive offices at 1800 West Loop South, Suite 1375,
Houston, Texas 77027.
 
<TABLE>
<CAPTION>
                                                         PERCENT OF
                                     AMOUNT AND          OUTSTANDING
                                      NATURE OF         COMMON STOCK
                                     BENEFICIAL       -----------------
NAME AND ADDRESS OF BENEFICIAL      OWNERSHIP OF       BEFORE   AFTER
            OWNER                  COMMON STOCK(1)    OFFERING OFFERING
------------------------------     ---------------    -------- --------
<S>                                <C>                <C>      <C>      
James P. Norris...................          --            --      --
J. Patrick Millinor, Jr...........     236,812(2)        2.5%    1.2%
Donald L. Luke....................          --            --      --
Chester J. Jachimiec..............     147,333(3)        1.6%      *
Richard S. Rouse..................     125,933(4)        1.2%      *
William Michael Callahan..........      18,400(5)        1.0%      *
Alfred R. Roach, Jr...............      18,400(5)          *       *
John M. Sullivan..................     112,050(6)        1.2%      *
James D. Weaver...................      96,500(7)        1.0%      *
James D. Jennings.................     653,872(8)        6.9%    3.3%
Timothy Johnston..................     330,764(8)        3.5%    1.7%
Ronald D. Bryant..................     464,921(9)         --     2.3%
David L. Henninger................     113,033(9)         --       *
Andrew Jeffrey Kelly..............     403,111           4.2%    2.0%
Thomas B. McDade..................          --            --      --
Lucian Morrison...................       2,000             *       *
Fredric Sigmund...................     187,775(9)(10)     --       *
National City Bank Dayton, as
 Trustee of the Airtron, Inc.
 Savings and Profit Sharing Plan..     639,074           6.7%    3.2%
 c/o Mr. David Smeltzer
 6 North Main Street
 Dayton, Ohio 45412
Richard M. Siefring...............     985,431(8)       10.4%    4.9%
 7813 N. Dixie Drive
 Dayton, Ohio 45414
</TABLE>
 
 
                                      61
<PAGE>
 
<TABLE>
<CAPTION>
                                                                  PERCENT OF
                                                 AMOUNT AND       OUTSTANDING
                                                  NATURE OF      COMMON STOCK
                                                 BENEFICIAL    -----------------
                                                OWNERSHIP OF    BEFORE   AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER           COMMON STOCK(1) OFFERING OFFERING
------------------------------------           --------------- -------- --------
<S>                                            <C>             <C>      <C>
Dale M. Wilkerson............................       527,969(8)    5.6%     2.6%
 7813 N. Dixie Drive
 Dayton, Ohio 45414
Gordon A. Cain...............................     2,417,950      25.5%    12.1%
 Eight Greenway Plaza, Suite 702
 Houston, Texas 77046
All executive officers and named directors of
 the Company as a group
 (19 persons)................................     2,992,904      31.2%    14.9%
</TABLE>
--------
 * Beneficially owns less than 1% of the outstanding shares of Common Stock.
(1) The numbers shown do not include an aggregate of 171,333 options or
    warrants to purchase Common Stock held by such individuals which are not
    exercisable within 60 days.
(2) Includes 16,667 shares subject to options exercisable on December 31,
    1997.
(3) Includes 16,000 shares held in each of the Paula Ann Jachimiec Trust and
    the Sarah Elizabeth Jachimiec Trust of which Mr. Jachimiec is trustee. Mr.
    Jachimiec disclaims beneficial ownership of such shares. Includes 15,333
    shares subject to options exercisable on December 31, 1997.
(4) Includes 13,333 shares subject to options exercisable on December 31,
    1997.
(5) Does not include warrants to purchase 257,000 shares of Common Stock at
    $17.50 per share and 25,629 shares that may be issued upon the occurrence
    of certain events. See "Related Party Transactions."
(6) Includes 82,050 shares for which Mr. Sullivan has a limited power of
    attorney to vote and exercise investment powers until revoked by the
    actual owners.
   
(7) Includes 10,000 shares subject to currently exercisable options.     
   
(8) Includes shares held in employee benefit plans (Jennings--195,728 shares;
    Johnston--285,334 shares; and Wilkerson--383,484 shares).     
(9) All such shares will be issued upon completion of the Offering.
(10) Includes shares held by the MacDonald-Miller Industries, Inc. Employee
     Stock Ownership Plan and Trust.
 
                                      62
<PAGE>
 
                               THE ACQUISITIONS
 
  The Company entered into exchange agreements with shareholders of the Pre-
Offering Companies (other than Jarrell) and merger agreements with the
shareholders of Jarrell and the Offering Acquisition Companies. With respect
to the Pre-Offering Companies, the Company paid, and with respect to the
Offering Acquisition Companies the Company will pay, an agreed value for all
the issued and outstanding capital stock of each GroupMAC Company based
generally on the Company's evaluation of the operating results and
capitalization of such company. In some cases, the shareholders of a company
have the opportunity to receive additional amounts of purchase price
contingent upon the occurrence of future events. Shareholders of several Pre-
Offering Companies also received preferred stock which will be redeemed for
cash (at a redemption price equal to $1.00 per share) with a portion of the
proceeds of the Offering.
 
  The following table sets forth for each GroupMAC Company, as of the date of
its acquisition, the consideration paid or to be paid to its shareholders (i)
in cash, (ii) in Common Stock, (iii) in preferred stock and (iv) in assumed
debt.
 
<TABLE>
<CAPTION>
                                           SHARES OF   SHARES OF
                                            COMMON     PREFERRED       ASSUMED
                             CASH(1)(4)   STOCK(1)(4) STOCK(1)(5)       DEBT
                             -----------  ----------- -----------    -----------
<S>                          <C>          <C>         <C>            <C>
PRE-OFFERING COMPANIES:
Airtron..................... $20,848,637   4,652,140  14,873,133     $ 1,289,927
A-ABC/A-1...................   1,886,000     359,302          --         947,937
Charlie's...................   1,502,502     157,256          --         112,741
CRPP(2).....................     450,000     192,123     550,000(2)       78,236
CRA (asset purchase)(2).....   2,000,000          --     500,000              --
Costner(2)(3)...............     501,290      65,536     100,000         193,755
Hallmark....................   2,080,794     105,687     580,000         338,398
Jarrell.....................     150,000      12,698          --          26,654
K&N(2)......................   1,568,000     403,111   1,568,000       1,498,995
Sibley(2)...................   1,201,873      62,001     664,691         376,368
USA (asset purchase)........     435,779      49,804     435,771         100,000
Way Residential (asset
 purchase)(2)(3)............      16,500       6,428          --              --
                             -----------   ---------  ----------     -----------
                              32,641,375   6,066,086  19,271,595       4,963,011
                             -----------   ---------  ----------     -----------
OFFERING ACQUISITION
 COMPANIES:(3)
All Service.................   2,311,570     201,804          --           8,830
Arkansas Mechanical.........   2,121,000     151,500          --         692,997
Central Carolina............   3,637,952     281,508          --             979
Evans.......................   1,167,391     101,915          --              --
Linford(2)..................     651,000     126,037          --         114,000
MacDonald-Miller(2).........   6,001,931     643,064          --       5,624,398
Masters.....................   6,605,457     491,076          --       1,834,709
Mechanical..................     109,000       7,786          --              --
Paul E. Smith...............          --     217,062          --         325,000
Southeast Mechanical........   2,149,000     153,571          --         355,980
Van's.......................   1,559,125     113,034          --         340,000
Willis......................   2,257,000     241,786          --         220,731
Yale........................   2,215,000     158,214          --         420,045
                             -----------   ---------  ----------     -----------
                              30,785,426   2,888,357          --       9,937,669
                             -----------   ---------  ----------     -----------
S Corporation Distribu-
 tions(4)...................  (1,856,250)   (119,554)         --              --
                             -----------   ---------  ----------     -----------
    Total................... $61,570,551   8,834,889  19,271,595     $14,900,680
                             ===========   =========  ==========     ===========
</TABLE>
--------
(1) Subject to post-closing adjustments.
(2) The former shareholders of these GroupMac Companies may receive additional
    consideration in the form of cash, Common Stock or warrants for Common
    Stock based on the occurance of future events.
(3) The shares of Common Stock to be issued is based on the midpoint of the
    range of initial public offering prices reflected on the cover page of
    this Prospectus.
(4) The cash and Common Stock consideration is presented before anticipated
    Subchapter S distributions.
(5) Includes 1,713,622 warrants for preferred stock.
 
                                      63
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
 
GENERAL
   
  Under the Company's Articles of Incorporation, as amended (the "Articles"),
the Company has authority to issue 150,000,000 shares of capital stock,
consisting of 50,000,000 shares of Preferred Stock, par value $0.001 per share
(the "Preferred Stock"), and 100,000,000 shares of Common Stock, par value
$0.001 per share. As of the date of this Prospectus, the Company had
outstanding 9,486,396 shares of Common Stock and 17,557,973 shares of
Preferred Stock (13,159,511 shares of Series A Preferred Stock, 100,000 shares
of Series C Preferred Stock, 1,568,000 shares of Series D Preferred Stock,
580,000 shares of Series E Preferred Stock, 664,691 shares of Series F
Preferred Stock, 500,000 shares of Series H Preferred Stock, 435,771 shares of
Series I Preferred Stock and 550,000 shares of Series G Preferred Stock). All
of the outstanding Preferred Stock and warrants for 1,713,622 shares of Series
A Preferred Stock will be redeemed at a price of $1.00 per share out of the
net proceeds of the Offering. When so redeemed, all such shares of Preferred
Stock will be authorized and subject to reissuance by the Company.     
 
  The following summary description of the material features of the capital
stock of the Company is intended as a summary only and is qualified in its
entirety by reference to the Articles, a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
 
PREFERRED STOCK
 
  The Articles authorize the issuance of Preferred Stock in one or more series
having designations, rights and preferences determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without approval of holders of Common Stock, to issue Preferred Stock with
dividends, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders of the Common
Stock. In the event of issuance, the Preferred Stock could be used, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. Although the Company has no present
intention to issue any additional shares of its Preferred Stock, there can be
no assurance that it will not do so in the future.
 
COMMON STOCK
 
  Voting Rights. Holders of Common Stock are entitled to one vote for each
share on all matters on which shareholders generally are entitled to vote,
including elections of directors. Upon consummation of the Offering, the Board
of Directors will be classified into three classes of five directors, with the
term of each class expiring on a staggered basis. The classification of the
Board of Directors may make it more difficult to change the composition of the
Board of Directors and thereby may discourage or make more difficult an
attempt by a person or group to obtain control of the Company. The Articles do
not provide for cumulative voting for the election of directors. Holders of
Common Stock have no preemptive, subscription, redemption or conversion
rights.
 
  Dividends. Subject to the preferential rights of any outstanding Preferred
Stock that may be created by the Board of Directors under the Articles,
dividends may be paid to holders of Common Stock when, as and if declared by
the Board of Directors out of funds legally available for such purpose. The
declaration and payment of dividends on Common Stock could be restricted by
the terms of any Preferred Stock issued. Under the TBCA, dividends may be paid
by the Company out of "surplus" (as defined under Article 1.02 of the TBCA)
or, if there is no surplus, out of net profits for the fiscal year in which
the dividends are declared and/or the preceding fiscal year. On a pro forma
basis, at June 30, 1997, the Company had surplus of approximately $21 million
(on a book value basis) for the payment of dividends, and the Company will
also be able to pay dividends out of any net profits for the current and/or
prior fiscal year, if any. However, the Company does not intend to pay
dividends at the present time. See "Dividend Policy" and "Description of Bank
Credit Agreement."
 
  Liquidation. In the event of the dissolution or winding up of the Company,
after payment or provision for payment of debts and other liabilities of the
Company and any other series or class of the Company's stock hereafter issued
that ranks senior as to liquidation rights to the Common Stock, the holders of
Common Stock
 
                                      64
<PAGE>
 
will be entitled to receive pro rata all remaining assets of the Company
available to such holders. All outstanding shares of Common Stock are, and the
shares of Common Stock to be sold by the Company in this Offering will be,
duly and validly issued, fully paid and nonassessable.
 
  Miscellaneous. There is no established public trading market for the Common
Stock. The Common Stock has been approved for listing on the New York Stock
Exchange.
 
  The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
 
STATUTORY BUSINESS COMBINATION PROVISION
 
  The Company is subject to Article 13 of the TBCA ("Article 13") which, with
certain exceptions, prohibits a Texas corporation from engaging in a "business
combination" (as defined in Article 13) with any shareholder who is a
beneficial owner of 20% or more of the corporation's outstanding stock for a
period of three years after such shareholder's acquisition of a 20% ownership,
unless: (i) the board of directors of the corporation approves the transaction
or the shareholder's acquisition of shares prior to the acquisition or (ii)
two-thirds of the unaffiliated shareholders of the corporation approve the
transaction at a shareholders' meeting. Shares that are issuable, but have not
yet been issued, pursuant to options, conversion or exchange rights or other
agreements are not considered outstanding for purposes of Article 13.
 
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
 
  The Articles contain a "fair price" provision which generally requires that
certain mergers, business combinations and similar transactions constituting a
"Business Transaction" with a "Related Person" (generally the beneficial owner
of at least 10 percent of the Company's voting stock) be approved by the
holders of at least 80 percent of the Company's voting stock, unless (i) the
transaction is approved by at least 80 percent of the "Continuing Directors"
of the Company, who constitute a majority of the entire board, (ii) the
transaction occurs more than five years after the last acquisition of the
Company voting stock by the Related Person or (iii) certain "fair price" and
procedural requirements are satisfied. The Articles define "Business
Transaction" as (i) any merger or consolidation involving the Company or a
subsidiary of the Company, (ii) any sale, lease, exchange, transfer or other
disposition (in one transaction or a series of transactions), including
without limitation a mortgage or any other security device, of all or any
substantial part of the assets either of the Company or of a subsidiary of the
Company, (iii) any sale, lease, exchange, transfer or other disposition of all
or any substantial part of the assets of an entity to the Company or a
subsidiary of the Company, (iv) the issuance, sale, exchange, transfer or
other disposition by the Company or a subsidiary of the Company of any
securities of the Company or any subsidiary of the Company, (v) any
recapitalization or reclassification of the Company's securities (including
without limitation, any reverse stock split) or other transaction that would
have the effect of increasing the voting power of a Related Person, (vi) any
liquidation, spinoff, splitoff, splitup or dissolution of the Company, and
(vii) any agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Transaction. "Continuing
Director" is defined to mean a director who either was a member of the Board
of Directors of the Company prior to the time such Related Person became a
Related Person or who subsequently became a director of the Company and whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least 80 percent of the Continuing Directors then on
the Board of Directors, either by a specific vote or by approval of the proxy
statement issued by the Company on behalf of the Board of Directors in which
such person is named as nominee for director, without an objection to such
nomination; provided, however, that in no event shall a director be considered
a "Continuing Director" if such director is a Related Person and the Business
Transaction to be voted upon is with such Related Person or is one in which
such Related Person otherwise has an interest (except proportionately as a
shareholder of the Company).
 
  In accordance with the Company's Bylaws, a shareholder of the Company may
nominate persons for election to the Board of the Company if the shareholder
submits such nomination, together with certain related information required by
the Company's Bylaws, in writing to the Secretary of the Company not less than
50 days nor more than 75 days prior to the date of any annual meeting of
shareholders.
 
                                      65
<PAGE>
 
                     DESCRIPTION OF BANK CREDIT AGREEMENT
 
GENERAL
 
  In connection with this Offering, the Company expects to enter into a credit
agreement (the "Bank Credit Agreement") with lenders (the "Lenders") and Texas
Commerce Bank National Association, as Agent (the "Agent"). The Agent has
committed to provide, or arrange for a syndicate of Lenders to provide, the
Company, subject to certain terms and conditions, the entire $75 million
principal amount of the revolving credit facility described below. The
following description summarizes the material provisions the Company currently
expects will be included in the Bank Credit Agreement. The following
description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of the Bank Credit
Agreement, which have yet to be fully negotiated.
 
AMORTIZATION; PREPAYMENTS
 
  Loans under the Bank Credit Agreement may be prepaid at any time without
premium or penalty in reasonable minimum amounts. Prepayments of Eurodollar
borrowings on any day other than the last day of an interest period will be
required to be accompanied by a payment to the Lenders of various costs,
expenses or losses, if any, incurred as a result of such prepayment. The
amount available under the Bank Credit Agreement will be payable in full on
its maturity date.
 
SECURITY; GUARANTEES
 
  Borrowings under the Bank Credit Agreement will be guaranteed by the
Company's Material subsidiaries (as defined in the Bank Credit Agreement),
including future Material subsidiaries. The obligations of the Company under
the Bank Credit Agreement and the obligations under the guarantees will be
secured by a first priority lien on the accounts receivable and inventory of
the Company and its Material subsidiaries, including any future subsidiaries,
and by a pledge of stock of its domestic subsidiaries.
 
INTEREST RATES
   
  Loans under the Bank Credit Agreement will bear interest at a rate per annum
at the Company's option, of either (i) the Alternate Base Rate (which is equal
to the greater of the Federal Funds Effective Rate (as defined in the Bank
Credit Agreement) plus .5% or the Prime Rate (as defined in the Bank Credit
Agreement) plus a margin depending on the ratio of indebtedness for borrowed
money to Adjusted EBITDA (as defined in the Bank Credit Agreement), or (ii)
the Eurodollar Rate (as defined in the Bank Credit Agreement) plus a margin,
depending on the ratio of indebtedness for borrowed money to Adjusted EBITDA.
    
FEES, EXPENSES AND COSTS; CREDIT FACILITIES
 
  The terms of the Bank Credit Agreement will require the Company to pay the
following fees in connection with the maintenance of loans under the Bank
Credit Agreement: (i) commitment fees to be paid to the Lenders in amounts
between .25% and .375% per annum with respect to the unused commitments under
the Bank Credit Agreement depending on the ratio of indebtedness for borrowed
money to Adjusted EBITDA, payable quarterly in arrears until such time as such
facility is terminated; and (ii) administration fees payable annually to the
Agent. In addition, the Company will pay various underwriting and arrangement
fees and closing costs in connection with the origination and syndication of
the Bank Credit Agreement.
 
  The Company will also be required to reimburse the Agent for all reasonable
out-of-pocket costs and expenses incurred in the preparation, documentation
and administration of the Bank Credit Agreement and to reimburse the Lenders
for all reasonable costs and expenses incurred in connection with the
enforcement of their rights in connection with a default or the enforcement of
the Bank Credit Agreement. The Company will
 
                                      66
<PAGE>
 
indemnify the Agent and the Lenders and their respective officers, directors,
shareholders, employees, agents and attorneys against certain costs, expenses
(including fees and reimbursements of counsel) and liabilities arising out of
or relating to the Bank Credit Agreement and the transactions contemplated
thereby. The Lenders also will be entitled to be reimbursed for certain
reserve requirements and increases therein, changes in law and circumstances,
taxes (other than an overall net income), capital adequacy, and consequential
costs. Further, the inability to determine Eurodollar Rates or the possible
future illegality of the Eurodollar Rate option will result in such rate
option being unavailable.
 
COVENANTS
 
  The Bank Credit Agreement will contain substantial restrictive covenants
limiting the ability of the Company and its subsidiaries to: (i) incur
Indebtedness (as defined in the Bank Credit Agreement), including contractual
contingent obligations; (ii) pay certain debt after default; (iii) create or
allow to exist liens or other encumbrances; (iv) transfer assets except for
sales and other transfers of inventory or surplus, immaterial or obsolete
assets in the ordinary course of business; (v) enter into mergers,
consolidations and asset dispositions of all or substantially all of its
properties; (vi) make investments; (vii) extend credit to any entity; (viii)
sell, transfer or otherwise dispose of any class of stock or the voting rights
of any subsidiary of the Company; (ix) enter into transactions with related
parties other than on an arm's-length basis on terms no less favorable to the
Company than those available from third parties; (x) amend certain agreements;
(xi) make any material change in the nature of the business conducted by the
Company; (xii) pay dividends or redeem shares of capital stock; and (xiii)
make capital expenditures.
 
  In addition, the Bank Credit Agreement will contain covenants that, among
other things and with certain exceptions, will require the Company and its
subsidiaries to: (i) maintain the existence, qualification and good standing
of the Company and its subsidiaries; (ii) comply in all material respects with
all material applicable laws; (iii) maintain material properties, rights and
franchises; (iv) deliver certain financial and other information; (v) maintain
specified insurance; (vi) pay taxes; and (vii) notify the Lenders of any
default under the Loan Documents (as defined in the Bank Credit Agreement) and
of certain other material events.
 
  Under the Bank Credit Agreement, the Company will be required to satisfy
certain financial covenants and tests, including (i) a fixed charge coverage
ratio of not less than 1.20 to 1.0; (ii) a minimum tangible net worth that is
positive; (iii) a ratio of total indebtedness for borrowed money to
Capitalization of not greater than 55%; and (iv) a minimum Consolidated Net
Worth (as defined in the Bank Credit Agreement) equal to the net worth at the
closing date of the Facility less $750,000 plus 100% of the net proceeds of
any equity issued plus 75% of cumulative net income after the closing date.
Changes in generally accepted accounting principles that materially affect
financial covenants may result in modifications to the financial covenants
with the view to placing the covenants on the same economic basis as before
the change in generally accepted accounting principles.
 
EVENTS OF DEFAULT
 
  Events of Default under the Bank Credit Agreement will include, subject to
certain applicable notice and grace periods, the following: (i) a default in
the payment when due of any principal, interest, fees or other amount under
the Bank Credit Agreement; (ii) a default by the Company under any debt
instrument in excess of $500,000, or the occurrence of any event or condition
that enables the holder of such debt to accelerate the maturity thereof; (iii)
any material breach of any representation, warranty or statement in, or
failure to perform any duty or covenant under the Bank Credit Agreement or any
of the Loan Documents; (iv) commencement of voluntary or involuntary
bankruptcy, insolvency or similar proceedings by or against the Company or any
Material subsidiary; (v) any judgment or order in excess of $500,000 net of
confirmed insurance remaining undischarged or unstayed for longer than certain
periods; and (vi) a Change of Control (as defined in the Bank Credit
Agreement).
 
                                      67
<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
   
  Upon completion of the Offering, the Company will have outstanding
19,961,706 shares of Common Stock (21,086,706 shares if the Underwriters'
over-allotment option is exercised in full). Of these shares, the 7,500,000
shares (8,625,000 shares if the Underwriters' over-allotment option is
exercised in full) sold in the Offering will be freely tradable in the public
market without restriction or limitation under the Securities Act, except for
any shares held by an "affiliate" (as defined in the Securities Act) of the
Company. The 9,486,396 shares of Common Stock held by existing shareholders of
the Company immediately prior to the Offering and the 2,975,309 shares of
Common Stock to be issued to shareholders of the Offering Acquisition
Companies, Costner, Way Residential and Callahan Roach, will be "restricted
securities" within the meaning of Rule 144, except for the 643,064 shares of
Common Stock registered under the Securities Act in connection with the
acquisition of MacDonald-Miller.     
   
  In addition, certain of the Company's directors, executive officers and
principal shareholders, who hold an aggregate of 8,169,576 shares of Common
Stock, have entered into lock-up agreements with the Representatives of the
Underwriters. These persons have agreed not to offer, sell, contract to sell,
grant any option with respect to, pledge, hypothecate or otherwise dispose of,
any shares of Common Stock owned by them until the date occurring 180 days
after the date of this Prospectus without the prior written consent of the
Representatives. All such 8,169,576 shares will become available for sale 180
days after the date of this Prospectus upon expiration of these lock-up
agreements, subject to compliance with Rule 144 promulgated under the
Securities Act.     
 
  In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned, for a
least one year, shares of Common Stock that have not been registered under the
Securities Act or that were acquired from an "affiliate" of the Company is
entitled to sell within any three-month period the number of shares of Common
Stock that does not exceed the greater of (i) one percent of the number of the
then outstanding shares or (ii) the average weekly reported trading volume of
the Common Stock during the four calendar weeks preceding the sale. Sales
under Rule 144 are also subject to certain notice requirements and to the
availability of current public information about the Company and must be made
in unsolicited brokers' transactions or to a market maker. A person (or
persons whose shares are aggregated) who is not an "affiliate" of the Company
under the Securities Act during the three months preceding a sale and who has
beneficially owned such shares for at least two years is entitled to sell such
shares under Rule 144(k) without regard to the information, volume, manner of
sale and notice provisions of such Rule. Commencing October 24, 1997,
1,211,200 "restricted" shares of Common Stock will be eligible for resale
pursuant to Rule 144, subject to the volume, manner of sale and other
limitations thereof. The remaining "restricted" shares will become eligible
for resale pursuant to Rule 144 from time to time thereafter.
 
  On the date of this Prospectus, the Company had outstanding options to
purchase 378,800 shares of Common Stock, 100,533 of which will be vested.
Options to purchase 10,000 shares of Common Stock have been exercised and
options to purchase at least an additional 1,976,734 shares of Common Stock
will be granted under the Stock Awards Plan and a stock option plan for
nonmanagement employees concurrently with the closing of the Offering. The
Company expects to file a registration statement on Form S-8 under the
Securities Act to register the shares of Common Stock issuable upon exercise
of options granted under these plans. Accordingly, such shares will be freely
tradeable by holders who are not affiliates of the Company and, subject to the
volume and manner of sale limitations of Rule 144, by holders who are
affiliates of the Company.
 
  Prior to this Offering, there has been no active trading market for the
Common Stock. No predictions can be made of the effect, if any, that market
sales of shares of Common Stock or the availability of such shares for sale
will have on the market price prevailing from time to time. Nevertheless,
sales of significant amounts of Common Stock could adversely affect the
prevailing market price of Common Stock, as well as impair the ability of the
Company to raise capital through the issuance of additional equity securities.
 
 
                                      68
<PAGE>
 
TRANSFER RESTRICTIONS
 
  Purchasers of Common Stock in the acquisitions of the Pre-Offering Companies
were, and Common Stock in the acquisitions of the Offering Acquisition
Companies will be, required to enter into a Stock Transfer Restriction
Agreement.
 
  The Stock Transfer Restriction Agreements are substantially similar and
generally require that, at any time that the Company is engaged in an
underwritten public offering of its securities, each shareholder who is a
party thereto shall refrain from making any disposition of Common Stock on a
securities exchange or in the over-the-counter or any other public trading
market for the period of time requested by the Company; provided, however,
that (i) the restrictions on the transfer of Common Stock shall not limit any
shareholder's right to sell Common Stock pursuant to any piggyback
registration right that such shareholder may have pursuant to any registration
rights or similar agreement binding upon the Company and (ii) such
restrictions are no more restrictive than those imposed on the management of
the Company. Additionally, each Stock Transfer Restriction Agreement provides
that, during the one-year period following the date of such agreement (the
"First Holding Period"), the shareholder will not dispose of his or her shares
of Common Stock (subject to certain limited exceptions generally involving
transfers to family members and trusts or pursuant to an effective
registration statement). In addition to the foregoing restrictions, during the
one year period following the First Holding Period (the "Second Holding
Period"), no shareholder who is a party thereto may dispose of any Common
Stock in any calendar month in an amount greater than 3% of the number of
shares of Common Stock issued to such shareholder increasing cumulatively for
months in which less than 3% was sold. After expiration of the Second Holding
Period, all such restrictions under the Stock Transfer Restriction Agreements
lapse. Finally, any shareholder who is a party thereto shall provide five
business days' notice to the Company prior to any proposed disposition until
the later of (i) the end of the one-year period following the Second Holding
Period, (ii) for as long as such shareholder is an officer or director of the
Company or any of its Pre-Offering Companies or (iii) the date on which such
shareholder ceases to hold the greater of 20,000 shares of Common Stock or 20%
of the number of shares.
 
  No shareholder who is a party thereto shall make a transfer of any Common
Stock if such action would constitute (i) a violation of any federal or state
securities law, (ii) a breach of any condition to any exemption from
registration of the Common Stock under any such laws or (iii) a breach of any
undertaking or agreement of such shareholder entered into pursuant to such
laws or in connection with obtaining an exemption thereunder.
 
  The summary herein of certain provisions of the Stock Transfer Restriction
Agreements does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all of the provisions thereof, the form of
which is filed as an exhibit to the Registration Statement.
 
REGISTRATION RIGHTS
   
  Pursuant to several Registration Rights Agreements, as amended (the
"Registration Rights Agreements"), the Company has agreed to register under
the Securities Act substantially all of the shares of Common Stock outstanding
on the date of this Prospectus (9,486,396 shares) and will enter into similar
agreements with the shareholders of the Offering Acquisition Companies (except
MacDonald-Miller), Costner, Way Residential and Callahan Roach (who will
receive 2,975,309 shares of Common Stock). Pursuant to the Registration Rights
Agreements, the shareholders who are parties thereto will be entitled, subject
to certain limitations, to include their shares of Common Stock in a
registration of shares of Common Stock subsequent to this Offering which is
initiated by the Company under the Securities Act. The Registration Rights
Agreement with respect to the founding shareholders of the Company
additionally provides that any one or more shareholders holding a minimum
number of shares of Common Stock has the right to require the Company to
effect a registration of all or any part of the shares of Common Stock under
the Securities Act (a "Demand Registration"). In the event the aggregate
number of shares of Common Stock which the shareholders request the Company to
include in any registration, together, in the case of a registration initiated
by the Company, with the shares of Common Stock of the Company to be included
in such registration, exceeds the number that in the opinion of the managing
underwriter can be sold in such offering without materially affecting the
offering price of such shares, the number of shares of each     
 
                                      69
<PAGE>
 
shareholder to be included in such registration will be reduced pro rata based
on the aggregate number of shares for which registration was requested.
 
  The Company at its option, may delay the filing of a registration statement
required pursuant to any Demand Registration for up to 120 days if it has
determined that filing a registration statement would be seriously detrimental
to the Company or its shareholders or that a delay in filing the registration
statement is necessary in light of a pending corporate development. In
addition, although the Company's founding shareholders have the right to have
the shares of Common Stock owned by them registered by the Company under the
Securities Act as described below, each of them has agreed not to exercise
their respective demand rights for the two year period following the Offering
except for Mr. Cain who has agreed to not exercise his demand rights for one
year.
 
  The Registration Rights Agreements contain customary provisions whereby the
Company and the shareholders party thereto agree to indemnify and contribute
to the other with regard to losses caused by the misstatement of any
information or the omission of any information required to be provided in a
registration statement filed under the Securities Act. The Registration Rights
Agreements require the Company to pay the expenses associated with any
registration other than sales discounts, commissions, transfer taxes and
amounts to be borne by underwriters or as otherwise required by law.
 
  The summary herein of certain provisions of the Registration Rights
Agreements does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all of the provisions of the forms of
Registration Rights Agreements, copies of which are filed as exhibits to the
Registration Statement.
 
                                      70
<PAGE>
 
                                 UNDERWRITING
 
  Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among the Company and the underwriters named
below (the "Underwriters"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters, for whom The Robinson-Humphrey
Company, LLC, William Blair & Company, L.L.C. and ABN AMRO Chicago Corporation
are acting as representatives (the "Representatives"), has severally agreed to
purchase from the Company the number of shares of Common Stock set forth below
opposite their respective names. The Underwriters are committed to purchase
all of such shares if any are purchased. Under certain circumstances, the
commitments of non-defaulting Underwriters may be increased as set forth in
the Underwriting Agreement.
 
<TABLE>
<CAPTION>
                                                                       NUMBER OF
      UNDERWRITERS                                                      SHARES
      ------------                                                     ---------
      <S>                                                              <C>
      The Robinson-Humphrey Company, LLC..............................
      William Blair & Company, L.L.C..................................
      ABN AMRO Chicago Corporation....................................
                                                                       ---------
        Total......................................................... 7,500,000
                                                                       =========
</TABLE>
 
  The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public initially at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of $       per share.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $     per share on sales to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
 
  The Company has granted the Underwriters an option, exercisable by the
Representatives, to purchase up to 1,125,000 additional shares of Common Stock
at the initial public offering price less the underwriting discount. Such
option, which expires 30 days after the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent the Representatives
exercise such option, each of the Underwriters will be obligated, subject to
certain conditions, to purchase approximately the same percentage of the
option shares as the number of shares to be purchased initially by that
Underwriter bears to the total number of shares to be purchased initially by
the Underwriters.
 
  Prior to this Offering, there has been no established trading market for the
Common Stock. The initial price to the public for the Common Stock offered
hereby was determined by negotiations among the Company and the
Representatives. Among the factors considered in determining the initial price
to the public were the history of and the prospects for the industry in which
the Company competes, the past and present operations of the Company and the
historical results of operations of the Company, the prospects for future
earnings of the Company, the general condition of the securities markets at
the time of the Offering, and the recent market prices of securities of
generally comparable companies. There can be no assurance that an active
trading market will develop for the Common Stock or that the Common Stock will
trade in the public market subsequent to the Offering at or above the initial
public offering price.
 
  An affiliate of ABN AMRO Chicago Corporation will make loans to the Company
under the Bank Credit Agreement, and such affiliate will receive a portion of
the proceeds from this Offering pursuant to the repayment of loans under the
Original Credit Agreement. See "Use of Proceeds."
 
  The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments the Underwriters may be required to make in respect thereof.
 
 
                                      71
<PAGE>
 
  The Representatives, on behalf of the Underwriters, may engage in over-
allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act. Over-
allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
Common Stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the
Representatives to reclaim a selling concession from a syndicate member when
shares of Common Stock originally sold by such syndicate member are purchased
in a syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the Common Stock to be higher than it would otherwise be in
the absence of such transactions. These transactions may be effected on the
New York Stock Exchange or otherwise and, if commenced, may be discontinued at
any time.
   
  In connection with the Offering, the Company, its officers and directors and
certain of its shareholders have agreed that, during a period of 180 days from
the date of this Prospectus, such holders will not, without the prior written
consent of the Representatives, directly or indirectly, offer, sell, contract
to sell, grant any option with respect to, pledge, hypothecate or otherwise
dispose of, any shares of Common Stock. In addition, the Company has agreed
that, during a period of 180 days from the date of this Prospectus, the
Company will not, without the prior written consent of the Representatives,
directly or indirectly, offer, sell, contract to sell, grant any option with
respect to, pledge, hypothecate or otherwise dispose of any shares of Common
Stock except for shares of Common Stock to be issued in the Offering, in
connection with acquisitions generally, and upon the exercise of stock options
or sale of Common Stock pursuant to a "cashless exercise" of stock options
which are either (i) outstanding on the date of this Prospectus, (ii) issued
under the Company's 1997 Stock Awards Plan or (iii) issued under the Company's
stock option plan for non-management employees or a bona fide gift of Common
Stock, provided that the donee agrees to be bound by the terms of the donor's
lockup agreement to purchase Common Stock granted in employment contracts or
under the Stock Option Plan and pursuant to director options as described
under "Management--Option Grants."     
 
                                 LEGAL MATTERS
 
  The legality of the Common Stock offered hereby will be passed upon for the
Company by Bracewell & Patterson, L.L.P., Houston, Texas, and for the
Underwriters by King & Spalding, Atlanta, Georgia.
 
                                    EXPERTS
 
  The financial statements of Group Maintenance America Corp. (GroupMAC
Parent), Group Maintenance America Corp. and Subsidiaries (formerly Airtron,
Inc.), K&N Plumbing, Heating and Air Conditioning, Inc., A-ABC Appliance, Inc.
and A-1 Appliance & Air Conditioning, Inc., Arkansas Mechanical Services, Inc.
and Mechanical Services, Inc., Callahan Roach Products and Publications, Inc.,
Central Carolina Air Conditioning Company, Hallmark Air Conditioning, Inc. and
Subsidiary, Sibley Services, Incorporated, Southeast Mechanical Service, Inc.,
Willis Refrigeration, Air Conditioning & Heating, Inc., and Yale, Inc., to the
extent and for the periods indicated in their reports, have been included
herein and in the registration statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
 
  The financial statements of Masters, Inc. as of December 31, 1995, December
31, 1996 and June 30, 1997, and for each of the three years in the period
ended December 31, 1996 and for the six month period ended June 30, 1997
included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
 
  The financial statements and schedules of MacDonald-Miller included in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Moss Adams LLP,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
 
                                      72
<PAGE>
 
                             AVAILABLE INFORMATION
 
  The Company has filed with the Commission a Registration Statement (which
term encompasses any and all amendments thereto) under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus, which is filed as
part of the Registration Statement, does not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain items of which were omitted in accordance with the rules and
regulations of the Commission. Statements made in this Prospectus concerning
the contents of any contract, agreement or other document referred to are
summaries of the terms of such contract, agreement or other document and are
not necessarily complete. With respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
hereby made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. For further information with respect to the Company, reference
is hereby made to the Registration Statement and such exhibits and schedules
filed as a part thereof, which may be inspected, without charge, at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: 7 World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of all or any portion of the Registration Statement may
be obtained from the Public Reference facilities of the Commission, upon
payment of the prescribed fees. The Registration Statement is also available
on the Internet at the Commission's World Wide Web site at http://www.sec.gov.
The Common Stock has been approved for listing on the NYSE, and reports, proxy
statements and other information concerning the Company can be inspected and
copied at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
 
  As a result of the Offering, the Company will be subject to the reporting
requirements under the Exchange Act and, in accordance therewith, will file
reports, proxy statements, information statements and other information with
the Commission. The Company intends to furnish annual reports to its
shareholders containing audited financial statements reported on by an
independent certified public accounting firm and quarterly reports containing
unaudited summary financial information for each of the first three quarters
of each year.
 
                                      73
<PAGE>
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
GROUP MAINTENANCE AMERICA CORP. UNAUDITED
 PRO FORMA COMBINED FINANCIAL STATEMENTS
  Introduction to Unaudited Pro Forma Combined Financial Statements........  F-4
  Unaudited Pro Forma Combined Balance Sheet...............................  F-6
  Unaudited Pro Forma Combined Statements of Operations....................  F-8
  Notes to Unaudited Pro Forma Combined Financial Statements............... F-14
HISTORICAL FINANCIAL STATEMENTS
 GROUP MAINTENANCE AMERICA CORP. (GROUPMAC PARENT)
  Report of Independent Public Accountants................................. F-19
  Balance Sheets........................................................... F-20
  Statements of Operations................................................. F-21
  Statements of Shareholders' Equity....................................... F-22
  Statements of Cash Flows................................................. F-23
  Notes to Financial Statements............................................ F-24
GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
 (FORMERLY AIRTRON, INC.)
  Report of Independent Public Accountants................................. F-29
  Consolidated Balance Sheets.............................................. F-30
  Consolidated Statements of Operations.................................... F-31
  Consolidated Statements of Shareholders' Equity.......................... F-32
  Consolidated Statements of Cash Flows.................................... F-33
  Notes to Consolidated Financial Statements............................... F-34
MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
  Report of Independent Public Accountants................................. F-46
  Consolidated Balance Sheets.............................................. F-47
  Consolidated Statements of Operations.................................... F-48
  Consolidated Statements of Shareholders' Equity.......................... F-49
  Consolidated Statements of Cash Flows.................................... F-50
  Notes to Consolidated Financial Statements............................... F-51
MASTERS, INC.
  Report of Independent Public Accountants................................. F-61
  Balance Sheets........................................................... F-62
  Statements of Operations................................................. F-63
  Statements of Shareholder's Equity....................................... F-64
  Statements of Cash Flows................................................. F-65
  Notes to Financial Statements............................................ F-66
K&N PLUMBING, HEATING AND AIR CONDITIONING, INC.
  Report of Independent Public Accountants................................. F-73
  Balance Sheet............................................................ F-74
  Statement of Operations.................................................. F-75
  Statement of Shareholders' Equity........................................ F-76
  Statement of Cash Flows.................................................. F-77
  Notes to Financial Statements............................................ F-78
A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR
 CONDITIONING, INC.
  Report of Independent Public Accountants................................. F-83
  Combined Balance Sheets.................................................. F-84
</TABLE>
 
                                      F-1
<PAGE>
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
  Combined Statements of Operations.......................................  F-85
  Combined Statements of Shareholders' Equity.............................  F-86
  Combined Statements of Cash Flows.......................................  F-87
  Notes to Combined Financial Statements..................................  F-88
ARKANSAS MECHANICAL SERVICES, INC. AND MECHANICAL
 SERVICES, INC.
  Report of Independent Public Accountants................................  F-93
  Combined Balance Sheets.................................................  F-94
  Combined Statements of Operations.......................................  F-95
  Combined Statements of Shareholders' Equity.............................  F-96
  Combined Statements of Cash Flows.......................................  F-97
  Notes to Combined Financial Statements..................................  F-98
CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
  Report of Independent Public Accountants................................ F-104
  Balance Sheets.......................................................... F-105
  Statements of Operations................................................ F-106
  Statements of Shareholders' Equity...................................... F-107
  Statements of Cash Flows................................................ F-108
  Notes to Financial Statements........................................... F-109
CENTRAL CAROLINA AIR CONDITIONING COMPANY
  Report of Independent Public Accountants................................ F-112
  Balance Sheets.......................................................... F-113
  Statements of Operations................................................ F-114
  Statements of Shareholders' Equity...................................... F-115
  Statements of Cash Flows................................................ F-116
  Notes to Financial Statements........................................... F-117
HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
  Report of Independent Public Accountants................................ F-122
  Consolidated Balance Sheets............................................. F-123
  Consolidated Statements of Operations................................... F-124
  Consolidated Statements of Shareholders' Equity......................... F-125
  Consolidated Statements of Cash Flows................................... F-126
  Notes to Consolidated Financial Statements.............................. F-127
SIBLEY SERVICES, INCORPORATED
  Report of Independent Public Accountants................................ F-133
  Balance Sheets.......................................................... F-134
  Statements of Operations................................................ F-135
  Statements of Shareholders' Equity...................................... F-136
  Statements of Cash Flows................................................ F-137
  Notes to Financial Statements........................................... F-138
SOUTHEAST MECHANICAL SERVICE, INC.
  Report of Independent Public Accountants................................ F-144
  Balance Sheets.......................................................... F-145
  Statements of Operations................................................ F-146
  Statements of Shareholders' Equity...................................... F-147
  Statements of Cash Flows................................................ F-148
  Notes to Financial Statements........................................... F-149
</TABLE>
 
                                      F-2
<PAGE>
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
  Report of Independent Public Accountants................................ F-153
  Balance Sheets.......................................................... F-154
  Statements of Operations................................................ F-155
  Statements of Shareholders' Equity...................................... F-156
  Statements of Cash Flows................................................ F-157
  Notes to Financial Statements........................................... F-158
YALE, INCORPORATED
  Report of Independent Public Accountants................................ F-163
  Balance Sheets.......................................................... F-164
  Statements of Operations................................................ F-165
  Statements of Shareholders' Equity...................................... F-166
  Statements of Cash Flows................................................ F-167
  Notes to Financial Statements........................................... F-168
</TABLE>
 
                                      F-3
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                         UNAUDITED PRO FORMA COMBINED
                             FINANCIAL STATEMENTS
 
  The following unaudited pro forma combined financial statements give effect
to the acquisitions by Group Maintenance America Corp. ("GroupMAC"), of 11
companies acquired to date ("the Pre-Offering Companies") and 13 additional
companies for which definitive agreements have been signed (the "Offering
Acquisition Companies" and together with the Pre-Offering Companies, the
"GroupMAC Companies") as follows:
 
<TABLE>
<CAPTION>
                                                                       DATE
COMPANY                                                              ACQUIRED
-------                                                             -----------
<S>                                                                 <C>
Airtron, Inc.......................................................   5/2/97
A-ABC Appliance, Inc. and A-1 Appliance & Air Conditioning, Inc....   6/1/97
Hallmark Air Conditioning, Inc.....................................   6/1/97
K&N Plumbing, Heating and Air Conditioning, Inc....................   6/1/97
Way Residential....................................................   6/30/97
AA JARL, Inc. (d/b/a "Jarrell Plumbing")...........................   6/30/97
Charlie Crawford, Inc. (d/b/a "Charlie's Plumbing")................   6/30/97
Costner Brothers, Inc..............................................   6/30/97
Callahan Roach Products & Publications, Inc. & Callahan Roach &
 Associates........................................................   7/1/97
Sibley Services, Incorporated......................................   7/1/97
United Service Alliance, L.C.......................................   7/31/97
All Service Electric, Inc.......................................... At offering
Arkansas Mechanical Services, Inc.................................. At offering
Central Carolina Air Conditioning Company.......................... At offering
Evans Services, Inc................................................ At offering
Linford Service Company............................................ At offering
MacDonald-Miller Industries, Inc................................... At offering
Masters, Inc....................................................... At offering
Mechanical Services, Inc........................................... At offering
Paul E. Smith Co., Inc............................................. At offering
Southeast Mechanical Service, Inc.................................. At offering
Van's Comfortemp Air Conditioning, Inc............................. At offering
Willis Refrigeration, Air Conditioning & Heating, Inc.............. At offering
Yale Incorporated.................................................. At offering
</TABLE>
 
  All of the acquisitions have been or will be accounted for utilizing the
purchase method of accounting. The pending acquisitions, which are all
evidenced by signed definitive agreements, are expected to occur at or
immediately following the closing of the Company's initial public offering,
with Airtron, Inc. ("Airtron") as the acquirer for financial accounting
purposes. These unaudited pro forma combined financial statements are based on
the historical financial statements of the acquired companies and estimates
and assumptions set forth below and in the notes to the unaudited pro forma
combined financial statements.
 
  The unaudited pro forma combined balance sheets combine the historical
consolidated balance sheet of the Company and the balance sheets of the
acquisitions completed subsequent to June 30, 1997 with the balance sheets of
the pending acquisitions, as if these acquisitions had occurred on June 30,
1997. The accompanying unaudited pro forma statements of operations of the
Company combine the historical statements of operations of GroupMAC and the
statements of operations of the completed and pending acquisitions as if such
acquisitions had occurred on January 1, 1996.
 
                                      F-4
<PAGE>
 
  GroupMAC has preliminarily analyzed the savings that it expects to realize
from reductions in salaries and certain benefits to the owners. To the extent
the owners of the GroupMAC Companies have agreed prospectively to reductions
in salary, bonuses and benefits, these reductions have been reflected in the
pro forma combined statements of operations. With respect to other potential
cost savings, GroupMAC cannot fully quantify these savings until completion of
the combination of the GroupMAC Companies. It is anticipated that these
savings will be partially offset by costs related to GroupMAC's new corporate
management and by the costs associated with being a public company. However,
because these savings and costs cannot be accurately quantified at this time,
they have not been included in the pro forma combined financial information of
GroupMAC.
 
  The pro forma adjustments are based on preliminary estimates, available
information and certain assumptions that management deems appropriate and may
be revised as additional information becomes available. The pending
acquisitions are subject to certain working capital and long-term debt
adjustments, of which an estimate is reflected in the pro forma adjustments.
The pro forma combined financial data do not purport to represent what
GroupMAC's financial position or results of operations would actually have
been if such transactions had in fact occurred on those dates and are not
necessarily representative of GroupMAC's financial position or results of
operations for any future period. Since the pending and completed acquisitions
have not historically been under common control or management, historical pro
forma combined results may not be indicative of or comparable to future
performance. The unaudited pro forma combined financial statements should be
read in conjunction with other financial statements and notes thereto included
elsewhere in this prospectus. See "Risk Factors" included elsewhere herein.
 
                                      F-5
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                  UNAUDITED PRO FORMA COMBINED BALANCE SHEET
 
                                 JUNE 30, 1997
 
                                (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                          GROUPMAC AND MACDONALD-         OTHER RESIDENTIAL OTHER COMMERCIAL             PRO FORMA  PRO FORMA
ASSETS                    SUBSIDIARIES   MILLER   MASTERS SERVICE COMPANIES SERVICE COMPANIES COMBINED  ADJUSTMENTS COMBINED
------                    ------------ ---------- ------- ----------------- ----------------- --------  ----------- ---------
<S>                       <C>          <C>        <C>     <C>               <C>               <C>       <C>         <C>
CURRENT ASSETS:
 Cash and cash
 equivalents......          $  5,875    $    --   $   637      $ 1,792           $   446      $  8,750   $  1,464   $ 10,214
 Accounts receiv-
 able--
 Trade, net of al-
 lowance..........            14,940     14,728     6,270        2,921             7,576        46,435         --     46,435
 Other............               418        388       343           18                 4         1,171         --      1,171
 Due from related
 parties..........                --        673       246          215                74         1,208     (1,208)        --
 Inventories......             4,935        814       622        1,060             1,327         8,758         --      8,758
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on uncom-
 pleted contracts.                43      1,016     1,420          214               387         3,080         --      3,080
 Refundable income
 taxes............               577         --        --           --                --           577         --        577
 Deferred tax as-
 set..............             1,607         --        --          230                --         1,837         --      1,837
 Prepaid expenses
 and other current
 assets...........               718         63        71          311               373         1,536         --      1,536
                            --------    -------   -------      -------           -------      --------   --------   --------
  Total current
  assets..........            29,113     17,682     9,609        6,761            10,187        73,352        256     73,608
PROPERTY AND
EQUIPMENT, net....             4,721      1,555       610        2,266             2,148        11,300       (206)    11,094
GOODWILL, net.....            18,318         --        --           --               591        18,909     56,761     75,670
DEFERRED TAX AS-
SETS..............            10,120        196        --           --                --        10,316         --     10,316
OTHER NONCURRENT
ASSETS............             2,670        519       674        1,383                 9         5,255     (1,659)     3,596
                            --------    -------   -------      -------           -------      --------   --------   --------
  Total assets....          $ 64,942    $19,952   $10,893      $10,410           $12,935      $119,132   $ 55,152   $174,284
                            ========    =======   =======      =======           =======      ========   ========   ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
-----------------------------
CURRENT
LIABILITIES:
<S>                       <C>          <C>        <C>     <C>               <C>               <C>       <C>         <C>
 Accounts payable
 and accrued ex-
 penses...........          $ 11,551    $ 7,659   $ 3,312      $ 1,915           $ 4,528      $ 28,965   $    207   $ 29,172
 Short-term debt,
 including current
 maturities.......             4,577      4,886     1,070          727             1,256        12,516      2,092     14,608
 Billings in
 excess of costs
 and estimated
 earnings on
 uncompleted
 contracts........             1,781      1,716       851           39               317         4,704         --      4,704
 Liability for
 warranty costs...               854         --        --           55                --           909         --        909
 Deferred service
 revenue..........             1,153         --        --        1,209               332         2,694         --      2,694
 Income taxes
 payable..........               495        396        --          345                --         1,236         --      1,236
 Deferred tax
 liabilities......                --         --        --           26                32            58      1,506      1,564
 Other current
 liabilities......               740         --       395           27                --         1,162         --      1,162
 Due to
 shareholders/affiliates.        537         35        --           41               748         1,361     29,557     30,918
                            --------    -------   -------      -------           -------      --------   --------   --------
  Total current
  liabilities.....            21,688     14,692     5,628        4,384             7,213        53,605     33,362     86,967
LONG-TERM DEBT,
net of current
maturities........            26,434        708       765          739               817        29,463      1,903     31,366
LEASE OBLIGATIONS.                34         --        --           --                14            48         --         48
DEFERRED SERVICE
REVENUE...........               145         --        --          204                --           349         --        349
DEFERRED TAX LIA-
BILITY............                --         --        --          156                17           173        113        286
DEFERRED COMPENSA-
TION..............                --        190        --          372                --           562       (562)        --
DUE TO SHAREHOLD-
ERS...............             9,745         --        --           --                --         9,745         --      9,745
OTHER LONG-TERM
LIABILITIES.......               773         --        --           11                --           784         --        784
REDEEMABLE PRE-
FERRED STOCK AND
RELATED WARRANTS..            17,121         --        --           --                --        17,121      2,150     19,271
SHAREHOLDERS' EQ-
UITY (DEFICIT)
 Common stock.....                 9        355         5           52               502           923       (911)        12
 Additional paid-
 in capital.......            23,687         --        --           41               107        23,835     36,315     60,150
 Retained earnings
 (deficit)........           (34,694)     4,007     4,495        4,451             4,417       (17,324)   (17,370)   (34,694)
 Treasury stock...                --         --        --           --              (152)         (152)       152         --
                            --------    -------   -------      -------           -------      --------   --------   --------
  Total sharehold-
  ers' equity
  (deficit).......           (10,998)     4,362     4,500        4,544             4,874         7,282     18,186     25,468
                            --------    -------   -------      -------           -------      --------   --------   --------
  Total liabili-
  ties and share-
  holders' equity
  (deficit).......          $ 64,942    $19,952   $10,893      $10,410           $12,935      $119,132   $ 55,152   $174,284
                            ========    =======   =======      =======           =======      ========   ========   ========
<CAPTION>
                           OFFERING    PRO FORMA
ASSETS                    ADJUSTMENTS AS ADJUSTED
------                    ----------- -----------
<S>                       <C>         <C>
CURRENT ASSETS:
 Cash and cash
 equivalents......         $   (757)   $  9,457
 Accounts receiv-
 able--
 Trade, net of al-
 lowance..........               --      46,435
 Other............               --       1,171
 Due from related
 parties..........               --          --
 Inventories......               --       8,758
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on uncom-
 pleted contracts.               --       3,080
 Refundable income
 taxes............               --         577
 Deferred tax as-
 set..............               --       1,837
 Prepaid expenses
 and other current
 assets...........               --       1,536
                          ----------- -----------
  Total current
  assets..........             (757)     72,851
PROPERTY AND
EQUIPMENT, net....               --      11,094
GOODWILL, net.....               --      75,670
DEFERRED TAX AS-
SETS..............               --      10,316
OTHER NONCURRENT
ASSETS............             (197)      3,399
                          ----------- -----------
  Total assets....         $   (954)   $173,330
                          =========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
-----------------------------
CURRENT
LIABILITIES:
<S>                       <C>         <C>
 Accounts payable
 and accrued ex-
 penses...........         $     --    $ 29,172
 Short-term debt,
 including current
 maturities.......          (12,501)      2,107
 Billings in
 excess of costs
 and estimated
 earnings on
 uncompleted
 contracts........               --       4,704
 Liability for
 warranty costs...               --         909
 Deferred service
 revenue..........               --       2,694
 Income taxes
 payable..........               --       1,236
 Deferred tax
 liabilities......               --       1,564
 Other current
 liabilities......               --       1,162
 Due to
 shareholders/affiliates.   (30,918)         --
                          ----------- -----------
  Total current
  liabilities.....          (43,419)     43,548
LONG-TERM DEBT,
net of current
maturities........          (31,366)         --
LEASE OBLIGATIONS.              (48)         --
DEFERRED SERVICE
REVENUE...........               --         349
DEFERRED TAX LIA-
BILITY............               --         286
DEFERRED COMPENSA-
TION..............               --          --
DUE TO SHAREHOLD-
ERS...............               --       9,745
OTHER LONG-TERM
LIABILITIES.......               --         784
REDEEMABLE PRE-
FERRED STOCK AND
RELATED WARRANTS..          (19,271)         --
SHAREHOLDERS' EQ-
UITY (DEFICIT)
 Common stock.....                8          20
 Additional paid-
 in capital.......           93,142     153,292
 Retained earnings
 (deficit)........               --     (34,694)
 Treasury stock...               --          --
                          ----------- -----------
  Total sharehold-
  ers' equity
  (deficit).......           93,150     118,618
                          ----------- -----------
  Total liabili-
  ties and share-
  holders' equity
  (deficit).......         $   (954)   $173,330
                          =========== ===========
</TABLE>    
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-6
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                  UNAUDITED PRO FORMA COMBINED BALANCE SHEET
 
                                 JUNE 30, 1997
 
                                (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                             OTHER RESIDENTIAL SERVICE COMPANIES
                     ----------------------------------------------------
                     CENTRAL                OTHER        TOTAL OTHER
 ASSETS              CAROLINA WILLIS CRPP COMPANIES RESIDENTIAL COMPANIES
 ------              -------- ------ ---- --------- ---------------------
 <S>                 <C>      <C>    <C>  <C>       <C>
 CURRENT ASSETS:
 Cash and cash
 equivalents.......   $  457  $  788 $106  $  441          $ 1,792
 Accounts receiv-
 able--
  Trade, net of
  allowance........      868   1,391   --     662            2,921
  Other............       --      --   --      18               18
 Due from related
 parties...........      175      --   --      40              215
 Inventories.......      246     194   47     573            1,060
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on
 uncompleted con-
 tracts............      168      --   --      46              214
 Refundable income
 taxes.............       --      --   --      --               --
 Deferred tax as-
 set...............       --     230   --      --              230
 Prepaid expenses
 and other current
 assets............      220      10   --      81              311
                      ------  ------ ----  ------          -------
   Total current
   assets..........    2,134   2,613  153   1,861            6,761
 PROPERTY AND
 EQUIPMENT, net....      675     512  118     961            2,266
 GOODWILL, net.....       --      --   --      --               --
 DEFERRED TAX AS-
 SETS..............       --      --   --      --               --
 OTHER NONCURRENT
 ASSETS............       39     360   --     984            1,383
                      ------  ------ ----  ------          -------
   Total assets....   $2,848  $3,485 $271  $3,806          $10,410
                      ======  ====== ====  ======          =======
<CAPTION>
 LIABILITIES
 AND
 SHAREHOLDERS'
 EQUITY
 -------------
 <S>                 <C>      <C>    <C>  <C>       <C>
 CURRENT LIABILI-
 TIES:
 Accounts payable
 and accrued ex-
 penses............   $  508  $  381 $ 90  $  936          $ 1,915
 Short-term debt,
 including current
 maturities........        1     221   61     444              727
 Billings in ex-
 cess of costs and
 estimated earn-
 ings on
 uncompleted con-
 tracts............       39      --   --      --               39
 Liability for
 warranty costs....       --      --   --      55               55
 Deferred service
 revenue...........      763     229   --     217            1,209
 Income taxes pay-
 able..............       --     284   14      47              345
 Deferred tax lia-
 bilities..........       --      --   --      26               26
 Other current li-
 abilities.........       --      --   --      27               27
 Due to related
 parties...........       --      --   --      41               41
                      ------  ------ ----  ------          -------
   Total current
   liabilities.....    1,311   1,115  165   1,793            4,384
 LONG-TERM DEBT,
 net of current ma-
 turities..........       --      --   18     721              739
 LEASE OBLIGATIONS.       --      --   --      --               --
 DEFERRED SERVICE
 REVENUE...........      204      --   --      --              204
 DEFERRED TAX LIA-
 BILITY............       --     147    9      --              156
 DEFERRED COMPENSA-
 TION..............       61      --   --     311              372
 DUE TO SHAREHOLD-
 ERS...............       --      --   --      --               --
 OTHER LONG-TERM
 LIABILITIES.......       --      --   --      11               11
 REDEEMABLE PRE-
 FERRED STOCK AND
 RELATED WARRANTS..       --      --   --      --               --
 SHAREHOLDERS' EQ-
 UITY (DEFICIT)
 Common stock......       20       4    1      27               52
 Additional paid-
 in capital........       23      --   --      18               41
 Retained earnings
 (deficit).........    1,229   2,219   78     925            4,451
 Treasury stock....       --      --   --      --               --
                      ------  ------ ----  ------          -------
   Total sharehold-
   ers' equity
   (deficit).......    1,272   2,223   79     970            4,544
                      ------  ------ ----  ------          -------
   Total liabili-
   ties and share-
   holders' equity
   (deficit).......   $2,848  $3,485 $271  $3,806          $10,410
                      ======  ====== ====  ======          =======
<CAPTION>
                                     OTHER COMMERCIAL SERVICE COMPANIES
                     -------------------------------------------------------------------
                                     ARKANSAS  SOUTHEAST    OTHER       TOTAL OTHER
 ASSETS               YALE  SIBLEY  MECHANICAL MECHANICAL COMPANIES COMMERCIAL COMPANIES
 ------              ------ ------- ---------- ---------- --------- --------------------
 <S>                 <C>    <C>     <C>        <C>        <C>       <C>
 CURRENT ASSETS:
 Cash and cash
 equivalents.......  $   94 $   41    $   20     $   74    $  217         $   446
 Accounts receiv-
 able--
  Trade, net of
  allowance........   1,554    635     1,338        936     3,113           7,576
  Other............      --     --        --         --         4               4
 Due from related
 parties...........      --     13        18         43        --              74
 Inventories.......      89    126        76         64       972           1,327
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on
 uncompleted con-
 tracts............     295     55        36          1        --             387
 Refundable income
 taxes.............      --     --        --         --        --              --
 Deferred tax as-
 set...............      --     --        --         --        --              --
 Prepaid expenses
 and other current
 assets............      45    244        11         36        37             373
                     ------ ------- ---------- ---------- --------- --------------------
   Total current
   assets..........   2,077  1,114     1,499      1,154     4,343          10,187
 PROPERTY AND
 EQUIPMENT, net....     694     87       633        430       304           2,148
 GOODWILL, net.....      --     --        14         --       577             591
 DEFERRED TAX AS-
 SETS..............      --     --        --         --        --              --
 OTHER NONCURRENT
 ASSETS............      --     --         1         --         8               9
                     ------ ------- ---------- ---------- --------- --------------------
   Total assets....  $2,771 $1,201    $2,147     $1,584    $5,232         $12,935
                     ====== ======= ========== ========== ========= ====================
<CAPTION>
 LIABILITIES
 AND
 SHAREHOLDERS'
 EQUITY
 -------------
 <S>                 <C>    <C>     <C>        <C>        <C>       <C>
 CURRENT LIABILI-
 TIES:
 Accounts payable
 and accrued ex-
 penses............  $  983 $  284    $  795     $  355    $2,111         $ 4,528
 Short-term debt,
 including current
 maturities........     245    307       500        135        69           1,256
 Billings in ex-
 cess of costs and
 estimated earn-
 ings on
 uncompleted con-
 tracts............      19     73       100        125        --             317
 Liability for
 warranty costs....      --     --        --         --        --              --
 Deferred service
 revenue...........      --     --        --         --       332             332
 Income taxes pay-
 able..............      --     --        --         --        --              --
 Deferred tax lia-
 bilities..........      --     32        --         --        --              32
 Other current li-
 abilities.........      --     --        --         --        --              --
 Due to related
 parties...........      --     --        35        371       342             748
                     ------ ------- ---------- ---------- --------- --------------------
   Total current
   liabilities.....   1,247    696     1,430        986     2,854           7,213
 LONG-TERM DEBT,
 net of current ma-
 turities..........     175     69       192        221       160             817
 LEASE OBLIGATIONS.      --     --        --         --        14              14
 DEFERRED SERVICE
 REVENUE...........      --     --        --         --        --              --
 DEFERRED TAX LIA-
 BILITY............      --     17        --         --        --              17
 DEFERRED COMPENSA-
 TION..............      --     --        --         --        --              --
 DUE TO SHAREHOLD-
 ERS...............      --     --        --         --        --              --
 OTHER LONG-TERM
 LIABILITIES.......      --     --        --         --        --              --
 REDEEMABLE PRE-
 FERRED STOCK AND
 RELATED WARRANTS..      --     --        --         --        --              --
 SHAREHOLDERS' EQ-
 UITY (DEFICIT)
 Common stock......       1     21        26         --       454             502
 Additional paid-
 in capital........     101     --        --          6        --             107
 Retained earnings
 (deficit).........   1,247    503       546        371     1,750           4,417
 Treasury stock....      --   (105)      (47)        --        --            (152)
                     ------ ------- ---------- ---------- --------- --------------------
   Total sharehold-
   ers' equity
   (deficit).......   1,349    419       525        377     2,204           4,874
                     ------ ------- ---------- ---------- --------- --------------------
   Total liabili-
   ties and share-
   holders' equity
   (deficit).......  $2,771 $1,201    $2,147     $1,584    $5,232         $12,935
                     ====== ======= ========== ========== ========= ====================
</TABLE>
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-7
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                     FOR THE YEAR ENDED DECEMBER 31, 1996
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>   
<CAPTION>
                                                                     OTHER      OTHER
                                                                  RESIDENTIAL COMMERCIAL
                        GROUPMAC AND MACDONALD-                     SERVICE    SERVICE   GROUPMAC  PRO FORMA      PRO FORMA
                        SUBSIDIARIES   MILLER   MASTERS    K&N     COMPANIES  COMPANIES   PARENT  ADJUSTMENTS    AS ADJUSTED
                        ------------ ---------- -------  -------  ----------- ---------- -------- -----------    -----------
<S>                     <C>          <C>        <C>      <C>      <C>         <C>        <C>      <C>            <C>
REVENUES..............    $81,880     $66,059   $39,826  $24,279    $48,964    $46,499    $  --    $     --       $307,507
COST OF SERVICES......     58,506      56,373    35,854   20,705     30,628     33,845       --          --        235,911
                          -------     -------   -------  -------    -------    -------    -----    --------       --------
 Gross profit.........     23,374       9,686     3,972    3,574     18,336     12,654       --          --         71,596
SELLING, GENERAL AND
ADMINISTRATIVE EX-
PENSES................     19,811       7,632     2,484    2,638     16,375     10,367      724     (11,078)(a)     48,953
GOODWILL AMORTIZATION.         --          --        --       --        131         --       --       1,760 (b)      1,891
                          -------     -------   -------  -------    -------    -------    -----    --------       --------
 Income (loss) from
 operations...........      3,563       2,054     1,488      936      1,830      2,287     (724)      9,318         20,752
OTHER INCOME (EX-
PENSE):
 Interest expense.....        (82)       (520)     (135)     (97)      (295)      (210)      (1)      1,213 (c)       (127)
 Interest income......        171          --        --       --         86         22        2          --            281
 Other................        256           8        --       (3)       231         (1)      --        (194)(d)        297
                          -------     -------   -------  -------    -------    -------    -----    --------       --------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION..      3,908       1,542     1,353      836      1,852      2,098     (723)     10,337         21,203
INCOME TAX PROVISION..      1,572         574        --      315        275         46       --       6,455 (e)      9,237
                          -------     -------   -------  -------    -------    -------    -----    --------       --------
NET INCOME (LOSS).....    $ 2,336     $   968   $ 1,353  $   521    $ 1,577    $ 2,052    $(723)   $  3,882       $ 11,966
                          =======     =======   =======  =======    =======    =======    =====    ========       ========
PRO FORMA NET INCOME
PER SHARE.............                                                                                            $    .59
                                                                                                                  ========
SHARES USED IN COMPUT-
ING PRO FORMA NET IN-
COME PER SHARE........                                                                                      (f)     20,159
                                                                                                                  ========
</TABLE>    
 
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-8
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                     FOR THE YEAR ENDED DECEMBER 31, 1996
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                               OTHER RESIDENTIAL SERVICE COMPANIES
                   ---------------------------------------------------------------
                                                                       TOTAL OTHER
                   CENTRAL  A-ABC/                             OTHER   RESIDENTIAL
                   CAROLINA  A-1    WILLIS  HALLMARK  CRPP   COMPANIES  COMPANIES
                   -------- ------  ------  -------- ------  --------- -----------
<S>                <C>      <C>     <C>     <C>      <C>     <C>       <C>
REVENUES.........   $8,161  $8,546  $6,781   $6,516  $1,553   $17,407    $48,964
COST OF SERVICES.    5,182   5,447   5,033    3,461     311    11,194     30,628
                    ------  ------  ------   ------  ------   -------    -------
 Gross profit....    2,979   3,099   1,748    3,055   1,242     6,213     18,336
SELLING, GENERAL
AND ADMINISTRA-
TIVE EXPENSES....    2,598   2,652   1,206    3,029   1,238     5,652     16,375
GOODWILL AMORTI-
ZATION...........       --     114      --       17      --        --        131
                    ------  ------  ------   ------  ------   -------    -------
 Income from op-
 erations........      381     333     542        9       4       561      1,830
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........      (10)    (95)    (25)     (31)     (9)     (125)      (295)
 Interest income.       30      11       8       16      --        21         86
 Other...........      (40)      1      48        3      (7)      226        231
                    ------  ------  ------   ------  ------   -------    -------
INCOME (LOSS) BE-
FORE INCOME TAX
PROVISION........      361     250     573       (3)    (12)      683      1,852
INCOME TAX PROVI-
SION.............       --      --     238       18      --        19        275
                    ------  ------  ------   ------  ------   -------    -------
NET INCOME
(LOSS)...........   $  361  $  250  $  335   $  (21) $  (12)  $   664    $ 1,577
                    ======  ======  ======   ======  ======   =======    =======
<CAPTION>
                              OTHER COMMERCIAL SERVICE COMPANIES
                   -----------------------------------------------------------
                                                                      TOTAL
                                                                      OTHER
                                     ARKANSAS  SOUTHEAST    OTHER   COMMERCIAL
                    YALE    SIBLEY  MECHANICAL MECHANICAL COMPANIES COMPANIES
                   -------- ------- ---------- ---------- --------- ----------
<S>                <C>      <C>     <C>        <C>        <C>       <C>
REVENUES.........  $10,065  $6,962    $6,237     $5,282    $17,953   $46,499
COST OF SERVICES.    7,931   5,335     4,773      3,831     11,975    33,845
                   -------- ------- ---------- ---------- --------- ----------
 Gross profit....    2,134   1,627     1,464      1,451      5,978    12,654
SELLING, GENERAL
AND ADMINISTRA-
TIVE EXPENSES....    1,729   1,498     1,083        866      5,191    10,367
GOODWILL AMORTI-
ZATION...........       --      --        --         --         --        --
                   -------- ------- ---------- ---------- --------- ----------
 Income from op-
 erations........      405     129       381        585        787     2,287
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........      (30)    (31)      (51)       (55)       (43)     (210)
 Interest income.       --      --        --         --         22        22
 Other...........      (50)     16        30        (15)        18        (1)
                   -------- ------- ---------- ---------- --------- ----------
INCOME (LOSS) BE-
FORE INCOME TAX
PROVISION........      325     114       360        515        784     2,098
INCOME TAX PROVI-
SION.............       --      42        --         --          4        46
                   -------- ------- ---------- ---------- --------- ----------
NET INCOME
(LOSS)...........  $   325  $   72    $  360     $  515    $   780   $ 2,052
                   ======== ======= ========== ========== ========= ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-9
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                    FOR THE SIX MONTHS ENDED JUNE 30, 1996
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>   
<CAPTION>
                                                                   OTHER      OTHER
                                                                RESIDENTIAL COMMERCIAL
                                   MACDONALD-                     SERVICE    SERVICE             PRO FORMA     PRO FORMA
                          AIRTRON    MILLER   MASTERS    K&N     COMPANIES  COMPANIES  GROUPMAC ADJUSTMENTS   AS ADJUSTED
                          -------  ---------- -------  -------  ----------- ---------- -------- -----------   -----------
<S>                       <C>      <C>        <C>      <C>      <C>         <C>        <C>      <C>           <C>
REVENUES................  $37,127   $36,382   $18,279  $11,893    $23,255    $24,460     $--      $    --      $151,396
COST OF SERVICES........   26,918    31,590    16,639   10,433     14,762     17,575      --           --       117,917
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
 Gross profit...........   10,209     4,792     1,640    1,460      8,493      6,885      --           --        33,479
SELLING, GENERAL AND AD-
MINISTRATIVE EXPENSES...    9,470     3,706     1,009    1,349      8,021      4,676      --       (4,163)(a)    24,068
GOODWILL AMORTIZATION...       --        --        --       --         61         27      --          858 (b)       946
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
 Income from operations.      739     1,086       631      111        411      2,182      --        3,305         8,465
OTHER INCOME (EXPENSE):
 Interest expense.......      (37)     (244)      (67)     (38)      (149)      (102)     --          575 (c)       (62)
 Interest income........       42        --         8        1         38         12      --           --           101
 Other..................      200        67        --        4        (18)        10      --          (23)(d)       240
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
INCOME BEFORE INCOME TAX
PROVISION ..............      944       909       572       78        282      2,102      --        3,857         8,744
INCOME TAX PROVISION....      368       347        --      150        (38)       283      --        2,766 (e)     3,876
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
NET INCOME (LOSS).......  $   576   $   562   $   572  $   (72)   $   320    $ 1,819     $--      $ 1,091      $  4,868
                          =======   =======   =======  =======    =======    =======     ===      =======      ========
PRO FORMA NET INCOME PER
SHARE...................                                                                                       $    .24
                                                                                                               ========
SHARES USED IN COMPUTING
PRO FORMA NET INCOME PER
SHARE...................                                                                                  (f)    20,159
                                                                                                               ========
</TABLE>    
 
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-10
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                    FOR THE SIX MONTHS ENDED JUNE 30, 1996
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                              OTHER RESIDENTIAL SERVICE COMPANIES
                   -------------------------------------------------------------
                                                                     TOTAL OTHER
                   CENTRAL  A-ABC/                           OTHER   RESIDENTIAL
                   CAROLINA  A-1    WILLIS  HALLMARK CRPP  COMPANIES  COMPANIES
                   -------- ------  ------  -------- ----  --------- -----------
<S>                <C>      <C>     <C>     <C>      <C>   <C>       <C>
REVENUES.........   $3,672  $4,314  $3,059   $3,016  $816   $8,378     $23,255
COST OF SERVICES.    2,141   2,802   2,669    1,390   174    5,586      14,762
                    ------  ------  ------   ------  ----   ------     -------
 Gross profit....    1,531   1,512     390    1,626   642    2,792       8,493
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........    1,420   1,251     625    1,573   548    2,604       8,021
GOODWILL AMORTI-
ZATION...........       --      58      --        3    --       --          61
                    ------  ------  ------   ------  ----   ------     -------
 Income (loss)
 from operations.      111     203    (235)      50    94      188         411
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........       (5)    (61)    (11)     (11)   (6)     (55)       (149)
 Interest income.        7       1       9        9    --       12          38
 Other...........       10      17       9      (42)    2      (14)        (18)
                    ------  ------  ------   ------  ----   ------     -------
INCOME (LOSS) BE-
FORE INCOME TAX
PROVISION........      123     160    (228)       6    90      131         282
INCOME TAX PROVI-
SION.............       --      --     (95)      34    26       (3)        (38)
                    ------  ------  ------   ------  ----   ------     -------
NET INCOME
(LOSS)...........   $  123  $  160  $ (133)  $  (28) $ 64   $  134     $   320
                    ======  ======  ======   ======  ====   ======     =======
<CAPTION>
                              OTHER COMMERCIAL SERVICE COMPANIES
                   ----------------------------------------------------------
                                                                     TOTAL
                                                                     OTHER
                                    ARKANSAS  SOUTHEAST    OTHER   COMMERCIAL
                    YALE   SIBLEY  MECHANICAL MECHANICAL COMPANIES COMPANIES
                   ------- ------- ---------- ---------- --------- ----------
<S>                <C>     <C>     <C>        <C>        <C>       <C>
REVENUES.........  $5,343  $4,210    $3,460     $2,847    $8,600    $24,460
COST OF SERVICES.   4,186   3,236     2,663      2,007     5,483     17,575
                   ------- ------- ---------- ---------- --------- ----------
 Gross profit....   1,157     974       797        840     3,117      6,885
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........     873     711       525        388     2,179      4,676
GOODWILL AMORTI-
ZATION...........      --      --        --         --        27         27
                   ------- ------- ---------- ---------- --------- ----------
 Income (loss)
 from operations.     284     263       272        452       911      2,182
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........     (16)    (17)      (23)       (28)      (18)      (102)
 Interest income.      --       1        --         --        11         12
 Other...........     (22)     15        17         (3)        3         10
                   ------- ------- ---------- ---------- --------- ----------
INCOME (LOSS) BE-
FORE INCOME TAX
PROVISION........     246     262       266        421       907      2,102
INCOME TAX PROVI-
SION.............      --     198        --         --        85        283
                   ------- ------- ---------- ---------- --------- ----------
NET INCOME
(LOSS)...........  $  246  $   64    $  266     $  421    $  822    $ 1,819
                   ======= ======= ========== ========== ========= ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-11
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                    FOR THE SIX MONTHS ENDED JUNE 30, 1997
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>   
<CAPTION>
                                                                     OTHER      OTHER
                                                                  RESIDENTIAL COMMERCIAL
                        GROUPMAC AND MACDONALD-                     SERVICE    SERVICE   GROUPMAC   PRO FORMA      PRO FORMA
                        SUBSIDIARIES   MILLER   MASTERS    K&N     COMPANIES  COMPANIES   PARENT   ADJUSTMENTS    AS ADJUSTED
                        ------------ ---------- -------  -------  ----------- ---------- --------  -----------    -----------
<S>                     <C>          <C>        <C>      <C>      <C>         <C>        <C>       <C>            <C>
REVENUES..............    $42,844     $38,836   $19,318  $10,061    $23,012    $23,870   $    --    $     --       $157,941
COST OF SERVICES......     30,920      33,451    17,457    8,670     13,684     17,177        --          --        121,359
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
 Gross profit.........     11,924       5,385     1,861    1,391      9,328      6,693        --          --         36,582
SELLING, GENERAL AND
ADMINISTRATIVE EX-
PENSES................     18,025       3,788     1,197    1,376      7,820      5,171     1,783     (12,182)(a)     26,978
GOODWILL AMORTIZATION.         31          --        --       --         55         27        --         833 (b)        946
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
 Income (loss) from
 operations...........     (6,132)      1,597       664       15      1,453      1,495    (1,783)     11,349          8,658
OTHER INCOME (EX-
PENSE):
 Interest expense.....       (395)       (214)      (76)     (40)      (128)      (142)       (2)        934 (c)        (63)
 Interest income......        153          --        11        1         59         16         4          --            244
 Other................        228         167        --       (9)       138         35        --         (51)(d)        508
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION..     (6,146)      1,550       599      (33)     1,522      1,404    (1,781)     12,232          9,347
INCOME TAX PROVISION..        349         569        --      (55)       228         24        --       3,002 (e)      4,117
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
NET INCOME (LOSS).....    $(6,495)    $   981   $   599  $    22    $ 1,294    $ 1,380   $(1,781)   $  9,230       $  5,230
                          =======     =======   =======  =======    =======    =======   =======    ========       ========
PRO FORMA NET INCOME
PER SHARE.............                                                                                             $    .26
                                                                                                                   ========
SHARES USED IN COMPUT-
ING PRO FORMA NET IN-
COME PER SHARE........                                                                                      (f)      20,159
                                                                                                                   ========
</TABLE>    
 
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-12
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                    FOR THE SIX MONTHS ENDED JUNE 30, 1997
 
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
<TABLE>
<CAPTION>
                              OTHER RESIDENTIAL SERVICE COMPANIES
                   -------------------------------------------------------------
                                                                     TOTAL OTHER
                   CENTRAL  A-ABC/                           OTHER   RESIDENTIAL
                   CAROLINA  A-1    WILLIS  HALLMARK CRPP  COMPANIES  COMPANIES
                   -------- ------  ------  -------- ----  --------- -----------
<S>                <C>      <C>     <C>     <C>      <C>   <C>       <C>
REVENUES.........   $4,170  $3,419  $3,471   $2,168  $844   $8,940     $23,012
COST OF SERVICES.    2,208   2,227   2,413    1,005   184    5,647      13,684
                    ------  ------  ------   ------  ----   ------     -------
 Gross profit....    1,962   1,192   1,058    1,163   660    3,293       9,328
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........    1,485     949     511    1,455   532    2,888       7,820
GOODWILL AMORTI-
ZATION...........       --      48      --        7    --       --          55
                    ------  ------  ------   ------  ----   ------     -------
 Income (loss)
 from operations.      477     195     547     (299)  128      405       1,453
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........       (2)    (34)    (10)     (11)   (8)     (63)       (128)
 Interest income.       27       4      18        4    --        6          59
 Other...........       10      (8)     13       63    (1)      61         138
                    ------  ------  ------   ------  ----   ------     -------
INCOME (LOSS) BE-
FORE INCOME
TAX PROVISION....      512     157     568     (243)  119      409       1,522
INCOME TAX PROVI-
SION.............       --      --     225      (21)   22        2         228
                    ------  ------  ------   ------  ----   ------     -------
NET INCOME
(LOSS)...........   $  512  $  157  $  343   $ (222) $ 97   $  407     $ 1,294
                    ======  ======  ======   ======  ====   ======     =======
<CAPTION>
                              OTHER COMMERCIAL SERVICE COMPANIES
                   ----------------------------------------------------------
                                                                     TOTAL
                                                                     OTHER
                                    ARKANSAS  SOUTHEAST    OTHER   COMMERCIAL
                    YALE   SIBLEY  MECHANICAL MECHANICAL COMPANIES COMPANIES
                   ------- ------- ---------- ---------- --------- ----------
<S>                <C>     <C>     <C>        <C>        <C>       <C>
REVENUES.........  $5,174  $2,259    $4,029     $2,358    $10,050   $23,870
COST OF SERVICES.   3,791   1,679     3,169      1,725      6,813    17,177
                   ------- ------- ---------- ---------- --------- ----------
 Gross profit....   1,383     580       860        633      3,237     6,693
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........   1,052     627       583        409      2,500     5,171
GOODWILL AMORTI-
ZATION...........      --      --        --         --         27        27
                   ------- ------- ---------- ---------- --------- ----------
 Income (loss)
 from operations.     331     (47)      277        224        710     1,495
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........     (19)    (10)      (32)       (43)       (38)     (142)
 Interest income.      --      --        --         --         16        16
 Other...........      (9)     --         2         --         42        35
                   ------- ------- ---------- ---------- --------- ----------
INCOME (LOSS) BE-
FORE INCOME
TAX PROVISION....     303     (57)      247        181        730     1,404
INCOME TAX PROVI-
SION.............      --      (4)       --         --         28        24
                   ------- ------- ---------- ---------- --------- ----------
NET INCOME
(LOSS)...........  $  303  $  (53)   $  247     $  181    $   702   $ 1,380
                   ======= ======= ========== ========== ========= ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these unaudited pro forma
                        combined financial statements.
 
                                      F-13
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
          NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
 
1. BACKGROUND:
 
  Group Maintenance America Corp. ("GroupMAC") was founded in 1996 to create
the leading nationwide provider of heating, ventilation and air conditioning
("HVAC"), plumbing and electrical services to residential and commercial
customers. GroupMAC has acquired 11 companies to date (the "Pre-Offering
Companies") and has definitive agreements to acquire an additional 13
companies (the "Offering Acquisition Companies") concurrently with this
Offering.
 
  The unaudited pro forma combined statements of operations for the year ended
December 31, 1996 utilize the fiscal years of the companies, all of which
approximate GroupMAC's fiscal year end. For the six months ended June 30, 1996
and 1997, the respective companies' actual financial statements for the six
month periods ended June 30, 1996 and 1997 are utilized. The respective
results of operations for the Pre-Offering Companies from January 1, 1997 to
the dates of the acquisitions were combined with GroupMAC and the Offering
Acquisition Companies' actual results of operations for the six months ended
June 30, 1997 to determine the pro forma results of operations for the six
months ended June 30, 1997.
 
2. COMPLETED AND PENDING ACQUISITIONS:
 
  The acquisitions of the Pre-Offering Companies were financed by borrowings
under a credit agreement dated May 2, 1997 (the "Credit Agreement"). The
Credit Agreement provides secured facilities consisting of a) an 18-month
revolving credit facility providing up to $3 million in revolving loans (the
"Revolving Credit Facility"), b) a six-year term loan of $20 million to help
fund the acquisition of Airtron (the "Airtron Term Loan"), and c) a term loan
facility available until October 31, 1998, providing for up to $12 million in
term loans having a final maturity six years after the date of the Credit
Agreement (the "Acquisition Credit Facility"). The Credit Agreement is more
fully described in Note 7 to the GroupMAC and Subsidiaries Consolidated
Financial Statements contained herein.
 
  The results of operations of the completed transactions are included in the
actual results of operations of the Company from the date of acquisition and
the historical balance sheet at June 30, 1997 includes the acquisitions
completed as of that date. In addition, the Company acquired three of the Pre-
Offering Companies in July 1997 and has signed definitive agreements to
purchase the outstanding capital stock of the Offering Acquisition Companies.
The completion of these pending transactions are subject to various
conditions. All of the completed and pending acquisitions are accounted for as
purchases. The cash portion of the pending acquisitions is assumed to be
provided by proceeds from the Offering.
 
  The following table sets forth the consideration paid or to be paid in (a)
cash, (b) shares of non-convertible, non-voting Preferred Stock to the
shareholders of the Pre-Offering Companies and (c) shares of Common Stock to
the shareholders of the Pre-Offering and Offering Acquisition Companies. The
Preferred Stock is redeemable at any time after the initial issuance, in whole
or in part, at the option of the Company, at an amount equal to the
liquidation value of $1.00 per share plus any accrued but unpaid dividends. In
the event that an initial public offering ("IPO") has not occurred by June 30,
1999, cumulative dividends accrue commencing July 1, 1997 at an annual rate of
$.08 per whole share. Redemption of all outstanding Preferred Stock is
mandatory upon an IPO.
   
  For purposes of computing the estimated purchase price for accounting
purposes, the value of the Preferred Stock is based on the liquidation value
of $1.00 per share and the value of the Common Stock is determined using an
estimated weighted average fair value of approximately $11.00 per share, which
represents a discount rate of approximately 21% from the anticipated initial
public offering price of $14.00 due primarily to restrictions on the sale and
transferability of both the privately issued shares and shares to be issued
simultaneous with the Offering. The restrictions are created by the
limitations on future sales caused by existing securities laws, and an
additional contractual restriction imposed on the shares issued in connection
with the acquisition of the GroupMAC Companies. This contractual provision
prohibits the shareholders from selling, transferring or otherwise disposing
of any shares for one year following the date of acquisition of such shares
and limiting dispositions for one additional year to no more than 36% of their
holdings. The total estimated purchase price of     
 
                                     F-14
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
    NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
   
$91.0 million for the Pre-Offering and Offering Acquisition Companies
(excluding Airtron, the accounting acquirer) is comprised of (a) cash of $40.7
million, (b) Preferred Stock of $4.4 million and (c) Common Stock of $45.9
million, based on the estimated fair values per share discussed in this
paragraph.     
   
  The estimated purchase price and related allocations of the excess purchase
price are based upon preliminary estimates and are subject to certain purchase
price adjustments at and following closing. Based upon management's
preliminary analysis, it is anticipated that the historical carrying value of
the assets and liabilities of the acquired companies (representing $15.3
million) will approximate fair value. This results in an allocation to
goodwill of approximately $75.7 million. Management has not identified any
other material tangible or identifiable intangible assets to which a portion
of the purchase price could reasonably be allocated. The total consideration
specified below has been reduced by distributions totaling $3.5 million
representing substantially all of the previously taxed undistributed earnings
of such acquired companies from the acquired companies that are S
corporations. The total consideration specified below does not reflect $2.1
million of other distributions of real estate and non operating assets offset
by related liabilities of $1.6 million. However, these amounts are reflected
in the pro forma adjustments as further described in Note 3.     
<TABLE>   
<CAPTION>
                                      SHARES OF SHARES OF
                                      PREFERRED  COMMON       TOTAL
                              CASH    STOCK(1)    STOCK   CONSIDERATION
                             -------  --------- --------- -------------
<S>                          <C>      <C>       <C>       <C>
PRE-OFFERING COMPANIES
 Pre-June 30, 1997
  Acquisitions:
  Airtron................... $20,849   14,873     4,652     $ 58,192
  A-ABC/A-1.................   1,886       --       359        5,659
  Charlie's.................   1,503       --       157        3,154
  Costner...................     501      100        66        1,289
  Hallmark..................   2,081      580       106        3,770
  Jarrell...................     150       --        13          283
  K&N.......................   1,568    1,568       403        7,369
  Way Residential (asset
   purchase)................      16       --         6           84
                             -------   ------     -----     --------
                              28,554   17,121     5,762       79,800
                             -------   ------     -----     --------
 Remaining Pre-Offering
  Acquisitions:
  Callahan Roach............   2,450    1,050       192        5,517
  Sibley....................   1,202      665        62        2,518
  USA (asset purchase)......     436      436        50        1,395
                             -------   ------     -----     --------
                               4,088    2,151       304        9,430
                             -------   ------     -----     --------
Total Pre-Offering
 Acquisitions...............  32,642   19,272     6,066       89,230
                             -------   ------     -----     --------
OFFERING ACQUISITION
 COMPANIES
  All Service...............   2,312       --       202        4,371
  Arkansas Mechanical.......   2,121       --       151        3,408
  Central Carolina..........   3,638       --       281        6,342
  Evans ....................   1,167       --       102        2,309
  Linford ..................     651       --       126        1,698
  MacDonald-Miller..........   6,002       --       643       13,204
  Masters...................   6,605       --       491       11,461
  Mechanical................     109       --         8          196
  Paul E. Smith.............      --       --       217        2,205
  Southeast Mechanical......   2,149       --       154        3,706
  Van's.....................   1,559       --       113        2,825
  Willis....................   2,257       --       242        4,965
  Yale......................   2,215       --       158        3,250
                             -------   ------     -----     --------
                              30,785       --     2,888       59,940
                             -------   ------     -----     --------
Sub S Corp Distributions....  (1,856)      --      (119)          --
                             -------   ------     -----     --------
    Totals.................. $61,571   19,272     8,835     $149,170
                             =======   ======     =====     ========
</TABLE>    
--------
(1) The preferred stock is valued at $1 per share.
 
                                     F-15
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
    NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
       
       
3. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
 
  a) Records the S Corporation Distributions of $3.5 million of which $1.4
million is expected to be paid using cash on hand of the applicable company
and $2.1 million is expected to be satisfied with a note to the selling
shareholders. Also records the deferred income tax liabilities associated with
converting all acquired companies taxed under Subchapter S of the Internal
Revenue Code (the Code) to corporations taxed under Subchapter C of the Code.
 
  b) Records the final proceeds expected to be received from the Stock
Subscription Agreement dated October 24, 1996, representing the purchase of
668,000 shares by an individual at $3.08 per share.
 
  c) Records the settlement of all shareholder receivables and payables with
cash at closing.
 
  d) Records the elimination of all assets and liabilities of the acquired
companies that are specifically excluded as part of the purchase transaction.
 
  e) Records the proceeds from the final borrowings under the $12 million term
loan facility of the Credit Agreement to fund the acquisitions of three Pre-
Offering Companies that closed subsequent to June 30, 1997.
 
  f) Records the elimination of the historical equity accounts of the three
Pre-Offering Companies discussed in Note 3e and the 13 Offering Acquisition
Companies that will close concurrently with this Offering.
 
  g) Records the purchase of the three Pre-Offering Companies discussed in
Note 3e and the 13 Offering Acquisition Companies that will close concurrently
with this Offering, including the cash, preferred stock and common stock
consideration due to these companies. In connection with the acquisitions of
certain of the GroupMAC Companies, the Company has agreed to make contingent
payments, if earned, to the former owners over periods up to two years based
on formulas in their respective acquisition agreements. These payments will be
made through a combination of cash, shares of Common Stock and warrants to
purchase Common Stock. Amounts earned under the terms of the agreements will
be recorded as additional goodwill and amortized over the remaining
amortization period.
 
  h) Records the proceeds from the issuance of 7,500,000 shares of GroupMAC
Common Stock, net of estimated offering costs of $11,850,000. Offering costs
primarily consist of underwriting discounts and commissions, accounting fees,
legal fees and printing expenses.
 
  i) Records the repayment of the Revolving Credit Facility, the Airtron Term
Loan and the Acquisition Line of Credit with proceeds from the Offering.
 
  j) Records the remaining estimated cash due to the Pre-Offering Companies
and the cash portion to be paid to the Offering Acquisition Companies in
connection with the acquisition of such companies.
 
  k) Records the retirement of GroupMAC preferred stock.
 
  l) Records the retirement of debt assumed in connection with the acquisition
of the GroupMAC Companies.
 
                                     F-16
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
    NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
  The following tables summarize unaudited pro forma combined balance sheet
adjustments:
 
<TABLE>   
<CAPTION>
                                                                                      PRO FORMA
                            (A)     (B)     (C)     (D)     (E)      (F)      (G)    ADJUSTMENTS
                          -------  ------  ------  ------  ------  -------  -------  -----------
<S>                       <C>      <C>     <C>     <C>     <C>     <C>      <C>      <C>
Cash and cash
 equivalents............  $(1,423) $2,056  $  383  $  184  $2,900           $(2,636)   $ 1,464
Due from related
 parties................                   (1,208)                                      (1,208)
Property and equipment,
 net....................                             (206)                                (206)
Goodwill................    1,619                     107          (14,750)  69,785     56,761
Other noncurrent assets.                           (1,659)                              (1,659)
Accounts payable and
 accrued expenses.......                                                       (207)      (207)
Short-term debt,
 including current
 maturities.............   (2,107)                     15                               (2,092)
Deferred tax
 liabilities, current...   (1,506)                                                      (1,506)
Due to
 shareholder/affiliates.                      825                           (30,382)   (29,557)
Long-term debt, net of
 current maturities.....                              997  (2,900)                      (1,903)
Deferred tax
 liabilities, long-term.     (113)                                                        (113)
Deferred compensation...                              562                                  562
Preferred stock.........                                                     (2,150)    (2,150)
Common stock............               (2)                             915       (2)       911
Additional paid-in
 capital................           (2,054)                             147  (34,408)   (36,315)
Retained earnings
 (deficit)..............    3,530                                   13,840              17,370
Treasury stock..........                                              (152)               (152)
                          -------  ------  ------  ------  ------  -------  -------    -------
  Total.................  $    --  $   --  $   --  $   --  $   --  $    --  $    --    $    --
                          =======  ======  ======  ======  ======  =======  =======    =======
</TABLE>    
 
<TABLE>
<CAPTION>
                                                                            OFFERING
                            (H)      (I)       (J)       (K)       (L)     ADJUSTMENTS
                          -------  --------  --------  --------  --------  -----------
<S>                       <C>      <C>       <C>       <C>       <C>       <C>
Cash and cash
 equivalents............  $93,347  $(32,500) $(30,918) $(19,271) $(11,415)   $  (757)
Other noncurrent assets.     (197)                                              (197)
Short-term debt,
 including current
 maturities.............              3,833                         8,668     12,501
Due to
 shareholder/affiliates.                       30,918                         30,918
Long-term debt, net of
 current maturities.....             28,667                         2,699     31,366
Lease obligations.......                                               48         48
Preferred stock.........                                 19,271               19,271
Common stock............       (8)                                                (8)
Additional paid-in
 capital................  (93,142)                                           (93,142)
Retained earnings
 (deficit)..............                                                          --
                          -------  --------  --------  --------  --------    -------
  Total.................  $    --  $     --  $     --  $     --  $     --    $    --
                          =======  ========  ========  ========  ========    =======
</TABLE>
 
                                      F-17
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
    NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
4. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS:
 
  a) Reflects the prospective reduction in salaries, bonuses and benefits to
the owners of the GroupMAC Companies to which they have agreed. These
reductions in salaries, bonuses and benefits are in accordance with the terms
of the employment agreements. Such employment agreements are primarily for
three years, contain restrictions related to competition and provide severance
for termination of employment in certain circumstances.
 
  The salaries, bonuses, benefits and other compensation items recorded in the
individual financial statements of each of the acquired companies amounted to
$15.1 million, $6.2 million and $7.2 million for the twelve month period ended
at or around December 31, 1996 and the six month periods ended June 30, 1996
and 1997, respectively. The contractually agreed upon compensation and
benefits for these same companies, on a going forward basis, amount to $4.0
million, $2.0 million and $2.0 million for the twelve month period ended at or
around December 31, 1996 and the six month periods ended June 30, 1996 and
1997, respectively. The differences between these amounts for the periods
noted herein equate to $11.1 million, $4.2 million and $5.2 million,
respectively and are reflected as pro forma adjustments.
 
  Also reflects the reduction in compensation expense related to the non-
recurring, non-cash compensation charge of $7.0 million recorded by the
Company in the second quarter of 1997 related to the reverse acquisition of
GroupMAC Parent.
 
  b) Reflects the amortization of goodwill to be recorded as a result of the
Acquisitions over a 40-year estimated life.
 
  c) Reflects the elimination of historical interest expense related to the
Credit Agreement and the assumed debt of the GroupMAC Companies resulting from
the payoff of such debt with the proceeds of the Offering. Offsetting this
reduction is interest expense related to the notes issued to fund the S
Corporation Distributions discussed in Note 3a.
 
  d) Reflects the elimination of income and expenses related to a management
benefit plan in effect at one of the GroupMAC Companies. This plan will be
liquidated in connection with the acquisition of the company.
 
  e) Reflects the incremental provision for federal and state income taxes
relating to the compensation differential and other pro forma adjustments
discussed in this Note 4 as well as income taxes on S Corporation earnings.
 
  f) The number of shares estimated to be outstanding on completion of the
Offering include the following:
 
<TABLE>
<S>                                                                   <C>
Shares issued in Initial Public Offering.............................  7,500,000
Shares issued under Subscription Agreement dated October 24, 1996....  2,600,000
Shares issued to Pre-Offering Companies..............................  6,066,085
Shares issued to Offering Acquisition Companies......................  2,768,804
Shares issued to Founding Management and Directors...................  1,026,817
Incremental effect of options and warrants on shares outstanding.....    196,957
                                                                      ----------
Shares estimated to be outstanding................................... 20,158,663
                                                                      ==========
</TABLE>
 
                                     F-18
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Group Maintenance America Corp.
 
  We have audited the accompanying balance sheets of Group Maintenance America
Corp. (the Company) as of December 31, 1996 and April 30, 1997, and the
related statements of operations, shareholders' equity (deficit), and cash
flows for the periods from October 21, 1996 (inception) to December 31, 1996
and the four months ended April 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Group Maintenance America
Corp. as of December 31, 1996 and April 30, 1997 and the results of its
operations and its cash flows for the periods from October 21, 1996
(inception) to December 31, 1996 and the four months ended April 30, 1997, in
conformity with generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 11, 1997
 
                                     F-19
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                                 BALANCE SHEETS
 
<TABLE>   
<CAPTION>
                                                      DECEMBER 31,  APRIL 30,
                                                          1996        1997
                                                      ------------ -----------
                    ASSETS
<S>                                                   <C>          <C>
CURRENT ASSETS:
  Cash and cash equivalents..........................   $ 228,036  $   516,838
  Due from employee..................................       1,200        6,759
  Prepaid expenses...................................       2,341           --
                                                       ----------  -----------
    Total current assets.............................     231,577      523,597
PROPERTY AND EQUIPMENT, net..........................     100,996      120,694
OTHER NONCURRENT ASSETS..............................      19,473    1,094,708
                                                       ----------  -----------
    Total assets.....................................  $  352,046  $ 1,738,999
                                                       ==========  ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<S>                                                   <C>          <C>
CURRENT LIABILITIES:
  Accounts payable...................................  $  137,377  $   527,869
  Accrued expenses...................................       6,118    1,478,898
                                                       ----------  -----------
    Total current liabilities........................     143,495    2,006,767
LONG-TERM DEBT.......................................      75,000       75,000
OTHER LONG-TERM LIABILITIES..........................          --       73,424
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
  Preferred stock, $.001 par value; 50,000,000 shares
   authorized; none issued or outstanding............          --           --
  Common stock, $.001 par value; 100,000,000 shares
   authorized; 1,211,345 and 1,611,345 shares issued,
   respectively......................................       1,211        1,611
  Additional paid-in capital.........................   8,238,857    8,238,457
  Retained earnings..................................    (722,517)  (2,503,260)
  Subscriptions receivable...........................  (7,384,000)  (6,153,000)
                                                       ----------  -----------
    Total shareholders' equity (deficit).............     133,551     (416,192)
                                                       ----------  -----------
    Total liabilities and shareholders' equity
     (deficit).......................................  $  352,046  $ 1,738,999
                                                       ==========  ===========
</TABLE>    
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-20
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                       INCEPTION
                                                      (OCTOBER 21,
                                                         1996)     FOUR MONTHS
                                                        THROUGH       ENDED
                                                      DECEMBER 31,  APRIL 30,
                                                          1996        1997
                                                      ------------ -----------
<S>                                                   <C>          <C>
REVENUES.............................................         --            --
COST OF SERVICES.....................................         --            --
                                                       ---------   -----------
  Gross profit.......................................         --            --
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.........    724,006     1,783,409
                                                       ---------   -----------
    Loss from operations.............................   (724,006)   (1,783,409)
OTHER INCOME (EXPENSE):
  Interest expense...................................     (1,118)       (2,000)
  Interest income....................................      2,607         4,666
                                                       ---------   -----------
    Loss before income tax provision.................   (722,517)   (1,780,743)
INCOME TAX PROVISION.................................         --            --
                                                       ---------   -----------
NET LOSS.............................................  $(722,517)  $(1,780,743)
                                                       =========   ===========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-21
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                  STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
 
<TABLE>   
<CAPTION>
                            COMMON STOCK
                          ---------------- ADDITIONAL                             SHAREHOLDERS'
                          NUMBER OF         PAID-IN     RETAINED    SUBSCRIPTIONS    EQUITY
                           SHARES   AMOUNT  CAPITAL     EARNINGS     RECEIVABLE     (DEFICIT)
                          --------- ------ ----------  -----------  ------------- -------------
<S>                       <C>       <C>    <C>         <C>          <C>           <C>
BALANCE, October 21,
 1996                            -- $   -- $       --  $        --   $        --   $        --
  Net loss..............         --     --         --     (722,517)           --      (722,517)
  Issuance of
   subscription
   agreement............         --     --  8,000,000           --    (8,000,000)           --
  Issuance of common
   stock................    791,345    791     32,807           --            --        33,598
  Shares issued under
   subscription
   agreement............    200,000    200       (200)          --       616,000       616,000
  Compensation expense
   related to issuance
   of management shares.    220,000    220    206,250           --            --       206,470
                          --------- ------ ----------  -----------   -----------   -----------
BALANCE, December 31,
 1996...................  1,211,345  1,211  8,238,857     (722,517)   (7,384,000)      133,551
  Net loss..............         --     --         --   (1,780,743)           --    (1,780,743)
  Shares issued under
   subscription
   agreement............    400,000    400       (400)          --     1,231,000     1,231,000
                          --------- ------ ----------  -----------   -----------   -----------
BALANCE, April 30, 1997.  1,611,345 $1,611 $8,238,457  $(2,503,260)  $(6,153,000)  $  (416,192)
                          ========= ====== ==========  ===========   ===========   ===========
</TABLE>    
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-22
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                       INCEPTION
                                                      (OCTOBER 21,
                                                         1996)     FOUR MONTHS
                                                        THROUGH       ENDED
                                                      DECEMBER 31,  APRIL 30,
                                                          1996        1997
                                                      ------------ -----------
<S>                                                   <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss............................................  $(722,517)  $(1,780,743)
 Adjustments to reconcile net loss to net cash used
  in operating activities:
   Depreciation and amortization.....................      3,343        12,877
   Noncash compensation charge.......................    206,250            --
   Changes in operating assets and liabilities:
    (Increase) decrease in--
     Prepaid expenses and other assets...............     (3,541)       (3,218)
     Other noncurrent assets.........................         --        (1,567)
    Increase (decrease) in--
     Accounts payable................................    137,377       390,492
     Accrued expenses................................      6,118       979,562
                                                       ---------   -----------
      Net cash used in operating activities..........   (372,970)     (402,597)
                                                       ---------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment.................   (104,339)      (32,575)
                                                       ---------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock..............    649,818     1,231,000
 Proceeds from borrowings............................     75,000            --
 Deferred offering costs.............................    (19,473)     (439,205)
 Deferred financing costs............................         --       (67,821)
                                                       ---------   -----------
      Net cash provided by financing activities......    705,345       723,974
                                                       ---------   -----------
INCREASE IN CASH AND CASH EQUIVALENTS................    228,036       288,802
CASH AND CASH EQUIVALENTS, beginning of period.......         --       228,036
                                                       ---------   -----------
CASH AND CASH EQUIVALENTS, end of period.............  $ 228,036   $   516,838
                                                       =========   ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-23
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Group Maintenance America Corp. (the Company or GroupMAC Parent) was
incorporated in October 1996 and, therefore, the financial statements reflect
the period since the Company's inception through December 31, 1996 and the
four months ended April 30, 1997. The Company's primary business is to build a
national company providing heating, ventilation and air conditioning (HVAC),
plumbing and electrical services.
 
  Effective April 30, 1997, GroupMAC Parent entered into an Agreement and Plan
of Exchange (the Agreement) with Airtron, Inc. (Airtron), in which $20,366,951
in cash, 14,873,133 shares of GroupMAC Parent preferred stock and 4,652,140
shares of GroupMAC Parent common stock were issued to shareholders of Airtron
in exchange for 100 percent of the then outstanding shares of Airtron. In
connection with this merger the combined company is referred to as GroupMAC
and Subsidiaries. The Agreement closed on May 2, 1997 with the cash portion
funded by the Company's available credit facility and a capital contribution
from a shareholder pursuant to a stock subscription agreement (see note 6).
For accounting purposes, the transaction was accounted for as a reverse
acquisition, as if Airtron acquired GroupMAC Parent, as the former
shareholders of Airtron now own a majority of GroupMAC Parent's common stock.
Concurrent with this transaction, the resulting combined entity will be named
Group Maintenance America Corp. and Subsidiaries. The Company is included in
the consolidated financial statements of GroupMAC and Subsidiaries, presented
elsewhere herein, for periods subsequent to the effective date of the
acquisition.
 
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with original maturities of three months or
less to be cash equivalents. There were no cash payments for interest or
income taxes in 1996 or in the four months ended April 30, 1997.
 
 Property and Equipment
 
  Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures of major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Income Taxes
 
  The Company follows the liability method of accounting for income taxes in
accordance with Statement of Financial Accounting Standards No. 109. Under
this method deferred income taxes are recorded based upon differences between
the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
underlying assets or liabilities are received or settled.
 
                                     F-24
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The Company has recorded a full valuation allowance against all deferred tax
assets due to the uncertainty of ultimate realizability. Accordingly, no income
tax benefit has been recorded for the losses incurred.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Other noncurrent assets consists of the following:
 
<TABLE>
<CAPTION>
                                                        DECEMBER 31, APRIL 30,
                                                            1996        1997
                                                        ------------ ----------
       <S>                                              <C>          <C>
       Deferred offering costs.........................   $ 13,648   $  452,853
       Deferred financing costs........................         --      634,463
       Other noncurrent assets.........................      5,825        7,392
                                                          --------   ----------
                                                          $ 19,473   $1,094,708
                                                          ========   ==========
</TABLE>
 
  Accrued expenses consists of the following:
 
<TABLE>
<CAPTION>
                                                        DECEMBER 31, APRIL 30,
                                                            1996        1997
                                                        ------------ ----------
       <S>                                              <C>          <C>
       Accrued compensation............................   $    --    $  767,476
       Accrued financing costs.........................        --       566,642
       Other accrued expenses..........................     6,118       144,780
                                                          -------    ----------
                                                          $ 6,118    $1,478,898
                                                          =======    ==========
</TABLE>
 
                                      F-25
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
4. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                              ESTIMATED
                                                USEFUL   DECEMBER 31, APRIL 30,
                                                LIVES        1996       1997
                                              ---------- ------------ ---------
<S>                                           <C>        <C>          <C>
Office equipment, furniture and fixtures..... 3--7 years  $ 104,339   $136,358
Less accumulated depreciation................                (3,343)   (15,664)
                                                          ---------   --------
                                                          $ 100,996   $120,694
                                                          =========   ========
</TABLE>
 
5. LONG-TERM DEBT
 
CREDIT AGREEMENT
 
  In May 1997, the Company entered into a credit agreement (the Credit
Agreement) with a group of banks providing for secured facilities consisting
of an 18-month revolving credit line of $3 million, a six-year term loan of
$20 million used in connection with the acquisition of Airtron (see note 1)
and a term loan facility, available until October 31, 1998, providing for up
to $12 million in term loans having a final maturity six years after the date
of the Credit Agreement, to be used in connection with future acquisitions.
Loans under the revolving credit facility are limited to a borrowing base
consisting of 70% of eligible accounts receivable. Interest on outstanding
borrowings is payable in quarterly installments beginning August 31, 1997. A
commitment fee of .25% is payable on the unused portion of the revolving
credit line.
 
  The Credit Agreement contains covenants which, among other matters, restrict
or limit the ability of the Company to pay dividends, incur indebtedness, make
capital expenditures and repurchase capital stock. The Company must also
maintain a minimum fixed charge coverage ratio (as defined) and certain other
ratios, among other restrictions.
 
  As of June 30, 1997, available borrowing capacity under the Credit Agreement
was $5.4 million.
 
LONG-TERM DEBT
 
  On October 24, 1996, the Company executed a $75,000 subordinated note with a
Texas limited liability company. The note bears interest at eight percent (8%)
and is payable upon the earlier of (i) the closing of the Company's first
public offering of its common stock or (ii) two years from the date of the
note. The note is subordinate to all indebtedness of the Company to the banks
and is guaranteed by certain officers of the Company.
 
6. SHAREHOLDERS' EQUITY (DEFICIT)
 
COMMON STOCK
 
  The Company is authorized to issue 100 million shares of common stock, $.001
par value. There were 1,211,345 and 1,611,345 shares of common stock issued
and outstanding at December 31, 1996 and April 30, 1997, respectively. In
connection with the sale of certain shares of common stock to management, a
nonrecurring, noncash compensation charge of $206,250 was recorded in 1996 to
reflect the difference between the amount paid for the shares and the
estimated fair value of the shares on the date of sale.
 
  On October 24, 1996, the Company entered into a stock subscription agreement
with an individual allowing for the purchase of up to 2.6 million shares of
common stock at a purchase price of $3.08 per share. Under this agreement, 0.2
million shares were purchased in October 1996, 0.2 million in January 1997 and
0.2 million in
 
                                     F-26
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

April 1997 and additional shares are required to be purchased upon written
notice from the Company, but in no event later than October 24, 1998.
Subsequent to April 30, 1997, an additional 1.658 million shares have been
purchased under the Subscription Agreement.
 
PREFERRED STOCK
 
  The Company is authorized to issue up to 50 million shares of preferred
stock, par value $.001 per share, in one or more series. As of December 31,
1996 and April 30, 1997, none were outstanding.
 
OPTIONS
 
  Under an option agreement dated October 24, 1996, the Company is authorized
to grant stock options with respect to 388,800 shares of the Company's common
stock to directors and senior management.
 
  The following is a summary of stock option activity and number of shares
reserved for outstanding options.
 
<TABLE>
<CAPTION>
                                                                OPTION   NUMBER
                                                               PRICE PER   OF
                                                                 SHARE   SHARES
                                                               --------- -------
       <S>                                                     <C>       <C>
       Granted................................................   $3.08   291,600
                                                                         -------
       Balance at December 31, 1996...........................           291,600
       Granted................................................   $3.08    69,200
                                                                         -------
       Balance at April 30, 1997..............................           360,800
                                                                         =======
</TABLE>
 
  At April 30, 1997, options representing 28,000 shares were available to be
granted under the option agreement.
 
  The Company has adopted the disclosure-only provisions of the Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation. Accordingly, no compensation cost has been recognized for the
option agreement as all options have an exercise price equal to or greater
than the fair value of the underlying stock at date of grant. Had compensation
cost for the Company's stock option plan been determined consistent with the
provisions of SFAS No. 123, net loss would have been increased by the
following pro forma amounts:
 
<TABLE>
<CAPTION>
                                                        INCEPTION
                                                       (OCTOBER 21,
                                                          1996)     FOUR MONTHS
                                                         THROUGH       ENDED
                                                       DECEMBER 31,  APRIL 30,
                                                           1996        1997
                                                       ------------ -----------
<S>                                                    <C>          <C>
Net loss:
  As reported.........................................  $(722,517)  $(1,780,743)
  Pro forma...........................................  $(745,602)  $(1,837,870)
</TABLE>
 
  The pro forma compensation cost may not be representative of that to be
expected in future years because options vest over several years and
additional awards may be made each year.
 
                                     F-27
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used by the plan for fiscal 1996 and for the four months ending
April 30, 1997: no dividend yield; expected volatility of 0%; risk-free
interest rate of 6.26%; and expected lives of ten years. The weighted average
fair value per share of the options granted during fiscal 1996 and in the four
months ending April 30, 1997 is estimated to be $1.425.
 
7. INCOME TAXES
 
  There is no Federal income tax provision as losses were incurred and a
valuation allowance has been established against future benefits deriving from
the carryforward of these losses.
 
8. COMMITMENTS AND CONTINGENCIES
 
  The Company has entered into various operating lease agreements, primarily
for office space, furniture and service equipment. Minimum annual rental
payments under non-cancelable operating leases as of June 30, 1997, were
approximately as follows:
 
<TABLE>
<CAPTION>
         FOR THE YEAR
         ENDING APRIL
         30,
         ------------
         <S>                                             <C>
           1997......................................... $46,000
           1998.........................................     600
           1999.........................................     300
                                                         =======
</TABLE>
 
  Rental expense under operating leases was $9,032 for the period ended
December 31, 1996 and $49,194 for the four months ending April 30, 1997.
 
9. EVENT SUBSEQUENT TO INDEPENDENT AUDITORS' REPORT--STOCK SPLIT
 
  On August 16, 1997, the Company's Board of Directors declared a 1-for-2.5
reverse stock split of the Company's common stock. All share data included in
the consolidated financial statements have been restated to reflect the stock
split.
 
                                     F-28
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Group Maintenance America Corp. and Subsidiaries (formerly Airtron, Inc.):
 
  We have audited the accompanying consolidated balance sheets of Group
Maintenance America Corp. and Subsidiaries (formerly Airtron, Inc.) (the
Company) as of February 29, 1996, February 28, 1997 and June 30, 1997 and the
related consolidated statements of operations, shareholders' equity (deficit)
and cash flows for the years ended February 28, 1995, February 29, 1996 and
February 28, 1997, and the four months ended June 30, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Group
Maintenance America Corp. and Subsidiaries (formerly Airtron, Inc.) as of
February 29, 1996, February 28, 1997 and June 30, 1997 and the results of its
operations and its cash flows for the years ended February 28, 1995, February
29, 1996 and February 28, 1997, and the four months ended June 30, 1997, in
conformity with generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
August 1, 1997
 
                                     F-29
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>   
<CAPTION>
                                            FEBRUARY    FEBRUARY     JUNE 30,
                                            29, 1996    28, 1997       1997
                                           ----------- ----------- ------------
               ASSETS
<S>                                        <C>         <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents..............  $ 1,773,643 $ 4,339,406 $  5,875,027
  Accounts receivable, net of allowance
   for doubtful accounts of $568,327,
   $479,905 and $528,769, respectively...    7,409,168   7,811,108   14,939,516
  Inventories............................    3,686,094   3,354,054    4,934,852
  Costs and estimated earnings in excess
   of billings on uncompleted contracts..       36,123      13,229       43,274
  Prepaid expenses and other current
   assets................................      351,783     359,427    1,136,436
  Deferred tax assets....................    1,338,000     764,500    1,607,450
  Refundable income taxes................           --   3,235,500      576,467
                                           ----------- ----------- ------------
    Total current assets.................   14,594,811  19,877,224   29,113,022
PROPERTY AND EQUIPMENT, net..............    1,387,456   1,289,242    4,721,461
GOODWILL, net of accumulated amortization
 of $30,795..............................           --          --   18,317,831
DEFERRED TAX ASSET.......................    4,957,700   3,195,100   10,120,000
OTHER NONCURRENT ASSETS..................    7,342,260   2,791,491    2,669,975
                                           ----------- ----------- ------------
    Total assets.........................  $28,282,227 $27,153,057 $ 64,942,289
                                           =========== =========== ============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<S>                                        <C>         <C>         <C>
CURRENT LIABILITIES:
  Short-term borrowings and current
   maturities of long-term debt..........  $        -- $   148,994 $  4,577,200
  Accounts payable.......................    2,958,771   2,882,012    7,089,459
  Accrued expenses.......................    5,231,529   7,765,355    5,315,951
  Due to related parties.................           --          --      537,421
  Billings in excess of costs and
   estimated earnings on uncompleted
   contracts.............................    1,554,948   1,469,002    1,780,467
  Deferred service contract revenue......      732,655     738,559    1,153,186
  Income taxes payable...................      832,023     536,498      494,479
  Other current liabilities..............           --          --      740,000
                                           ----------- ----------- ------------
    Total current liabilities............   11,309,926  13,540,420   21,688,163
LONG-TERM DEBT, net of current
 maturities..............................           --   1,140,933   26,467,994
COMPENSATION AND BENEFITS PAYABLE........    9,909,809   5,831,263           --
DUE TO SHAREHOLDERS......................           --          --    9,744,500
OTHER LONG-TERM LIABILITIES..............      689,100     650,000      918,477
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK AND RELATED
 WARRANTS................................           --          --   17,121,133
SHAREHOLDERS' EQUITY (DEFICIT):
  Common stock, $.001 par value;
   100,000,000 shares authorized;
   5,692,261, 4,652,140 and 8,707,998
   shares issued and outstanding,
   respectively..........................        5,692       4,652        8,708
  Additional paid-in capital.............    2,701,116   2,646,093   25,740,895
  Retained earnings (deficit)............    3,666,584   3,339,696  (34,693,811)
  Subscriptions receivable...............           --          --   (2,053,770)
                                           ----------- ----------- ------------
    Total shareholders' equity (deficit).    6,373,392   5,990,441  (10,997,978)
                                           ----------- ----------- ------------
    Total liabilities and shareholders'
     equity (deficit)....................  $28,282,227 $27,153,057 $ 64,942,289
                                           =========== =========== ============
</TABLE>    
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-30
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                              FOUR MONTHS ENDED JUNE
                         YEAR ENDED  YEAR ENDED  YEAR ENDED             30,
                          FEBRUARY    FEBRUARY    FEBRUARY    ------------------------
                          28, 1995    29, 1996    28, 1997       1996         1997
                         ----------- ----------- -----------  -----------  -----------
                                                              (UNAUDITED)
<S>                      <C>         <C>         <C>          <C>          <C>
REVENUES................ $72,225,889 $73,764,643 $81,879,819  $25,956,840  $31,085,514
COST OF SERVICES........  50,459,914  52,673,935  58,505,888   18,925,670   22,686,136
                         ----------- ----------- -----------  -----------  -----------
  Gross profit..........  21,765,975  21,090,708  23,373,931    7,031,170    8,399,378
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES...............  17,882,164  17,614,854  19,811,136    5,461,278    6,189,127
COMPENSATION EXPENSE
 FROM REVERSE
 ACQUISITION............          --          --          --           --    6,978,300
WARRANT COMPENSATION....   2,400,000          --          --           --           --
                         ----------- ----------- -----------  -----------  -----------
  Income (loss) from
   operations...........   1,483,811   3,475,854   3,562,795    1,569,892   (4,768,049)
OTHER INCOME (EXPENSE):
  Interest expense......          --          --     (82,211)     (37,768)    (352,666)
  Interest income.......      75,835      67,744     170,918       20,100       93,212
  Other.................     140,078     246,219     256,249       23,535        2,821
                         ----------- ----------- -----------  -----------  -----------
    Income (loss) before
     income tax
     provision..........   1,699,724   3,789,817   3,907,751    1,575,759   (5,024,682)
INCOME TAX PROVISION....     910,664   1,650,956   1,571,680      633,614      800,000
                         ----------- ----------- -----------  -----------  -----------
NET INCOME (LOSS)....... $   789,060 $ 2,138,861 $ 2,336,071  $   942,145  $(5,824,682)
                         =========== =========== ===========  ===========  ===========
WEIGHTED AVERAGE SHARES
 OUTSTANDING............   8,008,122   6,190,337   5,172,201    5,172,201    8,875,295
                         =========== =========== ===========  ===========  ===========
NET INCOME (LOSS) PER
 SHARE.................. $      0.10 $      0.35 $      0.45  $      0.18  $     (0.66)
                         =========== =========== ===========  ===========  ===========
</TABLE>
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-31
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
 
<TABLE>   
<CAPTION>
                             COMMON STOCK       ADDITIONAL                                                 TOTAL
                          --------------------    PAID-IN      RETAINED     TREASURY    SUBSCRIPTIONS  SHAREHOLDERS'
                            SHARES     AMOUNT     CAPITAL      EARNINGS       STOCK      RECEIVABLE   EQUITY (DEFICIT)
                          ----------  --------  -----------  ------------  -----------  ------------- ----------------
<S>                       <C>         <C>       <C>          <C>           <C>          <C>           <C>
BALANCE, February 28,
 1994...................     502,767  $502,767  $        --  $  7,305,936  $(5,633,300)  $        --    $  2,175,403
 Adjustment to convert
  number and par value
  of Airtron shares to
  shares of GroupMAC
  Parent ...............   8,825,065  (493,439)     493,439            --           --            --              --
                          ----------  --------  -----------  ------------  -----------   -----------    ------------
RESTATED BALANCE, Febru-
 ary 28, 1994...........   9,327,832     9,328      493,439     7,305,936   (5,633,300)           --       2,175,403
 Purchases of stock.....          --        --           --            --   (1,534,896)           --      (1,534,896)
 Cancellation of trea-
  sury stock............  (2,639,420)   (2,640)    (139,626)   (4,618,714)   4,760,980            --              --
 Contributions of bene-
  fit trust.............          --        --           --            --    2,125,866            --       2,125,866
 Compensation on war-
  rants.................          --        --    2,400,000            --           --            --       2,400,000
 Net income.............          --        --           --       789,060           --            --         789,060
                          ----------  --------  -----------  ------------  -----------   -----------    ------------
BALANCE, February 28,
 1995...................   6,688,412     6,688    2,753,813     3,476,282     (281,350)           --       5,955,433
 Purchases of stock.....          --        --           --            --   (2,657,565)           --      (2,657,565)
 Cancellation of trea-
  sury stock............    (996,151)     (996)     (52,697)   (1,948,559)   2,002,252            --              --
 Contributions to bene-
  fit trust.............          --        --           --            --      936,663            --         936,663
 Net income.............          --        --           --     2,138,861           --            --       2,138,861
                          ----------  --------  -----------  ------------  -----------   -----------    ------------
BALANCE, February 29,
 1996...................   5,692,261     5,692    2,701,116     3,666,584           --            --       6,373,392
 Purchases of stock.....          --        --           --            --   (2,112,474)           --      (2,112,474)
 Repurchase of warrants.          --        --           --      (600,000)          --            --        (600,000)
 Cancellation of trea-
  sury stock............  (1,040,121)   (1,040)     (55,023)   (2,056,411)   2,112,474            --              --
 Distributions to share-
  holders...............          --        --           --        (6,548)          --            --          (6,548)
 Net income.............          --        --           --     2,336,071           --            --       2,336,071
                          ----------  --------  -----------  ------------  -----------   -----------    ------------
BALANCE, February 28,
 1997...................   4,652,140     4,652    2,646,093     3,339,696           --            --       5,990,441
 Purchase of Acquired
  Companies.............   2,713,858     2,714   23,065,369            --           --    (6,153,000)     16,915,083
 Preferred Stock issued
  to Airtron sharehold-
  ers in reverse acqui-
  sition................          --        --           --   (14,873,133)          --            --     (14,873,133)
 Distribution to Airtron
  shareholders in
  reverse acquisition...          --        --           --   (17,335,692)          --            --     (17,335,692)
 Shares issued under
  subscription agree-
  ment..................   1,332,000     1,332       (1,332)           --           --     4,099,230       4,099,230
 Exercise of options....      10,000        10       30,765            --           --            --          30,775
 Net (loss).............          --        --           --    (5,824,682)          --            --      (5,824,682)
                          ----------  --------  -----------  ------------  -----------   -----------    ------------
BALANCE, June 30, 1997..   8,707,998  $  8,708  $25,740,895  $(34,693,811) $        --   $(2,053,770)   $(10,997,978)
                          ==========  ========  ===========  ============  ===========   ===========    ============
</TABLE>    
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-32
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                      FOUR MONTHS ENDED
                          YEAR ENDED    YEAR ENDED    YEAR ENDED           JUNE 30,
                         FEBRUARY 28,  FEBRUARY 29,  FEBRUARY 28,  -------------------------
                             1995          1996          1997         1996          1997
                         ------------  ------------  ------------  -----------  ------------
                                                                   (UNAUDITED)
<S>                      <C>           <C>           <C>           <C>          <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net income (loss)...... $   789,060   $ 2,138,861   $ 2,336,071   $   942,145  $ (5,824,682)
 Adjustments to
  reconcile net income
  (loss) to net cash
  provided by (used in)
  operating activities:
 Depreciation and
  amortization..........     228,759       238,338       208,037        71,836       194,477
 Gain from sale of
  property and
  equipment.............       6,993        (9,222)     (223,593)       (5,521)           --
 Deferred income taxes..  (2,295,336)   (1,400,500)    2,336,100     1,204,700     2,338,223
 Non-cash compensation
  expense from reverse
  acquisition...........          --            --            --            --     6,978,300
 Warrant compensation...   2,400,000            --            --            --            --
 Changes in operating
  assets and
  liabilities, net of
  effect of
  acquisitions
  accounted for as
  purchases:
  (Increase) decrease
   in -
   Accounts receivable..    (571,196)     (403,499)     (401,940)   (1,756,106)   (2,078,958)
   Inventories..........    (177,969)      171,699       332,040       456,037        29,553
   Costs and estimated
    earnings in excess
    of billings on
    uncompleted
    contracts...........    (174,216)      163,218        22,894            --       (30,045)
   Prepaid expenses and
    other current
    assets..............       2,718       (33,805)       (7,644)   (1,068,085)       71,952
   Refundable income
    taxes...............          --            --    (3,235,500)           --       431,378
   Other noncurrent
    assets..............          --            --            --            --         4,821
  Increase (decrease)
   in -
   Accounts payable.....      (2,464)      425,430       (76,759)    1,400,875       461,236
   Accrued expenses.....     417,434       667,499     2,533,826      (435,002)   (5,848,590)
   Due to related
    parties.............          --            --            --            --       (10,395)
   Billings in excess of
    costs and estimated
    earnings on
    uncompleted
    contracts...........     248,316      (143,888)      (85,946)      340,007       311,465
   Deferred service
    contract revenue....      46,264        23,516         5,904        27,844      (104,989)
   Income tax payable...     (77,096)      590,661      (295,525)   (1,597,897)     (221,172)
   Other current
    liabilities.........          --            --            --            --       619,120
   Compensation and
    benefits payable....   1,498,152     1,579,127       254,920    (1,086,957)       (8,513)
   Other long-term
    liabilities.........          --            --            --            --       121,405
                         -----------   -----------   -----------   -----------  ------------
    Net cash provided by
     (used in) operating
     activities.........   2,339,419     4,007,435     3,702,885    (1,506,124)   (2,565,414)
                         -----------   -----------   -----------   -----------  ------------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Cash paid for
  acquisitions, net of
  cash acquired of
  $2,011,220............          --            --            --            --    (5,342,855)
 Deferred offering
  costs.................          --            --            --            --      (545,690)
 Purchases of property
  and equipment.........    (370,289)     (246,009)     (182,256)      (49,048)     (364,955)
 Proceeds from sale of
  property and
  equipment.............          --        56,909       296,026            --            --
 Proceeds from note
  receivable............      29,396            --       155,803            --            --
                         -----------   -----------   -----------   -----------  ------------
    Net cash provided by
     (used in) investing
     activities.........    (340,893)     (189,100)      269,573       (49,048)   (6,253,500)
                         -----------   -----------   -----------   -----------  ------------
CASH FLOWS FROM
 FINANCING ACTIVITIES:
 Purchases of stock.....  (1,534,896)   (2,657,565)     (787,174)     (205,471)           --
 Repurchase of warrants.          --            --      (538,500)           --            --
 Proceeds from long-term
  debt..................          --            --            --            --    29,600,000
 Payments of long-term
  debt..................          --            --       (35,373)           --    (2,976,681)
 Payments of other long-
  term obligations......          --       (37,000)      (39,100)      (13,000)           --
 Deferred offering
  costs.................          --            --            --            --       (31,838)
 Issuance of stock......          --            --            --            --     4,099,230
 Exercise of options....          --            --            --            --        30,775
 Distributions to
  shareholders..........          --            --        (6,548)           --   (20,366,951)
                         -----------   -----------   -----------   -----------  ------------
    Net cash provided by
     (used in) financing
     activities.........  (1,534,896)   (2,694,565)   (1,406,695)     (218,471)   10,354,535
                         -----------   -----------   -----------   -----------  ------------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS............     463,630     1,123,770     2,565,763    (1,773,643)    1,535,621
CASH AND CASH
 EQUIVALENTS, beginning
 of period..............     186,243       649,873     1,773,643     1,773,643     4,339,406
                         -----------   -----------   -----------   -----------  ------------
CASH AND CASH
 EQUIVALENTS, end of
 period................. $   649,873   $ 1,773,643   $ 4,339,406   $        --  $  5,875,027
                         ===========   ===========   ===========   ===========  ============
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-33
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Group Maintenance America Corp. (GroupMAC Parent) was incorporated as a
Texas corporation in October, 1996 to build a national company providing
heating, ventilation and air conditioning (HVAC), plumbing and electrical
services.
 
  Effective April 30, 1997, GroupMAC Parent entered into an Agreement and Plan
of Exchange (the Agreement) with Airtron, Inc. (Airtron), in which $20,366,951
in cash, 14,873,133 shares of GroupMAC Parent preferred stock and 4,652,140
shares of GroupMAC Parent common stock were issued to shareholders of Airtron
in exchange for 100 percent of the then outstanding shares of Airtron.
 
  Although for legal purposes Airtron was acquired by GroupMAC Parent, for
accounting purposes, the transaction was accounted for as a reverse
acquisition, as if Airtron acquired GroupMAC Parent, due to the fact that the
former shareholders of Airtron then owned a majority of GroupMAC Parent's
common stock. In connection with the purchase of GroupMAC Parent, the
consideration paid to the shareholders of GroupMAC Parent was recorded as a
nonrecurring compensation expense of $6,978,300 in the accompanying statements
of operations for the four month period ended June 30, 1997. The consolidated
financial statements presented herein for the periods prior to the effective
date of the acquisition only include the accounts of Airtron. The consolidated
statements of shareholders' equity have been converted from Airtron's capital
stock structure to GroupMAC Parent's capital stock structure to reflect the
exchange of shares pursuant to the Agreement. The cash paid to the Airtron
shareholders, net of existing liabilities to former shareholders, has been
treated as a distribution to the Airtron shareholders. The consolidated group
of companies are collectively referred to herein as GroupMAC and Subsidiaries
or "the Company." All significant intercompany balances have been eliminated.
Concurrent with the initial public offering of the Company's common stock, the
Company intends to change its fiscal year end from February 28 to December 31.
 
  Airtron was incorporated in 1970 as a Delaware Corporation. Airtron installs
and services brand name heating and air conditioning equipment for residential
and commercial customers located in Ohio, Indiana, Kentucky, Florida and
Texas.
 
  In May and June 1997, the Company acquired in separate transactions seven
additional residential or commercial service companies (the Acquired
Companies), through a combination of cash and preferred and common stock of
the Company. Subsequent to June 30, 1997 the Company acquired three additional
companies and has signed definitive agreements to acquire 13 others.
 
  The acquisitions of the Acquired Companies were accounted for as purchase
business combinations, with the results of operations included in the
Company's financial statements from the effective date of acquisition.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Interim Financial Information
 
  The interim consolidated financial statements for the four months ended June
30, 1996, are unaudited, and certain information and footnote disclosures,
normally included in financial statements prepared in accordance with
generally accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the interim financial statements, have been
included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
                                     F-34
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
Use of Estimates
 
  The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
from service and maintenance contracts are recognized over the life of the
contracts. Revenues from construction contracts are recognized on a percentage
of completion basis using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
Cash and Cash Equivalents
 
  Cash equivalents of approximately $911,000, $2,189,000 and $3,823,000 at
February 29, 1996, February 28, 1997 and June 30, 1997, respectively, consist
of short-term investments in money market funds. For purposes of the
statements of cash flows, the Company considers all highly liquid investments
with original maturities of three months or less to be cash equivalents. Cash
payments for income taxes were approximately $2,946,000, $2,452,000,
$2,586,000 and $456,000 for the years ended February 28, 1995, February 29,
1996 and February 28, 1997 and the four months ended June 30, 1997,
respectively.
 
Investments
 
  The Company classifies all investments held for the deferred compensation
plan with readily determinable fair values as trading securities. These
securities are recorded at fair value with unrealized holding gains and losses
reported in earnings. Where readily determinable fair values are not
available, investments are recorded at cost.
 
Inventories
 
  Inventories consist primarily of purchased materials and supplies. The
inventory is valued at the lower of cost or market, with cost determined on a
first-in, first-out (FIFO) basis.
 
Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed
principally using the straight-line method over the useful lives of the
assets. Leasehold improvements are amortized over the lesser of the remaining
lease term or the estimated useful life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures of major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
Goodwill
 
  Goodwill represents the excess of the aggregate purchase price over the fair
value of net assets acquired and is amortized on a straight-line basis over a
period of 40 years. The Company assesses the recoverability of
 
                                     F-35
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
this intangible asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future operating
cash flows compared to the carrying value of goodwill. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.
 
Stock-Based Compensation
 
  SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but
does not require companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to continue
to account for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.
 
Warranty Costs
 
  The Company generally warrants all of its work for a period of one year from
the date of installation. A provision for estimated warranty costs is made at
the time a product is sold or service is rendered.
 
Income Taxes
 
  The Company uses the asset and liability method to account for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
New Accounting Pronouncement
 
  Effective March 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
  In February 1997, the Financial Accounting Standards Board issued SFAS 128,
Earnings Per Share, which the Company is required to adopt for both interim
and annual periods ending after December 15, 1997. SFAS 128 simplifies the
earnings per share calculation by replacing primary earnings per share with
basic earnings per share, as well as requiring the presentation of fully
diluted earnings per share. Basic earnings per share is computed by dividing
reported earnings available to common shareholders by the weighted average
shares outstanding. The Company's current presentation of net income per share
is the same as the fully diluted earnings per share presentation required by
SFAS 128.
 
                                     F-36
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
Net Income Per Share
 
  Net income per share is calculated by dividing net income by the weighted
average number of shares of common stock and common stock equivalents. Stock
options are regarded as common stock equivalents and are therefore considered
in net income per share calculations if dilutive. Common stock equivalents are
computed using the treasury stock method. All stock options are dilutive and,
accordingly, primary and fully diluted net income per share are the same.
 
  The following table summarizes weighted average shares outstanding for each
of the periods presented (in thousands).
 
<TABLE>
<CAPTION>
                                                                   FOUR MONTHS ENDED
                           YEAR ENDED   YEAR ENDED   YEAR ENDED        JUNE 30,
                          FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, ---------------------
                              1995         1996         1997        1996       1997
                          ------------ ------------ ------------ ----------- ---------
                                                                 (UNAUDITED)
<S>                       <C>          <C>          <C>          <C>         <C>
Shares issued in the
 acquisition of Airtron.   8,008,122    6,190,337    5,172,201    5,172,201  4,652,140
Group Maintenance
 America Corp. shares
 outstanding, excluding
 acquisitions...........          --           --           --           --  2,953,345
Shares issued for the
 acquisition of the
 Acquired Companies.....          --           --           --           --  1,102,513
Stock options, net of
 assumed repurchase of
 common shares as
 treasury stock.........          --           --           --           --    167,297
                           ---------    ---------    ---------    ---------  ---------
                           8,008,122    6,190,337    5,172,201    5,172,201  8,875,295
                           =========    =========    =========    =========  =========
</TABLE>
 
3. BUSINESS COMBINATIONS
   
  During May and June 1997, the Company acquired the Acquired Companies for an
aggregate consideration of approximately $21,608,000. This consisted of
$7,705,000 in cash and payables to the former shareholders of the Acquired
Companies, and 2,248,000 and 1,110,019 shares of preferred and common stock,
respectively. The preferred stock was valued at its redemption value of $1 per
share. The common stock was valued at its estimated fair value at the time of
the respective acquisition. The Company financed the cash portion of the
purchase consideration through borrowings under its credit agreement. Purchase
price consideration is subject to final adjustment. The allocation of purchase
price to the assets acquired and liabilities assumed has been initially
assigned and recorded based on preliminary estimates of fair value and may be
revised as additional information becomes available.     
 
                                     F-37
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The unaudited pro forma data presented below consists of the combined income
statement data for GroupMAC Parent, Airtron and the Acquired Companies as if
the acquisitions were effective on the first day of the period being reported
(in thousands, except for per share amounts) (unaudited).
 
<TABLE>
<CAPTION>
                                                           FISCAL   FOUR MONTHS
                                                            YEAR       ENDED
                                                            1996   JUNE 30, 1997
                                                          -------- -------------
       <S>                                                <C>      <C>
       Revenues.......................................... $128,500    $43,900
                                                          ========    =======
       Net income........................................ $  6,000    $ 1,000
                                                          ========    =======
       Net income per share.............................. $   0.68    $  0.11
                                                          ========    =======
</TABLE>
 
  The above pro forma amounts for 1996 include the historical information for
each of the companies using their historical year end, rather than the year
end of the Company, as the Acquired Companies year end approximates the
Company's. The pro forma amounts for 1997 include the results of operations
for each of the companies for the four months ended June 30, 1997. Pro forma
adjustments included in the amounts above include compensation differentials,
adjustment for goodwill amortization over a period of 40 years, elimination of
historical interest expense on long-term debt which was repaid, the addition
of interest expense on borrowed funds used to finance the acquisition of
Airtron and the Acquired Companies, and adjustment to the federal and state
income tax provisions based on pro forma operating results. Net income per
share for 1996 and 1997 assumes all shares issued for the acquisitions of
Airtron and the Acquired Companies had been outstanding for the periods
presented.
 
4. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Other noncurrent assets consists of the following:
 
<TABLE>
<CAPTION>
                                               FEBRUARY   FEBRUARY   JUNE 30,
                                               29, 1996   28, 1997     1997
                                              ---------- ---------- ----------
<S>                                           <C>        <C>        <C>
Investments restricted for benefit of
 employees:
  Recorded at fair value..................... $4,033,097 $       -- $       --
  Recorded at cost...........................  3,153,360  2,791,491         --
Note receivable..............................    155,803         --         --
Refundable income taxes......................         --         --  2,183,883
Other noncurrent assets......................         --         --    486,092
                                              ---------- ---------- ----------
                                              $7,342,260 $2,791,491 $2,669,975
                                              ========== ========== ==========
</TABLE>
 
  Accrued expenses consists of the following:
 
<TABLE>
<S>                                            <C>        <C>        <C>
Accrued payroll costs and benefits............ $4,423,249 $7,006,790 $3,063,446
Warranties....................................    494,506    544,031    853,592
Other accrued expenses........................    313,774    214,534  1,398,913
                                               ---------- ---------- ----------
                                               $5,231,529 $7,765,355 $5,315,951
                                               ========== ========== ==========
</TABLE>
 
                                     F-38
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  The summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                      FEBRUARY 29,  FEBRUARY 28,    JUNE 30,
                                          1996          1997          1997
                                      ------------  ------------  ------------
<S>                                   <C>           <C>           <C>
Costs incurred....................... $ 14,613,066  $ 13,125,649  $ 16,489,091
Estimated earnings recognized........    2,983,612     2,275,287     3,129,035
                                      ------------  ------------  ------------
                                        17,596,678    15,400,936    19,618,126
Less billings on contracts...........  (19,115,503)  (16,856,709)  (21,355,319)
                                      ------------  ------------  ------------
                                      $ (1,518,825) $ (1,455,773) $ (1,737,193)
                                      ============  ============  ============
</TABLE>
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying consolidated balance sheets under the following captions:
 
<TABLE>
<CAPTION>
                                         FEBRUARY 29,   FEBRUARY     JUNE 30,
                                             1996       28, 1997       1997
                                         ------------  -----------  -----------
<S>                                      <C>           <C>          <C>
Costs and estimated earnings in excess
 of billings on uncompleted contracts... $    36,123   $    13,229  $    43,274
Billings in excess of costs and
 estimated earnings on uncompleted
 contracts..............................  (1,554,948)   (1,469,002)  (1,780,467)
                                         -----------   -----------  -----------
                                         $(1,518,825)  $(1,455,773) $(1,737,193)
                                         ===========   ===========  ===========
</TABLE>
 
6. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and equipment
were as follows:
 
<TABLE>
<CAPTION>
                              ESTIMATED
                               USEFUL     FEBRUARY     FEBRUARY     JUNE 30,
                                LIVES     29, 1996     28, 1997       1997
                             ----------- -----------  -----------  -----------
<S>                          <C>         <C>          <C>          <C>
Land........................          -- $   244,813  $   217,551  $   217,551
Building and improvements... 20-30 years     927,631      639,903      639,903
Service and other vehicles..   4-7 years     114,837      134,795    2,533,669
Machinery and equipment.....  5-10 years     679,748      686,319    1,156,245
Office equipment, furniture
 and fixtures...............  5-10 years     667,220      724,013    1,313,933
Leasehold improvements......          --     542,422      550,033      687,214
                                         -----------  -----------  -----------
                                           3,176,671    2,952,614    6,548,515
Less accumulated
 depreciation...............              (1,789,215)  (1,663,372)  (1,827,054)
                                         -----------  -----------  -----------
                                         $ 1,387,456  $ 1,289,242  $ 4,721,461
                                         ===========  ===========  ===========
</TABLE>
 
                                      F-39
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
7. SHORT-AND LONG-TERM DEBT
 
  Short-and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                       FEBRUARY    JUNE 30,
                                                       28, 1997      1997
                                                      ----------  -----------
<S>                                                   <C>         <C>
Note payable to former shareholder at 8.25%, due in
 monthly installments of $20,822 including interest,
 repaid in May 1997 with proceeds from the Company's
 Credit Agreement.................................... $1,289,927  $        --
Credit Agreement:
  Revolving credit loan..............................         --      500,000
  Advancing acquisition line of credit loan..........         --    9,100,000
  Term loan..........................................         --   20,000,000
Equipment installment loans payable to banks and
 other financial institutions, interest varying from
 7.5% to 10.25%, payable in monthly installments
 including interest, final installment due January
 1998................................................         --      450,230
Equipment installment loans payable to banks,
 interest varying from 8.75% to 9.0%, secured by
 certain equipment, payable in monthly and quarterly
 installments including interest, final installment
 due November 2000...................................         --      471,295
Notes payable to the former shareholders of an
 Acquired Company at 8%, payable in monthly
 installments through November 2004..................         --      523,669
                                                      ----------  -----------
    Total short- and long-term debt..................  1,289,927   31,045,194
Less short-term borrowings and current maturities....   (148,994)  (4,577,200)
                                                      ----------  -----------
                                                      $1,140,933  $26,467,994
                                                      ==========  ===========
</TABLE>
 
  On May 2, 1997, the Company entered into a credit agreement (the Credit
Agreement) with a total commitment of $35 million. The Credit Agreement
consists of three portions: (a) a revolving credit agreement up to $3 million
for use as working capital, (b) a $12 million advancing acquisition line of
credit to finance the acquisitions, and (c) a $20 million term loan to finance
the acquisition of Airtron. Borrowings under the Credit Agreement bear
interest through October 1998 at the prime rate. Beginning in November 1998,
the interest rate is adjusted for margins ranging from 0% to 0.5%, depending
on the ratio of the Company's funded debt to its historical earnings before
interest, taxes, depreciation and amortization, subject to certain
adjustments, as approved by the lender. The Company is subject to commitment
fees of 0.25% per annum for the unutilized portion of the revolving credit
agreement and the advancing acquisition line of credit. The Credit Agreement
prohibits the Company from incurring additional indebtedness, except for
indebtedness existing at the time of execution of the Credit Agreement,
letters of credit up to $750,000, earn-out obligations and other limitations.
The Company may not pay any dividends or repurchase outstanding shares of the
Company's stock, except for the purchase of stock of departing officers and
employees. The Credit Agreement also requires the Company to maintain certain
levels of consolidated net worth and comply with certain other financial
covenants. The Company's subsidiaries have guaranteed all borrowings under the
Credit Agreement. All outstanding borrowings under the revolving credit
agreement are due on or before October 31, 1998, and the advancing acquisition
line of credit and the term loan mature on April 30, 2003. At June 30, 1997,
the applicable interest rate is 8.5%.
 
                                     F-40
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The aggregate maturities of the long-term debt as of June 30, 1997 are as
follows:
 
<TABLE>
<CAPTION>
         YEAR
         ENDING
         JUNE
         30,
         ------
         <S>                                         <C>
           1998..................................... $ 4,577,200
           1999.....................................   5,168,487
           2000.....................................   5,498,520
           2001.....................................   5,450,153
           2002.....................................   5,450,153
           Thereafter...............................   4,900,681
                                                     -----------
                                                     $31,045,194
                                                     ===========
</TABLE>
 
8. DUE TO SHAREHOLDERS
 
  Under the Agreement, part of the cash purchase price paid to shareholders
relates to the tax benefits which will be received by the Company related to
the exercise of previously outstanding warrants and distributions under
deferred compensation arrangements. A liability and deferred tax asset of
$9,744,500 have been recognized in the accompanying consolidated financial
statements for an estimate of these amounts as of June 30, 1997.
 
9. STOCK-BASED COMPENSATION PLANS
 
  Prior to the Agreement, under an option agreement dated October 24, 1996,
GroupMAC Parent granted stock options to directors and senior management to
purchase an aggregate of 360,800 shares at an exercise price of $3.08.
Subsequent to the Agreement the Company did not grant any stock options
through June 30, 1997. Under this option agreement, options representing
350,800 shares of common stock were outstanding at June 30, 1997 and there
were options representing 28,000 shares of common stock available for grant.
 
  The following is a summary of stock option activity and number of shares
reserved for outstanding options.
 
<TABLE>
<CAPTION>
                                                               OPTION   NUMBER
                                                              PRICE PER   OF
                                                                SHARE   SHARES
                                                              --------- -------
       <S>                                                    <C>       <C>
       Granted...............................................   $3.08   291,600
                                                                        -------
       Balance at December 31, 1996..........................           291,600
       Granted...............................................   $3.08    69,200
                                                                        -------
       Balance at April 30, 1997, date of Agreement..........           360,800
       Exercised.............................................   $3.08   (10,000)
                                                                        -------
       Balance at June 30, 1997..............................           350,800
                                                                        =======
</TABLE>
 
                                     F-41
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The Company has adopted the disclosure-only provisions of the Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation. Accordingly, compensation cost has been recognized only for the
options which have an exercise price less than the fair value of the
underlying stock at date of grant. Had compensation cost for the Company's
stock option plan been determined consistent with the provisions of SFAS No.
123, net income and net income per share would have been decreased by the
following pro forma amounts:
 
<TABLE>
<CAPTION>
                                                                    FOUR MONTHS
                                                                       ENDED
                                                                     JUNE 30,
                                                                       1997
                                                                    -----------
<S>                                                                 <C>
Net Loss:
  As Reported...................................................... $(5,824,682)
  Pro forma........................................................ $(5,853,682)
Net Loss Per Share:
  As Reported...................................................... $     (0.66)
  Pro forma........................................................ $     (0.66)
</TABLE>
 
  The pro forma compensation cost may not be representative of that to be
expected in future years because options vest over several years and
additional awards may be made each year.
 
  The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for fiscal 1996 for the plan: no dividend yield; expected
volatility of 0%; risk-free interest rate of 6.26%; and expected lives of ten
years. The weighted average fair value per share of the options granted prior
to the Agreement is estimated to be $1.425.
 
  In July 1994, Airtron extended 60,000 warrants to purchase common shares at
$1 each until August 1, 2011. The appraisal for market value of Airtron's
stock at that time, was $40 per share, resulting in a charge of $2,400,000 and
an offsetting increase in retained earnings in fiscal 1995. All 60,000
warrants were outstanding at February 29, 1996. In August 1996, 15,000 of
these warrants were purchased from a former shareholder for $538,500,
resulting in a reduction in retained earnings for the original recorded value
of the warrants of $600,000 with the offset recorded as other income. At
February 28, 1997, 45,000 warrants were outstanding. In connection with the
Agreement these warrants were exchanged for cash and preferred and common
shares of GroupMAC Parent.
 
  Airtron had deferred compensation arrangements for certain members of
management and the Board of Directors.The assets and liabilities previously
recorded by the Company have been reflected as distributions in the
accompanying financial statements.
 
10. SHAREHOLDERS' EQUITY
 
COMMON STOCK
 
  The Company is authorized to issue 100 million shares of common stock, $.001
par value. There are 8,707,998 shares of common stock outstanding at June 30,
1997.
 
  On October 24, 1996, the Company entered into a stock subscription agreement
with an individual allowing for the purchase of up to 2.6 million shares of
common stock at a purchase price of $3.08 per share. Under this agreement, 0.2
million shares were purchased in October, 1996, 0.2 million in January, 1997,
0.2 million in April, 1997, 880,000 on May 5, 1997, 452,000 on June 12, 1997,
326,000 on July 14, 1997 and additional shares are required to be purchased
upon written notice from the Company, but in no event later than October 24,
1998.
 
                                     F-42
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
 
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
PREFERRED STOCK
   
  The Company is authorized to issue up to 50 million shares of preferred
stock, par value of $.001 per share, in one or more series. The non-
convertible, non-voting preferred stock is redeemable at any time after the
initial issuance, in whole or in part, at the option of the Company, at an
amount equal to the liquidation value of $1.00 per share plus any accrued but
unpaid dividends. In the event that an initial public offering (IPO) has not
occurred by June 30, 1999, cumulative dividends accrue commencing July 1, 1999
at an annual rate of $.08 per whole share. Redemption of all outstanding
preferred stock is mandatory upon an IPO.     
 
  In connection with certain acquisitions, the Company has issued 15,407,511
shares of preferred stock and warrants to purchase 1,713,622 shares of
preferred stock. Subsequent to June 30, 1997, an additional 2,150,462 shares
of preferred stock were issued in connection with other acquisitions (see Note
16).
 
11. INCOME TAXES
 
  Income tax expense consists of:
 
<TABLE>
<CAPTION>
                                                                    FOUR MONTHS
                             YEAR ENDED   YEAR ENDED   YEAR ENDED      ENDED
                              FEBRUARY     FEBRUARY     FEBRUARY     JUNE 30,
                              28, 1995     29, 1996     28, 1997       1997
                             -----------  -----------  -----------  -----------
<S>                          <C>          <C>          <C>          <C>
Current:
  Federal................... $ 2,590,000  $ 2,529,500  $(1,020,024) $(1,656,723)
  State and local...........     616,000      536,456      384,338      118,500
                             -----------  -----------  -----------  -----------
                               3,206,000    3,065,956     (635,686)  (1,538,223)
Deferred:
  Federal...................  (2,295,336)  (1,415,000)   2,207,366    2,338,223
  State and local...........          --           --           --           --
                             -----------  -----------  -----------  -----------
                             $   910,664  $ 1,650,956  $ 1,571,680  $   800,000
                             ===========  ===========  ===========  ===========
</TABLE>
 
  Total income tax expense differs from the amounts computed by applying the
U.S. federal statutory income tax rate of 34% to income before income tax
provision as a result of the following:
 
<TABLE>
<CAPTION>
                                                                   FOUR MONTHS
                             YEAR ENDED   YEAR ENDED   YEAR ENDED     ENDED
                            FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,  JUNE 30,
                                1995         1996         1997        1997
                            ------------ ------------ ------------ -----------
<S>                         <C>          <C>          <C>          <C>
Tax provision (benefit) at
 statutory rate............   $577,906    $1,288,538   $1,328,635  $(1,708,392)
Increase (decrease)
 resulting from:
  State income taxes, net
   of federal benefit......    406,560       354,061      253,663       78,210
  Compensation expense from
   reverse acquisition.....         --            --           --    2,372,622
  Other....................    (73,802)        8,357      (10,618)      57,560
                              --------    ----------   ----------  -----------
                              $910,664    $1,650,956   $1,571,680  $   800,000
                              ========    ==========   ==========  ===========
</TABLE>
 
                                     F-43
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
 
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The components of the deferred income tax assets and liabilities are as
follows:
 
<TABLE>
<CAPTION>
                              FEBRUARY    FEBRUARY    JUNE 30,
                              29, 1996    28, 1997      1997
                             ----------  ----------  -----------
<S>                          <C>         <C>         <C>
Deferred income tax assets:
  Allowance for doubtful
   accounts................. $  221,600  $  187,200  $   201,660
  Inventories...............    222,800     245,600      245,590
  Accrued expenses..........    611,200     577,300    1,213,640
  Compensation and benefits.  5,430,000   2,986,600   10,076,080
  Other.....................         --          --      473,360
                             ----------  ----------  -----------
    Total deferred income
     tax assets.............  6,485,600   3,996,700   12,210,330
                             ----------  ----------  -----------
Deferred income tax
 liabilities:
  Depreciation..............     (2,000)    (37,100)    (313,580)
  State franchise tax.......   (163,300)         --      (35,300)
  Other.....................    (24,600)         --     (134,000)
                             ----------  ----------  -----------
    Total deferred income
     tax liabilities........   (189,900)    (37,100)    (482,880)
                             ----------  ----------  -----------
    Net deferred income tax
     assets................. $6,295,700  $3,959,600  $11,727,450
                             ==========  ==========  ===========
</TABLE>
 
  These deferred income tax assets and liabilities are included in the
accompanying consolidated balance sheets under the following captions:
 
<TABLE>
<S>                                           <C>        <C>        <C>
Deferred tax assets--current................. $1,338,000 $  764,500 $ 1,607,450
Deferred tax assets--long-term...............  4,957,700  3,195,100  10,120,000
                                              ---------- ---------- -----------
                                              $6,295,700 $3,959,600 $11,727,450
                                              ========== ========== ===========
</TABLE>
 
  Management believes it is more likely than not the Company will realize the
benefits of the net deferred tax assets.
 
12. LEASES
 
  Operating leases for certain facilities and transportation equipment expire
at various dates through 2009. Certain leases contain renewal options.
Approximate minimum future rental payments as of June 30, 1997 are as follows:
 
<TABLE>
         <S>                                         <C>
         1998....................................... $ 2,141,000
         1999.......................................   1,705,000
         2000.......................................   1,341,000
         2001.......................................   1,129,000
         2002.......................................   1,018,000
         Thereafter.................................   5,569,000
                                                     -----------
                                                     $12,903,000
                                                     ===========
</TABLE>
 
  Total rental expense for the years ended February 28, 1995, February 29,
1996 and February 28, 1997 and the four months ended June 30, 1997 was
approximately $1,223,000, $1,970,000, $1,726,000 and $584,000, respectively,
(including $328,000, $445,000, $605,000 and $245,000, respectively, to related
parties).
 
                                     F-44
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
 
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
13. EMPLOYEE BENEFIT PLANS
 
  Airtron maintains a Profit Sharing and Stock Ownership Plan (the Plan).
Substantially all Airtron employees are eligible to participate in the Plan.
Airtron's contribution, as determined by the Board of Directors, is based upon
the participant's gross pay and amounted to approximately $222,000 in fiscal
years ending in 1995, 1996 and 1997 and $74,000 in the four months ended June
30, 1997. In connection with the Agreement (see Note 1) all Airtron shares
held by the Plan were exchanged for cash and preferred and common shares of
Group MAC Parent.
 
  Certain of the Acquired Companies maintain defined contribution plans
covering substantially all employees.
 
14. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various legal actions. It is not possible to
predict the outcome of these matters; however, in the opinion of management,
the disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position or results of operations.
 
15. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
restricted investments (carried at cost or fair value--see Note 4) and long-
term debt. The Company believes that the carrying value of these instruments
on the accompanying balance sheets approximate their fair value.
 
16. SUBSEQUENT EVENTS
 
  During July 1997, the Company acquired three companies for an aggregate of
approximately $4,088,000 in cash and payables to the former shareholders of
the companies, and 2,150,000 and 304,000 shares of preferred and common stock,
respectively, along with warrants to purchase 514,000 shares of common stock.
The Company financed the cash portion of the purchase consideration through
borrowings under its Credit Agreement. The acquisitions will be accounted for
under the purchase method. Purchase price consideration is subject to final
adjustment. The allocation of purchase price to the assets acquired and
liabilities assumed has been initially assigned and recorded based on
preliminary estimates of fair value and may be revised as additional
information becomes available.
 
  The Company has signed definitive agreements to acquire 13 companies with
combined annual revenues of approximately $168.7 million for which the
closings will occur simultaneously with an initial public offering expected to
occur in the last quarter of 1997. Such companies provide HVAC, plumbing
and/or electrical services to residential and/or commercial customers. Such
services include both new installations and service, repair and replacement
work.
 
  Subsequent to the independent auditors' report, on August 16, 1997, the
Company's Board of Directors approved a 1-for-2.5 reverse stock split on the
Company's common stock. All share and per share data included in the
consolidated financial statements have been restated to reflect the stock
split.
 
                                     F-45
<PAGE>
 
       
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors
MacDonald-Miller Industries, Inc.
 
  We have audited the accompanying consolidated balance sheets of MacDonald-
Miller Industries, Inc. and subsidiaries as of December 31, 1995, 1996 and
June 30, 1997, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years ended December
31, 1996, and the six-month period ended June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of MacDonald-
Miller Industries, Inc. and subsidiaries as of December 31, 1995 and 1996, and
June 30, 1997, and the results of their operations and cash flows for each of
the three years ended December 31, 1996 and the six-month period ended June
30, 1997 in conformity with generally accepted accounting principles.
 
Moss Adams LLP
 
Seattle, Washington
   
August 7, 1997, except for Notes 2 and 11,     
as to which the date
is August 18, 1997
 
                                     F-46
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                      DECEMBER 31,        JUNE 30,
                                                 ----------------------- -----------
                                                    1995        1996        1997
                                                 ----------- ----------- -----------
               ASSETS
<S>                                              <C>         <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents..................... $        -- $        -- $        --
  Receivables, less allowance for doubtful
   accounts of $145,000, $137,378 and $149,653,
   respectively:
    Trade.......................................   9,771,993  13,287,714  14,728,290
    Related parties and employees...............     108,840     341,186     672,407
    Unconsolidated affiliate....................     279,000     321,000     388,000
  Inventories...................................     651,442     713,726     814,093
  Costs and estimated earnings in excess of
   billings on uncompleted contracts............   1,356,980   1,342,213   1,015,468
  Prepaid expenses..............................      45,835     117,368      63,403
  Income taxes refundable.......................          --     114,396          --
                                                 ----------- ----------- -----------
      Total current assets......................  12,214,090  16,237,603  17,681,661
PROPERTY AND EQUIPMENT, net.....................   1,159,820   1,436,293   1,555,323
OTHER NONCURRENT ASSETS
  Real estate held for investment...............     510,000     508,066     411,066
  Other assets..................................     106,610     145,861     107,523
  Deferred income taxes.........................     148,000     105,000     196,000
                                                 ----------- ----------- -----------
                                                     764,610     758,927     714,589
                                                 ----------- ----------- -----------
      Total assets.............................. $14,138,520 $18,432,823 $19,951,573
                                                 =========== =========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                              <C>         <C>         <C>
CURRENT LIABILITIES:
  Current maturities of long-term debt.......... $   100,136 $    96,000 $    96,000
  Accounts payable..............................   4,525,382   5,148,905   5,241,881
  Notes payable:
    Bank........................................   2,199,134   5,395,816   4,790,113
    Shareholders and related parties............     673,523      30,000      35,340
  Accrued expenses..............................   1,915,968   1,840,699   2,416,748
  Income taxes payable..........................      28,764          --     396,001
  Billings in excess of costs and estimated
   earnings on uncompleted contracts............   1,076,700   1,660,159   1,715,783
                                                 ----------- ----------- -----------
      Total current liabilities.................  10,519,607  14,171,579  14,691,866
LONG-TERM DEBT, net of current maturities.......     699,098     758,149     708,285
DEFERRED COMPENSATION...........................     355,085     189,848     189,848
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock, no par value; 150,000 shares
   authorized...................................     198,473     291,539     355,133
  Retained earnings.............................   2,366,257   3,021,708   4,006,441
                                                 ----------- ----------- -----------
      Total shareholders' equity................   2,564,730   3,313,247   4,361,574
                                                 ----------- ----------- -----------
      Total liabilities and shareholders'
       equity................................... $14,138,520 $18,432,823 $19,951,573
                                                 =========== =========== ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-47
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED JUNE
                              YEARS ENDED DECEMBER 31,                    30,
                         -------------------------------------  ------------------------
                            1994         1995         1996         1996         1997
                         -----------  -----------  -----------  -----------  -----------
                                                                (UNAUDITED)
<S>                      <C>          <C>          <C>          <C>          <C>
REVENUES................ $39,534,230  $45,508,339  $66,058,958  $36,382,305  $38,835,662
COST OF SERVICES........  32,256,651   36,927,012   56,372,933   31,590,195   33,451,024
                         -----------  -----------  -----------  -----------  -----------
    Gross profit........   7,277,579    8,581,327    9,686,025    4,792,110    5,384,638
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES...............   6,088,076    7,338,381    7,631,851    3,705,694    3,787,822
                         -----------  -----------  -----------  -----------  -----------
    Income from
     operations.........   1,189,503    1,242,946    2,054,174    1,086,416    1,596,816
OTHER INCOME (EXPENSE):
  Interest expense......    (275,490)    (370,603)    (519,842)    (244,135)    (214,381)
  Other.................     (25,865)     (42,527)       7,926       66,751      167,209
                         -----------  -----------  -----------  -----------  -----------
                            (301,355)    (413,130)    (511,916)    (177,384)     (47,172)
    Income before income
     tax provision......     888,148      829,816    1,542,258      909,032    1,549,644
INCOME TAX PROVISION....     325,730      344,238      574,000      347,059      569,001
                         -----------  -----------  -----------  -----------  -----------
NET INCOME.............. $   562,418  $   485,578  $   968,258  $   561,973  $   980,643
                         ===========  ===========  ===========  ===========  ===========
</TABLE>
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-48
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                     NUMBER
                                       OF      COMMON    RETAINED
                                     SHARES    STOCK     EARNINGS     TOTAL
                                     -------  --------  ----------  ----------
<S>                                  <C>      <C>       <C>         <C>
BALANCE, December 31, 1993.......... 102,603  $117,535  $2,527,242  $2,644,777
  Issuance of common stock..........   2,777    55,540          --      55,540
  Purchase and retirement of common
   stock............................  (2,834)  (79,919)         --     (79,919)
  Effects of adjustments related to
   unconsolidated affiliate.........      --        --    (738,816)   (738,816)
  Net income........................      --        --     562,418     562,418
                                     -------  --------  ----------  ----------
BALANCE, December 31, 1994.......... 102,546    93,156   2,350,844   2,444,000
  Issuance of common stock..........   4,802   108,514          --     108,514
  Purchase and retirement of common
   stock............................    (100)   (3,197)         --      (3,197)
  Effects of adjustments related to
   unconsolidated affiliate.........      --        --    (470,165)   (470,165)
  Net income........................      --        --     485,578     485,578
                                     -------  --------  ----------  ----------
BALANCE, December 31, 1995.......... 107,248   198,473   2,366,257   2,564,730
  Issuance of common stock..........   3,977    93,066          --      93,066
  Effects of adjustments related to
   unconsolidated affiliate.........      --        --    (312,807)   (312,807)
  Net income........................      --        --     968,258     968,258
                                     -------  --------  ----------  ----------
BALANCE, December 31, 1996.......... 111,225   291,539   3,021,708   3,313,247
  Issuance of common stock..........   1,800    63,594          --      63,594
  Effects of adjustments related to
   unconsolidated affiliate.........      --        --       4,090       4,090
  Net income........................      --        --     980,643     980,643
                                     -------  --------  ----------  ----------
BALANCE, June 30, 1997.............. 113,025  $355,133  $4,006,441  $4,361,574
                                     =======  ========  ==========  ==========
</TABLE>
 
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-49
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED
                             YEARS ENDED DECEMBER 31,                JUNE 30,
                         -----------------------------------  ------------------------
                           1994        1995         1996         1996         1997
                         ---------  -----------  -----------  -----------  -----------
                                                              (UNAUDITED)
<S>                      <C>        <C>          <C>          <C>          <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net income............. $ 562,418  $   485,578  $   968,258  $   561,973  $   980,643
 Adjustments to
  reconcile net income
  to cash flows from
  operating activities:
 Depreciation and
  amortization..........   250,162      266,763      376,391      167,654      210,208
 (Gain) loss on
  disposal of property
  and equipment.........    (7,897)       8,623       18,857           --       24,294
 Allowance for loss on
  real estate held for
  investment............        --           --       25,000       25,000       97,000
 Deferred income taxes..    (9,000)     (67,000)      43,000      (81,000)     (91,000)
 Changes in operating
  assets and
  liabilities:
  (Increase) decrease
   in:
   Trade receivables....   (46,296)  (2,700,456)  (3,515,721)  (1,181,851)  (1,440,576)
   Receivables from
    related parties and
    employees...........  (141,194)      32,354     (232,346)       7,226     (331,221)
   Receivable from
    unconsolidated
    affiliate...........  (176,000)    (103,000)     (42,000)     (21,000)     (67,000)
   Inventories..........   (76,019)      66,366      (62,284)    (310,598)    (100,367)
   Costs and estimated
    earnings in excess
    of billings on
    uncompleted
    contracts...........    41,276     (325,574)      14,767   (1,038,698)     326,745
   Prepaid expenses.....    51,746        1,525      (71,533)    (106,776)      53,965
   Income taxes
    refundable..........        --           --     (114,396)    (154,537)     114,396
   Other assets.........    57,860      (43,860)     (39,251)    (145,625)      38,338
  Increase (decrease)
   in:
   Accounts payable.....  (105,101)     906,917       83,013     (652,636)     691,425
   Accrued expenses.....   446,596      353,195      (75,269)     551,774      576,049
   Income taxes payable.  (216,105)      25,894      (28,764)     (28,764)     396,001
   Billings in excess of
    costs and estimated
    earnings on
    uncompleted
    contracts...........  (159,552)     649,570      583,459      643,626       55,624
   Deferred
    compensation........        --      355,085     (165,237)          --           --
                         ---------  -----------  -----------  -----------  -----------
Net cash provided by
 (used in) operating
 activities.............   472,894      (88,020)  (2,234,056)  (1,764,232)   1,534,524
                         ---------  -----------  -----------  -----------  -----------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Purchases of property
  and equipment.........  (452,306)    (654,940)    (686,586)    (534,042)    (365,461)
 Proceeds from sale of
  property and
  equipment.............     9,975       73,841       14,865           --       11,929
 Additions to real
  estate held for
  investment............        --     (510,000)     (23,066)     (21,289)          --
                         ---------  -----------  -----------  -----------  -----------
Net cash used in
 investing activities...  (442,331)  (1,091,099)    (694,787)    (555,331)    (353,532)
                         ---------  -----------  -----------  -----------  -----------
CASH FLOWS FROM
 FINANCING ACTIVITIES:
 Disbursements in
  transit...............        --      198,590      540,510    1,338,474     (598,449)
 Increase (decrease) of
  notes payable to bank,
  net...................   895,548      394,297    3,196,682    1,331,530     (605,703)
 Effect of adjustment
  related to
  unconsolidated
  affiliate.............  (738,816)    (470,165)    (312,807)    (345,641)       4,090
 Proceeds from notes
  payable to related
  parties...............   239,613      673,523       55,000       69,452       30,340
 Payments of notes
  payable to related
  parties...............  (288,454)    (231,268)    (698,523)     (20,000)     (25,000)
 Proceeds from long-term
  borrowings............        --      816,932      312,021           --           --
 Payments of long-term
  debt..................   (99,457)    (331,050)    (257,106)     (91,778)     (49,864)
 Proceeds from issuance
  of common stock.......    55,540      108,514       93,066       37,526       63,594
 Purchase and retirement
  of common stock.......   (79,919)      (3,197)          --           --           --
                         ---------  -----------  -----------  -----------  -----------
Net cash provided by
 (used in) financing
 activities.............   (15,945)   1,156,176    2,928,843    2,319,563   (1,180,992)
                         ---------  -----------  -----------  -----------  -----------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS............    14,618      (22,943)          --           --           --
CASH AND CASH
 EQUIVALENTS, beginning
 of period..............     8,325       22,943           --           --           --
                         ---------  -----------  -----------  -----------  -----------
CASH AND CASH
 EQUIVALENTS, end of
 period................. $  22,943  $        --  $        --  $        --  $        --
                         =========  ===========  ===========  ===========  ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-50
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  MacDonald-Miller Industries, Inc. (the Company) (MMI), a Washington
corporation, is a mechanical contractor and service company engaged in the
design, installation and maintenance of heating, ventilating, air
conditioning, plumbing, refrigeration, and automated control systems for
commercial and industrial properties. The main areas of operation are in the
states of Washington and Oregon.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation and Principles of Consolidation
   
  On August 18, 1997, the Company signed an agreement and plan of merger with
Group Maintenance America Corp. (GroupMAC), whereby GroupMAC will acquire the
Company in a merger transaction for a combination of cash and common shares of
GroupMAC. The merger will close concurrent with the closing of the initial
public offering of the common stock of GroupMAC. Prior to the closing of the
acquisition, the Company will distribute the net assets of MacDonald-Miller
Residential (MMR) (a division of MMI), to its shareholders, in a tax-free
distribution.     
 
  The accompanying financial statements exclude MMR, include only the
operations of MMI to be acquired in the merger and have been prepared on the
basis that the distribution of the net assets of MMR had been completed as of
December 31, 1993. Therefore, these financial statements do not include any of
the net assets or operations of MMR for the periods presented which were
included in previously issued financial statements of MMI. Effects of
adjustments related to the unconsolidated affiliate have been shown as a
reduction in shareholders' equity for each of the years presented.
 
  The following provides summary financial information of MMI, including MMR,
as presented in previously issued financial statements:
 
<TABLE>
<CAPTION>
                                    DECEMBER 31,                    JUNE 30,
                         ----------------------------------- -----------------------
                            1994        1995        1996        1996        1997
                         ----------- ----------- ----------- ----------- -----------
                                                             (UNAUDITED) (UNAUDITED)
<S>                      <C>         <C>         <C>         <C>         <C>
Revenues................ $42,806,970 $50,371,690 $71,597,840 $38,979,761 $41,972,630
Income from operations..     816,888   1,007,683   1,238,957     395,035   1,605,945
Net income..............     322,226     388,738     384,718     113,768     963,965
Total assets............              15,213,014  19,318,982              20,828,390
Net assets..............               3,317,211   3,794,995               4,822,554
</TABLE>
 
  MMR is a separate operating entity with separate facilities and management.
Following is a summary of the net assets of MMR as of June 30, 1997 which will
be distributed to shareholders (unaudited):
 
<TABLE>
   <S>                                                                <C>
   Receivables......................................................  $ 726,675
   Inventories......................................................    230,574
   Costs and estimated earnings in excess of billings on uncompleted
    contracts.......................................................    102,038
   Property and equipment...........................................    189,649
   Other assets.....................................................     15,881
   Accounts payable.................................................   (230,250)
   Accrued expenses.................................................   (185,587)
   Due to MMI.......................................................   (388,000)
                                                                      ---------
     Net assets.....................................................  $ 460,980
                                                                      =========
</TABLE>
 
                                     F-51
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Amounts reported as due from affiliate in the accompanying balance sheets
represent the allocation of bank borrowings attributed to MMR and are expected
to be remitted to the Company at the completion of the planned acquisition as
separate financing of the division is established.
 
  The consolidated financial statements include the accounts of MacDonald-
Miller Industries, Inc. and its wholly-owned subsidiaries MacDonald-Miller
Co., Inc. and MacDonald-Miller Service, Inc. (collectively "the Company").
Intercompany balances and transactions are eliminated in consolidation.
 
 Interim Financial Information
 
  The interim financial statements as of June 30, 1996 and for the six months
then ended, are unaudited, and certain information and footnote disclosures
have been omitted. In the opinion of management, all adjustments, consisting
of only normal recurring adjustments, necessary to fairly present the
financial position, results of operations and cash flows with respect to the
interim financial statements, have been included. The results of operations
for the interim periods are not necessarily indicative of the results for the
entire fiscal year.
 
 Use of Estimates
 
  The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Significant estimates used in preparing these financial statements include
estimated costs to complete contracts in progress which have a direct effect
on gross profit.
 
 Revenue Recognition
 
  Revenues from fixed-price and modified fixed-price construction contracts
are recognized on the percentage-of-completion basis using the cost-to-cost
method. This method is used because the Company considers contract costs to be
the best available measure of progress on these contracts. Revenues from cost-
plus-fee contracts are recognized on the basis of costs incurred during the
period plus the fee earned, measured by the same method. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Changes in job performance, job conditions, estimated
profitability and final contract settlements may result in revisions to costs
and revenues and are recognized in the period in which the revisions are
determined.
 
 Inventories
 
  Inventories consist of parts and supplies used in the Company's operations.
The inventories are valued at the lower of cost (determined using the first-
in, first-out method) or market.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using
straight-line and accelerated methods over the useful life of the assets.
Leasehold improvements are amortized over the life of the related lease.
 
 Disbursements in Transit
 
  Under the Company's cash management system, checks issued, but not presented
to the bank frequently result in overdraft balances for financial accounting
purposes. These balances are classified as accounts payable in the balance
sheets and as a financing activity in the statements of cash flows.
 
                                     F-52
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Warranty Costs
 
  The Company warrants labor for one year on new construction and 90 days
after servicing of air conditioning and heating units. A reserve for warranty
costs is recorded upon completion of installation or services.
 
 Stock-Based Compensation
 
  Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS
No. 123). The new standard measures compensation cost using a fair value
method, which computes compensation cost as the difference between the
options' fair value and the option price on the grant date. However, SFAS No.
123 allows companies to continue to measure compensation cost using the
intrinsic value method, which computes compensation cost as the difference
between a company's stock price and the option price at the grant date. The
Company has elected to continue to use the intrinsic value method.
 
 Income Taxes
 
  Income taxes are accounted for using an asset and liability approach which
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the
financial statement and tax basis of assets and liabilities at the applicable
enacted tax rates. Income taxes are explained further in Note 9.
 
 Fair Value of Financial Instruments
 
  The Company's financial instruments include cash and cash equivalents,
billed receivables, loans, short-term debt (a revolving line of credit with a
variable interest rate) and long-term debt. The carrying value of these
instruments approximate fair value.
 
 Asset Impairment
 
  Effective January 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
 Reclassifications
 
  Certain amounts in the financial statements for 1994 and 1995 have been
reclassified to conform with the 1996 presentation. These changes had no
effect on operating results.
 
                                     F-53
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
3. CONTRACTS RECEIVABLE
 
  Accounts receivable consists of the following:
 
<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                              ----------------------  JUNE 30,
                                                 1995       1996        1997
                                              ---------- ----------- -----------
   <S>                                        <C>        <C>         <C>
   Contracts receivable
     Completed contracts..................... $    3,257 $   511,903 $   767,621
     Contracts in progress...................  7,065,294   9,843,152  11,231,253
     Retentions..............................  1,413,742   1,549,731   1,631,527
                                              ---------- ----------- -----------
                                               8,482,293  11,904,786  13,630,401
   Service and maintenance...................  1,110,384   1,219,618   1,195,211
   Other.....................................    324,316     300,688      52,331
                                              ---------- ----------- -----------
                                               9,916,993  13,425,092  14,877,943
   Less allowance for doubtful accounts......    145,000     137,378     149,653
                                              ---------- ----------- -----------
                                              $9,771,933 $13,287,714 $14,728,290
                                              ========== =========== ===========
</TABLE>
 
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                              DECEMBER 31,
                                         -----------------------   JUNE 30,
                                            1995        1996         1997
                                         ----------- -----------  -----------
   <S>                                   <C>         <C>          <C>
   Costs incurred on uncompleted
    contracts........................... $29,427,252 $36,199,700  $32,045,499
   Estimated earnings...................   5,377,340   5,029,941    4,227,719
                                         ----------- -----------  -----------
                                          34,804,592  41,229,641   36,273,218
   Less billings to date................  34,524,312  41,547,587   36,973,533
                                         ----------- -----------  -----------
                                         $   280,280 $  (317,946) $  (700,315)
                                         =========== ===========  ===========
</TABLE>
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
<TABLE>
<CAPTION>
                                            DECEMBER 31,
                                       ------------------------   JUNE 30,
                                          1995         1996         1997
                                       -----------  -----------  -----------
   <S>                                 <C>          <C>          <C>
   Costs and estimated earnings in
    excess of billings on uncompleted
    contracts......................... $ 1,356,980  $ 1,342,213  $ 1,015,468
   Billings in excess of costs and
    estimated earnings on uncompleted
    contracts.........................  (1,076,700)  (1,660,159)  (1,715,783)
                                       -----------  -----------  -----------
                                       $   280,280  $  (317,946) $  (700,315)
                                       ===========  ===========  ===========
</TABLE>
 
                                      F-54
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                      ESTIMATED     DECEMBER 31,
                                       USEFUL   ---------------------  JUNE 30,
                                        LIVES      1995       1996       1997
                                      --------- ---------- ---------- ----------
   <S>                                <C>       <C>        <C>        <C>
   Machinery and equipment...........  5 years  $  709,983 $  763,572 $  887,108
   Vehicles..........................  5 years     188,267    167,810    139,232
   Office furniture and equipment....  7 years     553,565    600,376    608,090
   Data processing equipment.........  5 years     736,129    955,399  1,039,165
   Communication equipment...........  5 years      90,759    112,419    108,145
   Leasehold improvements............  9 years     179,322    220,432    312,194
                                                ---------- ---------- ----------
                                                 2,458,025  2,820,008  3,093,934
   Less accumulated depreciation.....            1,298,205  1,383,715  1,538,611
                                                ---------- ---------- ----------
                                                $1,159,820 $1,436,293 $1,555,323
                                                ========== ========== ==========
</TABLE>
 
6. REAL ESTATE HELD FOR INVESTMENT
 
  During 1995, the Company purchased certain real property which was not
intended to be used in business operations. The property is encumbered with
debt. The debt service payments are calculated using an amortization period of
30 years with interest at 7.88%. Monthly payments, including interest, are
$3,000 with the remaining balance due in full in October 2000. The balances of
the net book value and long-term debt of the real estate held for investment
are as follows:
 
<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                  ------------------  JUNE 30,
                                                    1995      1996      1997
                                                  --------  --------  ---------
   <S>                                            <C>       <C>       <C>
   Cost basis.................................... $560,000  $583,066  $ 583,066
   Loss reserve..................................  (50,000)  (75,000)  (172,000)
                                                  --------  --------  ---------
     Net book value.............................. $510,000  $508,066  $ 411,066
                                                  ========  ========  =========
   Long-term debt................................ $401,664  $398,149  $ 396,285
                                                  ========  ========  =========
</TABLE>
 
7. NOTE PAYABLE TO BANK
 
  The note payable to bank represents the outstanding balance on a $6,000,000
revolving line of credit with interest at the bank's prime rate plus .75%. The
weighted average interest rate for December 31, 1995, 1996 and June 30, 1997
was 9.83%, 9.15% and 9.27%, respectively. The line of credit is subject to
annual renewal. The note is collateralized by receivables and inventory, and
is guaranteed by the executive officers. The Company is required under the
agreement to maintain certain financial covenants. These financial covenants
include current ratio and tangible net worth requirements, fixed asset
addition restrictions, dividend payment restrictions, and certain restrictions
regarding changes in ownership.
 
                                     F-55
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
8. LONG-TERM DEBT
 
  Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                      ----------------- JUNE 30,
                                                        1995     1996     1997
                                                      -------- -------- --------
   <S>                                                <C>      <C>      <C>
   Note payable to bank, due in monthly installments
    of $8,000 plus interest at prime plus 1%,
    collateralized by equipment.....................  $352,000 $456,000 $408,000
   Note payable, paid in full during 1996...........    45,570       --       --
   Note payable related to real estate (see Note 6).   401,664  398,149  396,285
                                                      -------- -------- --------
                                                       799,234  854,149  804,285
   Less current portion.............................   100,136   96,000   96,000
                                                      -------- -------- --------
                                                      $699,098 $758,149 $708,285
                                                      ======== ======== ========
</TABLE>
 
  The aggregate maturities of the long-term debt for future years ending June
30 are as follows:
 
<TABLE>
      <S>                                                               <C>
      1998............................................................. $ 96,000
      1999.............................................................   96,000
      2000.............................................................  492,285
      2001.............................................................   96,000
      2002.............................................................   24,000
                                                                        --------
                                                                        $804,285
                                                                        ========
</TABLE>
 
9. INCOME TAXES
 
  The income tax provision consists of:
 
<TABLE>
<CAPTION>
                                       DECEMBER 31,              JUNE 30,
                                ---------------------------- ------------------
                                  1994      1995      1996     1996      1997
                                --------  --------  -------- --------  --------
   <S>                          <C>       <C>       <C>      <C>       <C>
   Current..................... $334,730  $411,238  $531,000 $428,059  $660,001
   Deferred....................   (9,000)  (67,000)   43,000  (81,000)  (91,000)
                                --------  --------  -------- --------  --------
                                $325,730  $344,238  $574,000 $347,059  $569,001
                                ========  ========  ======== ========  ========
</TABLE>
 
  Total income tax expense differs from the amounts computed by applying the
United States statutory income tax rate to income before income tax provision
as a result of the following:
 
<TABLE>
<CAPTION>
                                       DECEMBER 31,                         JUNE 30,
                         ----------------------------------------- ---------------------------
                           1994    %     1995    %     1996    %     1996    %     1997    %
                         -------- ---- -------- ---- -------- ---- -------- ---- -------- ----
<S>                      <C>      <C>  <C>      <C>  <C>      <C>  <C>      <C>  <C>      <C>
Income tax provision at
 statutory rate......... $301,970 34.0 $282,138 34.0 $524,368 34.0 $309,071 34.0 $526,879 34.0
Increase (reduction) in
 income taxes resulting
 from:
 State income taxes.....    3,200  0.4    2,600  0.3    6,600  0.4    3,300  0.4   10,800  0.7
 Meals and
  entertainment.........   18,100  2.0   22,800  2.7   23,800  1.5   11,900  1.3   13,600  0.9
 Other non-deductible
  expenses..............    2,210  0.2   19,700  2.4    5,600  0.4    5,800  0.6    2,800  0.2
 Other..................      250   --   17,000  2.0   13,632  0.9   16,988  1.9   14,922  0.9
                         -------- ---- -------- ---- -------- ---- -------- ---- -------- ----
                         $325,730 36.6 $344,238 41.4 $574,000 37.2 $347,059 38,2 $569,001 36.7
                         ======== ==== ======== ==== ======== ==== ======== ==== ======== ====
</TABLE>
 
                                     F-56
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The components of the deferred income tax assets and liabilities are as
follows:
 
<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                   ------------------  JUNE 30,
                                                     1995      1996      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Deferred tax assets:
     Warranty reserve............................. $ 44,000  $ 45,000  $ 41,000
     Allowance for doubtful accounts..............   56,000    48,000    51,000
     Loss on sale reserve.........................   17,000    26,000    58,000
     Deferred Compensation........................  121,000    65,000    65,000
     Other........................................       --    18,000    60,000
                                                   --------  --------  --------
       Total deferred income tax assets...........  238,000   202,000   275,000
                                                   --------  --------  --------
   Deferred tax liabilities:
     Contracts in progress........................  (17,000)  (36,000)   (8,000)
     Depreciation.................................  (73,000)  (61,000)  (71,000)
                                                   --------  --------  --------
       Total deferred income tax liabilities......  (90,000)  (97,000)  (79,000)
                                                   --------  --------  --------
       Net deferred income taxes.................. $148,000  $105,000  $196,000
                                                   ========  ========  ========
</TABLE>
 
10. ACCRUED LIABILITIES
 
  Accrued liabilities consists of:
 
<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                               ---------------------  JUNE 30,
                                                  1995       1996       1997
                                               ---------- ---------- ----------
      <S>                                      <C>        <C>        <C>
      Payroll................................. $1,176,450 $1,269,823 $1,718,077
      Payroll and business taxes..............    495,867    309,251    488,115
      Other...................................    243,651    261,625    210,556
                                               ---------- ---------- ----------
                                               $1,915,968 $1,840,699 $2,416,748
                                               ========== ========== ==========
</TABLE>
 
11. COMMITMENTS
 
  The Company conducts its operation from facilities which are leased from an
affiliated entity. The lease was amended on August 18, 1997 resulting in
increased rental payments which now expire July 2007. The lease modifications
are reflected in the schedule below. The Company also leases vehicles and
facilities from unrelated companies under agreements expiring at various times
through 2001. The Company accounts for these leases as operating leases.
Aggregate minimum annual lease payments are as follows:
 
<TABLE>
<CAPTION>
                  YEARS ENDING                   RELATED
                    JUNE 30,                      PARTY      OTHER      TOTAL
                  ------------                  ---------- ---------- ----------
   <S>                                          <C>        <C>        <C>
     1998...................................... $  418,000 $  511,000 $  929,000
     1999......................................    475,000    467,000    942,000
     2000......................................    475,000    350,000    825,000
     2001......................................    475,000    211,000    686,000
     2002......................................    475,000     59,000    534,000
    Thereafter.................................  2,177,000         --  2,177,000
                                                ---------- ---------- ----------
                                                $4,495,000 $1,598,000 $6,093,000
                                                ========== ========== ==========
</TABLE>
 
                                     F-57
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Rental expense under operating leases:
 
<TABLE>
<CAPTION>
                     YEARS ENDING                     RELATED
                     DECEMBER 31,                      PARTY    OTHER    TOTAL
                     ------------                     -------- -------- --------
   <S>                                                <C>      <C>      <C>
     1994............................................ $380,000 $368,000 $748,000
     1995............................................  380,000  521,000  901,000
     1996............................................  380,000  582,000  962,000
<CAPTION>
                    PERIOD ENDING
                       JUNE 30,
                    -------------
   <S>                                                <C>      <C>      <C>
     1996............................................ $190,000 $300,000 $490,000
     1997............................................  190,000  320,000  510,000
</TABLE>
 
12. RELATED PARTY BALANCES AND TRANSACTIONS
 
 Notes Payable
 
  During 1996, the note payable to shareholder was paid in full, which
included interest payments of $57,000.
 
 Receivables
 
  These balances represent short-term loans granted by the company to
shareholders and employees not incurred in the ordinary course of business.
The receivables are unsecured.
 
 Leases
 
  As further described in Note 11, the Company leases its main plant and
office facilities from the Company's president and principal shareholder.
 
13. EMPLOYEE BENEFIT PLANS
 
 Pension Plan
 
  The Company contributes monthly to several union-sponsored pension plans for
the benefit of most hourly employees. Such contributions aggregated
approximately $2,162,000, $958,000 and $480,000 in 1996, 1995 and 1994,
respectively, and $1,214,000 and $1,140,520 for the period ending June 30,
1997 and 1996, respectively.
 
 ESOP
   
  The Company has established an employee stock ownership plan (ESOP) which
permits participation by eligible nonunion employees. Contributions are
determined at the discretion of the Board of Directors. ESOP expense amounted
to $87,000, $360,000 and $354,000 in 1996, 1995 and 1994, respectively. There
were no contributions for the periods ending June 30, 1997 and 1996.
Subsequent to the sale of the Company to GroupMAC (see Note 2), the ESOP plan
will be terminated.     
 
 401(k)
 
  The Company sponsors a 401(k) salary savings plan for the benefit of all
eligible union and nonunion employees. All contributions to the plan are
elective by the participants. Matching contributions amounted to $27,371,
$29,000 and $26,400 in 1996, 1995 and 1994, respectively, and $88,262 and
$14,430 for the period ending June 30, 1997 and 1996, respectively.
 
                                     F-58
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Stock Options
 
  In 1989, several key employees were granted options to purchase 25,000
shares of common stock at fair market value at the date of grant of $20 per
share. The options vest and become exercisable in substantially equal annual
amounts through December 1998. Unexercised options expire one year after
becoming vested or 90 days following termination of employment for reasons
other than death or disability, if earlier. Unexercised options may be
extended to a maximum of two years after becoming vested with the approval of
the Board of Directors.
 
  During 1995, the Company granted options to six employees to purchase 2,000
shares each of common stock at $31.97 per share, the fair market value at the
date of grant. These options are exercisable at the rate of 200 shares
annually through June 2004. During 1997, the Company amended the plan and
granted options to three additional employees to purchase shares of common
stock at $42.05 per share, the fair market value at date of grant.
 
  The following table shows changes in stock options outstanding:
 
<TABLE>
<CAPTION>
                                       INCENTIVE STOCK OPTIONS
                                     -----------------------------
                                     AUTHORIZED GRANTED  AVAILABLE     PRICE
                                     ---------- -------  --------- -------------
<S>                                  <C>        <C>      <C>       <C>
Balance, December 31, 1994..........   80,000   19,469*    52,100     $20.00
  Creation of new plan..............   20,000       --     20,000
  Granted...........................       --   12,000    (12,000)    $31.97
  Exercised.........................       --   (4,702)        --  $20 to $26.16
  Canceled..........................       --     (975)        --       --
                                      -------   ------    -------
Balance, December 31, 1995..........  100,000   25,792*    60,100  $20 to $31.97
  Exercised.........................       --   (3,977)        --  $20 to $31.97
                                      -------   ------    -------
Balance, December 31, 1996..........  100,000   21,815*    60,100  $20 to $31.97
  Granted...........................       --    5,000     (5,000)    $42.05
  Exercised.........................       --   (1,800)        --  $20 to $42.05
                                      -------   ------    -------
Balance, June 30, 1997..............  100,000   25,015*    55,100  $20 to $42.05
                                      =======   ======    =======
</TABLE>
--------
* At the periods ended, the cumulative number of options vested were as
  follows:
 
<TABLE>
      <S>                                                                  <C>
      December 31, 1994................................................... 5,444
      December 31, 1995................................................... 5,444
      December 31, 1996................................................... 5,444
      June 30, 1997....................................................... 2,777
</TABLE>
 
  Upon successful completion of the sale of MMI, all options in the key
employees plan will be vested and exercised. The employee plan will be
eliminated.
 
 Incentive Compensation Plan
 
  During 1995, the Board of Directors established an Incentive Compensation
Plan (ICP) on behalf of executive management. The ICP provides that a portion
of net income, in excess of an established rate of return on equity, be
expensed as incentive compensation. The 1996 and 1995 incentive compensation
expense is $10,000 and $710,000, respectively. There was no expense for the
period ending June 30, 1997 and 1996. The deferred portion at December 31,
1996 and 1995 of $190,000 and $355,000 is payable in future years depending on
operating results of the Company. In the event of operating losses, the
deferred pool will be reduced by the lesser of the operating loss, or the
deferred pool. Participation in the ICP is subject to certain employment and
vesting provisions. The deferred amounts are subordinated to bank and surety
credits.
 
                                     F-59
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
14. CONCENTRATIONS OF CREDIT RISK
 
  Financial instruments which potentially subject the Company to
concentrations of credit risk consist of receivables and costs and earnings in
excess of billings on uncompleted contracts. Concentrations of credit risk
with respect to billed and unbilled receivables are limited due to the large
number of customers comprising the Company's customer base. The Company
generally does not require collateral, but in most cases can place liens
against the property constructed if a default takes place.
 
15. SIGNIFICANT CUSTOMERS
 
  During the period ending June 30, 1997, the Company had $17,706,000 or 45%
of the periods revenues, and $6,840,000 or 45% of the ending accounts
receivable from two customers. The accounts receivable and revenue represent
four jobs.
 
16. SUPPLEMENTAL CASH FLOW INFORMATION
 
<TABLE>
<CAPTION>
                                     DECEMBER 31,            JUNE 30,
                              -------------------------- -----------------
                                1994     1995     1996     1996     1997
                              -------- -------- -------- -------- --------
   <S>                        <C>      <C>      <C>      <C>      <C>
   Cash paid during the year
    for:
     Income taxes............ $427,105 $370,000 $405,300 $200,000 $150,000
                              ======== ======== ======== ======== ========
     Interest................ $275,490 $370,604 $519,842 $244,135 $214,381
                              ======== ======== ======== ======== ========
</TABLE>
 
                                     F-60
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors of
 Masters, Inc.
Gaithersburg, Maryland
 
  We have audited the accompanying balance sheets of Masters, Inc. as of
December 31, 1995, December 31, 1996 and June 30, 1997, and the related
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996 and for the six month period
ended June 30, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, such financial statements present fairly, in all material
respects, the financial position of Masters, Inc., as of December 31, 1995,
December 31, 1996 and June 30, 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996
and for the six month period ended June 30, 1997 in conformity with generally
accepted accounting principles.
 
DELOITTE & TOUCHE LLP
 
Washington, D.C.
July 24, 1997
 
                                     F-61
<PAGE>
 
                                 MASTERS, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                          DECEMBER 31, DECEMBER 31,  JUNE 30,
                                              1995         1996        1997
               ASSETS                     ------------ ------------ -----------
<S>                                       <C>          <C>          <C>
CURRENT ASSETS:
  Cash and cash equivalents.............. $   535,255  $   670,776  $   637,330
  Accounts receivable, less allowance for
   doubtful accounts of $50,000, $99,290
   and $257,839, respectively............   6,257,622    6,859,307    6,859,621
  Costs and estimated earnings in excess
   of billings on uncompleted contracts..   1,506,793    1,866,172    1,419,830
  Inventories............................     489,063      588,715      621,912
  Prepaid expenses and other assets......      50,166       48,829       70,818
                                          -----------  -----------  -----------
    Total current assets.................   8,838,899   10,033,799    9,609,511
PROPERTY AND EQUIPMENT, net..............     590,229      625,125      609,719
OTHER NONCURRENT ASSETS..................     673,570      673,570      673,570
                                          -----------  -----------  -----------
    Total assets......................... $10,102,698  $11,332,494  $10,892,800
                                          ===========  ===========  ===========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
<S>                                       <C>          <C>          <C>
CURRENT LIABILITIES:
  Short-term borrowings and current
   maturities of long-term debt.......... $ 1,406,634  $ 1,979,616  $ 1,069,777
  Accounts payable.......................   1,781,218    1,761,200    2,152,392
  Accrued expenses.......................   1,042,627    1,241,727    1,160,127
  Billings in excess of costs and
   estimated earnings on uncompleted
   contracts.............................     721,159      627,052      850,687
  Other current liabilities..............     406,163      319,904      395,275
                                          -----------  -----------  -----------
    Total current liabilities............   5,357,801    5,929,499    5,628,258
LONG-TERM DEBT, net of current
 maturities..............................     827,492      800,238      764,932
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDER'S EQUITY:
  Common stock, par value $1 per share;
   50,000 shares authorized; 5,100 shares
   issued and outstanding................       5,100        5,100        5,100
  Retained earnings......................   3,912,305    4,597,657    4,494,510
                                          -----------  -----------  -----------
    Total shareholder's equity...........   3,917,405    4,602,757    4,499,610
                                          -----------  -----------  -----------
    Total liabilities and shareholder's
     equity.............................. $10,102,698  $11,332,494  $10,892,800
                                          ===========  ===========  ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-62
<PAGE>
 
                                 MASTERS, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED JUNE
                               YEAR ENDED DECEMBER 31,                 30,
                         ----------------------------------- -----------------------
                            1994        1995        1996        1996        1997
                         ----------- ----------- ----------- ----------- -----------
                                                             (UNAUDITED)
<S>                      <C>         <C>         <C>         <C>         <C>
REVENUES................ $30,327,333 $35,160,419 $39,825,843 $18,278,841 $19,318,196
COST OF SERVICES........  28,018,280  31,746,287  35,854,155  16,639,076  17,457,471
                         ----------- ----------- ----------- ----------- -----------
  Gross profit..........   2,309,053   3,414,132   3,971,688   1,639,765   1,860,725
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES...............   1,664,069   2,373,300   2,483,875   1,008,650   1,196,777
                         ----------- ----------- ----------- ----------- -----------
  Income from
   operations...........     644,984   1,040,832   1,487,813     631,115     663,948
INTEREST EXPENSE........      86,940     102,428     134,718      58,888      64,672
                         ----------- ----------- ----------- ----------- -----------
NET INCOME.............. $   558,044 $   938,404 $ 1,353,095 $   572,227 $   599,276
                         =========== =========== =========== =========== ===========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-63
<PAGE>
 
                                 MASTERS, INC.
 
                       STATEMENTS OF SHAREHOLDER'S EQUITY
 
<TABLE>
<CAPTION>
                                                                       TOTAL
                                                COMMON  RETAINED   SHAREHOLDER'S
                                                STOCK   EARNINGS      EQUITY
                                                ------ ----------  -------------
<S>                                             <C>    <C>         <C>
BALANCE, January 1, 1994....................... $5,100 $3,125,114   $3,130,214
  Net income...................................           558,044      558,044
  Dividends paid...............................          (219,912)    (219,912)
                                                ------ ----------   ----------
BALANCE, December 31, 1994.....................  5,100  3,463,246    3,468,346
  Net income...................................           938,404      938,404
  Dividends paid...............................          (489,345)    (489,345)
                                                ------ ----------   ----------
BALANCE, December 31, 1995.....................  5,100  3,912,305    3,917,405
  Net income...................................         1,353,095    1,353,095
  Dividends paid...............................          (667,743)    (667,743)
                                                ------ ----------   ----------
BALANCE, December 31, 1996.....................  5,100  4,597,657    4,602,757
  Net income...................................           599,276      599,276
  Dividends paid...............................          (702,423)    (702,423)
                                                ------ ----------   ----------
BALANCE, June 30, 1997......................... $5,100 $4,494,510   $4,499,610
                                                ====== ==========   ==========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-64
<PAGE>
 
                                 MASTERS, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED
                                YEAR ENDED DECEMBER 31,                 JUNE 30,
                          -------------------------------------  -----------------------
                             1994         1995         1996         1996        1997
                          -----------  -----------  -----------  ----------- -----------
                                                                 (UNAUDITED)
<S>                       <C>          <C>          <C>          <C>         <C>
CASH FLOWS FROM OPERAT-
 ING ACTIVITIES:
 Net income.............  $   558,044  $   938,404  $ 1,353,095   $572,227   $   599,276
 Adjustments to recon-
  cile net income to net
  cash provided by (used
  in) operating activi-
  ties:
 Depreciation...........      227,572      236,131      258,079    144,065       139,740
 Loss(Gain) on disposal
  of assets.............       20,576        8,480        2,223         --          (305)
 Bad debt expense.......      425,602      626,625      434,250    100,000       169,741
 Changes in operating
  assets and liabili-
  ties:
  (Increase) decrease
   in--
   Notes and accounts
    receivable..........     (517,095)  (1,881,816)  (1,035,935)  (701,119)     (170,055)
   Costs and estimated
    earnings in excess
    of billings on un-
    completed contracts.     (104,401)    (278,186)    (359,379)  (667,721)      446,342
   Inventories..........      116,978        9,039      (99,652)    31,423       (33,197)
   Prepaid expenses and
    other assets........      (16,255)     (17,607)       1,337      9,945       (21,989)
  Increase (decrease)
   in--
   Accounts payable.....      380,925      120,221      (20,018)   326,793       391,192
   Billings in excess of
    costs and estimated
    earnings on uncom-
    pleted contracts....       43,624      209,499      (94,107)    26,087       223,635
   Accrued salaries and
    wages...............        2,662       16,042       17,360     58,963        40,363
   Accrued profit shar-
    ing and bonus.......      143,148      256,752      189,431    (43,433)     (162,176)
   Accrued vacation ben-
    efits...............       53,589       40,105       61,561     29,600        35,858
   Payroll taxes and
    withholding.........       22,291       (5,665)     (69,252)    57,517         4,356
   Other current liabil-
    ities...............      238,406       80,814      (86,259)   (52,484)       75,371
                          -----------  -----------  -----------   --------   -----------
Net cash provided by
 (used in) operating ac-
 tivities...............    1,595,666      358,838      552,734   (108,137)    1,738,152
                          -----------  -----------  -----------   --------   -----------
CASH FLOWS FROM INVEST-
 ING ACTIVITIES:
 Purchases of property
  and equipment.........     (284,326)  (1,045,919)    (295,198)  (169,080)     (130,357)
 Proceeds from sale of
  equipment.............       18,208          566           --         --         6,327
                          -----------  -----------  -----------   --------   -----------
 Net cash used in in-
  vesting activities....     (266,118)  (1,045,353)    (295,198)  (169,080)     (124,030)
                          -----------  -----------  -----------   --------   -----------
CASH FLOWS FROM FINANC-
 ING ACTIVITIES:
 Proceeds from long-term
  debt..................      160,000    1,604,746      659,234    944,234            --
 Payments of long-term
  debt..................   (1,237,110)    (345,617)    (113,506)   (51,018)     (945,145)
 Dividends paid.........     (219,912)    (489,345)    (667,743)  (567,324)     (702,423)
                          -----------  -----------  -----------   --------   -----------
 Net cash provided by
  (used in) financing
  activities............   (1,297,022)     769,784     (122,015)   325,892    (1,647,568)
                          -----------  -----------  -----------   --------   -----------
NET INCREASE (DECREASE)
 IN CASH AND CASH EQUIV-
 ALENTS.................       32,526       83,269      135,521     48,675       (33,446)
CASH AND CASH EQUIVA-
 LENTS, beginning of pe-
 riod...................      419,460      451,986      535,255    535,255       670,776
                          -----------  -----------  -----------   --------   -----------
CASH AND CASH EQUIVA-
 LENTS, end of period...  $   451,986  $   535,255  $   670,776   $583,930   $   637,330
                          ===========  ===========  ===========   ========   ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-65
<PAGE>
 
                                 MASTERS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Masters, Inc. (the Company) is a Mechanical Contractor primarily engaged in
the installation of residential and commercial plumbing, heating, air
conditioning and sprinkler systems within a 100-mile radius of the Washington,
D.C. area.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim financial statements for the six months ended June 30, 1996 are
unaudited, and certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principles, have been omitted. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the financial position, results of operations and cash flows
with respect to the interim financial statements, have been included. The
results of operations for the interim periods are not necessarily indicative
of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported period. Actual results could differ from these estimates.
 
 Revenue Recognition
 
  The Company reports revenues from long-term construction contracts in
progress based on the percentage-of-completion method of accounting and,
therefore, takes into account the costs, estimated earnings and revenues to
date on contracts not yet completed.
 
  The amount of revenue recognized at the statement date is the portion of the
total contract price that the cost expended to date bears to the anticipated
final total cost, based on current estimates of the cost to complete. Revenue
recognized is not necessarily related to the progress billings to customers.
 
  As contracts extend over one or more years, revisions in estimates of cost
and earnings during the course of the work are reflected in the accounting
period in which the facts which require the revision become known.
 
  At the time a loss on a contract becomes known, the entire amount of the
estimated loss is recognized in the financial statements.
 
 Cash and Cash Equivalents
 
  The Company has a cash management system with its bank that provides for the
investment of excess cash balances. The bank transfers the Company's excess
cash balances daily to investments that are under the bank's control. At
December 31, 1995, December 31, 1996 and June 30, 1997, the balances invested
under the cash management system were $1,294,005, $1,198,620 and $1,106,523,
respectively. The Company considers its investments with initial maturities of
less than 90 days to be cash equivalents.
 
                                     F-66
<PAGE>
 
                                 MASTERS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 Inventories
 
  Inventories consist primarily of purchased materials and supplies.
Inventories are stated at the lower of cost or market with cost determined on
a first-in, first-out basis.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed by the
straight-line method based on the estimated useful lives of the assets.
Leasehold improvements are depreciated over the lesser of the remaining lease
term or the estimated useful life of the asset. Expenditures for repairs and
maintenance are charged to expense when incurred. Expenditures for major
renewals and betterments, which extend the useful lives of existing equipment,
are capitalized and depreciated. Upon retirement or disposition of property or
equipment, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in the statement of
operations.
 
 Warranty Costs
 
  The Company provides one to two year warranties on their contracts. At
December 31, 1995, December 31, 1996 and June 30, 1997, the Company's warranty
reserve was $80,000, $159,000 and $192,388, respectively.
 
 Income Taxes
 
  The Company has elected to be taxed under Subchapter S of the Internal
Revenue Code. Accordingly, the current taxable income of the Company is
taxable to the shareholder who is responsible for the payment of taxes
thereon.
 
 New Accounting Pronouncement
 
  Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long Lived Assets and for Long-Lived Assets to be Disposed
Of." Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
 Reclassification
 
  Certain amounts reported in the 1995 and 1996 financial statements have been
reclassified to conform with the June 30, 1997 presentation.
 
                                     F-67
<PAGE>
 
                                 MASTERS, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Accounts receivable consists of the following:
 
<TABLE>
<CAPTION>
                                           DECEMBER 31, DECEMBER 31,  JUNE 30,
                                               1995         1996        1997
                                           ------------ ------------ ----------
      <S>                                  <C>          <C>          <C>
      Trade accounts receivable..........   $5,337,781   $6,064,444  $5,919,387
      Retentions.........................      288,552      226,646     521,686
      Shareholder........................      224,658      238,579     245,539
      Service............................       63,332       50,487      62,057
      Trade notes receivable.............       57,672       36,557      25,366
      Other..............................      335,627      341,884     343,425
                                            ----------   ----------  ----------
                                            $6,307,622   $6,958,597  $7,117,460
      Allowance for sales adjustments and
       doubtful accounts.................      (50,000)     (99,290)   (257,839)
                                            ----------   ----------  ----------
                                            $6,257,622   $6,859,307  $6,859,621
                                            ==========   ==========  ==========
</TABLE>
 
  Accrued expenses consists of the following:
 
<TABLE>
      <S>                                      <C>        <C>        <C>
      Accrued salaries and wages.............. $  195,815 $  213,175 $  253,538
      Accrued profit sharing and bonus........    415,837    605,268    443,092
      Accrued vacation benefits...............    307,523    369,084    404,941
      Payroll taxes and withholding...........    123,452     54,200     58,556
                                               ---------- ---------- ----------
                                               $1,042,627 $1,241,727 $1,160,127
                                               ========== ========== ==========
</TABLE>
 
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                       DECEMBER 31,  DECEMBER 31,    JUNE 30,
                                           1995          1996          1997
                                       ------------  ------------  ------------
      <S>                              <C>           <C>           <C>
      Costs incurred.................  $ 37,064,954  $ 62,376,659  $ 58,243,065
      Estimated earnings recognized..    15,929,952    26,073,509    24,889,245
                                       ------------  ------------  ------------
                                         52,994,906    88,450,168    83,132,310
      Less billings on contracts.....   (52,209,272)  (87,211,048)  (82,563,167)
                                       ------------  ------------  ------------
                                       $    785,634  $  1,239,120  $    569,143
                                       ============  ============  ============
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
      Costs and estimated earnings in
       excess of billings on
       uncompleted contracts.........  $  1,506,793  $  1,866,172  $  1,419,830
      Billings in excess of costs and
       estimated earnings on
       uncompleted contracts.........      (721,159)     (627,052)     (850,687)
                                       ------------  ------------  ------------
                                       $    785,634  $  1,239,120  $    569,143
                                       ============  ============  ============
</TABLE>
 
                                      F-68
<PAGE>
 
                                 MASTERS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
5. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                              ESTIMATED
                                USEFUL   DECEMBER 31,  DECEMBER 31,   JUNE 30,
                                LIVES        1995          1996         1997
                              ---------- ------------  ------------  -----------
<S>                           <C>        <C>           <C>           <C>
Leasehold improvements.......  2-7 years $   215,396   $   221,265   $   223,012
Office furniture and
 equipment................... 5-10 years     784,498       838,904       858,900
Automotive equipment.........  3-5 years     399,942       435,623       470,864
Construction machinery and
 equipment................... 8-10 years   1,003,995     1,132,070     1,174,761
                                         -----------   -----------   -----------
                                           2,403,831     2,627,862     2,727,537
Less accumulated
 depreciation................             (1,813,602)   (2,002,737)   (2,117,818)
                                         ===========   ===========   ===========
                                         $   590,229   $   625,125   $   609,719
                                         ===========   ===========   ===========
</TABLE>
 
6. OTHER NONCURRENT ASSETS
 
  During the fourth quarter of 1995, the Company purchased three model homes
from a customer for $673,570 in order to settle certain accounts receivable
balances. The Company is not in the real estate business, and intends to sell
this real estate. Management believes that the carrying value of these homes
approximates their net realizable value based on recent sales in this
development.
 
  The related mortgage note totaling $630,462, $619,627 and $612,915 as of
December 31, 1995, December 31, 1996 and June 30, 1997, respectively, matures
October 5, 2000, and is payable in monthly installments of $5,843 including
principal and interest at 9.25%. The operating results of the investment are
not significant.
 
  Maturities of the mortgage note are as follows:
 
<TABLE>
<CAPTION>
      YEAR ENDING JUNE 30,
      --------------------
      <S>                                                               <C>
        1998........................................................... $ 14,159
        1999...........................................................   15,525
        2000...........................................................   17,024
        2001...........................................................  566,207
                                                                        --------
                                                                        $612,915
                                                                        ========
</TABLE>
 
7. SHORT AND LONG-TERM DEBT
 
  The Company has a revolving loan agreement with a bank, which as of December
31, 1995, December 31, 1996 and June 30, 1997, provided for maximum borrowings
of $3,000,000, $3,500,000 and $3,500,000, respectively. The agreement has a
maturity date of September 1, 1997. Borrowings under this agreement at
December 31, 1995, December 31, 1996 and June 30, 1997, amounted to
$1,300,000, $1,890,000 and $1,000,000, respectively, with interest at 8.5
percent at December 31, 1995, 8.25 percent at December 31, 1996 and 8.5
percent at June 30, 1997. All advances under the revolving note are cross-
collateralized with the notes and mortgage payable discussed below. The debt
agreements require among other provisions, the maintenance of certain levels
of net worth and working capital, and place restrictions on cash dividends.
 
  The Company's long term debt for December 31, 1995, December 31, 1996 and
June 30, 1997, was $303,664, $270,227 and $221,794, respectively.
 
                                     F-69
<PAGE>
 
                                 MASTERS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                            DECEMBER 31, DECEMBER 31, JUNE 30,
                                                1995         1996       1997
                                            ------------ ------------ --------
<S>                                         <C>          <C>          <C>
7.75%, due 2/28/97, secured by equipment...   $ 44,484     $  9,198   $     --
8.0%, due 6/25/97, secured by equipment....     33,582       12,999         --
8.25%, due 11/22/00, secured by equipment..    200,002      166,431    148,539
                                              --------     --------   --------
  Total Notes Payable......................    278,068      188,628    148,539
                                              --------     --------   --------
Capitalized lease, payable in monthly
 installments, interest at 15.35%, due
 6/30/00, secured by equipment.............     25,596       21,321     18,928
Capitalized lease, payable in monthly
 installments, interest at 9.07%, due
 4/30/01, secured by equipment.............   $     --     $ 60,278   $ 54,327
                                              --------     --------   --------
  Total Capitalized Leases.................     25,596       81,599     73,255
                                              --------     --------   --------
    Total long-term debt...................    303,664      270,227    221,794
                                              --------     --------   --------
    Less current maturities................    (94,303)     (76,095)   (55,618)
                                              --------     --------   --------
                                              $209,361     $194,132   $166,176
                                              ========     ========   ========
</TABLE>
 
  The aggregate maturities of the long-term debt as of June 30, 1997 are as
follows:
 
<TABLE>
      <S>                                                               <C>
      1998............................................................. $ 37,507
      1999.............................................................   40,721
      2000.............................................................   44,211
      2001.............................................................   26,100
                                                                        --------
                                                                        $148,539
                                                                        ========
</TABLE>
 
  Total borrowings under the notes payable with the bank are collateralized by
accounts receivable, inventory, and property and equipment of the Company, the
personal guarantee of the shareholder, and an assignment of the proceeds of a
$2,000,000 life insurance policy on the life of the shareholder.
 
  Future minimum lease payments under capital leases together with the present
value of the net minimum lease payments are as follows:
 
<TABLE>
<CAPTION>
      YEAR ENDING JUNE 30,
      --------------------
      <S>                                                               <C>
        1998........................................................... $25,183
        1999...........................................................  25,183
        2000...........................................................  25,183
        2001...........................................................  12,954
                                                                        -------
      Total minimum lease payments.....................................  88,503
      Less: Amount representing interest............................... (15,248)
                                                                        -------
      Present value of net minimum lease payments......................  73,255
      Less: Current Portion............................................ (18,111)
                                                                        -------
      Long-term Portion................................................ $55,144
                                                                        =======
</TABLE>
 
  Interest paid by Company on short and long-term debt was as follows:
 
<TABLE>
      <S>                                                              <C>
      Year ending December 31, 1994................................... $106,083
      Year ending December 31, 1995...................................  115,031
      Year ending December 31, 1996...................................  157,435
      Six months ending June 30, 1997.................................   77,445
</TABLE>
 
                                     F-70
<PAGE>
 
                                 MASTERS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
8. LEASES
 
  The Company occupies warehouse and office space which is subject to
operating leases. These leases provide for the following annual rental
payments:
 
<TABLE>
<CAPTION>
      YEAR ENDING JUNE 30,
      --------------------
      <S>                                                             <C>
        1998......................................................... $  283,558
        1999.........................................................    280,881
        2000.........................................................    278,094
        2001.........................................................    289,008
        2002.........................................................    296,522
        Thereafter...................................................    165,858
                                                                      ----------
                                                                      $1,593,921
                                                                      ==========
</TABLE>
 
  Total rent expense was $285,353, $268,419 and $293,074 for the years ended
December 31, 1994, December 31, 1995 and December 31, 1996, respectively. Rent
expense was $140,766 for the six months ended June 30, 1997.
 
  Office furniture and equipment at December 31, 1995, December 31, 1996 and
June 30, 1997, includes $27,500, $96,734 and $96,734, respectively, of
equipment under leases that have been capitalized. Accumulated depreciation
for such equipment was $2,750 at December 31, 1995, $17,940 at December 31,
1996 and $27,613 at June 30, 1997.
 
9. RELATED PARTY TRANSACTIONS
 
  On January 22, 1997, the Company entered into a partnership with the
shareholder of the Company for the lease of warehouse and office space. The
lease requires an annual base rental of $233,700. The lease extends through
February 1, 2003. Rent increases on each anniversary at the rate of 4%. All
expenses except base period real estate taxes are paid by the Company. Total
rental expense under this lease for the six months ended June 30, 1997, was
$97,375.
 
  The Company leases equipment from a company owned by the shareholder and an
officer of the Company. Expense for this equipment was $210,000, $199,925, and
$207,972, for the years ended December 31, 1994, December 31, 1995 and
December 31, 1996, respectively. Expense for this equipment was $100,803 for
the six months ended June 30, 1997.
 
  The Company makes a monthly payment for advertising to a company owned by
the shareholder of the Company. Payments to this company were $0 for the year
ended December 31, 1994, and approximately $48,000 for each year ending
December 31, 1995 and December 31, 1996. Payments were $24,000 for the six
months ended June 30, 1997.
 
  The Company has an outstanding receivable of $131,633 as of December 31,
1995, December 31, 1996 and June 30, 1997 from a company owned by the
shareholder of the Company.
 
  The shareholder of the Company owes the Company $224,658, $238,579 and
$245,539 in notes receivable as of December 31, 1995, December 31, 1996 and
June 30, 1997, respectively. The balance includes accrued interest at rates
ranging from 7.0% to 8.5% and the notes are payable on demand.
 
                                     F-71
<PAGE>
 
                                 MASTERS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
10. EMPLOYEE BENEFIT PLANS
 
  The Company adopted a qualified Profit-Sharing and 401(k) Retirement Plan in
December 1994. The Plan covers substantially all full time employees. The
401(k) portion of the Plan was effective in January 1995. Contributions are
determined based upon the discretion of the Company's Board of Directors. The
Company contributed $120,500 and $181,915 to the plan for the years ended
December 31, 1995 and December 31, 1996, respectively. A contribution of
$70,292 was made for the six months ended June 30, 1997. A favorable
determination letter dated January 29, 1996, has been obtained from the
Internal Revenue Service.
 
11. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's combined financial position, results of operations or liquidity.
 
12. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
and short and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheets approximate their fair
value.
 
13. SUBSEQUENT EVENT
   
  In April 1997, the Company signed a letter of intent with Group Maintenance
America Corp. (GroupMAC), whereby GroupMAC will acquire the Company in a
merger transaction for a combination of cash and common shares of GroupMAC
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC, subject to certain conditions including the negotiation of
definitive agreements and approval by Directors of both companies.     
 
                                  * * * * * *
 
                                     F-72
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
K & N Plumbing, Heating and Air Conditioning, Inc.
 
  We have audited the accompanying balance sheet of K & N Plumbing, Heating
and Air Conditioning, Inc. as of March 31, 1997, and the related statements of
operations, shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 financial statements referred to above present fairly,
in all material respects, the financial position of K & N Plumbing, Heating
and Air Conditioning, Inc. as of March 31, 1997, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
May 20, 1997, except for note 12, for which the date is June 1, 1997
 
                                     F-73
<PAGE>
 
               K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                                 BALANCE SHEET
 
<TABLE>
<CAPTION>
                                                                          MARCH 31,
                                                                             1997
                                                                          ----------
                               ASSETS
<S>                                                                       <C>
CURRENT ASSETS:
  Accounts receivable, net of allowance of $98,098....................... $3,410,659
  Inventories............................................................    254,135
  Other receivables......................................................    191,056
  Prepaid expenses and other current assets..............................    155,270
  Deferred income taxes..................................................    109,892
                                                                          ----------
    Total current assets.................................................  4,121,012
PROPERTY AND EQUIPMENT, net..............................................  1,483,869
OTHER NONCURRENT ASSETS..................................................     20,895
                                                                          ----------
    Total assets......................................................... $5,625,776
                                                                          ==========
                  LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of long-term debt......... $1,285,189
  Accounts payable.......................................................  1,399,235
  Accrued expenses.......................................................    627,263
  Deferred service contract revenue......................................     27,970
  Income taxes payable...................................................    120,187
                                                                          ----------
    Total current liabilities............................................  3,459,844
LONG-TERM DEBT, net of current maturities................................    305,685
DEFERRED INCOME TAXES....................................................    252,091
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock, $1 par value; 100,000 shares authorized;
   5,000 shares issued and outstanding...................................      5,000
  Retained earnings......................................................  1,603,156
                                                                          ----------
    Total shareholders' equity...........................................  1,608,156
                                                                          ----------
    Total liabilities and shareholders' equity........................... $5,625,776
                                                                          ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-74
<PAGE>
 
               K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                            STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                    YEAR ENDED
                                                                     MARCH 31,
                                                                       1997
                                                                    -----------
<S>                                                                 <C>
REVENUES........................................................... $24,279,160
COST OF SERVICES...................................................  20,704,965
                                                                    -----------
  Gross profit.....................................................   3,574,195
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.......................   2,638,037
                                                                    -----------
  Income from operations...........................................     936,158
OTHER INCOME (EXPENSE):
  Interest expense.................................................     (97,390)
  Other............................................................      (3,222)
                                                                    -----------
    Income before income tax provision.............................     835,546
INCOME TAX PROVISION...............................................     314,764
                                                                    -----------
NET INCOME......................................................... $   520,782
                                                                    ===========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-75
<PAGE>
 
               K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                       STATEMENT OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                       TOTAL
                                                 COMMON  RETAINED  SHAREHOLDERS'
                                                 STOCK   EARNINGS     EQUITY
                                                 ------ ---------- -------------
<S>                                              <C>    <C>        <C>
BALANCE, March 31, 1996......................... $5,000 $1,082,374  $1,087,374
  Net income....................................    --     520,782     520,782
                                                 ------ ----------  ----------
BALANCE, March 31, 1997......................... $5,000 $1,603,156  $1,608,156
                                                 ====== ==========  ==========
</TABLE>
 
 
 
 
 
 
    The accompanying notes are an integral part of the financial statements.
 
                                      F-76
<PAGE>
 
               K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                            STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                       YEAR
                                                                       ENDED
                                                                     MARCH 31,
                                                                       1997
                                                                     ---------
<S>                                                                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income......................................................... $ 520,782
 Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation......................................................   500,679
  Loss on sales of property and equipment...........................    10,982
  Deferred income taxes.............................................    79,621
  Changes in operating assets and liabilities:
   (Increase) decrease in--
    Accounts receivable.............................................  (566,374)
    Inventories.....................................................  (100,496)
    Other receivables...............................................   141,343
    Prepaid expenses and other current assets.......................    45,096
    Other noncurrent assets.........................................    (4,972)
   Increase (decrease) in--
    Accounts payable................................................    71,813
    Accrued expenses................................................    11,445
    Deferred service contract revenue...............................    27,970
    Income taxes payable............................................   112,851
                                                                     ---------
      Net cash provided by operating activities.....................   850,740
                                                                     ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment................................  (661,326)
 Proceeds from sales of property and equipment......................    14,442
                                                                     ---------
      Net cash used in investing activities.........................  (646,884)
                                                                     ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Checks outstanding in excess of bank balance.......................  (425,718)
 Net borrowings on line of credit...................................    66,382
 Principal payments on shareholder debt.............................   (12,658)
 Proceeds from issuance of installment debt.........................   479,093
 Principal payments on installment debt.............................  (310,955)
                                                                     ---------
      Net cash used in financing activities.........................  (203,856)
                                                                     ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................       --
CASH AND CASH EQUIVALENTS, beginning of year........................       --
                                                                     ---------
CASH AND CASH EQUIVALENTS, end of year.............................. $     --
                                                                     =========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-77
<PAGE>
 
              K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                MARCH 31, 1997
 
1. BUSINESS AND ORGANIZATION
 
  K & N Plumbing, Heating and Air Conditioning, Inc., (the Company) is
primarily engaged in the business of installing plumbing, heating and air
conditioning systems for new single-family detached homes in the areas in and
around Dallas and Austin, Texas and Las Vegas, Nevada. In addition, the
Company is involved in the replacement and repair market.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Cash and Cash Equivalents
 
  For purposes of the statement of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest and taxes were $99,838 and
$114,955, respectively, for the year ended March 31, 1997.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from construction contracts are recognized on a percentage
of completion basis, using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
 Inventories
 
  Inventories consist primarily of purchased materials and supplies. The
inventory is valued at the lower of cost or market, with cost determined on a
first-in, first-out (FIFO) basis.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease-term or the
estimated life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statement of operations.
 
 
                                     F-78
<PAGE>
 
              K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 Warranty Costs
 
  The Company warrants labor for one to two years after installation of new
air conditioning and heating units. The Company generally warrants labor for
one year after servicing of existing air conditioning and heating units. A
reserve for warranty costs is recorded upon completion of installation or
service.
 
 Income Taxes
 
  The Company uses the asset and liability method to account for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
 New Accounting Pronouncement
 
  Effective April 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Prepaid expenses and other current assets consist of the following at March
31, 1997:
 
<TABLE>
<S>                                                                    <C>
    Prepaid expenses.................................................. $ 94,808
    Due from employees................................................   60,462
                                                                       --------
                                                                       $155,270
                                                                       ========
  Accrued expenses consist of the following at March 31, 1997:
    Accrued payroll and related expense............................... $242,845
    Other accrued expenses............................................  384,418
                                                                       --------
                                                                       $627,263
                                                                       ========
</TABLE>
 
4. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment at March 31, 1997 are as follows:
 
<TABLE>
<CAPTION>
                                                        ESTIMATED
                                                       USEFUL LIVES
                                                       ------------
<S>                                                    <C>          <C>
  Machinery and equipment.............................  5--7 years  $   554,461
  Service and other vehicles..........................     5 years    2,239,457
  Office equipment, furniture and fixtures............  5--7 years      290,702
  Leasehold improvements..............................         --       290,875
                                                                    -----------
                                                                      3,375,495
  Less accumulated depreciation.......................               (1,891,626)
                                                                    -----------
                                                                    $ 1,483,869
                                                                    ===========
</TABLE>
 
                                     F-79
<PAGE>
 
              K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
5. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<S>                                                                 <C>
  Credit facility in the amount of $1,000,000 with a bank, bearing
   interest at prime plus 1.5%, secured by trade receivables and
   inventory....................................................... $  970,321
  Equipment installation loans payable to banks and other financial
   institutions, interest varying from 7.5% to 10.24%,
   collateralized by certain equipment, payable in monthly
   installments including interest, final installment due January
   1998............................................................    620,553
                                                                    ----------
      Total short- and long-term debt..............................  1,590,874
   Less short-term borrowings and current maturities............... (1,285,189)
                                                                    ----------
                                                                    $  305,685
                                                                    ==========
</TABLE>
 
  The Company had a revolving credit agreement with a bank to provide
borrowings up to $1,000,000. The agreement expires on August 30, 1997. The
revolving credit agreement was collateralized by accounts receivable,
inventories and the personal guarantee of the shareholder. The agreement
contained certain covenants with regard to minimum net worth and lending
limits of up to 80% of accounts receivable less than 60 days old. Borrowings
under the agreement in effect on March 31, 1997, bear interest at 10.0%, which
represents prime plus 1.5%. Borrowings outstanding at March 31, 1997 were
$970,321. The agreement was repaid in connection with the Company's
acquisition, see note 12.
 
  The aggregate maturities of the short- and long-term debt as of March 31,
1997 are as follows:
 
<TABLE>
<S>                                                                   <C>
  1998............................................................... $1,285,189
  1999...............................................................    246,605
  2000...............................................................     59,080
                                                                      ----------
                                                                      $1,590,874
                                                                      ==========
</TABLE>
 
6. INCOME TAXES
 
  Income tax expense for the year ended March 31, 1997 consists of:
 
<TABLE>
<CAPTION>
                                                      CURRENT  DEFERRED  TOTAL
                                                      -------- -------- --------
<S>                                                   <C>      <C>      <C>
  Federal............................................ $216,077 $73,166  $289,243
  State..............................................   19,066   6,455    25,521
                                                      -------- -------  --------
                                                      $235,143 $79,621  $314,764
                                                      ======== =======  ========
</TABLE>
 
  Total income tax expense differs from the amount computed by applying the
U.S. federal statutory income tax rate of 34% to income before income tax
provision as a result of the following:
 
<TABLE>
<S>                                                                     <C>
  Tax provision at statutory rate...................................... $284,086
  Increase resulting from:
    State income taxes, net of federal benefit.........................   16,844
    Other..............................................................   13,834
                                                                        --------
                                                                        $314,764
                                                                        ========
</TABLE>
 
                                     F-80
<PAGE>
 
              K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The components of the deferred income tax assets and liabilities are as
follows:
 
<TABLE>
<S>                                                                     <C>
  Deferred income tax assets:
    Warranty reserves.................................................. $ 41,440
    Deferred service contract revenues.................................   10,349
    Allowance for doubtful accounts....................................   36,296
    Vacation accrual...................................................   21,807
                                                                        --------
      Total deferred income tax asset..................................  109,892
                                                                        --------
  Deferred income tax liabilities:
    Depreciation....................................................... $112,936
    Other..............................................................  139,155
                                                                        --------
      Total deferred income tax liability..............................  252,091
                                                                        --------
      Net deferred income tax liability................................ $142,199
                                                                        ========
</TABLE>
 
7. LEASES
 
  The Company incurred rent expenses under operating leases of $137,351 for
the year ended March 31, 1997. Of such amount, $107,760 related to a facility
that is leased by the Company from its shareholder. Under the lease agreement,
the Company is to pay for all maintenance, certain taxes and insurance for the
facility.
 
  Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of March 31, 1997
are as follows:
 
<TABLE>
<S>                                                                     <C>
  1998................................................................. $137,760
  1999.................................................................  107,760
  2000.................................................................  107,760
  2001.................................................................  107,760
  2002 and thereafter..................................................   53,880
                                                                        --------
                                                                        $514,920
                                                                        ========
</TABLE>
 
8. EMPLOYEE BENEFIT PLAN
 
  The Company maintains a voluntary 401(k) profit-sharing plan covering all
employees. Employees may choose to defer up to 15% of their compensation
during the Plan year, not to exceed Internal Revenue Service limitations, by
contributing to the Plan. The Company matches 50% of each employee's
contributions up to a maximum of 5% of the employee's gross earnings.
Contributions made by the Company of $57,400 were charged to operations in the
year ended March 31, 1997.
 
9. SALES TO SIGNIFICANT CUSTOMERS
 
  During the year ended March 31, 1997, two customers accounted for
approximately 30% of the Company's revenues.
 
10. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
 
 
                                     F-81
<PAGE>
 
              K & N PLUMBING, HEATING AND AIR CONDITIONING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
11. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents and
short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheet approximates their fair
value.
 
12. SUBSEQUENT EVENT
   
  Effective June 1, 1997, Group Maintenance America Corp. (GroupMAC) acquired
all the outstanding shares of the Company for a combination of cash, preferred
stock and common stock of GroupMAC. All of the preferred shares issued in
connection with the acquisition of the business will be redeemed for cash
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC.     
 
                                     F-82
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
A-ABC Appliance, Inc. and
 A-1 Appliance & Air Conditioning, Inc.:
 
  We have audited the accompanying combined balance sheets of A-ABC Appliance,
Inc. and A-1 Appliance & Air Conditioning, Inc. (collectively referred to as
the Company) as of December 31, 1996 and May 31, 1997, and the related
combined statements of operations, shareholders' equity and cash flows for the
year ended December 31, 1996 and the five months ended May 31, 1997. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of A-ABC Appliance,
Inc. and A-1 Appliance & Air Conditioning, Inc. as of December 31, 1996 and
May 31, 1997, and the results of its operations and its cash flows for the
year ended December 31, 1996 and the five months ended May 31, 1997 in
conformity with generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 18, 1997
 
                                     F-83
<PAGE>
 
        A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
                            COMBINED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                         DECEMBER 31,  MAY 31,
                                                             1996        1997
                                                         ------------ ----------
<S>                                                      <C>          <C>
                        ASSETS
CURRENT ASSETS:
  Cash and cash equivalents............................   $  760,291  $  654,324
  Accounts receivable..................................      144,519     217,461
  Other receivables....................................       35,226         --
  Inventories..........................................      570,007     517,587
  Due from related parties and employees...............       30,912     162,580
  Prepaid expenses.....................................       13,289      57,090
                                                          ----------  ----------
    Total current assets...............................    1,554,244   1,609,042
PROPERTY AND EQUIPMENT, net............................      905,447     702,310
GOODWILL, net of accumulated amortization of $9,195 and
 $9,820, respectively..................................       50,808      50,183
OTHER NONCURRENT ASSETS................................      334,372     263,599
                                                          ----------  ----------
    Total assets.......................................   $2,844,871  $2,625,134
                                                          ==========  ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt.................   $  176,717  $  168,425
  Accounts payable.....................................      265,080     425,196
  Accrued expenses.....................................      183,797     213,732
  Due to related parties...............................      315,474     342,584
  Deferred service contract revenue....................      196,217     175,134
                                                          ----------  ----------
    Total current liabilities..........................    1,137,285   1,325,071
LONG-TERM DEBT, net of current maturities..............      844,549     779,511
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock.........................................        3,300       3,300
  Additional paid-in capital...........................      304,140     304,140
  Retained earnings....................................      555,597     213,112
                                                          ----------  ----------
    Total shareholders' equity.........................      863,037     520,552
                                                          ----------  ----------
    Total liabilities and shareholders' equity.........   $2,844,871  $2,625,134
                                                          ==========  ==========
</TABLE>
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-84
<PAGE>
 
        A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
                       COMBINED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          FIVE MONTHS ENDED
                                            YEAR ENDED         MAY 31,
                                           DECEMBER 31, ----------------------
                                               1996        1996        1997
                                           ------------ ----------  ----------
                                                      (UNAUDITED)
<S>                                        <C>          <C>         <C>
REVENUES..................................  $8,546,450  $3,382,901  $3,419,026
COST OF SERVICES..........................   5,446,934   2,147,150   2,227,471
                                            ----------  ----------  ----------
  Gross profit............................   3,099,516   1,235,751   1,191,555
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES.................................   2,766,293   1,124,839     996,082
                                            ----------  ----------  ----------
  Income from operations..................     333,223     110,912     195,473
OTHER INCOME (EXPENSE):
  Interest expense........................     (94,434)    (36,628)    (34,313)
  Interest income.........................      10,653       1,619       3,702
  Other...................................         779     (15,130)     (7,760)
                                            ----------  ----------  ----------
NET INCOME................................  $  250,221  $   60,773  $  157,102
                                            ==========  ==========  ==========
</TABLE>
 
 
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-85
<PAGE>
 
        A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
                  COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                             ADDITIONAL                TOTAL
                                      COMMON  PAID-IN   RETAINED   SHAREHOLDERS'
                                      STOCK   CAPITAL   EARNINGS      EQUITY
                                      ------ ---------- ---------  -------------
<S>                                   <C>    <C>        <C>        <C>
BALANCE, December 31, 1995........... $3,300  $304,140  $ 305,376    $ 612,816
  Net income.........................    --        --     250,221      250,221
                                      ------  --------  ---------    ---------
BALANCE, December 31, 1996...........  3,300   304,140    555,597      863,037
  Net income.........................    --        --     157,102      157,102
  Distributions to shareholders......    --        --    (499,587)    (499,587)
                                      ------  --------  ---------    ---------
BALANCE, May 31, 1997................ $3,300  $304,140  $ 213,112    $ 520,552
                                      ======  ========  =========    =========
</TABLE>
 
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-86
<PAGE>
 
        A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
                       COMBINED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                           FIVE MONTHS ENDED
                                             YEAR ENDED         MAY 31,
                                            DECEMBER 31, ---------------------
                                                1996        1996       1997
                                            ------------ ----------- ---------
                                                         (UNAUDITED)
<S>                                         <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income................................  $ 250,221    $  60,773  $ 157,102
 Adjustments to reconcile net income to net
  cash
  provided by (used in) operating
  activities:
   Depreciation and amortization...........    318,259      138,454    133,448
   Gain from sales of property and
    equipment..............................    (18,765)     (18,765)       --
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable...................     (8,567)    (194,850)   (72,942)
     Other receivables.....................    (28,778)       1,611     35,226
     Inventories...........................     17,073      (31,888)    52,420
     Due from related parties and
      employees............................      1,703        6,000    (11,186)
     Prepaid expenses......................     40,965      (16,391)   (43,801)
     Other noncurrent assets...............     (4,952)      (4,391)    24,940
    Increase (decrease) in--
     Accounts payable......................    (33,128)     143,415    160,116
     Accrued expenses......................   (120,496)      69,937     29,935
     Due to related parties................    (43,945)    (359,419)  (315,474)
     Deferred service contract revenue.....     36,714       94,838    (21,083)
                                             ---------    ---------  ---------
      Net cash provided by (used in)
           operating activities............    406,304     (110,676)   128,701
                                             ---------    ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment.......   (456,877)    (277,614)    (4,335)
 Proceeds from sales of property and
  equipment................................     20,585       20,585        --
                                             ---------    ---------  ---------
      Net cash used in investing
       activities..........................   (436,292)    (257,029)    (4,335)
                                             ---------    ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from long-term debt..............    376,714      376,714        --
 Payments of long-term debt................   (135,202)     (71,677)   (73,330)
 Distributions to shareholders.............        --           --    (157,003)
                                             ---------    ---------  ---------
      Net cash provided by (used in)
           financing activities............    241,512      305,037   (230,333)
                                             ---------    ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS...............................    211,524      (62,668)  (105,967)
CASH AND CASH EQUIVALENTS, beginning of
 period....................................    548,767      548,767    760,291
                                             ---------    ---------  ---------
CASH AND CASH EQUIVALENTS, end of period...  $ 760,291    $ 486,099  $ 654,324
                                             =========    =========  =========
</TABLE>
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-87
<PAGE>
 
       A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
                    NOTES TO COMBINED FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  A-ABC Appliance, Inc. (A-ABC) and A-1 Appliance & Air Conditioning, Inc. (A-
1), (collectively referred to as the Company), are under common ownership. As
common control exists among the entities, the financial statements have been
combined for all periods presented. There have been no intercompany
transactions between the entities. A-ABC and A-1 are primarily engaged in the
installation and servicing of heating and air conditioning systems, as well as
home appliances, for residential and light commercial customers in the Dallas,
Texas area.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim combined financial statements for the five months ended May 31,
1996 are unaudited, and certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the combined interim financial statements, have
been included. The results of operations for the interim periods are not
necessarily indicative of the results of the entire fiscal year.
 
 Use of Estimates
 
  The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenue is recognized upon completion of service. Revenues on service and
maintenance contracts are recognized over the life of the contract.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest were $92,052 and $34,313 for
the year ended December 31, 1996 and the five months ended May 31, 1997,
respectively.
 
 Inventories
 
  Inventories consist primarily of purchased materials and supplies. The
Company uses the first-in, first-out (FIFO) cost method to value its
inventories.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated useful life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated.
 
                                     F-88
<PAGE>
 
       A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
Upon retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Income Taxes
 
  The shareholders of the Company have elected to be taxed for federal tax
purposes as an S Corporation whereby the shareholders' respective equitable
shares in the taxable income of the Company are reportable on their individual
tax returns. The Company will make distributions to the shareholders each year
at least in amounts necessary to pay personal income taxes payable on the
Company's taxable income.
 
 New Accounting Pronouncement
 
  Effective January 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Other noncurrent assets consists of the following:
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31, MAY 31,
                                                              1996       1997
                                                          ------------ --------
<S>                                                       <C>          <C>
  Covenant not to compete, net of accumulated
   amortization of $247,500 and $293,333, respectively...   $302,500   $256,667
  Other noncurrent assets................................     31,872      6,932
                                                            --------   --------
                                                            $334,372   $263,599
                                                            ========   ========
  Accrued expenses consists of the following:
  Accrued payroll costs and benefits.....................   $100,151   $165,233
  Other accrued expenses.................................     83,646     48,499
                                                            --------   --------
                                                            $183,797   $213,732
                                                            ========   ========
</TABLE>
 
                                     F-89
<PAGE>
 
       A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
4. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                           ESTIMATED
                                            USEFUL    DECEMBER 31,    MAY 31,
                                             LIVES       1996          1997
                                          ----------- ------------  -----------
   <S>                                    <C>         <C>           <C>
   Land..................................         --  $    15,000   $       --
   Buildings and improvements............ 20-30 years     138,958           --
   Service and other vehicles............   4-7 years   1,191,155     1,193,253
   Office equipment, furniture and
    fixtures.............................  5-10 years     450,086       452,323
   Leasehold improvements................         --      214,691       214,691
                                                      -----------   -----------
                                                        2,009,890     1,860,267
   Less accumulated depreciation.........              (1,104,443)   (1,157,957)
                                                      -----------   -----------
                                                      $   905,447   $   702,310
                                                      ===========   ===========
</TABLE>
 
5. GOODWILL AND OTHER NONCURRENT ASSETS
 
  Goodwill represents the excess of the aggregate purchase price over the fair
value of net assets acquired and is amortized on a straight-line basis over a
period of 40 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating cash
flows of the acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows compared to
the carrying value of goodwill. The assessment of the recoverability of
goodwill will be impacted if estimated future operating cash flows are not
achieved.
 
  Other noncurrent assets include a covenant not to compete and deferred
charges related to the "Asset Purchase and Sale Agreement" made between the
Company's shareholders and former owners. The covenant not to compete and
deferred charges are amortized on a straight-line basis for a period of five
years, which is the period of the covenant in the agreement.
 
6. LONG-TERM DEBT
 
  Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                         DECEMBER 31,  MAY 31,
                                                             1996       1997
                                                         ------------ ---------
   <S>                                                   <C>          <C>
   Equipment installment loans payable to banks and
    other financial institutions, interest varying from
    8.75% to 9.0%, secured by certain equipment,
    payable in monthly and quarterly installments
    including interest, final installment
    due November 2000..................................   $  471,554  $ 419,900
   Notes payable to the former shareholders of A-1
    Appliance & Air Conditioning, Inc. at 8%, payable
    in monthly installments of $7,783, including
    interest, final installment due November 2004......      549,712    528,036
                                                          ----------  ---------
       Total long-term debt............................    1,021,266    947,936
   Less current maturities.............................     (176,717)  (168,425)
                                                          ----------  ---------
                                                          $  844,549  $ 779,511
                                                          ==========  =========
</TABLE>
 
                                     F-90
<PAGE>
 
       A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
  The aggregate maturities of the long-term debt as of December 31, 1996 are
as follows:
 
<TABLE>
<CAPTION>
                                                     A-ABC     A-1     COMBINED
                                                    -------- -------- ----------
   <S>                                              <C>      <C>      <C>
   1997............................................ $ 97,304 $ 79,413 $  176,717
   1998............................................  101,507   80,613    182,120
   1999............................................  108,743   71,823    180,566
   2000............................................   79,251   66,660    145,911
   2001............................................   23,435   72,477     95,912
   Thereafter......................................      --   240,040    240,040
                                                    -------- -------- ----------
                                                    $410,240 $611,026 $1,021,266
                                                    ======== ======== ==========
</TABLE>
 
7. SHAREHOLDERS' EQUITY
 
  The authorized, issued and outstanding common stock of the Company at
December 31, 1996 and May 31, 1997 is summarized as follows:
 
<TABLE>
<CAPTION>
                                                  NUMBER OF SHARES
                                           ------------------------------ COMMON
                                           AUTHORIZED ISSUED  OUTSTANDING STOCK
                                           ---------- ------- ----------- ------
   <S>                                     <C>        <C>     <C>         <C>
   A-ABC voting...........................       50        50        50   $  250
   A-ABC non-voting.......................       50        50        50       50
   A-1....................................  300,000   300,000   300,000    3,000
                                            -------   -------   -------   ------
     Total................................  300,100   300,100   300,100   $3,300
                                            =======   =======   =======   ======
</TABLE>
 
  The voting common stock and non-voting common stock of A-ABC have stated
values of $5 and $1 per share, respectively. The common stock of A-1 has a
stated value of $0.01 per share.
 
8. LEASES
 
  Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31,
1996 are as follows:
 
<TABLE>
<CAPTION>
                                                     A-ABC      A-1    COMBINED
                                                   ---------- ------- ----------
   <S>                                             <C>        <C>     <C>
   1997........................................... $   99,000 $27,000 $  126,000
   1998...........................................     99,000  27,000    126,000
   1999...........................................     99,000  27,000    126,000
   2000...........................................     99,000  11,250    110,250
   2001...........................................     99,000     --      99,000
   Thereafter.....................................    717,750     --     717,750
                                                   ---------- ------- ----------
                                                   $1,212,750 $92,250 $1,305,000
                                                   ========== ======= ==========
</TABLE>
 
  Total rental expense for the year ended December 31, 1996 and the five
months ended May 31, 1997 was $136,200 and $58,200, respectively.
 
9. RELATED PARTY TRANSACTIONS
 
  The Company leases the office building and warehouse from a shareholder of
A-ABC and A-1. The Company also pays management fees to a company owned by a
shareholder for administrative and operational services. The management
agreement is renewed annually.
 
                                     F-91
<PAGE>
 
       A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR CONDITIONING, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
  In May 1997, the Company sold land and buildings and improvements to a
shareholder for the recorded book value of $120,482. In addition, the Company
declared $342,584 of distributions to shareholders, which were not paid as of
May 31, 1997.
 
  At December 31, 1996 and May 31, 1997, the Company had amounts due to
related parties of $315,474 and $342,584, respectively, and amounts due from
related parties of $23,174 and $145,070, respectively.
 
10. EMPLOYEE BENEFIT PLAN
 
  The Company has a contributory 401(k) plan covering substantially all
employees. Contributions to this plan, determined annually, are at the
discretion of the Board of Directors. Authorized contributions for the year
ended December 31, 1996 and the five months ended May 31, 1997 amounted to
$20,258 and $9,942, respectively.
 
11. ADVERTISING
 
  The Company expenses advertising costs as incurred. Total advertising
expense for the year ended December 31, 1996 and the five months ended May 31,
1997 amounted to $401,722 and $136,350, respectively, and is included in
selling, general and administrative expenses in the accompanying combined
statements of operations.
 
12. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's combined financial position, results of operations or liquidity.
 
13. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents and
long-term debt. The Company believes that the carrying value of these
instruments on the accompanying combined balance sheets approximates their
fair value.
 
14. SUBSEQUENT EVENT
 
  Effective June 1, 1997, Group Maintenance America Corp. (GroupMAC) acquired
all of the outstanding shares of the Company for a combination of cash and
common stock of GroupMAC.
 
                                     F-92
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
 Arkansas Mechanical Services, Inc.
 and Mechanical Services, Inc.:
 
  We have audited the accompanying combined balance sheets of Arkansas
Mechanical Services, Inc. and Mechanical Services, Inc. (collectively referred
to as the Company) as of December 31, 1996 and June 30, 1997, and the related
combined statements of operations, shareholders' equity and cash flows for the
year ended December 31, 1996 and the six months ended June 30, 1997. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Arkansas
Mechanical Services, Inc. and Mechanical Services, Inc. as of December 31,
1996 and June 30, 1997, and the results of its operations and its cash flows
for the year ended December 31, 1996 and the six months ended June 30, 1997 in
conformity with generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 25, 1997
 
                                     F-93
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                            COMBINED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                       DECEMBER 31,  JUNE 30,
                                                           1996        1997
               ASSETS                                  ------------ ----------
<S>                                                    <C>          <C>
CURRENT ASSETS:
  Cash and cash equivalents...........................  $  124,687  $   20,123
  Accounts receivable.................................     960,574   1,337,571
  Inventories.........................................      55,036      75,862
  Costs and estimated earnings in excess of billings
   on uncompleted contracts...........................      52,310      36,203
  Due from related parties............................      21,291      17,553
  Prepaid expenses and other current assets...........       8,795      11,508
                                                        ----------  ----------
    Total current assets..............................   1,222,693   1,498,820
PROPERTY AND EQUIPMENT, net...........................     634,996     632,862
GOODWILL, net of accumulated amortization of $11,265
 and $11,922, respectively............................      14,975      14,318
OTHER NONCURRENT ASSETS...............................       1,217       1,383
                                                        ----------  ----------
    Total assets......................................  $1,873,881  $2,147,383
                                                        ==========  ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                    <C>          <C>
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of
   long-term debt.....................................  $  513,157  $  500,352
  Accounts payable....................................     529,497     725,177
  Accrued expenses....................................     157,811      69,571
  Billings in excess of costs and estimated earnings
   on uncompleted contracts...........................     117,526      99,690
  Due to related parties..............................          --      35,150
                                                        ----------  ----------
    Total current liabilities.........................   1,317,991   1,429,940
LONG-TERM DEBT, net of current maturities.............     205,170     192,645
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock........................................      26,000      26,000
  Retained earnings...................................     371,983     546,061
  Treasury stock, at cost.............................     (47,263)    (47,263)
                                                        ----------  ----------
    Total shareholders' equity........................     350,720     524,798
                                                        ----------  ----------
    Total liabilities and shareholders' equity........  $1,873,881  $2,147,383
                                                        ==========  ==========
</TABLE>
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-94
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                       COMBINED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                        SIX MONTHS ENDED JUNE
                                            YEAR ENDED           30,
                                           DECEMBER 31, ----------------------
                                               1996        1996        1997
                                           ------------ ----------  ----------
                                                      (UNAUDITED)
<S>                                        <C>          <C>         <C>
REVENUES..................................  $6,237,166  $3,460,144  $4,028,775
COST OF SERVICES..........................   4,773,451   2,663,083   3,168,537
                                            ----------  ----------  ----------
    Gross profit..........................   1,463,715     797,061     860,238
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES.................................   1,082,470     525,206     583,120
                                            ----------  ----------  ----------
    Income from operations................     381,245     271,855     277,118
OTHER INCOME (EXPENSE):
  Interest expense........................     (51,408)    (22,908)    (32,160)
  Other...................................      30,104      17,321       2,120
                                            ----------  ----------  ----------
NET INCOME................................  $  359,941  $  266,268  $  247,078
                                            ==========  ==========  ==========
</TABLE>
 
 
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-95
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                  COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                       TOTAL
                                      COMMON  RETAINED   TREASURY  SHAREHOLDERS'
                                       STOCK  EARNINGS    STOCK       EQUITY
                                      ------- ---------  --------  -------------
<S>                                   <C>     <C>        <C>       <C>
BALANCE, December 31, 1995........... $26,000 $ 252,756  $(47,263)   $ 231,493
  Net income.........................      --   359,941        --      359,941
  Distributions to shareholders......      --  (240,714)       --     (240,714)
                                      ------- ---------  --------    ---------
BALANCE, December 31, 1996...........  26,000   371,983   (47,263)     350,720
  Net income.........................      --   247,078        --      247,078
  Distributions to shareholders......      --   (73,000)       --      (73,000)
                                      ------- ---------  --------    ---------
BALANCE, June 30, 1997............... $26,000 $ 546,061  $(47,263)   $ 524,798
                                      ======= =========  ========    =========
</TABLE>
 
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-96
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                       COMBINED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED
                                               YEAR ENDED       JUNE 30,
                                              DECEMBER 31, --------------------
                                                  1996       1996       1997
                                              ------------ ---------  ---------
                                                        (UNAUDITED)
<S>                                           <C>          <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income.................................   $ 359,941   $ 266,268  $ 247,078
 Adjustments to reconcile net income to net
  cash provided by operating activities--
  Depreciation and amortization.............     109,624      65,735     89,354
  Changes in operating assets and liabili-
   ties:
  (Increase) decrease in--
   Accounts receivable......................    (368,388)   (366,932)  (376,997)
   Inventories..............................     (10,142)        (34)   (20,826)
   Costs and estimated earnings in excess of
    billings on uncompleted contracts.......     (27,750)    (52,223)    16,107
   Due from related parties.................      69,661      85,066      3,738
   Prepaid expenses and other current as-
    sets....................................      (5,009)    (20,847)    (2,879)
  Increase (decrease) in--
   Accounts payable.........................     215,954     367,492    195,680
   Accrued expenses.........................      43,524      10,842    (88,240)
   Billings in excess of costs and estimated
    earnings on uncompleted contracts.......      23,641     (71,807)   (17,836)
   Due to related parties...................     (41,609)    (41,609)    35,150
                                               ---------   ---------  ---------
     Net cash provided by operating activi-
      ties..................................     369,447     241,951     80,329
                                               ---------   ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment........    (237,113)   (130,895)   (86,563)
 Proceeds from sales of property and equip-
  ment......................................      15,000          --         --
                                               ---------   ---------  ---------
     Net cash used in investing activities..    (222,113)   (130,895)   (86,563)
                                               ---------   ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from short-term borrowings........     590,000     440,000    110,000
 Payments of short-term borrowings..........    (410,000)   (260,000)  (100,000)
 Proceeds from long-term debt...............     194,326      98,775     37,499
 Payments of long-term debt.................    (145,389)    (39,145)   (72,829)
 Distributions to shareholders..............    (295,714)   (155,000)   (73,000)
                                               ---------   ---------  ---------
     Net cash provided by (used in) financ-
      ing activities........................     (66,777)     84,630    (98,330)
                                               ---------   ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS................................      80,557     195,686   (104,564)
CASH AND CASH EQUIVALENTS, beginning of pe-
 riod.......................................      44,130      44,130    124,687
                                               ---------   ---------  ---------
CASH AND CASH EQUIVALENTS, end of period....   $ 124,687   $ 239,816  $  20,123
                                               =========   =========  =========
</TABLE>
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-97
<PAGE>
 
                    ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                    NOTES TO COMBINED FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Arkansas Mechanical Services, Inc. (AMS) and Mechanical Services, Inc.
(MSI), (collectively referred to as the Company), are under common ownership.
As common control exists among the entities, the financial statements have
been combined for all periods. All significant intercompany transactions and
balances have been eliminated in combination. The Company is primarily engaged
in the installation and servicing of heating and air conditioning systems for
commercial and industrial customers in Little Rock and Fayetteville, Arkansas
and the surrounding areas.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim combined financial statements for the six months ended June 30,
1996 are unaudited, and certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the combined interim financial statements, have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from construction contracts are recognized on a percentage
of completion basis using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which losses are
determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest were $51,408 and $32,160 for
the year ended December 31, 1996 and the six months ended June 30, 1997.
 
 Inventories
 
  Inventories consist primarily of purchased materials and supplies. The
Company uses the first-in, first-out (FIFO) cost method to value its
inventories.
 
                                     F-98
<PAGE>
 
                    ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Warranty Costs
 
  The Company warrants labor for the first year after installation on new air
conditioning and heating units. The Company generally warrants labor for 90
days after servicing of existing air conditioning and heating units. A reserve
for warranty costs is recorded upon completion of installation or service.
 
 Income Taxes
 
  The shareholders of the Company have elected to be taxed for federal tax
purposes as an S Corporation whereby the shareholders' respective equitable
shares in the taxable income of the Company are reportable on their individual
tax returns. The Company will make distributions to the shareholders each year
at least in amounts necessary to pay personal income taxes payable on the
Company's taxable income.
 
 New Accounting Pronouncement
 
  Effective January 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Accrued expenses consists of the following:
 
<TABLE>
<CAPTION>
                                                           DECEMBER 31, JUNE 30,
                                                               1996       1997
                                                           ------------ --------
      <S>                                                  <C>          <C>
      Accrued payroll costs and benefits..................  $ 115,949   $63,339
      Other accrued expenses..............................     41,862     6,232
                                                            ---------   -------
                                                            $ 157,811   $69,571
                                                            =========   =======
</TABLE>
 
                                     F-99
<PAGE>
 
                    ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                                       DECEMBER 31,  JUNE 30,
                                                           1996        1997
                                                       ------------ ----------
      <S>                                              <C>          <C>
      Costs incurred..................................  $1,493,806  $2,232,909
      Estimated earnings recognized...................     246,687     247,900
                                                        ----------  ----------
                                                         1,740,493   2,480,809
      Less billings on contracts......................   1,805,709   2,544,296
                                                        ----------  ----------
                                                        $  (65,216) $  (63,487)
                                                        ==========  ==========
</TABLE>
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
<TABLE>
<CAPTION>
                                                        DECEMBER 31, JUNE 30,
                                                            1996       1997
                                                        ------------ --------
      <S>                                               <C>          <C>
      Costs and estimated earnings in excess of
       billings on uncompleted contracts...............  $  52,310   $ 36,203
      Billings in excess of costs and estimated
       earnings on uncompleted contracts...............   (117,526)   (99,690)
                                                         ---------   --------
                                                         $ (65,216)  $(63,487)
                                                         =========   ========
</TABLE>
 
5. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                            ESTIMATED
                                              USEFUL   DECEMBER 31,  JUNE 30,
                                              LIVES        1996        1997
                                            ---------- ------------ ----------
      <S>                                   <C>        <C>          <C>
      Service and other vehicles...........  4-7 years  $  654,491  $  696,871
      Machinery and equipment.............. 5-10 years     228,766     233,744
      Office equipment, furniture and
       fixtures............................ 5-10 years      69,698      98,121
      Leasehold improvements...............         --      75,785      86,567
                                                        ----------  ----------
                                                         1,028,740   1,115,303
      Less accumulated depreciation........               (393,744)   (482,441)
                                                        ----------  ----------
                                                        $  634,996  $  632,862
                                                        ==========  ==========
</TABLE>
 
6. GOODWILL
 
  Goodwill represents the excess of the aggregate purchase price over the fair
value of net assets acquired and is amortized on a straight-line basis over a
period of 40 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating cash
flows of the acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows compared to
the carrying value of goodwill. The assessment of the recoverability of
goodwill will be impacted if estimated future operating cash flows are not
achieved.
 
                                     F-100
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
7. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                       DECEMBER 31, JUNE 30,
                                                           1996       1997
                                                       ------------ ---------
<S>                                                    <C>          <C>
Revolving line of credit with a bank with a maximum
 amount of $300,000; interest accrues at prime plus
 .75% and is payable monthly; secured by accounts
 receivable and the personal guarantee of the
 shareholders; due on demand..........................  $ 100,000   $  75,000
Revolving line of credit with a bank with a maximum
 amount of $250,000; interest accrues at 10.0% and is
 payable monthly; secured by accounts receivable and
 the personal guarantee of the shareholders; due on
 demand with a maturity date of June 1997.............    180,000          --
Revolving line of credit with a bank with a maximum
 amount of $400,000; interest accrues at prime plus
 1.5% and is payable monthly; secured by accounts
 receivable and the personal guarantee of the
 shareholders; due on demand with a maturity date of
 February 1998........................................         --     215,000
Equipment installment notes to a bank; interest
 accrued at various rates, payable in monthly
 installments, including interest, of $14,256, final
 installment due 2001; secured by service and other
 vehicles and the personal guarantee of stockholders..    275,603     259,718
Note payable to a bank; interest accrues at 9.5%;
 payable in monthly installments including interest,
 of $2,025, final installments, due August 1997;
 secured by personal guarantee of the shareholder.....     92,512      83,731
Equipment installment notes to a bank; interest
 varying from 7.5% to 10.0%; payable in monthly
 installments of various amounts, including interest,
 through 2000; secured by service and other vehicles..     39,366      33,287
Note payable to a company affiliated through common
 ownership; interest accrued at 9.0%; payable in
 monthly installments, including interest of $981,
 final installment due December 1999; unsecured.......     30,846      26,261
                                                        ---------   ---------
  Total short- and long-term debt.....................    718,327     692,997
Less short-term borrowings and current maturities.....   (513,157)   (500,352)
                                                        ---------   ---------
                                                        $ 205,170   $ 192,645
                                                        =========   =========
</TABLE>
 
  The aggregate maturities of the short- and long-term debt as of December 31,
1996 are as follows:
 
<TABLE>
<CAPTION>
                                                        AMS      MSI    COMBINED
                                                      -------- -------- --------
      <S>                                             <C>      <C>      <C>
      1997........................................... $320,107 $193,050 $513,157
      1998...........................................   69,749   12,758   82,507
      1999...........................................   68,141   10,827   78,968
      2000...........................................   40,023    2,723   42,746
      2001...........................................      949       --      949
                                                      -------- -------- --------
                                                      $498,969 $219,358 $718,327
                                                      ======== ======== ========
</TABLE>
 
                                     F-101
<PAGE>
 
                    ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
8. SHAREHOLDERS' EQUITY
 
  The authorized, issued and outstanding common stock of the Company at
December 31, 1996 and June 30, 1997 is summarized as follows:
 
<TABLE>
<CAPTION>
                                                  NUMBER OF SHARES
                                             ---------------------------
                                                                TREASURY COMMON
                                   AMORTIZED ISSUED OUTSTANDING  STOCK    STOCK
                                   --------- ------ ----------- -------- -------
      <S>                          <C>       <C>    <C>         <C>      <C>
      AMS.........................  100,000  6,000     6,000     1,900   $ 6,000
      MSI.........................    1,000    400       333        --    20,000
                                    -------  -----     -----     -----   -------
        Total.....................  101,000  6,400     6,333     1,900   $26,000
                                    =======  =====     =====     =====   =======
</TABLE>
 
  The common stock of AMS has a par value of $1 per share. The common stock of
MSI has a par value of $1 per share, but has a stated value of $60 per share.
MSI must maintain $20,000 in shareholders' equity in order to retain its
contractors license.
 
9. LEASES
 
  Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as December 31, 1996
are as follows:
 
<TABLE>
<CAPTION>
                                                           AMS    MSI   COMBINED
                                                         ------- ------ --------
      <S>                                                <C>     <C>    <C>
      1997.............................................. $17,608 $6,912 $24,520
      1998..............................................  14,400  2,656  17,056
      1999..............................................  14,400     --  14,400
                                                         ------- ------ -------
                                                         $46,408 $9,568 $55,976
                                                         ======= ====== =======
</TABLE>
 
  In addition to the above lease commitments, the Company leases office and
warehouse space under a month-to-month operating lease, with monthly payments
of $3,200. Total rental expense for the year ended December 31, 1996 and the
six months ended June 30, 1997 was $76,409 and $38,421, respectively.
 
10. RELATED PARTY TRANSACTIONS
 
  The Company rents certain facilities from related parties. Total rent
expense for these facilities for the year ended December 31, 1996 and the six
months ended June 30, 1997 was $75,696 and $29,608, respectively. AMS rents
certain vehicles from a company affiliated through common ownership. Total
rent expense for these vehicles for the year ended December 31, 1996 and the
six months ended June 30, 1997 was $7,300 and $3,300, respectively.
 
  The Company obtains data processing and other services from a company
affiliated through common ownership. The total expense for these services for
the year ended December 31, 1996 and the six months ended June 30, 1997 was
$120,564 and $60,282, respectively.
 
11. EMPLOYEE BENEFIT PLAN
 
  Non-office employees are participants in a multi-employer defined
contribution plan pursuant to the collective bargaining agreement of the
union. Contributions for the year ended December 31, 1996 and the six months
ended June 30, 1997, were $91,316 and $57,512, respectively.
 
                                     F-102
<PAGE>
 
                    ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
12. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's combined financial position, results of operations or liquidity.
 
13. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents and
short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying combined balance sheets approximates
their fair value.
 
14. ACQUISITION OF COMPANY
 
  In May 1997, the Company signed a letter of intent with Group Maintenance
America Corp. (GroupMAC), whereby GroupMAC will acquire the Company in a
merger transaction for a combination of cash and common shares of GroupMAC
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC, subject to certain conditions including the negotiation of
definitive agreements and approval by Directors of both companies.
 
                                     F-103
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Callahan Roach Products and Publications, Inc.
 
  We have audited the accompanying balance sheet of Callahan Roach Products
and Publications, Inc. as of February 28, 1997, and the related statements of
operations, shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Callahan Roach Products
and Publications, Inc. as of February 28, 1997, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 30, 1997
 
                                     F-104
<PAGE>
 
                 CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                       FEBRUARY 28,  JUNE 30,
                                                           1997        1997
                                                       ------------ -----------
                                                                    (UNAUDITED)
<S>                                                    <C>          <C>
                        ASSETS
CURRENT ASSETS:
  Cash and cash equivalents...........................   $ 27,161    $105,939
  Accounts receivable.................................     10,104         --
  Inventories.........................................     44,567      46,837
                                                         --------    --------
    Total current assets..............................     81,832     152,776
PROPERTY AND EQUIPMENT, net...........................    126,374     117,843
                                                         --------    --------
    Total assets......................................   $208,206    $270,619
                                                         ========    ========
         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of
   long-term debt.....................................   $ 60,595    $ 60,629
  Accounts payable....................................     76,043      71,427
  Accrued expenses....................................     21,892      18,436
  Income taxes payable................................      2,576      14,407
                                                         --------    --------
    Total current liabilities.........................    161,106     164,899
LONG-TERM DEBT, net of current maturities.............     24,558      17,607
DEFERRED INCOME TAXES.................................      8,260       8,760
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock, $1 par value; 100,000 shares
   authorized;
   1,000 shares issued and outstanding................      1,000       1,000
  Retained earnings...................................     13,282      78,353
                                                         --------    --------
    Total shareholders' equity........................     14,282      79,353
                                                         --------    --------
    Total liabilities and shareholders' equity........   $208,206    $270,619
                                                         ========    ========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-105
<PAGE>
 
                 CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                             FOUR MONTHS ENDED
                                                 YEAR ENDED  ------------------
                                                FEBRUARY 28, JUNE 30,  JUNE 30,
                                                    1997       1996      1997
                                                ------------ --------  --------
                                                                (UNAUDITED)
<S>                                             <C>          <C>       <C>
REVENUES.......................................  $1,552,708  $639,702  $597,042
COST OF SERVICES...............................     310,816   108,479   130,710
                                                 ----------  --------  --------
  Gross profit.................................   1,241,892   531,223   466,332
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES...   1,238,075   438,965   379,697
                                                 ----------  --------  --------
  Income from operations.......................       3,817    92,258    86,635
OTHER INCOME (EXPENSES):
  Interest expense.............................      (9,196)   (2,187)   (5,197)
  Other........................................      (6,497)        9    (1,367)
                                                 ----------  --------  --------
   Income (loss) before income taxes...........     (11,876)   90,080    80,071
INCOME TAX PROVISION...........................         --     19,000    15,000
                                                 ----------  --------  --------
NET INCOME (LOSS)..............................  $  (11,876) $ 71,080  $ 65,071
                                                 ==========  ========  ========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-106
<PAGE>
 
                 CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                       STATEMENTS OF SHAREHOLDERS' EQUITY
 
 
<TABLE>
<CAPTION>
                                                                       TOTAL
                                                  COMMON RETAINED  SHAREHOLDERS'
                                                  STOCK  EARNINGS     EQUITY
                                                  ------ --------  -------------
<S>                                               <C>    <C>       <C>
BALANCE, February 28, 1996....................... $1,000 $ 25,158    $ 26,158
  Net loss.......................................    --   (11,876)    (11,876)
                                                  ------ --------    --------
BALANCE, February 28, 1997.......................  1,000   13,282      14,282
  Net income (unaudited).........................    --    65,071      65,071
                                                  ------ --------    --------
BALANCE, June 30, 1997 (unaudited)............... $1,000 $ 78,353    $ 79,353
                                                  ====== ========    ========
</TABLE>
 
 
 
 
 
    The accompanying notes are an integral part of the financial statements.
 
                                     F-107
<PAGE>
 
                 CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                        FOUR MONTHS ENDED
                                        YEAR ENDED  ---------------------------
                                       FEBRUARY 28, JUNE 30,  JUNE 30,
                                           1997       1996      1997
                                       ------------ --------  --------
                                                       (UNAUDITED)
<S>                                    <C>          <C>       <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)....................  $ (11,876)  $ 71,080  $ 65,071
 Adjustments to reconcile net income
  (loss) to net cash
  provided by operating activities:
   Depreciation.......................     26,587      2,395    17,872
   Deferred income taxes..............        --         --        500
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable..............     (8,890)    (9,983)   10,104
     Inventories......................      7,673      8,551    (2,270)
    Increase (decrease) in--
     Accounts payable.................     (4,555)   (54,180)   (4,616)
     Accrued expenses.................     14,051      2,462    (3,456)
     Income taxes payable.............       (589)    18,858    11,831
                                        ---------   --------  --------
      Net cash provided by operating
       activities.....................     22,401     39,183    95,036
                                        ---------   --------  --------
CASH FLOWS USED IN INVESTING
 ACTIVITIES:
 Purchases of property and equipment..   (103,577)   (43,945)   (9,341)
                                        ---------   --------  --------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net borrowings (repayments) on bank
  line of credit......................     35,701      1,535      (443)
 Proceeds from long-term debt.........     46,100     28,174       --
 Payment on long-term debt............    (11,405)      (723)   (6,474)
                                        ---------   --------  --------
      Net cash provided by (used in)
       financing activities...........     70,396     28,986    (6,917)
                                        ---------   --------  --------
NET INCREASE (DECREASE) IN CASH.......    (10,780)    24,224    78,778
CASH AND CASH EQUIVALENTS, beginning
 of period............................     37,941     37,941    27,161
                                        ---------   --------  --------
CASH AND CASH EQUIVALENTS, end of
 period...............................  $  27,161   $ 62,165  $105,939
                                        =========   ========  ========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-108
<PAGE>
 
                CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Callahan Roach Products and Publications, Inc., (the Company) is primarily
engaged in the business of selling marketing products and pricing models to
independent service companies which install and service heating and air
conditioning systems nationally.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  Interim financial statements as of June 30, 1997 and for the four months
ended June 30, 1996 and 1997, are unaudited, and certain information and
footnote disclosures, normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary to fairly present the financial position,
results of operations and cash flows with respect to the interim financial
statements, have been included. The results of operations for the interim
periods are not necessarily indicative of the results for the entire fiscal
year.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue and Cost Recognition
 
  Revenues from service contracts are recognized as services are performed.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest and taxes were $9,196 and
$3,123, respectively, for the year ended February 28, 1997.
 
 Inventories
 
  Inventories consists of supplies used in providing the Company's products
and services. The inventory is valued at the lower of cost or market, with
cost determined on a first-in, first-out (FIFO) basis.
 
 Property, Equipment and Depreciation
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
                                     F-109
<PAGE>
 
                CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 Income Taxes
 
  The Company uses the asset and liability method to account for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
 New Accounting Pronouncement
 
  Effective March 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
2. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Accrued expenses consist of the following at February 28, 1997:
 
<TABLE>
   <S>                                                                  <C>
   Accrued payroll and related expense................................. $14,051
   Other accrued expenses..............................................   7,841
                                                                        -------
                                                                        $21,892
                                                                        =======
</TABLE>
 
3. PROPERTY AND EQUIPMENT
 
  A summary of property and equipment at February 28, 1997 is as follows:
 
<TABLE>
<CAPTION>
                                                           ESTIMATED
                                                          USEFUL LIVES
                                                          ------------
   <S>                                                    <C>          <C>
   Furniture and fixtures................................  3-7 years   $179,641
   Less accumulated depreciation.........................               (53,267)
                                                                       --------
     Property and equipment, net.........................              $126,374
                                                                       ========
</TABLE>
 
4. INCOME TAXES
 
  There is no Federal income tax provision as losses were incurred and a
valuation allowance has been established against future benefits deriving from
the carryforward of these losses. The deferred income tax liability results
primarily from tax depreciation in excess of book depreciation on property and
equipment.
 
                                     F-110
<PAGE>
 
                CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
5. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following at February 28, 1997:
 
<TABLE>
   <S>                                                                  <C>
   Credit facility in the amount of $100,000 with a bank, bearing
    interest at 12.75%................................................  $42,584
   Equipment loans payable to financial institutions, interest varying
    from 12% to 19%, collateralized by certain equipment, payable in
    monthly installments including interest,
    final installment due February 2000...............................   42,569
                                                                        -------
                                                                         85,153
   Less short-term borrowings and current maturities..................  (60,595)
                                                                        -------
                                                                        $24,558
                                                                        =======
</TABLE>
 
  The Company has a revolving credit agreement with a bank to provide
borrowings up to $100,000. The revolving credit agreement is collateralized by
the personal guarantees of shareholders. Borrowings under the agreement in
effect on February 28, 1997, bear interest at 12.5%. Borrowings outstanding at
February 28, 1997 were $42,584.
 
  Maturities of short- and long-term debt are as follows:
 
<TABLE>
<CAPTION>
   YEAR ENDING
   FEBRUARY 28,
   ------------
   <S>                                                                   <C>
    1998................................................................ $60,595
    1999................................................................  16,375
    2000................................................................   8,183
                                                                         -------
                                                                         $85,153
                                                                         =======
</TABLE>
 
6. COMMITMENTS AND CONTINGENCIES
 
  The Company may be involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
 
7. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
and short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheets approximates their fair
value.
 
8. SUBSEQUENT EVENT
 
  Effective July 1, 1997, Group Maintenance America Corp. (GroupMAC) acquired
the Company in a merger transaction for a combination of cash, preferred stock
and common stock of GroupMAC. All of the preferred shares issued in connection
with the acquisition of the Company will be redeemed for cash concurrent with
the consummation of the initial public offering of the common stock of
GroupMAC.
 
                                     F-111
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors Central Carolina Air Conditioning Company:
 
  We have audited the accompanying balance sheets of Central Carolina Air
Conditioning Company (the Company) as of October 31, 1996 and June 30, 1997,
and the related statements of operations, shareholders' equity and cash flows
for the year ended October 31, 1996 and the eight months ended June 30, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Central Carolina Air
Conditioning Company as of October 31, 1996 and June 30, 1997, and the results
of its operations and its cash flows for the year ended October 31, 1996 and
the eight months ended June 30, 1997 in conformity with generally accepted
accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 18, 1997
 
                                     F-112
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                         OCTOBER 31,  JUNE 30,
                                                            1996        1997
                                                         ----------- ----------
<S>                                                      <C>         <C>
                         ASSETS
CURRENT ASSETS:
 Cash and cash equivalents.............................. $  440,289  $  457,132
 Accounts receivable....................................    627,783     867,913
 Inventories............................................    292,215     246,225
 Costs and estimated earnings in excess of billings on
  uncompleted contracts.................................    113,653     168,226
 Due from related parties...............................    505,003     175,448
 Prepaid expenses and other current assets..............    240,089     219,149
                                                         ----------  ----------
  Total current assets..................................  2,219,032   2,134,093
PROPERTY AND EQUIPMENT, net.............................    459,553     674,948
OTHER NONCURRENT ASSETS.................................     37,098      38,498
                                                         ----------  ----------
  Total assets.......................................... $2,715,683  $2,847,539
                                                         ==========  ==========
          LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
 Short-term borrowings and current maturities of long-
  term debt............................................. $   64,283  $      979
 Accounts payable.......................................    322,848     274,887
 Accrued expenses.......................................    261,300     232,751
 Billings in excess of costs and estimated earnings on
  uncompleted contracts.................................     48,399      39,131
 Deferred service contract revenue......................    755,047     762,821
                                                         ----------  ----------
  Total current liabilities.............................  1,451,877   1,310,569
DEFERRED SERVICE CONTRACT REVENUE.......................    211,397     204,304
DEFERRED COMPENSATION LIABILITY.........................     55,373      60,670
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
 Common stock--$10 par value; 2,000 shares authorized,
  issued and outstanding................................     20,000      20,000
 Additional paid-in capital.............................     23,140      23,140
 Retained earnings......................................    953,896   1,228,856
                                                         ----------  ----------
  Total shareholders' equity............................    997,036   1,271,996
                                                         ----------  ----------
  Total liabilities and shareholders' equity............ $2,715,683  $2,847,539
                                                         ==========  ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-113
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          EIGHT MONTHS ENDED
                                            YEAR ENDED         JUNE 30,
                                            OCTOBER 31,  ----------------------
                                               1996         1996        1997
                                            -----------  ----------  ----------
                                                       (UNAUDITED)
<S>                                         <C>          <C>         <C>
REVENUES................................... $8,161,356   $5,139,628  $5,463,051
COST OF SERVICES...........................  5,182,045    3,267,848   3,224,802
                                            ----------   ----------  ----------
  Gross profit.............................  2,979,311    1,871,780   2,238,249
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES..................................  2,598,253    1,672,596   1,648,388
                                            ----------   ----------  ----------
  Income from operations...................    381,058      199,184     589,861
OTHER INCOME (EXPENSE):
 Interest expense..........................     (9,841)      (6,073)     (3,087)
 Interest income...........................     30,219       17,611      28,472
 Other.....................................    (40,166)      13,487      11,233
                                            ----------   ----------  ----------
NET INCOME................................. $  361,270   $  224,209  $  626,479
                                            ==========   ==========  ==========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-114
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                       STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                            ADDITIONAL                 TOTAL
                                    COMMON   PAID-IN    RETAINED   SHAREHOLDERS'
                                     STOCK   CAPITAL    EARNINGS      EQUITY
                                    ------- ---------- ----------  -------------
<S>                                 <C>     <C>        <C>         <C>
BALANCE, October 31, 1995.......... $20,000  $23,140   $  973,595   $1,016,735
 Net income........................     --       --       361,270      361,270
 Distributions to shareholders.....     --       --      (380,969)    (380,969)
                                    -------  -------   ----------   ----------
BALANCE, October 31, 1996..........  20,000   23,140      953,896      997,036
 Net income........................     --       --       626,479      626,479
 Distributions to shareholders.....     --       --      (351,519)    (351,519)
                                    -------  -------   ----------   ----------
BALANCE, June 30, 1997............. $20,000  $23,140   $1,228,856   $1,271,996
                                    =======  =======   ==========   ==========
</TABLE>
 
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-115
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                           EIGHT MONTHS ENDED
                                             YEAR ENDED         JUNE 30,
                                             OCTOBER 31,  ----------------------
                                                1996         1996        1997
                                             -----------  -----------  ---------
                                                          (UNAUDITED)
<S>                                          <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income................................. $  361,270   $  224,209   $ 626,479
 Adjustments to reconcile net income to net
  cash
  provided by (used in) operating
  activities:
   Depreciation.............................    200,548      140,707     142,535
   Gain on sales of property and equipment..    (13,811)      (3,344)        --
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable....................   (144,095)    (243,215)   (240,130)
     Inventories............................      6,516       62,058      45,990
     Costs and estimated earnings in excess
      of billings on uncompleted contracts..    (73,301)     (52,611)    (54,573)
     Due from related parties...............   (340,792)    (481,044)    329,555
     Prepaid expenses and other current
      assets................................    (55,800)      91,214      20,940
     Other noncurrent assets................      1,750        1,050      (1,400)
    Increase (decrease) in--
     Accounts payable.......................     75,239        7,192     (47,961)
     Accrued expenses.......................    (82,481)    (123,859)    (28,549)
     Billings in excess of costs and
      estimated earnings on uncompleted
      contracts.............................     31,913       71,245      (9,268)
     Deferred service contract revenue......     17,670      (31,809)        681
     Deferred compensation liability........      7,945        5,297       5,297
                                             ----------   ----------   ---------
      Net cash provided by (used in)
       operating activities.................     (7,429)    (332,910)    789,596
                                             ----------   ----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment........   (244,128)    (266,117)   (357,930)
 Proceeds from sales of property and
  equipment.................................     25,615        3,344         --
                                             ----------   ----------   ---------
      Net cash used in investing activities.   (218,513)    (262,773)   (357,930)
                                             ----------   ----------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from short- and long-term debt....    125,000      125,000         --
 Payments of short- and long-term debt......   (120,203)     (14,655)    (63,304)
 Distributions to shareholders..............   (380,969)    (196,994)   (351,519)
                                             ----------   ----------   ---------
      Net cash used in financing activities.   (376,172)     (86,649)   (414,823)
                                             ----------   ----------   ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS................................   (602,114)    (682,332)     16,843
CASH AND CASH EQUIVALENTS, beginning of
 period.....................................  1,042,403    1,042,403     440,289
                                             ----------   ----------   ---------
CASH AND CASH EQUIVALENTS, end of period.... $  440,289   $  360,071   $ 457,132
                                             ==========   ==========   =========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-116
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                         NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
 
  Central Carolina Air Conditioning Company (the Company) is primarily engaged
in the installation and servicing of heating and air conditioning systems for
residential and commercial customers in the Greensboro and Winston Salem,
North Carolina areas.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim financial statements for the eight months ended June 30, 1996
are unaudited, and certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the interim financial statements, have been
included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from construction contracts are recognized on a percentage
of completion basis using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less to be
cash equivalents. Cash payments for interest were $9,841 and $3,087 for the
year ended October 31, 1996 and the eight months ended June 30, 1997,
respectively.
 
 Inventories
 
  Inventories consist of parts and supplies used mainly in the service portion
of the Company's operation. The inventory is valued at the lower of cost or
market, with cost determined on a first-in, first-out (FIFO) basis.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated life of the asset.
 
 
                                     F-117
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Warranty Costs
 
  The Company warrants labor for the first year after installation on new air
conditioning and heating units. The Company also offers an extended service
warranty on sales of air conditioning and heating units, for coverage up to
five years after installation. The Company generally warrants labor for 90
days after servicing of existing air conditioning and heating units. A reserve
for warranty costs is recorded upon completion of installation or service.
 
 Income Taxes
 
  The shareholders of the Company have elected to be taxed for federal and
North Carolina tax purposes as an S Corporation whereby the shareholders'
respective equitable shares in the taxable income of the Company are
reportable on their individual tax returns. The Company makes distributions to
the shareholders' each year at least in amounts necessary to pay personal
income tax payable on the Company's taxable income.
 
 New Accounting Pronouncement
 
  Effective November 1, 1995, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Prepaid expenses and other current assets consists of the following:
 
<TABLE>
<CAPTION>
                                                           OCTOBER 31, JUNE 30,
                                                              1996       1997
                                                           ----------- --------
   <S>                                                     <C>         <C>
   Prepaid expenses.......................................  $ 96,620   $ 69,732
   Cash value of life insurance...........................   119,331    130,801
   Other current assets...................................    24,138     18,616
                                                            --------   --------
                                                            $240,089   $219,149
                                                            ========   ========
</TABLE>
 
  Cash value of life insurance represents the cash value of six life insurance
policies.
 
  Accrued expenses consists of the following:
 
<TABLE>
   <S>                                                        <C>      <C>
   Accrued payroll costs and benefits........................ $124,208 $175,831
   Accrued bonus and profit sharing..........................   95,195      --
   Other accrued expenses....................................   41,897   56,920
                                                              -------- --------
                                                              $261,300 $232,751
                                                              ======== ========
</TABLE>
 
                                     F-118
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                                           OCTOBER 31, JUNE 30,
                                                              1996       1997
                                                           ----------- --------
   <S>                                                     <C>         <C>
   Costs incurred.........................................  $464,107   $526,315
   Estimated earnings recognized..........................   177,188    269,364
                                                            --------   --------
                                                             641,295    795,679
   Less billings on contracts.............................   576,041    666,584
                                                            --------   --------
                                                            $ 65,254   $129,095
                                                            ========   ========
</TABLE>
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
<TABLE>
<CAPTION>
                                                          OCTOBER 31, JUNE 30,
                                                             1996       1997
                                                          ----------- --------
   <S>                                                    <C>         <C>
   Costs and estimated earnings in excess of billings on
    uncompleted contracts...............................   $113,653   $168,226
   Billings in excess of costs and estimated earnings on
    uncompleted contracts...............................    (48,399)   (39,131)
                                                           --------   --------
                                                           $ 65,254   $129,095
                                                           ========   ========
</TABLE>
 
5. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and equipment
are as follows:
 
<TABLE>
<CAPTION>
                                          ESTIMATED   OCTOBER 31,   JUNE 30,
                                         USEFUL LIVES    1996         1997
                                         ------------ -----------  -----------
   <S>                                   <C>          <C>          <C>
   Service and other vehicles...........   4-7 years  $ 1,026,498  $ 1,320,858
   Machinery and equipment..............  5-10 years      203,362      206,399
   Office equipment, fixtures and
    fixtures............................  5-10 years      373,146      392,231
   Leasehold improvements...............         --       294,877      306,087
                                                      -----------  -----------
                                                        1,897,883    2,225,575
   Less accumulated depreciation........               (1,438,330)  (1,550,627)
                                                      -----------  -----------
                                                      $   459,553  $   674,948
                                                      ===========  ===========
</TABLE>
 
                                     F-119
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
6. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                          OCTOBER 31, JUNE 30,
                                                             1996       1997
                                                          ----------- --------
   <S>                                                    <C>         <C>
   Revolving line of credit with a bank, with a maximum
    amount
    of $200,000 through February 1, 1997; interest
    accrues at prime
    (8.25% as of October 31, 1996) and is payable
    monthly;
    unpaid principal due on demand.......................   $50,000     $--
   Note payable to bank, due in monthly installments of
    $1,167, with interest
    of 8% per annum and secured by vehicles; matures July
    15, 1997.............................................     9,998      979
   Note payable to bank, due in monthly installments of
    $1,093, with interest
    of 7.25% per annum and secured by vehicles; matures
    February 15, 1997....................................     4,285      --
                                                            -------     ----
                                                            $64,283     $979
                                                            =======     ====
</TABLE>
 
  The Company had a revolving line of credit with a bank to provide unsecured
borrowings of up to $200,000. Interest accrued at prime and was payable
monthly. This agreement matured in February 1997. Upon maturity, the Company
obtained another revolving line of credit to provide borrowings of up to
$300,000 with a loan maturity date of March 1, 1998. Other terms of the
agreement were unchanged.
 
7. LEASES
 
  The Company leases its office building and warehouse from a shareholder
under a 20-year lease terminating in October 2016. The rent is $9,125 for the
first three years and increases by 2.5% at the beginning of the fourth,
seventh, tenth, thirteenth, sixteenth and nineteenth years.
 
  Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of October 31, 1996
are as follows:
 
<TABLE>
   <S>                                                                <C>
   1997.............................................................. $  109,500
   1998..............................................................    109,500
   1999..............................................................    109,500
   2000..............................................................    112,238
   2001..............................................................    112,238
   Thereafter........................................................  1,799,369
                                                                      ----------
                                                                      $2,352,345
                                                                      ==========
</TABLE>
 
8. RELATED PARTY TRANSACTIONS
 
  The Company leases its office building and warehouse from shareholders of
the Company. For the year ended October 31, 1996 and the eight months ended
June 30, 1997, the Company paid $119,526 and $81,741, respectively, related to
these leases. As of October 31, 1996 and June 30, 1997, the Company has
unsecured advances to various shareholders totaling $444,933 and $136,400,
respectively. In addition, the Company has a mortgage receivable from the
President and shareholder of $60,070 and $39,048 as of October 31, 1996 and
June 30, 1997, respectively. These amounts are included in the amounts due
from related parties in the accompanying balance sheets.
 
                                     F-120
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
9. EMPLOYEE BENEFIT PLAN
 
  The Company maintains a voluntary 401(k) plan (the Plan) covering its
qualified employees. Employees may choose to defer up to 10% of their
compensation during the Plan year, not to exceed Internal Revenue Service
limitations, by contributing to the Plan. The Company matches 100% of each
employee's contributions up to a maximum of 5% of the employee's gross
earnings. Contributions made by the Company of $18,902 and $10,938 were
charged to operations in the year ended October 31, 1996 and the eight months
ended June 30, 1997, respectively.
 
10. COMMITMENTS AND CONTINGENCIES
 
  The Company may be involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
 
11. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents and
short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheets approximates their fair
value.
 
12. ACQUISITION OF COMPANY
 
  In May 1997, the Company signed a letter of intent with Group Maintenance
America Corp. (GroupMAC), whereby GroupMAC will acquire the Company in a
merger transaction for a combination of cash and common shares of GroupMAC
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC, subject to certain conditions including the negotiation of
definitive agreements and approval by Directors of both companies.
 
                                     F-121
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Hallmark Air Conditioning, Inc.:
 
  We have audited the accompanying consolidated balance sheets of Hallmark Air
Conditioning, Inc. and subsidiary (the Company) as of February 28, 1997 and
May 31, 1997, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year ended February 28, 1997 and
the three months ended May 31, 1997. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Hallmark
Air Conditioning, Inc. and subsidiary as of February 28, 1997 and May 31,
1997, and the results of their operations and their cash flows for the year
ended February 28, 1997 and the three months ended May 31, 1997, in conformity
with generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 11, 1997
 
                                     F-122
<PAGE>
 
                 HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                         FEBRUARY 28,  MAY 31,
                                                             1997        1997
                                                         ------------ ----------
<S>                                                      <C>          <C>
                        ASSETS
CURRENT ASSETS:
  Cash and cash equivalents............................   $  203,739  $  229,466
  Accounts receivable, net of allowance for doubtful
   accounts
   of $4,039 and $8,078, respectively..................      139,143     220,122
  Inventories..........................................      359,380     395,684
  Due from related parties.............................       43,977      38,140
  Deferred income taxes................................      163,673     160,527
  Prepaid expenses and other current assets............      244,257     184,829
                                                          ----------  ----------
    Total current assets...............................    1,154,169   1,228,768
PROPERTY AND EQUIPMENT, net............................      224,504     203,424
GOODWILL, net of accumulated amortization of $6,418 and
 $8,344, respectively..................................      109,113     107,187
DUE FROM RELATED PARTIES...............................       29,476      29,476
OTHER NONCURRENT ASSETS................................      131,990     128,040
                                                          ----------  ----------
    Total assets.......................................   $1,649,252  $1,696,895
                                                          ==========  ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of long-
   term debt...........................................   $   46,989  $   31,896
  Current obligations under capital leases.............       69,628      69,628
  Accounts payable.....................................       75,655     224,327
  Accrued expenses.....................................      146,658     197,154
  Deferred service contract revenue....................      310,927     294,453
                                                          ----------  ----------
    Total current liabilities..........................      649,857     817,458
LONG-TERM DEBT, net of current maturities..............      181,570     191,434
OBLIGATIONS UNDER CAPITAL LEASES, net of current
 maturities............................................       54,733      45,440
DEFERRED SERVICE CONTRACT REVENUE......................      159,708     144,204
DEFERRED INCOME TAXES..................................       22,429      19,283
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock--$100 par value; 500 shares authorized;
   180 shares issued and outstanding...................       18,000      18,000
  Retained earnings....................................      560,889     459,761
  Net unrealized gain on marketable securities.........        2,066       1,315
                                                          ----------  ----------
    Total shareholders' equity.........................      580,955     479,076
                                                          ----------  ----------
    Total liabilities and shareholders' equity.........   $1,649,252  $1,696,895
                                                          ==========  ==========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                     F-123
<PAGE>
 
                 HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED
                                   YEAR ENDED          MAY 31,
                                   FEBRUARY 28, ----------------------
                                       1997        1996        1997
                                   ------------ ----------  ----------
                                              (UNAUDITED)
<S>                                <C>          <C>         <C>         
REVENUES..........................  $6,516,181  $1,642,422  $1,558,526
COST OF SERVICES..................   3,461,490     879,293     826,626
                                    ----------  ----------  ----------
  Gross profit....................   3,054,691     763,129     731,900
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES..........   3,045,942     676,118     811,982
                                    ----------  ----------  ----------
  Income (loss) from operations...       8,749      87,011     (80,082)
OTHER INCOME (EXPENSE):
  Interest expense................     (30,647)     (7,436)    (30,135)
  Interest income.................      16,106       4,082      11,652
  Other...........................       3,227     (11,319)        --
                                    ----------  ----------  ----------
   Income (loss) before income tax
    provision.....................      (2,565)     72,338     (98,565)
INCOME TAX PROVISION..............      18,114      12,120       2,563
                                    ----------  ----------  ----------
NET INCOME (LOSS).................  $  (20,679) $   60,218  $ (101,128)
                                    ==========  ==========  ==========
</TABLE>
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                     F-124
<PAGE>
 
                 HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                          NET
                                                       UNREALIZED
                                                        GAIN ON       TOTAL
                                    COMMON  RETAINED   MARKETABLE SHAREHOLDERS'
                                     STOCK  EARNINGS   SECURITIES    EQUITY
                                    ------- ---------  ---------- -------------
<S>                                 <C>     <C>        <C>        <C>
BALANCE, February 29, 1996......... $18,000 $ 581,568    $  853     $ 600,421
  Net loss.........................     --    (20,679)      --        (20,679)
  Net unrealized gain on marketable
   securities......................     --        --      1,213         1,213
                                    ------- ---------    ------     ---------
BALANCE, February 28, 1997.........  18,000   560,889     2,066       580,955
  Net loss.........................     --   (101,128)      --       (101,128)
  Net unrealized loss on marketable
   securities......................     --        --       (751)         (751)
                                    ------- ---------    ------     ---------
BALANCE, May 31, 1997.............. $18,000 $ 459,761    $1,315     $ 479,076
                                    ======= =========    ======     =========
</TABLE>
 
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                     F-125
<PAGE>
 
                 HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                             YEAR ENDED         MAY 31,
                                            FEBRUARY 28, ---------------------
                                                1997        1996       1997
                                            ------------ ----------- ---------
                                                         (UNAUDITED)
<S>                                         <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss).........................  $ (20,679)   $  60,218  $(101,128)
 Adjustments to reconcile net income (loss)
  to net cash
  provided by (used in) operating
  activities:
   Depreciation and amortization...........    171,417       33,426     40,806
   Deferred income tax benefit.............       (114)         --         --
   Changes in operating assets and
    liabilities, net of effect of
    acquisitions accounted for as
    purchases:
    (Increase) decrease in--
     Accounts receivable...................     17,294     (107,706)   (80,979)
     Inventories...........................     (7,915)     (70,635)   (36,304)
     Due from related parties..............     10,175       46,610      5,837
     Prepaid expenses and other current
      assets...............................    (65,977)      88,660     58,677
    Increase (decrease) in--
     Accounts payable......................    (21,832)     105,401    148,672
     Accrued expenses......................   (105,520)      61,281     50,496
     Deferred service contract revenue.....    (41,539)       6,911    (31,978)
                                             ---------    ---------  ---------
      Net cash provided by (used in)
       operating activities................    (64,690)     224,166     54,099
                                             ---------    ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Cash acquired through acquisition.........     36,881       36,881        --
 Purchases of property and equipment.......    (35,742)     (12,629)   (13,850)
 Proceeds from sales of property and
  equipment................................     15,831          --         --
 Payment for covenant not to compete.......   (130,000)    (130,000)       --
 Proceeds from redemption of marketable
  securities, net..........................      1,663       30,475        --
                                             ---------    ---------  ---------
      Net cash used in investing
       activities..........................   (111,367)     (75,273)   (13,850)
                                             ---------    ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from long-term debt..............     16,010          --       9,864
 Payments of long-term debt................    (23,649)      (1,681)   (15,093)
 Payments of obligations under capital
  leases...................................    (66,055)         --      (9,293)
                                             ---------    ---------  ---------
      Net cash used in financing
       activities..........................    (73,694)      (1,681)   (14,522)
                                             ---------    ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS...............................   (249,751)    (147,212)    25,727
CASH AND CASH EQUIVALENTS, beginning of
 period....................................    453,490      453,490    203,739
                                             ---------    ---------  ---------
CASH AND CASH EQUIVALENTS, end of period...  $ 203,739    $ 600,702  $ 229,466
                                             =========    =========  =========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                     F-126
<PAGE>
 
                HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
 
  Hallmark Air Conditioning, Inc. and subsidiary (the Company) is primarily
engaged in the installation and servicing of heating and air conditioning
systems for residential and light commercial customers in Houston and San
Antonio, Texas.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principles of Consolidation
 
  The consolidated financial statements include the financial statements of
Hallmark Air Conditioning, Inc. (Hallmark) and its wholly-owned subsidiary,
Jerry Albert Air Conditioning, Inc. (Jerry Albert). All significant
intercompany balances and transactions have been eliminated in consolidation.
 
 Interim Financial Information
 
  The interim consolidated financial statements for the three months ended May
31, 1996 are unaudited, and certain information and footnote disclosures,
normally included in financial statements prepared in accordance with
generally accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the consolidated interim financial statements, have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
 
 Revenue Recognition
 
  Revenue is recognized upon completion of service. Revenues on service and
maintenance contracts are recognized over the life of the contract.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest and taxes were $32,261 and
$54,300, respectively, for the year ended February 28, 1997, and $28,310 and
$-0-, respectively, for the three months ended May 31, 1997.
 
 Inventories
 
  Inventories consist primarily of purchased materials and supplies. The
Company uses the first-in, first-out (FIFO) cost method to value its
inventories.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated useful life of the asset.
 
 
                                     F-127
<PAGE>
 
                HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statement of operations.
 
 Income Taxes
 
  The Company uses the asset and liability method to account for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
 New Accounting Pronouncement
 
  Effective March 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Prepaid expenses and other current assets consists of the following:
 
<TABLE>
<CAPTION>
                                                          FEBRUARY 28, MAY 31,
                                                              1997       1997
                                                          ------------ --------
<S>                                                       <C>          <C>
  Prepaid expenses.......................................   $ 36,484   $ 14,313
  Cash value of life insurance...........................    131,434     93,387
  Marketable securities..................................     30,015     30,805
  Federal income taxes receivable........................     46,324     46,324
                                                            --------   --------
                                                            $244,257   $184,829
                                                            ========   ========
  Other noncurrent assets consists of the following:
  Covenant not to compete, net of accumulated
   amortization of
   $10,833 and $14,033, respectively.....................   $119,167   $115,967
  Other noncurrent assets................................     12,823     12,073
                                                            --------   --------
                                                            $131,990   $128,040
                                                            ========   ========
  Accrued expenses consists of the following:
  Accrued payroll costs and benefits.....................   $100,330   $147,290
  Other accrued expenses.................................     46,328     49,864
                                                            --------   --------
                                                            $146,658   $197,154
                                                            ========   ========
</TABLE>
 
 
                                     F-128
<PAGE>
 
                HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                           ESTIMATED   FEBRUARY 28,  MAY 31,
                                          USEFUL LIVES     1997        1997
                                          ------------ ------------ ----------
   <S>                                    <C>          <C>          <C>
   Service and other vehicles............   4-7 years   $  731,913  $  756,447
   Machinery and equipment...............  5-10 years      303,791     265,097
   Office equipment, furniture and
    fixtures.............................  5-10 years       43,643      43,643
   Leasehold improvements................         --       122,205     122,205
                                                        ----------  ----------
                                                         1,201,552   1,187,392
   Less accumulated depreciation.........                 (977,048)   (983,968)
                                                        ----------  ----------
                                                        $  224,504  $  203,424
                                                        ==========  ==========
</TABLE>
 
  During the year ended February 28, 1997 and the three months ended May 31,
1997, the Company acquired $74,506 and $31,387, respectively, of property and
equipment in exchange for obligations under capital leases.
 
5. GOODWILL AND OTHER ASSETS
 
  Goodwill represents the excess of the aggregate purchase price over the fair
value of net assets acquired and is amortized on a straight-line basis over a
period of 40 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating cash
flows of the acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows compared to
the carrying value of goodwill. The assessment of the recoverability of
goodwill will be impacted if estimated future operating cash flows are not
achieved.
 
  Other assets include a covenant not to compete related to the acquisition of
Jerry Albert. The covenant not to compete is being amortized on a straight-
line basis over the life of the covenant, which is five years.
 
6. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                        FEBRUARY 28, MAY 31,
                                                            1997       1997
                                                        ------------ --------
   <S>                                                  <C>          <C>
   Revolving bank line of credit; borrowings not to
    exceed $175,000; interest accrues at 8.75% and is
    payable monthly; unpaid principal due in October
    1997...............................................   $ 10,000   $    --
   Equipment installment notes to a bank, interest
    varying from 8.5% to 9.5%; payable in monthly
    installments of various amounts, including
    interest, through July 1999; secured by certain
    machinery and equipment............................     28,402     36,596
   Note payable to the former shareholder relating to
    the purchase of all of the shares of Jerry Albert;
    interest accrues at 8.5%; payable in monthly
    installments, including interest, of $2,480, final
    installment due May 2006...........................    190,157    186,734
                                                          --------   --------
     Total short- and long-term debt...................    228,559    223,330
   Less short-term borrowings and current maturities...    (46,989)   (31,896)
                                                          --------   --------
                                                          $181,570   $191,434
                                                          ========   ========
</TABLE>
 
                                     F-129
<PAGE>
 
                 HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
  The aggregate maturities of short- and long-term debt as of February 28, 1997
are as follows:
 
<TABLE>
   <S>                                                                  <C>
   1998................................................................ $ 46,989
   1999................................................................   33,798
   2000................................................................   31,263
   2001................................................................   29,756
   2002................................................................   29,756
   Thereafter..........................................................   56,997
                                                                        --------
                                                                        $228,559
                                                                        ========
</TABLE>
 
7. INCOME TAXES
 
  Income tax expense consists of the following:
 
<TABLE>
<CAPTION>
                                                                          THREE
                                                                         MONTHS
                                                             YEAR ENDED   ENDED
                                                            FEBRUARY 28, MAY 31,
                                                                1997      1997
                                                            ------------ -------
   <S>                                                      <C>          <C>
   Federal:
     Current...............................................   $ 7,976    $  --
     Deferred..............................................      (114)      --
   State:
     Current...............................................    10,252     2,563
     Deferred..............................................       --        --
                                                              -------    ------
                                                              $18,114    $2,563
                                                              =======    ======
</TABLE>
 
  Total income tax expense differs from the amount computed by applying the
U.S. federal statutory income tax rate of 34% to loss before income tax
provision as a result of the following:
 
<TABLE>
<CAPTION>
                                                         FEBRUARY 28, MAY 31,
                                                             1997       1997
                                                         ------------ --------
   <S>                                                   <C>          <C>
   Benefit at the statutory rate........................   $  (872)   $(33,512)
   Increase resulting from:
     State income taxes, net of federal benefit.........    10,252       2,563
     Nondeductible expenses.............................     3,468       1,192
     Increase in valuation allowance....................        --      34,239
     Other..............................................     5,266      (1,919)
                                                           -------    --------
                                                           $18,114    $  2,563
                                                           =======    ========
</TABLE>
 
 
                                     F-130
<PAGE>
 
                HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
  The components of the deferred income tax assets and liabilities are as
follows:
 
<TABLE>
<CAPTION>
                                                          FEBRUARY 28, MAY 31,
                                                              1997       1997
                                                          ------------ --------
   <S>                                                    <C>          <C>
   Deferred income tax assets:
     Net operating loss carryforward.....................   $    --    $ 31,043
     Deferred service contract revenues..................    133,160    135,757
     Accrued customer protection.........................     15,358     13,131
     Allowance for doubtful accounts.....................      1,288      2,747
     Other...............................................     13,867     12,088
     Valuation allowance.................................        --     (34,239)
                                                            --------   --------
       Total deferred income tax asset...................    163,673    160,527
                                                            --------   --------
   Deferred income tax liabilities:
     Depreciation........................................     19,284     19,283
     Other...............................................      3,145        --
                                                            --------   --------
       Total deferred income tax liability...............     22,429     19,283
                                                            --------   --------
       Net deferred income tax asset.....................   $141,244   $141,244
                                                            ========   ========
</TABLE>
 
  Management believes it is more likely than not the Company will realize the
benefits of the net deferred income tax asset.
 
8. LEASES
 
  The Company is obligated under various capital leases, for service and other
vehicles, that expire at various dates through June 2000. At February 28, 1997
and May 31, 1997, the gross amount of property and equipment and related
accumulated amortization recorded under capital leases were as follows:
 
<TABLE>
<CAPTION>
                                                         FEBRUARY 28,  MAY 31,
                                                             1997       1997
                                                         ------------ ---------
   <S>                                                   <C>          <C>
   Service and other vehicles...........................  $ 259,143   $ 290,530
   Less accumulated depreciation........................   (127,548)   (141,290)
                                                          ---------   ---------
                                                          $ 131,595   $ 149,240
                                                          =========   =========
</TABLE>
 
  The Company also has several noncancelable operating leases, primarily for
service and other vehicles, that expire over the next three years. These
leases generally contain renewal options for periods ranging from three to
five years and require the Company to pay all executory costs such as
maintenance and insurance. Rental payments include minimum rentals plus
contingent rentals based on mileage. Rental expense for these operating leases
during the year ended February 28, 1997 and the three months ended May 31,
1997 was approximately $18,600 and $5,000, respectively.
 
 
                                     F-131
<PAGE>
 
                HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
  Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) and future minimum
capital lease payments as of February 28, 1997 are as follows:
 
<TABLE>
<CAPTION>
                                                              CAPITAL  OPERATING
                                                               LEASES   LEASES
                                                              -------- ---------
   <S>                                                        <C>      <C>
   Year ending February 28 or 29,
     1998.................................................... $ 69,628  $11,789
     1999....................................................   35,699   59,928
     2000....................................................   19,034      --
                                                              --------  -------
     Total minimum lease payments............................  124,361  $71,717
                                                                        =======
   Less current obligations under capital leases.............   69,628
                                                              --------
     Obligations under capital leases, net................... $ 54,733
                                                              ========
</TABLE>
 
  The Company leases its primary operations facility from a shareholder and
executive officer of the Company. The lease is for an initial one-year term
expiring in 1997 with an annual renewal thereafter and has been classified as
an operating lease and is included in the data presented above. Total rent
expense associated with this lease for the year ended February 28, 1997 and
the three months ended May 31, 1997 was approximately $96,000 and $24,000,
respectively.
 
9. EMPLOYEE BENEFIT PLAN
 
  During January 1997, the Company established a contributory 401(k) plan
covering substantially all employees. Contributions to this plan, determined
annually, are at the discretion of the Board of Directors. Authorized
contributions for the year ended February 28, 1997 amounted to $830.
 
10. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
 
11. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
marketable securities (carried at fair value), and short- and long-term debt.
The Company believes that the carrying value of these instruments on the
accompanying consolidated balance sheets approximates their fair value.
 
12. ACQUISITION OF JERRY ALBERT
 
  The Company acquired all of the outstanding shares of Jerry Albert on May 1,
1996, in exchange for a $200,000 note payable to the former shareholder of
Jerry Albert. The acquisition was accounted for as a purchase and the
operations of Jerry Albert have been included in the accompanying financial
statements since the date of acquisition. Based upon the relative size of the
acquisition, the related pro forma data is not presented.
 
13. SUBSEQUENT EVENT
 
  Effective June 1, 1997 Group Maintenance America Corp. (GroupMAC) acquired
all of the outstanding shares of the Company for a combination of cash,
preferred stock and common stock of GroupMAC. All of the preferred shares
issued in connection with the acquisition of the business will be redeemed for
cash concurrent with the consummation of the initial public offering of the
common stock of GroupMAC.
 
                                     F-132
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors 
Sibley Services, Incorporated:
 
  We have audited the accompanying balance sheets of Sibley Services,
Incorporated (the Company) as of October 31, 1996 and June 30, 1997, and the
related statements of operations, shareholders' equity and cash flows for the
year ended October 31, 1996 and the eight months ended June 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sibley Services,
Incorporated as of October 31, 1996 and June 30, 1997, and the results of its
operations and its cash flows for the year ended October 31, 1996 and the
eight months ended June 30, 1997 in conformity with generally accepted
accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 25, 1997
 
                                     F-133
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                        OCTOBER 31,   JUNE 30,
                                                           1996         1997
                                                        -----------  ----------
<S>                                                     <C>          <C>
                        ASSETS
CURRENT ASSETS:
 Cash and cash equivalents............................. $   76,034   $   40,710
 Accounts receivable...................................    693,839      635,358
 Inventories...........................................     89,649      126,146
 Costs and estimated earnings in excess of billings on
  uncompleted contracts................................    160,092       55,464
 Due from related parties and employees................     11,170       12,900
 Prepaid expenses and other current assets.............    242,851      243,957
                                                        ----------   ----------
  Total current assets.................................  1,273,635    1,114,535
PROPERTY AND EQUIPMENT, net............................     89,422       86,854
                                                        ----------   ----------
  Total assets......................................... $1,363,057   $1,201,389
                                                        ==========   ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
 Short-term borrowings and current maturities of long-
  term debt............................................ $  222,591   $  307,253
 Accounts payable......................................    337,452      226,854
 Accrued expenses......................................    127,036       57,137
 Billings in excess of costs and estimated earnings on
  uncompleted contracts................................      3,731       73,479
 Deferred service contract revenue.....................      5,463          --
 Deferred income taxes.................................     31,474       32,197
                                                        ----------   ----------
  Total current liabilities............................    727,747      696,920
LONG-TERM DEBT, net of current maturities..............     82,177       69,115
DEFERRED INCOME TAXES..................................      9,899       16,668
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
 Common stock--no par value; 1,000 shares authorized;
  534 shares issued
  and outstanding......................................     21,424       21,424
 Retained earnings.....................................    626,728      502,180
 Treasury stock, 138 shares at cost....................   (104,918)    (104,918)
                                                        ----------   ----------
  Total shareholders' equity...........................    543,234      418,686
                                                        ----------   ----------
    Total liabilities and shareholders' equity......... $1,363,057   $1,201,389
                                                        ==========   ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-134
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          EIGHT MONTHS ENDED
                                            YEAR ENDED         JUNE 30,
                                            OCTOBER 31,  ----------------------
                                               1996         1996        1997
                                            -----------  ----------  ----------
                                                       (UNAUDITED)
<S>                                         <C>          <C>         <C>
REVENUES................................... $6,962,485   $4,945,490  $2,823,468
COST OF SERVICES...........................  5,334,694    3,792,960   2,111,619
                                            ----------   ----------  ----------
  Gross profit.............................  1,627,791    1,152,530     711,849
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES..................................  1,497,773      955,427     846,902
                                            ----------   ----------  ----------
  Income (loss) from operations............    130,018      197,103    (135,053)
OTHER INCOME (EXPENSE):
 Interest expense..........................    (31,160)     (17,755)    (15,182)
 Other.....................................     15,516       13,547       4,404
                                            ----------   ----------  ----------
  Income (loss) before income tax
   provision...............................    114,374      192,895    (145,831)
INCOME TAX PROVISION.......................     42,030       70,885     (21,283)
                                            ----------   ----------  ----------
NET INCOME (LOSS).......................... $   72,344   $  122,010  $ (124,548)
                                            ==========   ==========  ==========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-135
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                       STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                       TOTAL
                                     COMMON  RETAINED   TREASURY   SHAREHOLDERS'
                                      STOCK  EARNINGS     STOCK       EQUITY
                                     ------- ---------  ---------  -------------
<S>                                  <C>     <C>        <C>        <C>
BALANCE, October 31, 1995........... $21,424 $ 554,384  $(104,918)   $ 470,890
  Net income........................     --     72,344        --        72,344
                                     ------- ---------  ---------    ---------
BALANCE, October 31, 1996...........  21,424   626,728   (104,918)     543,234
  Net loss..........................     --   (124,548)       --      (124,548)
                                     ------- ---------  ---------    ---------
BALANCE, June 30, 1997.............. $21,424 $ 502,180  $(104,918)   $ 418,686
                                     ======= =========  =========    =========
</TABLE>
 
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-136
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                          EIGHT MONTHS ENDED
                                              YEAR ENDED       JUNE 30,
                                              OCTOBER 31, --------------------
                                                 1996       1996       1997
                                              ----------- ---------  ---------
                                                        (UNAUDITED)
<S>                                           <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)...........................  $  72,344  $ 122,010  $(124,548)
 Adjustments to reconcile net income (loss)
  to net cash
  used in operating activities:
   Depreciation and amortization.............     23,899     15,235     16,185
   Gain on disposal of property and
    equipment................................     (7,090)       --         --
   Deferred income taxes.....................     21,110     35,442      7,492
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable.....................    (38,275)  (618,597)    58,481
     Inventories.............................    (15,047)   (54,979)   (36,497)
     Costs and estimated earnings in excess
      of billings on uncompleted contracts...    (82,416)   (48,664)   104,628
     Due from related parties and employees..      7,551    (21,266)    (1,730)
     Unbilled job costs......................      3,350        --         --
     Prepaid expenses and other current
      assets.................................   (121,387)   (52,617)    (1,106)
    Increase (decrease) in--
     Accounts payable........................     62,758    310,318   (110,598)
     Accrued expenses........................    (18,964)   (78,570)   (69,899)
     Billings in excess of costs and
      estimated earnings on uncompleted
      contracts..............................    (61,066)    83,948     69,748
     Deferred service contract revenue.......     (7,311)   (22,771)    (5,463)
     Income taxes payable....................    (59,089)       --         --
                                               ---------  ---------  ---------
      Net cash used in operating activities..   (219,633)  (330,511)   (93,307)
                                               ---------  ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment.........    (20,802)    (8,868)   (13,617)
 Proceeds from sales of property and
  equipment..................................      7,090        --         --
                                               ---------  ---------  ---------
      Net cash used in investing activities..    (13,712)    (8,868)   (13,617)
                                               ---------  ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net borrowings on line of credit............    207,000    237,000     81,000
 Payment on long-term note payable...........        --         --      (9,400)
                                               ---------  ---------  ---------
      Net cash provided by financing
       activities............................    207,000    237,000     71,600
                                               ---------  ---------  ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS....    (26,345)  (102,379)   (35,324)
CASH AND CASH EQUIVALENTS, beginning of
 period......................................    102,379    102,379     76,034
                                               ---------  ---------  ---------
CASH AND CASH EQUIVALENTS, end of period.....  $  76,034  $     --   $  40,710
                                               =========  =========  =========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-137
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                         NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
 
  Sibley Services, Incorporated (the Company) is primarily engaged in the
installation and servicing of heating and air conditioning systems for
commercial and industrial customers in Memphis, Tennessee and the surrounding
area.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim financial statements for the eight months ended June 30, 1996
are unaudited, and certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the interim financial statements, have been
included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from construction contracts are recognized on a percentage
of completion basis using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest and taxes were $26,004 and
$130,791, respectively, for the year ended October 31, 1996. Cash payments for
interest and taxes were $10,589 and $9,500, respectively, for the eight months
ended June 30, 1997.
 
 Inventories
 
  Inventories consist primarily of purchased materials. The inventory is
valued at the lower of cost or market, with cost determined on a first-in,
first-out (FIFO) basis.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated life of the asset.
 
                                     F-138
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Income Taxes
 
  The Company uses the asset and liability method to account for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
 New Accounting Pronouncement
 
  Effective November 1, 1995, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Prepaid expenses and other current assets consists of the following:
 
<TABLE>
<CAPTION>
                                                           OCTOBER 31, JUNE 30,
                                                              1996       1997
                                                           ----------- --------
   <S>                                                     <C>         <C>
   Cash value of life insurance...........................  $128,976   $144,012
   Prepaid expenses.......................................    64,213     50,713
   Refundable income taxes................................    49,662     42,123
   Other..................................................       --       7,109
                                                            --------   --------
                                                            $242,851   $243,957
                                                            ========   ========
</TABLE>
 
  Cash value of life insurance represents the cash value of five life
insurance policies. The Company is the owner and beneficiary of one policy
with a cash value of $21,417 at June 30, 1997 and a face value of $200,000.
There are four split-dollar policies with a cash value totaling $122,595 at
June 30, 1997. The Company also has a contingent receivable of $58,855 on the
four split-dollar policies at June 30, 1997. The contingent receivable is the
difference between the total premiums paid to date and the cash value. Per the
split-dollar agreement the Company will be reimbursed for 100% of the premiums
paid upon the death of the insured.
 
  Accrued expenses consists of the following:
 
<TABLE>
<CAPTION>
                                                            OCTOBER 31, JUNE 30,
                                                               1996       1997
                                                            ----------- --------
   <S>                                                      <C>         <C>
   Accrued payroll and related expenses....................  $ 94,670   $14,026
   Other accrued expenses..................................    32,366    43,111
                                                             --------   -------
                                                             $127,036   $57,137
                                                             ========   =======
</TABLE>
 
                                     F-139
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                                          OCTOBER 31, JUNE 30,
                                                             1996       1997
                                                          ----------- --------
   <S>                                                    <C>         <C>
   Costs incurred........................................  $222,130   $475,756
   Estimated earnings recognized.........................    90,036    124,870
                                                           --------   --------
                                                            312,166    600,626
   Less billings on contracts............................   155,805    618,641
                                                           --------   --------
                                                           $156,361   $(18,015)
                                                           ========   ========
</TABLE>
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
<TABLE>
<CAPTION>
                                                          OCTOBER 31, JUNE 30,
                                                             1996       1997
                                                          ----------- --------
   <S>                                                    <C>         <C>
   Costs and estimated earnings in excess of billings on
    uncompleted contracts...............................   $160,092   $ 55,464
   Billings in excess of costs and estimated earnings on
    uncompleted contracts...............................     (3,731)   (73,479)
                                                           --------   --------
                                                           $156,361   $(18,015)
                                                           ========   ========
</TABLE>
 
5. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and equipment
are as follows:
 
<TABLE>
<CAPTION>
                                               ESTIMATED
                                                 USEFUL   OCTOBER 31, JUNE 30,
                                                 LIVES       1996       1997
                                               ---------- ----------- ---------
   <S>                                         <C>        <C>         <C>
   Service and other vehicles.................  4-7 years  $  81,742  $  85,047
   Machinery and equipment.................... 5-10 years    123,864    126,105
   Office equipment, furniture and fixtures... 3-10 years    211,773    216,554
   Leasehold improvements.....................        --     121,312    124,602
                                                           ---------  ---------
                                                             538,691    552,308
   Less accumulated depreciation..............              (449,269)  (465,454)
                                                           ---------  ---------
     Property and equipment, net..............             $  89,422  $  86,854
                                                           =========  =========
</TABLE>
 
6. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                           OCTOBER 31, JUNE 30,
                                                              1996       1997
                                                           ----------- --------
   <S>                                                     <C>         <C>
   Credit facility in the amount of $500,000 with a bank,
    bearing interest at prime plus 1% (9.5% as of June
    30, 1997), secured by trade receivables and inventory.  $207,000   $288,000
   Note payable to shareholder with original face amount
    of $125,000, noninterest-bearing, discounted at 
    4.81%, $481 due weekly, including interest...........     97,768     88,368
                                                            --------   --------
     Total short- and long-term debt.....................    304,768    376,368
   Less short-term borrowings and current maturities.....   (222,591)  (307,253)
                                                            --------   --------
                                                            $ 82,177   $ 69,115
                                                            ========   ========
</TABLE>
 
                                     F-140
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The Company has an available line of credit of $500,000 through July 31,
1997. Advances are due April 30, 1997 and accrue interest at prime plus 1%.
The line of credit is secured by accounts receivable and inventory and the
personal guarantees of certain shareholders. Outstanding on the line of credit
as of October 31, 1996 and as of June 30, 1997 was $207,000 and $288,000,
respectively. The line of credit was repaid in connection with the Company's
acquisition, see note 14.
 
  The Company purchased 125 shares of its stock from a shareholder during the
fiscal year ending October 31, 1994. The purchase price was $125,000 payable
at $481 per week, beginning in 1997, for 260 weeks with no interest. The note
is unsecured and has been discounted using an interest rate of 4.81%. Interest
has been accrued through October 31, 1996, in the amount of $14,585.
 
  The aggregate maturities of the short- and long-term debt as of October 31,
1996 are as follows:
 
<TABLE>
   <S>                                                                  <C>
   1997................................................................ $222,591
   1998................................................................   19,552
   1999................................................................   20,513
   2000................................................................   21,521
   2001................................................................   20,591
                                                                        --------
                                                                        $304,768
                                                                        ========
</TABLE>
 
7. INCOME TAXES
 
  Income tax expense (benefit) consists of:
 
<TABLE>
<CAPTION>
                                                                       EIGHT
                                                                       MONTHS
                                                          YEAR ENDED   ENDED
                                                          OCTOBER 31, JUNE 30,
                                                             1996       1997
                                                          ----------- --------
   <S>                                                    <C>         <C>
   Federal
    Current..............................................   $15,961   $(20,000)
    Deferred.............................................    17,813      6,620
   State
    Current..............................................     4,959     (8,775)
    Deferred.............................................     3,297        872
                                                            -------   --------
                                                            $42,030   $(21,283)
                                                            =======   ========
</TABLE>
 
  Total income tax expense (benefit) differs from the amount computed by
applying the U.S. federal statutory income tax rate of 34% to income (loss)
before income tax provision as a result of the following:
 
<TABLE>
<CAPTION>
                                                                       EIGHT
                                                                       MONTHS
                                                          YEAR ENDED   ENDED
                                                          OCTOBER 31, JUNE 30,
                                                             1996       1997
                                                          ----------- --------
   <S>                                                    <C>         <C>
   Tax provision (benefit) at statutory rate.............  $ 38,887   $(49,583)
   Increase (decrease) resulting from:
     State income taxes, net of federal benefit..........     5,449     (5,216)
     Nondeductible expenses..............................     7,897      4,798
     Tax consequences of graduated rates.................   (10,203)    28,718
                                                           --------   --------
                                                           $ 42,030   $(21,283)
                                                           ========   ========
</TABLE>
 
                                     F-141
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The components of deferred income tax liability are as follows:
 
<TABLE>
<CAPTION>
                                                            OCTOBER 31, JUNE 30,
                                                               1996       1997
                                                            ----------- --------
   <S>                                                      <C>         <C>
   Deferred income tax liabilities:
    Uncompleted contracts..................................   $31,474   $32,197
    Depreciation...........................................     9,899    16,668
                                                              -------   -------
     Total deferred income tax liability...................   $41,373   $48,865
                                                              =======   =======
</TABLE>
 
8. LEASES
 
  Operating leases for certain facilities, service and other vehicles and
office equipment expire at various dates through 2000. Certain leases contain
renewal options. Approximate minimum future rental payments as of October 31,
1996 are as follows:
 
<TABLE>
<CAPTION>
                                                                         TOTAL
                                                                        --------
   <S>                                                                  <C>
   1997................................................................ $176,639
   1998................................................................   94,032
   1999................................................................   62,677
   2000................................................................   10,866
                                                                        --------
                                                                        $344,214
                                                                        ========
</TABLE>
 
9. RELATED PARTY TRANSACTIONS
 
  The Company leased a vehicle, computer equipment, its office and warehouse
from Sibley, Inc. (see note 8). The owner of Sibley, Inc., is related to a
shareholder of Sibley Services, Incorporated For the year ended October 31,
1996 and the eight months ended June 30, 1997 the Company paid $42,490 and
$22,816, respectively, related to these leases.
 
  The Company leased twenty-five vehicles and twenty-two vehicles as of
October 31, 1996 and June 30, 1997, respectively and computer equipment from
JDT Leasing Company (see note 8) which is 100% owned by a shareholder. For the
year ended October 31, 1996 and the eight months ended June 30, 1997 the
Company paid $129,332 and $94,995, respectively, related to these leases.
 
  The Company was owed $5,733 and $10,389 by a shareholder at October 31, 1996
and June 30, 1997, respectively. This receivable represents advances to the
shareholder and is unsecured.
 
  The Company also has a note payable to a former shareholder (see note 6).
 
10. EMPLOYEE BENEFIT PLANS
 
  The Company has a cafeteria plan for its eligible employees. Benefits under
the plan include medical and dental insurance.
 
  In 1996, the Company established a 401(k) plan for its qualified employees.
Eligibility requires one year of service and age 21 or over. Employees may
elect to defer up to 10% of their compensation. The Company has agreed to
match the employee contribution 100% up to 5% of compensation. Contributions
made by the Company of $53,646 and $36,733 were charged to operations in the
year ended October 31, 1996 and the eight months ended June 30, 1997,
respectively.
 
                                     F-142
<PAGE>
 
                         SIBLEY SERVICES, INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
11. SALES TO SIGNIFICANT CUSTOMER
 
  Contract revenue billed to one customer amounted to $1,302,289 or 19% of
total sales for the year ended October 31, 1996. At October 31, 1996, amounts
due from this customer included in accounts receivables were $156,885.
 
12. COMMITMENTS AND CONTINGENCIES
 
  The Company may be involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
 
13. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
and short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheets approximates their fair
value.
 
14. SUBSEQUENT EVENT
 
  Effective July 1, 1997 Group Maintenance America Corp. (GroupMAC) acquired
all of the outstanding shares of the Company for a combination of cash,
preferred stock and common stock of GroupMAC. All of the preferred shares
issued in connection with the acquisition of the business will be redeemed for
cash concurrent with the consummation of the initial public offering of the
common stock of GroupMAC.
 
                                     F-143
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Southeast Mechanical Service, Inc.:
 
  We have audited the accompanying balance sheets of Southeast Mechanical
Service, Inc. as of December 31, 1996 and June 30, 1997, and the related
statements of operations, shareholders' equity and cash flows for the year
ended December 31, 1996 and the six months ended June 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Southeast Mechanical
Service, Inc. as of December 31, 1996 and June 30, 1997 and the results of its
operations and its cash flows for the year ended December 31, 1996 and the six
months ended June 30, 1997 in conformity with generally accepted accounting
principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 18, 1997
 
                                     F-144
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                        DECEMBER 31,  JUNE 30,
                                                            1996        1997
                                                        ------------ ----------
<S>                                                     <C>          <C>
                        ASSETS
CURRENT ASSETS:
  Cash and cash equivalents............................  $   45,852  $   74,466
  Accounts receivable..................................     726,944     935,433
  Inventories..........................................      63,530      64,133
  Costs and estimated earnings in excess of billings on
   uncompleted contracts...............................       1,910       1,229
  Due from related parties and employees...............       2,268      42,420
  Prepaid expenses and other current assets............      30,471      35,955
                                                         ----------  ----------
    Total current assets...............................     870,975   1,153,636
PROPERTY AND EQUIPMENT, net............................     498,762     430,188
                                                         ----------  ----------
    Total assets.......................................  $1,369,737  $1,583,824
                                                         ==========  ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of long-
   term debt...........................................  $  311,779  $  135,254
  Accounts payable.....................................      94,911     218,453
  Accrued expenses.....................................      23,585     136,127
  Billings in excess of costs and estimated earnings on
   uncompleted contracts...............................      24,531     125,317
  Due to related parties...............................         --      371,042
                                                         ----------  ----------
    Total current liabilities..........................     454,806     986,193
LONG-TERM DEBT, net of current maturities..............     273,403     220,726
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock--$1.00 par value; 1,500 shares
   authorized,
   300 shares issued and outstanding...................         300         300
  Additional paid-in capital...........................       5,700       5,700
  Retained earnings....................................     635,528     370,905
                                                         ----------  ----------
    Total shareholders' equity.........................     641,528     376,905
                                                         ----------  ----------
    Total liabilities and shareholders' equity.........  $1,369,737  $1,583,824
                                                         ==========  ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-145
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED
                                            YEAR ENDED        JUNE 30,
                                           DECEMBER 31, ----------------------
                                               1996        1996        1997
                                           ------------ ----------  ----------
                                                      (UNAUDITED)
<S>                                        <C>          <C>         <C>
REVENUES..................................  $5,281,777  $2,847,310  $2,358,229
COST OF SERVICES..........................   3,830,398   2,006,815   1,724,977
                                            ----------  ----------  ----------
  Gross profit............................   1,451,379     840,495     633,252
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES.................................     865,939     388,095     408,957
                                            ----------  ----------  ----------
  Income from operations..................     585,440     452,400     224,295
OTHER INCOME (EXPENSE):
  Interest expense........................     (54,682)    (28,379)    (42,905)
  Other...................................     (15,360)     (3,304)         29
                                            ----------  ----------  ----------
NET INCOME................................  $  515,398  $  420,717  $  181,419
                                            ==========  ==========  ==========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-146
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                       STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                             ADDITIONAL                TOTAL
                                      COMMON  PAID-IN   RETAINED   SHAREHOLDERS'
                                      STOCK   CAPITAL   EARNINGS      EQUITY
                                      ------ ---------- ---------  -------------
<S>                                   <C>    <C>        <C>        <C>
BALANCE, December 31, 1995...........  $300    $5,700   $ 440,035    $ 446,035
  Net income.........................   --        --      515,398      515,398
  Distributions to shareholders......   --        --     (319,905)    (319,905)
                                       ----    ------   ---------    ---------
BALANCE, December 31, 1996...........   300     5,700     635,528      641,528
  Net income.........................   --        --      181,419      181,419
  Distributions to shareholders......   --        --     (446,042)    (446,042)
                                       ----    ------   ---------    ---------
BALANCE, June 30, 1997...............  $300    $5,700   $ 370,905    $ 376,905
                                       ====    ======   =========    =========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-147
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                           SIX MONTHS ENDED
                                                               JUNE 30,
                                            DECEMBER 31, ---------------------
                                                1996        1996       1997
                                            ------------ ----------- ---------
                                                         (UNAUDITED)
<S>                                         <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income................................  $ 515,398    $ 420,717  $ 181,419
 Adjustments to reconcile net income to net
  cash
  provided by operating activities:
   Depreciation............................    124,074       62,625     74,826
   Loss on disposal of property and
    equipment..............................     15,426        1,681        --
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable...................    (89,322)    (188,594)  (208,489)
     Inventories...........................        --        (1,290)      (603)
     Costs and estimated earnings in excess
      of billings on uncompleted contracts.     23,664      (12,705)       681
     Due from related parties and
      employees............................        536        1,949    (40,152)
     Prepaid expenses and other current
      assets...............................    (11,937)     (26,155)    (5,484)
    Increase (decrease) in--
     Accounts payable......................    (51,579)      49,418    123,542
     Accrued expenses......................     (8,360)       3,542    112,542
     Billings in excess of costs and
      estimated earnings on uncompleted
      contracts............................    (11,874)      25,678    100,786
                                             ---------    ---------  ---------
      Net cash provided by operating
       activities..........................    506,026      336,866    339,068
                                             ---------    ---------  ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
 Purchases of property and equipment.......   (185,972)     (60,537)    (6,252)
                                             ---------    ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from short-term borrowings and
  long-term debt...........................    163,552      120,863        --
 Payments of short-term borrowings and
  long-term debt...........................   (168,518)     (68,110)  (229,202)
 Dividends paid............................   (319,905)    (319,905)   (75,000)
                                             ---------    ---------  ---------
      Net cash used in financing
       activities..........................   (324,871)    (267,152)  (304,202)
                                             ---------    ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS...............................     (4,817)       9,177     28,614
CASH AND CASH EQUIVALENTS, beginning of
 period....................................     50,669       50,669     45,852
                                             ---------    ---------  ---------
CASH AND CASH EQUIVALENTS, end of period...  $  45,852    $  59,846  $  74,466
                                             =========    =========  =========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-148
<PAGE>
 
                      SOUTHEAST MECHANICAL SERVICE, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Southeast Mechanical Service, Inc. (the Company) is primarily engaged in the
servicing of commercial heating and air conditioning systems in Southeast
Florida including Broward, Dade and Palm Beach Counties.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim financial statements for the six months ended June 30, 1996, are
unaudited, and certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principals, have been omitted. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the financial position, results of operations and cash flows
with respect to the interim financial statements, have been included. The
results of operations for the interim periods are not necessarily indicative
of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from construction contracts are recognized on a percentage
of completion basis using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less to be
cash equivalents. Cash payments for interest were $16,406 and $27,839 for the
year ended December 31, 1996 and the six months ended June 30, 1997,
respectively.
 
 Inventories
 
  Inventories consist of parts and supplies used in the service portion of the
Company's operation. The inventory is valued at the lower of cost or market,
with cost determined on a first-in, first-out (FIFO) basis.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated useful life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated.
 
                                     F-149
<PAGE>
 
                      SOUTHEAST MECHANICAL SERVICE, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Upon retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Warranty Costs
 
  The Company warrants labor for the first year after installation on new air
conditioning and heating units. The Company generally warrants labor for 30
days after servicing of existing air conditioning and heating units. A reserve
for warranty costs is recorded upon completion of installation or service.
 
 Income Taxes
 
  The shareholders of the Company have elected to be taxed for federal tax
purposes as an S Corporation whereby the shareholders' respective equitable
shares in the taxable income of the Company are reportable on their individual
tax returns. The Company will make distributions to the shareholders each year
at least in amounts necessary to pay personal income taxes payable on the
Company's taxable income.
 
 New Accounting Pronouncement
 
  Effective January 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                                        DECEMBER 31, JUNE 30,
                                                            1996       1997
                                                        ------------ ---------
   <S>                                                  <C>          <C>
   Costs incurred......................................   $  8,013   $  76,854
   Estimated earnings recognized.......................      3,578      56,343
                                                          --------   ---------
                                                            11,591     133,197
   Less billings on contracts..........................    (34,212)   (257,285)
                                                          --------   ---------
                                                          $(22,621)  $(124,088)
                                                          ========   =========
</TABLE>
 
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
<TABLE>
   <S>                                                    <C>       <C>
   Costs and estimated earnings in excess of billings on
    uncompleted contracts................................ $  1,910  $   1,229
   Billings in excess of costs and estimated earnings on
    uncompleted contracts................................  (24,531)  (125,317)
                                                          --------  ---------
                                                          $(22,621) $(124,088)
                                                          ========  =========
</TABLE>
 
                                     F-150
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                   NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
4. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and equipment
are as follows:
 
<TABLE>
<CAPTION>
                                            ESTIMATED
                                             USEFUL    DECEMBER 31,  JUNE 30,
                                              LIVES       1996         1997
                                           ----------- ------------ ----------
   <S>                                     <C>         <C>          <C>
   Land...................................         --   $   57,839  $   57,839
   Buildings and improvements............. 20-30 years     273,896     273,896
   Service and other vehicles.............   4-7 years     594,809     594,809
   Machinery and equipment................  5-10 years      73,250      73,250
   Office equipment, furniture and
    fixtures..............................  5-10 years     161,686     167,938
                                                        ----------  ----------
                                                         1,161,480   1,167,732
   Less accumulated depreciation..........                (662,718)   (737,544)
                                                        ----------  ----------
                                                        $  498,762  $  430,188
                                                        ==========  ==========
</TABLE>
 
5. SHORT- AND LONG-TERM DEBT
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31, JUNE 30,
                                                              1996       1997
                                                          ------------ --------
   <S>                                                    <C>          <C>
   Note payable to a bank in connection with a working
    capital credit line facility. Interest payable
    monthly at the bank's prime rate plus .50% (8.75% at
    December 31, 1996 and 8.5% at June 30, 1997),
    principal amount due in April, 1997. The Company has
    an unused portion of this credit line facility
    available at December 31, 1996 of $113,000 and
    $281,000 at June 30, 1997. This credit line facility
    is collateralized by the Company's accounts
    receivable, inventory, property and equipment, and
    the personal guarantees of the shareholders and
    certain spouses.....................................    $187,000   $ 19,000
   Installment contracts payable at $8,201 per month,
    including interest at 7.75% to 9.50%, until October,
    1998 and at lesser amounts thereafter until
    November, 2000, collateralized by automotive
    equipment with a net book value of approximately
    $239,000. Balance net of deferred interest of
    $32,935 (current portion $17,384)...................     243,810    204,482
   Mortgage note payable in monthly installments of
    $1,259 plus interest at .50% above the bank's prime
    rate (8.75% at December 31, 1996 and 8.5% at June
    30, 1997) until January, 2005. The mortgage note is
    collateralized by a building and land with a net
    book value of approximately $169,000................     123,350    115,798
   Note payable to a bank, payable at $2,387 per month
    plus interest at .50% above the bank's prime rate
    (8.75% at December 31, 1996 and 8.5% at June 30,
    1997) through December, 1997. This note is
    collateralized by the Company's accounts receivable,
    inventory and certain property and equipment........      31,022     16,700
                                                            --------   --------
       Total short- and long-term debt..................     585,182    355,980
   Less short-term borrowings and current maturities....     311,779    135,254
                                                            --------   --------
                                                            $273,403   $220,726
                                                            ========   ========
</TABLE>
 
                                     F-151
<PAGE>
 
                      SOUTHEAST MECHANICAL SERVICE, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The aggregate maturities of the short- and long-term debt as of December 31,
1996 are as follows:
 
<TABLE>
   <S>                                                                  <C>
   1997................................................................ $311,779
   1998................................................................  101,137
   1999................................................................   68,009
   2000................................................................   41,326
   2001................................................................   15,104
   Thereafter..........................................................   47,827
                                                                        --------
                                                                        $585,182
                                                                        ========
</TABLE>
6. RELATED PARTY TRANSACTIONS
 
  During the year ended December 31, 1996 and the six months ended June 30,
1997, the Company paid consulting fees totaling $71,800 and $10,900,
respectively to various affiliated corporations which are owned by certain of
its shareholders.
 
  Interest expense in connection with shareholder loans repaid during the year
ended December 31, 1996 and the six months ended June 30, 1997 amounted to
$3,680 and $15,066, respectively.
 
  The Company rents storage space on a month-to-month basis from a partnership
owned by its shareholders. Rent expense related to this rental agreement
totaled $4,969 for the year ended December 31, 1996 and $2,461 for the six
months ended June 30, 1997.
 
  The Company's policy is to distribute to the shareholders pass-through
"Chapter S" income in the first month following year end. Such distributions
are made in the form of notes payable which bear interest at 10% and are paid
during the succeeding year. In January 1997, notes totaling $446,042 were
issued to shareholders in accordance with this policy. At June 30, 1997, there
was $371,042 still outstanding on these notes.
 
7. COMMITMENTS AND CONTINGENCIES
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
 
8. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
and short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheets approximates their fair
value.
 
9. ACQUISITION OF COMPANY
 
  In May 1997, the Company signed a letter of intent with Group Maintenance
America Corp. (GroupMAC), whereby GroupMAC will acquire the Company in a
merger transaction for a combination of cash and common shares of GroupMAC
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC, subject to certain conditions including the negotiation of
definitive agreements and approval by Directors of both companies.
 
                                     F-152
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors 
Willis Refrigeration, Air Conditioning & Heating, Inc.:
 
  We have audited the accompanying balance sheets of Willis Refrigeration, Air
Conditioning & Heating, Inc. (the Company) as of March 31, 1997 and June 30,
1997, and the related statements of operations, shareholders' equity and cash
flows for the year ended March 31, 1997 and the three months ended June 30,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Willis Refrigeration, Air
Conditioning & Heating, Inc. as of March 31, 1997 and June 30, 1997, and the
results of its operations and its cash flows for the year ended March 31, 1997
and the three months ended June 30, 1997 in conformity with generally accepted
accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 25, 1997
 
                                     F-153
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                          MARCH 31,   JUNE 30,
                                                             1997       1997
                                                          ---------- ----------
<S>                                                       <C>        <C>
                         ASSETS
CURRENT ASSETS:
 Cash and cash equivalents............................... $  774,445 $  788,191
 Accounts receivable, net of allowance for doubtful
  accounts of $564,648 and $539,673, respectively........  1,288,442  1,390,882
 Inventories.............................................    190,276    194,272
 Deferred income taxes...................................    240,441    229,950
 Prepaid expenses........................................     12,377      8,873
                                                          ---------- ----------
  Total current assets...................................  2,505,981  2,612,168
PROPERTY AND EQUIPMENT, net..............................    513,888    512,485
MARKETABLE SECURITIES....................................    263,175    278,850
OTHER NONCURRENT ASSETS..................................     80,585     81,538
                                                          ---------- ----------
  Total assets........................................... $3,363,629 $3,485,041
                                                          ========== ==========
          LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
 Short-term borrowings................................... $  222,828 $  220,731
 Accounts payable........................................    409,302    270,115
 Accrued expenses........................................     86,843    111,099
 Deferred service contract revenue.......................    199,194    229,235
 Income taxes payable....................................    230,913    283,747
                                                          ---------- ----------
  Total current liabilities..............................  1,149,080  1,114,927
DEFERRED INCOME TAXES....................................    142,005    147,072
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
 Common stock--no par value, stated value of $10 per
  share; 500 shares authorized; 405 shares issued and
  outstanding............................................      4,050      4,050
 Retained earnings.......................................  1,918,330  2,059,767
 Net unrealized gain on marketable securities............    150,164    159,225
                                                          ---------- ----------
  Total shareholders' equity.............................  2,072,544  2,223,042
                                                          ---------- ----------
  Total liabilities and shareholders' equity............. $3,363,629 $3,485,041
                                                          ========== ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-154
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                                            YEAR ENDED        JUNE 30,
                                            MARCH 31,   ----------------------
                                               1997        1996        1997
                                            ----------  ----------  ----------
                                                      (UNAUDITED)
<S>                                         <C>         <C>         <C>
REVENUES................................... $6,780,747  $1,643,275  $1,743,102
COST OF SERVICES...........................  5,033,377   1,318,762   1,257,766
                                            ----------  ----------  ----------
  Gross profit.............................  1,747,370     324,513     485,336
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES..................................  1,205,393     369,048     275,694
                                            ----------  ----------  ----------
  Income (loss) from operations............    541,977     (44,535)    209,642
OTHER INCOME (EXPENSE):
 Interest expense..........................    (25,379)     (7,343)     (4,864)
 Interest income...........................      7,926       3,257      10,449
 Other.....................................     48,464       9,655       6,353
                                            ----------  ----------  ----------
  Income (loss) before income tax
   provision...............................    572,988     (38,966)    221,580
INCOME TAX PROVISION.......................    237,962         --       80,143
                                            ----------  ----------  ----------
NET INCOME (LOSS).......................... $  335,026  $  (38,966) $  141,437
                                            ==========  ==========  ==========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-155
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                       STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                          NET
                                                       UNREALIZED
                                                        GAIN ON       TOTAL
                                     COMMON  RETAINED  MARKETABLE SHAREHOLDERS'
                                     STOCK   EARNINGS  SECURITIES    EQUITY
                                     ------ ---------- ---------- -------------
<S>                                  <C>    <C>        <C>        <C>
BALANCE, March 31, 1996............. $4,050 $1,583,304  $ 77,400   $1,664,754
 Net income.........................    --     335,026       --       335,026
 Net unrealized gain on marketable
  securities........................    --         --     72,764       72,764
                                     ------ ----------  --------   ----------
BALANCE, March 31, 1997.............  4,050  1,918,330   150,164    2,072,544
 Net income.........................    --     141,437       --       141,437
 Net unrealized gain on marketable
  securities........................    --         --      9,061        9,061
                                     ------ ----------  --------   ----------
BALANCE, June 30, 1997.............. $4,050 $2,059,767  $159,225   $2,223,042
                                     ====== ==========  ========   ==========
</TABLE>
 
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-156
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                              YEAR ENDED        JUNE 30,
                                              MARCH 31,   ---------------------
                                                 1997        1996       1997
                                              ----------  ----------- ---------
                                                          (UNAUDITED)
<S>                                           <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)........................... $ 335,026    $ (38,966) $ 141,437
 Adjustments to reconcile net income (loss)
  to net
  cash provided by (used in) operating
  activities:
   Depreciation and amortization.............    82,328       22,419     22,591
   Deferred income taxes.....................    80,900          --       8,944
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable.....................   (39,157)    (332,559)  (102,440)
     Inventories.............................    21,111          --      (3,996)
     Prepaid expenses........................    41,737      (22,000)     3,504
    Increase (decrease) in--
     Accounts payable........................  (125,073)     111,473   (139,187)
     Accrued expenses........................   (74,603)     (48,077)    24,256
     Deferred service contract revenue.......    16,154       25,242     30,041
     Income taxes payable....................    46,885          --      52,834
                                              ---------    ---------  ---------
      Net cash provided by (used in)
       operating activities..................   385,308     (282,468)    37,984
                                              ---------    ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment.........   (34,821)      (2,099)   (21,188)
 Increase in cash surrender value of life
  insurance policy...........................   (10,943)         --        (953)
                                              ---------    ---------  ---------
      Net cash used in investing activities..   (45,764)      (2,099)   (22,141)
                                              ---------    ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Payments of short-term borrowings...........   (84,942)         --      (2,097)
                                              ---------    ---------  ---------
      Net cash used in financing activities..   (84,942)         --      (2,097)
                                              ---------    ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS.................................   254,602     (284,567)    13,746
CASH AND CASH EQUIVALENTS, beginning of
 period......................................   519,843      519,843    774,445
                                              ---------    ---------  ---------
CASH AND CASH EQUIVALENTS, end of period..... $ 774,445    $ 235,276  $ 788,191
                                              =========    =========  =========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-157
<PAGE>
 
            WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Willis Refrigeration, Air Conditioning & Heating, Inc. (the Company) is
primarily engaged in the installation and servicing of heating and air
conditioning systems for residential customers in Ohio and northern Kentucky.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim financial statements for the three months ended June 30, 1996
are unaudited, and certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the interim financial statements, have been
included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
 Use of Estimates
 
  Management uses estimates and assumptions in preparing the financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from new construction sales are recognized on the
percentage of completion basis with seventy percent of the revenue recognized
at initial installation of new units and thirty percent recognized at the
final stage of installation when the residential building is nearing
completion. Material, equipment and labor costs are estimated for each job and
are recognized on the same percentage method.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents. Cash payments for interest were $25,379 and $2,131 for
the year ended March 31, 1997 and the three months ended June 30, 1997.
 
 Inventories
 
  Inventories consist primarily of parts and supplies used in both the service
and construction portions of the Company's operation. Inventory is stated at
the lower of cost or market.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated.
 
                                     F-158
<PAGE>
 
            WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Upon retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Marketable Securities
 
  The Company accounts for marketable securities in accordance with SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities. All of
the Company's marketable securities (all of which are equity securities) have
been classified as available for sale with unrealized gains or losses recorded
as a separate component of shareholders' equity. As of March 31, 1997 and June
30, 1997 the amortized cost of the marketable securities was $12,900.
 
 Warranty Costs
 
  The Company warrants labor for the first year after installation on new air
conditioning and heating units. The Company generally warrants labor for 90
days after servicing of existing air conditioning and heating units. A reserve
for warranty costs is recorded upon completion of installation or services.
 
 Income Taxes
 
  The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
 
 New Accounting Pronouncement
 
  Effective April 1, 1996, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
                                     F-159
<PAGE>
 
            WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
3. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                            ESTIMATED   MARCH 31,    JUNE 30,
                                           USEFUL LIVES    1997        1997
                                           ------------ ----------  ----------
   <S>                                     <C>          <C>         <C>
   Service and other vehicles.............   3-5 years  $  505,103  $  505,103
   Office equipment, furniture and
    fixtures..............................  3-10 years     223,379     244,567
   Buildings and improvements............. 18-31 years     453,267     453,267
   Land...................................         --      106,500     106,500
                                                        ----------  ----------
                                                         1,288,249   1,309,437
     Less accumulated depreciation........                (774,361)   (796,952)
                                                        ----------  ----------
                                                        $  513,888  $  512,485
                                                        ==========  ==========
</TABLE>
 
4. OTHER NONCURRENT ASSETS
 
  Other noncurrent assets includes the cash surrender value of a life
insurance policy for the vice president of the Company. The cash surrender
value of the policy is as follows:
 
<TABLE>
<CAPTION>
                                                            MARCH 31,  JUNE 30,
                                                              1997       1997
                                                            ---------  --------
   <S>                                                      <C>        <C>
   Cash surrender value.................................... $ 82,267   $ 83,220
   Outstanding loan........................................  (18,682)   (18,682)
                                                            --------   --------
     Net cash surrender value.............................. $ 63,585   $ 64,538
                                                            ========   ========
</TABLE>
 
5. SHORT-TERM BORROWINGS
 
  Short-term borrowings consists of the following:
 
<TABLE>
<CAPTION>
                                                             MARCH 31, JUNE 30,
                                                               1997      1997
                                                             --------- --------
   <S>                                                       <C>       <C>
   Revolving line of credit of up to $700,000 payable to a
    financial institution, bearing interest at 8.5%, due
    upon demand, but in any event without
    demand or notice on February 28, 1998................... $100,000  $100,000
   Notes payable to the president of the Company, bearing
    interest at 9%,
    no scheduled repayment..................................  122,828   120,731
                                                             --------  --------
     Total short-term borrowings............................ $222,828  $220,731
                                                             ========  ========
</TABLE>
 
6. INCOME TAXES
 
  Income tax expense consists of:
 
<TABLE>
<CAPTION>
                                                                    THREE MONTHS
                                                         YEAR ENDED    ENDED
                                                         MARCH 31,    JUNE 30,
                                                            1997        1997
                                                         ---------- ------------
   <S>                                                   <C>        <C>
   Current..............................................  $157,062    $71,199
   Deferred.............................................    80,900      8,944
                                                          --------    -------
     Income tax provision...............................  $237,962    $80,143
                                                          ========    =======
</TABLE>
 
                                     F-160
<PAGE>
 
            WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  Total income tax expense differed from the amount computed by applying the
U.S. federal statutory income tax rate of 34% to income before income tax
provision as a result of the following:
 
<TABLE>
<CAPTION>
                                                                    THREE MONTHS
                                                         YEAR ENDED    ENDED
                                                         MARCH 31,    JUNE 30,
                                                            1997        1997
                                                         ---------- ------------
   <S>                                                   <C>        <C>
   Expense at the statutory rate........................  $194,816    $75,337
   Increase (reduction) resulting from:
     State income taxes.................................    45,839     12,289
     Other..............................................    (2,693)    (7,483)
                                                          --------    -------
                                                          $237,962    $80,143
                                                          ========    =======
</TABLE>
 
  The components of the deferred income tax assets and liabilities are as
follows:
 
<TABLE>
<CAPTION>
                                                              MARCH 31, JUNE 30,
                                                                1997      1997
                                                              --------- --------
   <S>                                                        <C>       <C>
   Deferred income tax assets:
     Allowance for doubtful accounts......................... $226,249  $215,758
     Warranty reserves.......................................   11,252    11,252
     Vacation accrual........................................    2,940     2,940
                                                              --------  --------
       Total deferred income tax asset.......................  240,441   229,950
                                                              --------  --------
   Deferred income tax liabilities:
     Net unrealized gain on securities available for sale....  105,115   111,729
     Depreciation............................................   36,890    35,343
                                                              --------  --------
       Total deferred income tax liability...................  142,005   147,072
                                                              --------  --------
       Net deferred income tax asset......................... $ 98,436  $ 82,878
                                                              ========  ========
</TABLE>
 
  Management believes that it is more likely than not that the Company will
realize the benefits of the net deferred income tax asset recorded at March
31, 1997 and June 30, 1997.
 
7. EMPLOYEE BENEFIT PLAN
 
  The Company has a profit-sharing plan (the Plan) covering its qualified
employees. The Company may make a contribution amount at any time to the Plan
to the extent authorized by the Board of Directors. Total expense related to
this Plan for the year ended March 31, 1997 and the three months ended June
30, 1997, was approximately $54,200 and $3,700, respectively.
 
8. SALES TO SIGNIFICANT CUSTOMER
 
  During the year ended March 31, 1997 and the three months ended June 30,
1997 sales to one customer accounted for approximately 14% and 13% of the
Company's revenues.
 
9. EMPLOYMENT AGREEMENT
 
  On January 13, 1992, the Company entered into an employment agreement with
the Company's Chairman of the Board of Directors whereby an annual salary
would be paid to the Chairman through December 31, 2011 and would continue to
be paid in the event of death, disability, or termination of employment. An
annual salary
 
                                     F-161
<PAGE>
 
            WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
   
of $26,000 will be paid through August 31, 2006; $15,600 per annum will be
paid thereafter through December 31, 2011. The employment agreement will be
terminated upon the consummation of the proposed merger of the Company (see
note 11).     
 
10. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents,
marketable securities (carried at fair value) and short-term borrowings. The
Company believes that the carrying value of these instruments on the
accompanying balance sheets approximates their fair value.
 
11. ACQUISITION OF COMPANY
 
  In May 1997, the Company signed a letter of intent with Group Maintenance
America Corp. (GroupMAC), whereby GroupMAC would acquire the Company in a
merger transaction for a combination of cash and common shares of GroupMAC
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC, subject to certain conditions including the negotiation of
definitive agreements and approval by Directors of both companies.
 
                                     F-162
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Yale Incorporated
 
  We have audited the accompanying balance sheets of Yale, Inc. as of
September 30, 1996 and June 30, 1997, and the related statements of
operations, shareholders' equity and cash flows for the year ended September
30, 1996 and the nine months ended June 30, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Yale Incorporated as of
September 30, 1996 and June 30, 1997, and the results of its operations and
its cash flows for the year ended September 30, 1996 and the nine months ended
June 30, 1997 in conformity with generally accepted accounting principles.
 
KPMG Peat Marwick LLP
 
Houston, Texas
July 18, 1997
 
                                     F-163
<PAGE>
 
                               YALE INCORPORATED
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                       SEPTEMBER 30,  JUNE 30,
                                                           1996         1997
                                                       ------------- ----------
<S>                                                    <C>           <C>
                        ASSETS
CURRENT ASSETS:
  Cash and cash equivalents...........................  $  112,091   $   93,872
  Accounts receivable, net of allowance for doubtful
   accounts of $5,000.................................   1,355,712    1,553,593
  Inventories.........................................      80,563       89,466
  Costs and estimated earnings in excess of billings
   on uncompleted contracts...........................     127,177      295,298
  Prepaid expenses....................................      54,324       44,545
                                                        ----------   ----------
    Total current assets..............................   1,729,867    2,076,774
PROPERTY AND EQUIPMENT, net...........................     438,665      694,157
                                                        ----------   ----------
    Total assets......................................  $2,168,532   $2,770,931
                                                        ==========   ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of
   long-term debt.....................................  $  120,233   $  244,998
  Accounts payable....................................     529,545      763,695
  Accrued expenses....................................     217,847      219,303
  Billings in excess of costs and estimated earnings
   on uncompleted contracts...........................      93,306       19,401
                                                        ----------   ----------
    Total current liabilities.........................     960,931    1,247,397
LONG-TERM DEBT, net of current maturities.............     101,732      175,047
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock--no par value, stated value of $1 per
   share; 20,000 shares authorized; 1,000 shares
   issued and outstanding.............................       1,000        1,000
  Additional paid-in capital..........................     100,767      100,767
  Retained earnings...................................   1,004,102    1,246,720
                                                        ----------   ----------
    Total shareholders' equity........................   1,105,869    1,348,487
                                                        ----------   ----------
    Total liabilities and shareholders' equity........  $2,168,532   $2,770,931
                                                        ==========   ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-164
<PAGE>
 
                               YALE INCORPORATED
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                           YEAR ENDED         JUNE 30,
                                          SEPTEMBER 30, ----------------------
                                              1996         1996        1997
                                          ------------- ----------  ----------
                                                      (UNAUDITED)
<S>                                       <C>           <C>         <C>
REVENUES.................................  $10,065,130  $7,228,688  $7,362,875
COST OF SERVICES.........................    7,930,984   5,553,931   5,414,265
                                           -----------  ----------  ----------
  Gross profit...........................    2,134,146   1,674,757   1,948,610
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES................................    1,729,405   1,292,928   1,522,284
                                           -----------  ----------  ----------
  Income from operations.................      404,741     381,829     426,326
OTHER INCOME (EXPENSE):
  Interest expense.......................      (29,578)    (23,824)    (24,350)
  Other..................................      (49,791)    (21,383)     (9,358)
                                           -----------  ----------  ----------
NET INCOME...............................  $   325,372  $  336,622  $  392,618
                                           ===========  ==========  ==========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-165
<PAGE>
 
                               YALE INCORPORATED
 
                       STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                            ADDITIONAL                 TOTAL
                                     COMMON  PAID-IN    RETAINED   SHAREHOLDERS'
                                     STOCK   CAPITAL    EARNINGS      EQUITY
                                     ------ ---------- ----------  -------------
<S>                                  <C>    <C>        <C>         <C>
BALANCE, September 30, 1995......... $1,000  $100,767  $  803,730   $  905,497
  Net income........................    --        --      325,372      325,372
  Distributions to shareholders.....    --        --     (125,000)    (125,000)
                                     ------  --------  ----------   ----------
BALANCE, September 30, 1996.........  1,000   100,767   1,004,102    1,105,869
  Net income........................    --        --      392,618      392,618
  Distributions to shareholders.....    --        --     (150,000)    (150,000)
                                     ------  --------  ----------   ----------
BALANCE, June 30, 1997.............. $1,000  $100,767  $1,246,720   $1,348,487
                                     ======  ========  ==========   ==========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-166
<PAGE>
 
                               YALE INCORPORATED
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED
                                            YEAR ENDED         JUNE 30,
                                           SEPTEMBER 30, ---------------------
                                               1996         1996       1997
                                           ------------- ----------- ---------
                                                         (UNAUDITED)
<S>                                        <C>           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income...............................   $ 325,372    $ 336,622  $ 392,618
 Adjustments to reconcile net income to
  net cash provided by operating activities:
   Depreciation...........................     127,448       92,059    141,438
   Gain on sale of property and equipment.        (660)        (660)   (11,159)
   Changes in operating assets and
    liabilities:
    (Increase) decrease in--
     Accounts receivable..................      59,098     (149,234)  (197,881)
     Inventories..........................         410     (178,651)    (8,903)
     Costs and estimated earnings in excess 
      of billings on uncompleted contracts.    (93,145)     (51,801)  (168,121)
     Prepaid expenses.....................     (25,136)     (26,821)     9,779
    Increase (decrease) in--
     Accounts payable.....................       7,505      456,337    234,150
     Accrued expenses.....................      58,688      (52,607)     1,456
     Billings in excess of costs and
      estimated earnings on uncompleted 
      contracts...........................      54,294       38,574    (73,905)
                                             ---------    ---------  ---------
      Net cash provided by operating
       activities.........................     513,874      463,818    319,472
                                             ---------    ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment......    (315,074)    (315,074)  (403,831)
 Proceeds from sales of property and
  equipment...............................      41,945       41,945     18,060
                                             ---------    ---------  ---------
      Net cash used in investing
       activities.........................    (273,129)    (273,129)  (385,771)
                                             ---------    ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from long-term debt.............     233,400      233,400    319,000
 Payments of long-term debt...............    (253,784)    (221,810)  (120,920)
 Distributions to shareholders............    (125,000)    (125,000)  (150,000)
                                             ---------    ---------  ---------
      Net cash provided by (used in)
           financing activities...........    (145,384)    (113,410)    48,080
                                             ---------    ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS..............................      95,361       77,279    (18,219)
CASH AND CASH EQUIVALENTS, beginning of
 period...................................      16,730       16,730    112,091
                                             ---------    ---------  ---------
CASH AND CASH EQUIVALENTS, end of period..   $ 112,091    $  94,009  $  93,872
                                             =========    =========  =========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-167
<PAGE>
 
                               YALE INCORPORATED
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. BUSINESS AND ORGANIZATION
 
  Yale Incorporated (the Company) is primarily engaged in the installation and
servicing of heating and air conditioning systems for commercial and
industrial customers in the state of Minnesota.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Interim Financial Information
 
  The interim financial statements for the nine months ended June 30, 1996 are
unaudited, and certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principles, have been omitted. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the financial position, results of operations and cash flows
with respect to the interim financial statements, have been included. The
results of operations for the interim periods are not necessarily indicative
of the results for the entire fiscal year.
 
 Use of Estimates
 
  The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting year. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenues from work orders are recognized as services are performed. Revenues
on service and maintenance contracts are recognized over the life of the
contract. Revenues from construction contracts are recognized on a percentage
of completion basis using the cost-to-cost method. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and revenues and are recognized
in the period in which the revisions are determined.
 
 Cash and Cash Equivalents
 
  For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less to be
cash equivalents. Cash payments for interest were $37,791 and $24,350 for the
year ended September 30, 1996 and the nine months ended June 30, 1997,
respectively.
 
 Inventories
 
  Inventories consist of parts and supplies used in both the service and the
construction portions of the Company's operation. The inventory is valued at
the lower of cost or market, with cost determined on a first-in, first-out
(FIFO) basis.
 
 Property and Equipment
 
  Property and equipment is stated at cost. Depreciation is computed using the
straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated useful life of the asset.
 
  Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated.
 
                                     F-168
<PAGE>
 
                               YALE INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Upon retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
 
 Warranty Costs
 
  The Company warrants labor for the first year after installation on new air
conditioning and heating units. The Company generally warrants labor for 90
days after servicing of existing air conditioning and heating units. A reserve
for warranty costs is recorded upon completion of installation or service.
 
 Income Taxes
 
  The shareholders of the Company have elected to be taxed for federal and
Minnesota tax purposes as an S Corporation whereby the shareholders'
respective equitable shares in the taxable income of the Company are
reportable on their individual tax returns. The Company has made distributions
to the shareholders each year at least in amounts necessary to pay personal
income taxes payable on the Company's taxable income.
 
 New Accounting Pronouncement
 
  Effective October 1, 1995, the Company adopted SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Accordingly, in the event that facts and circumstances indicate that
property and equipment, and intangible or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are
compared to the asset's carrying amount to determine if a write-down to market
value is necessary. Adoption of this standard did not have a material effect
on the financial position or results of operations of the Company.
 
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
 
  Accrued expenses consists of the following:
 
<TABLE>
<CAPTION>
                                                         SEPTEMBER 30, JUNE 30,
                                                             1996        1997
                                                         ------------- --------
<S>                                                      <C>           <C>
  Accrued payroll costs and benefits....................   $209,324    $161,306
  Other accrued expenses................................      8,523      57,997
                                                           --------    --------
                                                           $217,847    $219,303
                                                           ========    ========
</TABLE>
 
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
 
  A summary of the status of uncompleted contracts is as follows:
 
<TABLE>
<CAPTION>
                                                         SEPTEMBER 30, JUNE 30,
                                                             1996        1997
                                                         ------------- --------
<S>                                                      <C>           <C>
  Costs incurred........................................  $1,162,529   $811,487
  Estimated earnings recognized.........................      60,763    108,605
                                                          ----------   --------
                                                           1,223,292    920,092
  Less billings on contracts............................   1,189,421    644,195
                                                          ----------   --------
                                                          $   33,871   $275,897
                                                          ==========   ========
</TABLE>
 
 
                                     F-169
<PAGE>
 
                               YALE INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
  These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheets under the following captions:
 
<TABLE>
<CAPTION>
                                                        SEPTEMBER 30, JUNE 30,
                                                            1996        1997
                                                        ------------- --------
<S>                                                     <C>           <C>
  Costs and estimated earnings in excess of billings on
   uncompleted contracts...............................   $127,177    $295,298
  Billings in excess of costs and estimated earnings on
   uncompleted contracts...............................    (93,306)    (19,401)
                                                          --------    --------
                                                          $ 33,871    $275,897
                                                          ========    ========
</TABLE>
 
5. PROPERTY AND EQUIPMENT
 
  The principal categories and estimated useful lives of property and
equipment are as follows:
 
<TABLE>
<CAPTION>
                                           ESTIMATED
                                             USEFUL   SEPTEMBER 30,  JUNE 30,
                                             LIVES        1996         1997
                                           ---------- ------------- ----------
   <S>                                     <C>        <C>           <C>
   Service and other vehicles.............  4-7 years   $ 675,544   $  845,186
   Machinery and equipment................ 5-10 years     141,367      153,019
   Office equipment, furniture and
    fixtures.............................. 5-10 years     101,171      124,444
   Leasehold improvements.................                     --       52,386
                                                        ---------   ----------
                                                          918,082    1,175,035
   Less accumulated depreciation..........               (479,417)    (480,878)
                                                        ---------   ----------
                                                        $ 438,665   $  694,157
                                                        =========   ==========
</TABLE>
 
6. SHORT- AND LONG-TERM DEBT
 
  The Company has an available line of credit of $450,000 that matures on
April 30, 1998. Advances issued are due on demand and accrue interest at 0.5%
above the prime rate. Also, the Company has an agreement to borrow up to
$350,000 of term debt secured by service and other vehicles and equipment. The
line of credit and equipment notes are secured by substantially all of the
Company's assets and the personal guarantees of certain shareholders. At June
30, 1997, the Company had $100,000 of outstanding borrowings on the line of
credit, and had approximately $320,000 of outstanding borrowings on the term
debt.
 
  Short- and long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                         SEPTEMBER 30, JUNE 30,
                                                             1996        1997
                                                         ------------- --------
<S>                                                      <C>           <C>
  Borrowings under line of credit agreement.............    $   --     $100,000
  Note payable to bank, due in monthly installments of
   $1,230, plus interest at 0.5% over prime, through May
   1997, secured by service and other vehicles..........      9,735         --
  Note payable to bank, due in monthly installments of
   $2,944, plus interest at 0.5% over prime, through
   August 1997, secured by service and other
   vehicles.............................................     32,695       6,195
  Note payable to bank, due in monthly installments of
   $1,805, plus interest at 0.5% over prime, through
   November 1998, secured by service and other vehicles.     46,948      30,703
  Note payable to bank, due in monthly installments of
   $1,014, plus interest at 0.5% over prime, through
   October 1998, secured by service and other vehicles..     25,346      16,220
  Note payable to bank, due in monthly installments of
   $1,584, plus interest at 0.5% over prime, through
   December 1998, secured by service and other vehicles.     42,744      28,488
</TABLE>
 
                                     F-170
<PAGE>
 
                               YALE INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
                                                       SEPTEMBER 30, JUNE 30,
                                                           1996        1997
                                                       ------------- ---------
<S>                                                    <C>           <C>
  Note payable to bank, due in monthly installments of
   $2,081, plus interest at 0.5% over prime, through
   April 1999, secured by service and other vehicles..      64,497      45,772
  Note payable to bank, due in monthly installments of
   $2,083, plus interest at 0.5% over prime, through
   February 2000, secured by service and other
   vehicles...........................................         --       66,667
  Note payable to bank, due in monthly installments of
   $3,000, plus interest at 0.5% over prime, through
   December 2000, secured by service and other
   vehicles...........................................         --      126,000
                                                         ---------   ---------
    Total short- and long-term debt...................     221,965     420,045
  Less short-term borrowings and current maturities...    (120,233)   (244,998)
                                                         ---------   ---------
                                                         $ 101,732   $ 175,047
                                                         =========   =========
</TABLE>
 
  The line of credit and the equipment notes contain certain restrictive
covenants relating to, among other items, minimum net income, minimum tangible
net worth, and debt to tangible net worth.
 
  The aggregate maturities of the short- and long-term debt as of September
30, 1996 are as follows:
 
<TABLE>
<S>                                                                     <C>
  1997................................................................. $120,233
  1998.................................................................   77,837
  1999.................................................................   23,895
                                                                        --------
                                                                        $221,965
                                                                        ========
</TABLE>
 
7. LEASES
 
  The Company operates out of facilities leased from a related entity under a
monthly operating lease requiring payments of $10,710 per month. The Company
sublets part of the building under an operating lease through February 1998.
Total rent expenses before sublease income for the year ended September 30,
1996 and the nine months ended June 30, 1997, were approximately $128,500 and
$96,400, respectively. Sublease income was approximately $39,000 and $29,250
for the year ended September 30, 1996 and the nine months ended June 30, 1997,
respectively. The Company has guaranteed the underlying mortgage
(approximately $405,000 as of September 30, 1996) for the facility.
 
8. RELATED PARTY TRANSACTIONS
 
  During the year ended September 30, 1996 and the nine months ended June 30,
1997, the Company paid management fees to related parties totaling
approximately $110,100 and $60,075, respectively. In addition, as discussed in
note 7, the Company leases its operating facilities from a related entity.
 
9. EMPLOYEE BENEFIT PLANS
 
  The Company has a 401(k) plan covering all employees not covered by a
collective bargaining agreement. Eligible employees may contribute from 2 to
20% of their qualifying compensation to the plan, with the Company required to
match 50% of the employee's first 6% of contributions. The Company may make
additional contributions to the plan to the extent authorized by the Board of
Directors. Total expense related to this plan for the year ended September 30,
1996 and the nine months ended June 30, 1997, was approximately $30,100 and
$20,778, respectively.
 
                                     F-171
<PAGE>
 
                               YALE INCORPORATED
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
  The Company makes contributions to union-administered benefit funds which
cover the majority of the Company's employees. For the year ended September
30, 1996 and the nine months ended June 30, 1997, the participation costs
charged to operations were approximately $592,400 and $511,720, respectively.
 
  Governmental regulations impose certain requirements relative to multi-
employer plans. In the event of plan termination or employer withdrawal, an
employer may be liable for a portion of the plan's unfunded vested benefits,
if any. The Company has not received information from the plans'
administrators to determine its share of any unfunded vested benefits. The
Company does not anticipate withdrawal from the plans, nor is the Company
aware of any expected plan terminations.
 
10. SALES TO SIGNIFICANT CUSTOMER
 
  During the year ended September 30, 1996 and the nine months ended June 30,
1997, sales to one customer accounted for approximately 18% and 26%,
respectively, of the Company's revenues.
 
11. COMMITMENTS AND CONTINGENCIES
 
 Claims
 
  The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
 
 Stock Transfer Agreement
 
  The Company has a stock transfer agreement with the shareholders
(participants) covering all shares of common stock whereby the Company is
required to repurchase the shares of a participant in certain circumstances.
Additionally, the Company has an option to repurchase the common shares of a
participant in certain circumstances.
 
12. FINANCIAL INSTRUMENTS
 
  The Company's financial instruments consist of cash and cash equivalents and
short- and long-term debt. The Company believes that the carrying value of
these instruments on the accompanying balance sheets approximates their fair
value.
 
13. ACQUISITION OF COMPANY
 
  In May 1997, the Company signed a letter of intent with Group Maintenance
America Corp. (GroupMAC), whereby GroupMAC will acquire the Company in a
merger transaction for a combination of cash and common shares of GroupMAC
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC, subject to certain conditions including the negotiation of
definitive agreements and approval by Directors of both companies.
 
                                     F-172
<PAGE>
 
  [The inside back cover of the Prospectus contains a collage of nine
photographs. The photographs are in color and depict the following: a worker
with a clip board standing next to the open driver's door of an Airtron panel
truck, MacDonald-Miller workers in a classroom receiving instructions, a
Jarrell Plumbing six-wheel service truck, Linford employees discussing a
project at the rear of a panel truck, employees making a house call at a
residence, a worker unloading a step ladder from an All Service Electric panel
truck in front of a commercial building, a technician working on an electric
oven installation, a Paul E. Smith Company employee in a panel truck, and a
dispatcher working in front of a keyboard and color monitor.]
<PAGE>
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
  NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY OF THE UNDERWRITERS
OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLIC-
ITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITA-
TION OF AN OFFER TO BUY ANY OF THE SHARES OF COMMON STOCK OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALI-
FIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLIC-
ITATION.
 
                                ---------------
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Prospectus Summary........................................................    3
Risk Factors..............................................................    9
The Company...............................................................   16
Use of Proceeds...........................................................   17
Capitalization............................................................   18
Dividend Policy...........................................................   18
Dilution..................................................................   19
Selected Historical and Pro Forma Financial Data..........................   20
Management's Discussion and Analysis of Financial Condition and Results of
 Operations...............................................................   22
Business..................................................................   40
Management................................................................   51
Related Party Transactions................................................   59
Security Ownership of Certain Beneficial Owners and Management............   61
The Acquisitions..........................................................   63
Description of Capital Stock..............................................   64
Description of Bank Credit Agreement......................................   66
Shares Eligible for Future Sale...........................................   68
Underwriting..............................................................   71
Legal Matters.............................................................   72
Experts...................................................................   72
Available Information.....................................................   73
Index to Financial Statements.............................................  F-1
</TABLE>
 
  UNTIL     , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY RE-
QUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
                                      SHARES
 
                   [LOGO OF GROUP MAINTENANCE APPEARS HERE]
                        GROUP MAINTENANCE AMERICA CORP.
 
                                 COMMON STOCK
 
                               ----------------
                                  PROSPECTUS
                               ----------------
 
                         THE ROBINSON-HUMPHREY COMPANY
 
                            WILLIAM BLAIR & COMPANY
 
                         ABN AMRO CHICAGO CORPORATION
 
                                       , 1997
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
 
                                    PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
  The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of the securities being registered. All amounts are estimates
except for the fees payable to the Commission and the NASD and the NYSE
listing fee.
 
<TABLE>
<CAPTION>
                                                                     AMOUNT TO
                                                                      BE PAID
                                                                     ----------
      <S>                                                            <C>
      Commission registration fee................................... $   40,145
      NASD filing fee...............................................     13,748
      NYSE listing fee..............................................    116,391
      Printing and Engraving expenses...............................    225,000
      Legal fees and expenses.......................................  1,700,000
      Accounting fees and expenses..................................  2,000,000
      Blue sky fees and expenses....................................      2,000
      Transfer Agent's and Registrar's fees.........................     12,000
      Miscellaneous.................................................    390,716
                                                                     ----------
        TOTAL....................................................... $4,500,000
                                                                     ==========
</TABLE>
 
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
 
  Article 2.02A of the TBCA provides, in relevant part, as follows:
 
  Subject to the provisions of Section B and C of this Article, each
corporation shall have the power:
 
    (16) to indemnify directors, officers, employees, and agents of the
  corporation and to purchase and maintain liability insurance for those
  persons.
 
  Article IX of the Articles of Incorporation of the Company (therein referred
to as the "Corporation") provides as follows:
 
    1. Right to Indemnification. Each person who was or is made a party or is
  threatened to be made a party to or is otherwise involved in any
  threatened, pending or completed action, suit or proceeding, whether civil,
  criminal, administrative, arbitrative or investigative, any appeal in such
  action, suit or proceeding, and any inquiry or investigation that would
  lead to such action, suit or proceeding (hereinafter a "proceeding"), by
  reason of the fact that he or she, or a person of whom he or she is the
  legal representative, is or was a director or officer of the Corporation or
  is or was serving at the request of the Corporation as a director or
  officer of another corporation or of a partnership, joint venture, trust or
  other enterprise, including service with respect to any employee benefit
  plan (hereinafter an "indemnitee"), whether the basis of such proceeding is
  alleged action in an official capacity as a director or officer or in any
  other capacity while serving as a director or officer, shall be indemnified
  and held harmless by the Corporation to the fullest extent authorized by
  the TBCA, as the same exists or may hereafter be amended (but, in the case
  of any such amendment, only to the extent that such amendment permits the
  Corporation to provide broader indemnification rights than permitted prior
  thereto), against all judgments, fines, penalties (including excise tax and
  similar taxes), settlements, and reasonable expenses actually incurred by
  such indemnitee in connection therewith. The right to indemnification
  conferred in this Article shall include the right to be paid by the
  Corporation the expenses incurred in defending any such proceeding in
  advance of its final disposition (hereinafter an "advancement of
  expenses"); provided, however, that, if the TBCA requires, an advancement
  of expenses incurred by an indemnitee shall be made only upon delivery to
  the Corporation of an undertaking, by or on behalf of such indemnitee, to
  repay all amounts so advanced if it shall ultimately be determined that
  such indemnitee is not entitled to be indemnified for such expenses under
  this Article or otherwise.
 
                                     II-1
<PAGE>
 
    2. Insurance. The Corporation may purchase and maintain insurance, at its
  expense, on behalf of any indemnitee against any liability asserted against
  him and incurred by him in such a capacity or arising out of his status as
  a representative of the Corporation, whether or not the Corporation would
  have the power to indemnify such person against such expense, liability or
  loss under the TBCA.
 
    3. Indemnity of Employees and Agents of the Corporation. The Corporation
  may, to the extent authorized from time to time by the board of directors,
  grant rights to indemnification and to the advancement of expenses to any
  employee or agent of the Corporation to the fullest extent of the
  provisions of this Article or as otherwise permitted under the TBCA with
  respect to the indemnification and advancement of expenses of directors and
  officers of the Corporation.
 
  The Company has entered into indemnity agreements with its directors and
certain key officers pursuant to which the Company generally is obligated to
indemnify its directors and such officers to the full extent permitted by the
TBCA as described above.
 
  The Form of Underwriting Agreement filed herewith as Exhibit 1.1, under
certain circumstances, provides for indemnification by the Underwriters of the
directors, officers and controlling persons of the Company.
 
  The Company has purchased liability insurance policies covering the
directors and officers of the Company, including, to provide protection where
the Company cannot legally indemnify a director or officer and where a claim
arises under the Employee Retirement Income Security Act of 1974 against a
director or officer based on an alleged breach of fiduciary duty or other
wrongful act.
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
   
  On October 21, 1996, the Company issued 977,200 shares of Common Stock to or
at the direction of its founders (Richard K. Reiling (225,000 shares to Mr.
Reiling and 17,000 shares to certain designees named by Mr. Reiling), J.
Patrick Millinor, Jr. (220,000 shares), Richard S. Rouse (112,600 shares to
Mr. Rouse and 21,400 shares to certain designees named by Mr. Rouse), Chester
J. Jachimiec (132,000 shares to Mr. Jachimiec, including 16,000 shares held in
each of the Paula Ann Jachimiec Trust and the Sarah Elizabeth Jachimiec Trust,
of which Mr. Jachimiec is the trustee, and 2,000 shares to a designee named by
Mr. Jachimiec), Edward J. Hoffer (107,200 shares), James Ford (100,000 shares)
and Darren B. Miller (40,000 shares)) at a price of $.003 per share for an
aggregate sales price of $2,443. On October 22, 1996, the Company issued
34,000 shares of Common Stock to Arthur B. Goetze and Darren B. Miller for a
purchase price of $.938 per share for an aggregate consideration of $31,875.
On October 24, 1996, the Company and Gordon Cain entered into a Subscription
Agreement pursuant to which Mr. Cain agreed to purchase from the Company
2,600,000 shares of Common Stock at a price of $3.077 per share. Pursuant to
such agreement, Mr. Cain has purchased all of such shares for an aggregate of
$8,000,000. On that same day, the Company granted options to purchase shares
of Common Stock as follows: 50,000 shares to Mr. Millinor (of which 16,667
will vest on December 31, 1997); 46,000 shares to Mr. Jachimiec (of which
15,333 shares will vest on December 31, 1997); 40,000 shares to Mr. Rouse (of
which 13,333 will vest on December 31, 1997); and 145,600 shares to nine other
individuals (of which 55,199 shares will vest on or before December 31, 1997).
Such options were issued for services rendered pursuant to employment
agreements and have an exercise price of $3.08. On April 30, 1997, Mr.
Millinor purchased 145 shares for an aggregate sales price of $1,000. On May
27, 1997, John Sullivan exercised an option to purchase 10,000 shares at a
price per share of $3.077 for an aggregate of $30,775. All of such sales were
completed without registration under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act.     
   
  On May 2, 1997, the Company issued 4,652,140 shares of Common Stock and
14,873,133 shares of Series A Preferred Stock to the shareholders of Airtron
for all of the issued and outstanding capital stock, warrants, SARs and
Deferred Compensation interests of Airtron; on June 20, 1997, the Company
issued 403,111 shares of Common Stock and 1,568,000 shares of Series D
Preferred Stock to two shareholders of K&N for all the issued and outstanding
stock of K&N; on June 24, 1997, the Company issued 105,687 shares of Common
Stock and 580,000 shares of Series E Preferred Stock to two former
shareholders of Hallmark for all the issued and     
 
                                     II-2
<PAGE>
 
   
outstanding stock of Hallmark; on June 24, 1997, the Company issued 12,698
shares of Common Stock to one shareholder of Jarrell for all the issued and
outstanding stock of Jarrell; on June 24, 1997, the Company issued 6,428
shares of Common Stock to Way; on June 25, 1997, the Company issued 359,302
shares of Common Stock to four shareholders of A-ABC and A-1 for all the
issued and outstanding stock of A-ABC and A-1; on June 25, 1997, the Company
issued 157,256 shares of Common Stock and 678,920 shares of Series B Preferred
Stock (which were exchanged for 43,106 additional shares of Common Stock of
the Company) to one shareholder of Charlie's for all the issued and
outstanding stock of Charlie's; on June 21, 1997, the Company issued 65,536
shares of Common Stock and 100,000 shares of Series C Preferred Stock to two
shareholders of Costner for all the issued and outstanding stock of Costner;
on July 15, 1997, the Company issued 62,001 shares of Common Stock and 664,691
shares of Series F Preferred Stock to two shareholders of Sibley for all the
issued and outstanding stock of Sibley; on July 17, 1997, the Company issued
192,123 shares of Common Stock and 550,000 shares of Series G Preferred Stock
to Callahan Roach; on July 31, 1997, the Company issued 49,804 shares of
Common Stock and 435,771 shares of Series I Preferred Stock to USA (such sales
of Common Stock and Preferred Stock are herein referred to as "Pre-Offering
Company Sales").     
   
  Simultaneously with the consummation of the Offering, the Company will issue
2,975,309 shares of Common Stock in connection with the acquisitions of the
Offering Acquisition Companies, Costner and Way Residential (such sales of
Common Stock are herein referred to as "Offering Acquisition Company Sales").
    
  The Pre-Offering Company Sales were and the Offering Acquisition Company
Sales will be completed without registration under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act.
 
  On May 19, 1997, the Company sold 35,297 units consisting of an aggregate of
14,119 shares of Common Stock and 45,138 shares of Series A Preferred Stock to
certain Airtron division vice presidents at a price of $4.04 per unit for an
aggregate sales price of $142,600. On July 17, 1997, the Company sold
approximately 1,597,686 units consisting of an aggregate of 639,074 shares of
Common Stock and 2,043,121 shares of Series A Preferred Stock to the
participants in the Airtron, Inc. Savings and Profit Sharing Plan at a price
of $4.04 per unit for an aggregate sales price of $6,454,651. Such sales were
exempt from registration by virtue of Section 4(2) of the Securities Act and
Rule 701 promulgated under the Securities Act.
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  (a) Exhibits
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
  1.1**  Form of Underwriting Agreement between the Company and the
         Underwriters named therein.
  3.1*   Articles of Incorporation of the Company, as amended.
  3.2*   Bylaws of the Company, as amended.
  4.1    Form of Certificate representing the Common Stock, par value $.001 per
         share, of the Company.
  4.2    Form of Stock Transfer Restriction Agreement among the Company and
         certain holders of the Common Stock.
  4.3    Form of Registration Rights Agreement among the Company and certain
         holders of the Common Stock.
  4.4    Form of Registration Rights Agreement among the Company and holders of
         Common Stock who were formerly holders of capital stock of the Pre-
         Offering Companies and the Offering Acquisition Companies.
  5      Opinion of Bracewell & Patterson, L.L.P. as to the legality of the
         Common Stock being offered.
 10.1    Form of Stock Awards Plan.
 10.2    Form of Option Agreement for Stock Awards Plan.
</TABLE>    
 
 
                                     II-3
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
  10.3   Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of a Majority of the Outstanding Common Stock of
         Airtron, Inc., dated April 30, 1997. (Confidential information has
         been omitted from this document and has been filed separately with the
         Commission.)
  10.4   Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of the Outstanding Capital Stock of K & N
         Plumbing, Heating and Air Conditioning, Inc., dated June 20, 1997.
         (Confidential information has been omitted from this document and has
         been filed separately with the Commission.)
  10.5   Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of the Outstanding Capital Stock of Costner
         Brothers, Inc., dated June 21, 1997. (Confidential information has
         been omitted from this document and has been filed separately with the
         Commission.)
  10.6   Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of the Outstanding Capital Stock of Hallmark Air
         Conditioning, Inc., dated June 24, 1997. (Confidential information has
         been omitted from this document and has been filed separately with the
         Commission.)
  10.7   Agreement and Plan of Merger among Group Maintenance America Corp.,
         JARL Acquisition Corp., AA JARL, Inc. and James Wilburn, dated March
         17, 1997.
  10.8   Asset Purchase Agreement among Hallmark Air Conditioning, Inc. and Way
         Service, Inc., dated June 24, 1997. (Confidential information has been
         omitted from this document and has been filed separately with the
         Commission.)
  10.9   Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of the Outstanding Capital Stock Charlie
         Crawford, Inc., dated June 25, 1997. (Confidential information has
         been omitted from this document and has been filed separately with the
         Commission.)
  10.10  Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of the Outstanding Capital Stock of A-ABC
         Appliance, Inc. and A-1 Appliance & Air Conditioning, Inc., dated July
         3, 1997. (Confidential information has been omitted from this document
         and has been filed separately with the Commission.)
  10.11  Agreement and Plan of Exchange by and among Group Maintenance America
         Corp. and the Holders of the Outstanding Capital Stock of Sibley
         Services, Inc., dated July 15, 1997. (Confidential information has
         been omitted from this document and has been filed separately with the
         Commission.)
  10.12  Agreement and Plan of Merger by and among Group Maintenance America
         Corp., CRP Acquisition Corp., Callahan Roach Products & Publications,
         Inc. and the Holders of the Outstanding Capital Stock of Callahan
         Roach Products & Publications, Inc., dated July 16, 1997.
  10.13  Agreement and Plan of Merger by and among Group Maintenance America
         Corp., CRP Acquisition Corp., Callahan Roach & Associates and all of
         the Partners of Callahan Roach & Associates, dated July 16, 1997.
  10.14  Asset Purchase Agreement among United Acquisition Corp., Group
         Maintenance America Corp., United Service Alliance, L.C. and the
         Members of United Service Alliance, L.C., Inc., dated July 31, 1997.
         (Confidential information has been omitted from this document and has
         been filed separately with the Commission.)
  10.15  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., All Service Acquisition Corp., All Service Electric,
         Inc. and the Holder of the Outstanding Capital Stock of All Service
         Electric, Inc., dated as of August 18, 1997.
  10.16  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., AMS Acquisition Corp., Arkansas Mechanical Services,
         Inc. and the Holders of the Outstanding Capital Stock of Arkansas
         Mechanical Services, Inc., dated as of August 18, 1997.
  10.17  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Central Carolina Acquisition Corp., Central Carolina
         Air Conditioning Company and the Holders of the Outstanding Capital
         Stock of Central Carolina Air Conditioning Company, dated as of August
         18, 1997.
</TABLE>
 
 
                                      II-4
<PAGE>
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
  10.18  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Evans Acquisition Corp., Evans Services, Inc., the
         Holder of the Outstanding Capital Stock of Evans Services, Inc., dated
         as of August 18, 1997.
  10.19  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Linford Acquisition Corp., Linford Service Company and
         the Holders of the Outstanding Common Stock of Linford Service
         Company, dated as of August 18, 1997.
  10.20  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., MacDonald-Miller Acquisition Corp., MacDonald-Miller
         Industries, Inc., the Principal Holders of the Outstanding Capital
         Stock of MacDonald-Miller Industries, Inc. and the Trustee of the
         MacDonald-Miller Stock Ownership Plan and Trust, dated as of August
         18, 1997.
  10.21  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Masters Acquisition Corp., Masters, Inc. and the Holder
         of the Outstanding Capital Stock of Masters, Inc., dated as of August
         18, 1997.
  10.22  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., AMS Acquisition Corp., Mechanical Services, Inc. and
         the Holders of the Outstanding Capital Stock of Mechanical Services,
         Inc., dated as of August 18, 1997.
  10.23  Form of Agreement and Plan of Exchange by and among Group Maintenance
         America Corp.,  Paul E. Smith Co., Inc. and the Holders of the
         Outstanding Capital Stock of Paul E. Smith Co., Inc., dated as of
         August 18, 1997.
  10.24  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Southeast Mechanical Service, Inc. and the Holders of
         the Outstanding Capital Stock of Southeast Mechanical Service, Inc.,
         dated as of August 18, 1997.
  10.25  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Van's Acquisition Corp., Van's Comfortemp Air
         Conditioning, Inc. and the Holders of the Outstanding Capital Stock of
         Van's Comfortemp Air Conditioning, Inc., dated as of August 18, 1997.
  10.26  Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Willis Acquisition Corp., Willis Refrigeration, Heating
         & Air Conditioning, Inc. and the Holders of the Outstanding Capital
         Stock of Willis Refrigeration, Heating & Air Conditioning, Inc., dated
         as of August 18, 1997.
 10.27   Form of Agreement and Plan of Merger by and among Group Maintenance
         America Corp., Yale Acquisition Corp., Yale Incorporated and the
         Holders of the Outstanding Capital Stock of Yale Incorporated, dated
         as of August 18, 1997.
  10.28  Form of Employment Agreement by and between Group Maintenance America
         Corp. and James P. Norris.
  10.29  Form of Employment Agreement by and between Group Maintenance America
         Corp. and J. Patrick Millinor, Jr.
  10.30  Form of Employment Agreement by and between Group Maintenance America
         Corp. and Donald L. Luke.
  10.31  Form of Employment Agreement by and between Group Maintenance America
         Corp. and James D. Jennings.
  10.32  Form of Employment Agreement by and between Group Maintenance America
         Corp. and Timothy Johnston.
  10.33  Form of Employment Agreement by and between Group Maintenance America
         Corp. and William Michael Callahan.
  10.34  Form of Employment Agreement by and between Group Maintenance America
         Corp. and Alfred R. Roach, Jr.
  10.35  Subscription Agreement between the Company and Gordon Cain.
</TABLE>    
 
                                      II-5
<PAGE>
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
  10.36  Airtron, Inc. 1997 Corporate Staff Bonus Plan.
  10.37  Credit Agreement by and among Group Maintenance America Corp., the
         Subsidiaries listed as guarantors, Texas Commerce Bank National
         Association and the signatory banks, dated as of May 2, 1997, as
         amended by the Amendment and Waiver of Credit Agreement by and among
         Group Maintenance America Corp., Texas Commerce Bank National
         Association and the signatory banks, dated as of July 14, 1997.
  21     Subsidiaries of the Company.
  23.1   Consent of Bracewell & Patterson, L.L.P. (included in its opinion
         filed as Exhibit 5 hereto).
  23.2*  Consent of KPMG Peat Marwick LLP.
  23.3*  Consent of Deloitte & Touche LLP.
  23.4*  Consent of Moss Adams LLP.
  23.5   Consent of Ronald D. Bryant.
  23.6   Consent of David L. Henninger.
  23.7   Consent of Andrew Jeffrey Kelly.
  23.8   Consent of Thomas B. McDade.
  23.9   Consent of Lucian Morrison.
  23.10  Consent of Fredric J. Sigmund.
  24     Powers of attorney.
  27     Financial Data Schedule.
</TABLE>    
--------
 * Filed herewith.
** To be filed by amendment.
 
  (b) Financial Statement Schedules
 
  The following financial statement schedules are included herein.
 
    None.
 
  All other schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions,
are inapplicable, or the information is included in the consolidated financial
statements, and therefore have been omitted.
 
ITEM 17. UNDERTAKINGS.
 
  (a) The undersigned registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
 
  (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described in Item 14, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Company of
expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
 
                                     II-6
<PAGE>
 
                                  SIGNATURES
   
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GROUP
MAINTENANCE AMERICA CORP. HAS DULY CAUSED THIS REGISTRATION STATEMENT OR
AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON OCTOBER 17, 1997.
    
                                          GROUP MAINTENANCE AMERICA CORP.
 
                                              /s/ J. Patrick Millinor, Jr.
                                          By:__________________________________
                                             J. Patrick Millinor, Jr.
                                             Chief Executive Officer
   
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE INDICATED CAPACITIES ON OCTOBER 17, 1997.     
 
<TABLE>
<CAPTION>
                      SIGNATURE                                 TITLE
                      ---------                                 -----
 
     <S>                                         <C>
              /s/ James P. Norris*               Chairman of the Board
     ___________________________________________
                  James P. Norris
 
           /s/ J. Patrick Millinor, Jr.          Director and Chief Executive Officer
       _________________________________________ (principal executive officer)
              J. Patrick Millinor, Jr.
 
                /s/ Darren B. Miller             Senior Vice President--Chief
     ___________________________________________ Financial Officer (principal
                  Darren B. Miller               financial and accounting officer)
 
               /s/ Donald L. Luke*               Director, President and Chief
     ___________________________________________ Operating Officer
                   Donald L. Luke
 
            /s/ Chester J. Jachimiec*            Director
     ___________________________________________
                Chester J. Jachimiec
 
              /s/ Richard S. Rouse*              Director
     ___________________________________________
                  Richard S. Rouse
 
              /s/ James D. Jennings*             Director
     ___________________________________________
                 James D. Jennings
 
              /s/ Timothy Johnston*              Director
     ___________________________________________
                  Timothy Johnston
 
              /s/ John M. Sullivan*              Director
     ___________________________________________
                  John M. Sullivan
 
              /s/ James D. Weaver*               Director
     ___________________________________________
                   James D. Weaver
</TABLE>
 
          /s/ Randolph W. Bryant
    *By:_________________________________
             Randolph W. Bryant
        (Attorney-in-fact for persons
                 indicated)
 
                                     II-7