<PAGE>
 
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1997
                                                     REGISTRATION NO. 333-
-------------------------------------------------------------------------------
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM S-4
                            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
     8 GREENWAY PLAZA, SUITE 1500                   AND SECRETARY
         HOUSTON, TEXAS 77046               8 GREENWAY PLAZA, SUITE 1500
            (713) 860-0100                      HOUSTON, TEXAS 77046
   (ADDRESS, INCLUDING ZIP CODE, AND               (713) 860-0100
      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
                         BRACEWELL & PATTERSON, L.L.P.
                       711 LOUISIANA STREET, SUITE 2900
                           HOUSTON, TEXAS 77002-2781
                                (713) 223-2900
 
  If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
 
                        CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
                                                                  PROPOSED
                                                   PROPOSED       MAXIMUM
                                                   MAXIMUM       AGGREGATE      AMOUNT OF
     TITLE OF EACH CLASS OF       AMOUNT TO BE  OFFERING PRICE    OFFERING     REGISTRATION
  SECURITIES TO BE REGISTERED      REGISTERED      PER UNIT       PRICE(1)        FEE(1)
-------------------------------------------------------------------------------------------
<S>                              <C>            <C>            <C>            <C>
                                   7,000,000
Common Stock, $0.001 par value..     shares         $14.00      $98,000,000      $28,910
-------------------------------------------------------------------------------------------
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
    Pursuant to Rule 457(c), the offering price and registration fee with
    respect to the Common Stock are computed on the basis of the average of
    the high and low prices of the Common Stock on December 5, 1997, as
    reported on The New York Stock Exchange, Inc. Composite Transactions
    Reporting System.
 
                               ----------------
 
  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.
 
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<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 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 DECEMBER 10, 1997
 
                                7,000,000 SHARES
 
                                      LOGO
[Logo of Group Maintenance America appears here]
 
                        GROUP MAINTENANCE AMERICA CORP.
 
                                  COMMON STOCK
 
                                  -----------
 
  Group Maintenance America Corp., a Texas corporation (collectively with its
subsidiaries, the "Company") may offer and issue from time to time up to
7,000,000 shares of common stock, par value $0.001 ("Common Stock") covered by
this Prospectus in connection with business combination transactions (each, an
"Acquisition") involving its acquisition, directly or indirectly, of
businesses, securities or assets of companies doing business in the Company's
industry. The price and other terms at which the Common Stock will be offered
shall be determined by negotiations between the Company and the companies to be
directly or indirectly acquired. The Company does not expect to pay any
underwriting discounts or commissions, but it may pay finder's fees from time
to time with respect to specific acquisitions. Any person receiving such fees
may be deemed to be an underwriter within the meaning of the Securities Act of
1933, as amended. The Company will pay all expenses of this Offering.
 
  As of December 5, 1997, 20,629,167 shares of the Common Stock were issued and
outstanding. The Common Stock is traded on the New York Stock Exchange under
the symbol "MAK." On December 5, 1997, the last reported sales price of the
Common Stock on the New York Stock Exchange was $14.00 per share.
 
  Persons receiving shares of the Common Stock offered hereby may be
contractually required to hold some portions of those shares for periods of up
to two years. In addition, pursuant to the provisions of Rule 145 under the
Securities Act of 1933, as amended, the volume limitations and certain other
requirements of Rule 144 under the Securities Act will apply to resales of
those shares by affiliates of the businesses the Company acquires for a period
of one year from the date of acquisition of the shares of Common Stock (or such
shorter period as the Securities and Exchange Commission may prescribe).
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS OF 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.
 
                               December   , 1997
<PAGE>
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Prospectus Summary........................................................    3
Risk Factors..............................................................    6
The Company...............................................................   12
Price Range of Common Stock...............................................   13
Capitalization............................................................   14
Dividend Policy...........................................................   14
Selected Historical and Pro Forma Financial Data..........................   15
Management's Discussion and Analysis of Financial Condition and Results of
 Operations...............................................................   17
Business..................................................................   34
Management................................................................   45
Related Party Transactions................................................   53
Security Ownership of Certain Beneficial Owners and Management............   55
The Acquisitions..........................................................   56
Description of Capital Stock..............................................   57
Description of Bank Credit Agreement......................................   59
Shares Eligible for Future Sale...........................................   61
Plan of Distribution......................................................   63
Experts...................................................................   63
Available Information.....................................................   64
Index to Financial Statements.............................................  F-1
</TABLE>
 
  NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFOR-
MATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY 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 SUB-
SEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION 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 SOLICITATION 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 AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
 
 
                                       2
<PAGE>
 
                               PROSPECTUS SUMMARY
 
  The Company has acquired 24 companies (the "GroupMAC Companies"). 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. ("GroupMAC Parent") and
the GroupMAC Companies, as well as to the business and operations of their
predecessors and (ii) 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 the IPO hereinafter referred to.
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. Upon completion of the closing of the initial public offering of
the Company's Common Stock (the "IPO") on November 13, the Company's fiscal
year was changed to 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 24 companies totaling $307.5 million in combined 1996 revenues.
Thirteen of the companies (the "Offering Acquisition Companies") were acquired
on November 13, 1997 concurrently with the closing of the IPO, and eleven of
the companies ("Pre-Offering Companies") had been acquired previously. The
Company believes it is one of the largest diversified providers of HVAC,
plumbing and electrical services in the United States.
 
  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.
 
  The Company is a Texas corporation with its principal executive offices
located at 8 Greenway Plaza, Suite 1500, Houston, Texas 77046, and its
telephone number is (713) 860-0100.
 
                                  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 6 for certain information that should be considered by prospective
investors of the Common Stock offered hereby.
 
                                       3
<PAGE>
 
             SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
 
  The Company previously acquired the Pre-Offering Companies and acquired the
Offering Acquisition Companies simultaneously with the closing of the IPO. 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 September 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; 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; Callahan Roach
Products & Publications, Inc. and Callahan Roach & Associates
("Callahan/Roach"); and Sibley Services, Incorporated ("Sibley Services") which
were acquired as of July 1, 1997; and United Service Alliance ("USA") which was
acquired as of July 31, 1997.
 
  The summary pro forma financial data of the Company as of and for the nine
months ended September 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 IPO 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.
 
                                       4
<PAGE>
 
                             SUMMARY FINANCIAL DATA
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                         PRO FORMA AS ADJUSTED
                                                     -------------------------------
                            FISCAL YEARS ENDED                     NINE MONTHS ENDED
                            FEBRUARY 28 OR 29,                       SEPTEMBER 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    $232,695 $244,321
Gross Profit............   21,766     21,091  23,374     71,596      53,059   57,281
Selling, General and
 Administrative
 Expenses(3)............   20,282(4)  17,615  19,811     48,953(5)   36,860   41,544(6)
Goodwill
 Amortization(7)........       --         --      --      1,991       1,493    1,493
                          -------    ------- -------   --------    -------- --------
Income from Operations..    1,484      3,476   3,563     20,652      14,706   14,244
Interest Income
 (Expense), Net.........       76         68      89         90          73      261
Other Income, Net.......      140        246     256        297         303      641
                          -------    ------- -------   --------    -------- --------
Income Before Income Tax
 Provision..............    1,700      3,790   3,908     21,039      15,082   15,146
Income Tax Provision....      911      1,651   1,572      9,212       6,594    6,627
                          -------    ------- -------   --------    -------- --------
Net Income..............  $   789    $ 2,139 $ 2,336   $ 11,827    $  8,488 $  8,519
                          =======    ======= =======   ========    ======== ========
Net Income Per Share....                               $   0.56    $   0.40 $   0.40
                                                       ========    ======== ========
Weighted Average Shares
 Outstanding(8).........                                 21,220      21,220   21,220
                                                       ========    ======== ========
OTHER DATA:
EBITDA(9)...............  $ 1,853    $ 3,960 $ 4,027   $ 26,061    $ 18,744 $ 18,872
                          =======    ======= =======   ========    ======== ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                     SEPTEMBER 30, 1997
                                              ----------------------------------
                                                          PRO       PRO FORMA
                                              ACTUAL   FORMA(2)   AS ADJUSTED(2)
                                              -------  ---------  --------------
<S>                                           <C>      <C>        <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents.................... $ 7,801  $  10,580     $ 26,266
Working Capital..............................   3,334    (17,252)      38,819
Total Assets.................................  81,156    176,880      188,320
Total Debt...................................  32,071     43,392        3,178
Preferred Stock..............................  19,271     19,271           --
Shareholders' Equity (Deficit)...............  (4,680)    28,959      132,146
</TABLE>
-------
(1) Concurrent with the IPO, the Company changed its fiscal year end from
    February 28 to December 31.
(2) Pro forma financial data give effect to the 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 September
    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 IPO and the redemption of preferred stock.
(3) Reflects a decrease of $11.1 million, $6.7 million and $6.9 million for the
    year ended December 31, 1996, nine months ended September 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 $2.8 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 the 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.
 
                                       5
<PAGE>
 
                                 RISK FACTORS
 
  In addition to the other information in this Prospectus, prospective
investors in the Common Stock offered hereby should consider carefully the
following factors before deciding to invest in the Common Stock.
 
LIMITED COMBINED OPERATING HISTORY
 
  The Company has conducted limited operations to date. See "The Company."
Prior to their acquisition by the Company, the GroupMAC Companies operated 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 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. 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
 
                                       6
<PAGE>
 
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."
 
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
 
                                       7
<PAGE>
 
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."
 
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 offering, 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
 
                                       8
<PAGE>
 
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."
 
CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS
 
  The executive officers, directors and certain founding shareholders of the
Company beneficially own a significant percentage of the outstanding Common
Stock. Accordingly, such persons 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
shareholders. See "Security Ownership of Certain Beneficial Owners and
Management."
 
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK
 
  At the date of this Prospectus, approximately 20.6 million shares of Common
Stock were outstanding. The 8,340,000 shares sold in the IPO (other than
shares that may be purchased by affiliates of the Company) are 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 have or will issue approximately 700,000 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 approximately 3.6 million 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 of the Company's IPO (the "Underwriters") not
to exercise their
 
                                       9
<PAGE>
 
respective demand rights for the two year period following the IPO 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. At the date of this Prospectus,
approximately 1.2 million "restricted" shares of Common Stock are 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.
 
  The Company has outstanding options and warrants to purchase up to a total
of approximately 2.9 million shares of Common Stock, of which only warrants
and options to purchase approximately 730,000 shares are exercisable within 60
days after the date of this Prospectus. The Company intends to register
substantially 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 until May 6, 1998
without the prior written consent of The Robinson-Humphrey Company, LLC,
except (A) that the Company may issue Common Stock in connection with
acquisitions generally, and pursuant to the exercise of stock options which
are either (i) outstanding on the date of the IPO, (ii) issued under the
Company's 1997 Stock Awards Plan or (iii) issued under the Company's stock
option plan for non-management employees, and (B) that such directors,
executive officers and shareholders may sell Common Stock pursuant to a
cashless exercise of such stock options or make a bona fide gift of Common
Stock provided the donee agrees to be bound by the terms of the donor's lockup
agreement.
 
  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, 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."
 
POSSIBLE VOLATILITY OF STOCK PRICE
 
  Prior to the IPO, no public market for the Common Stock existed. The market
price of the Common Stock 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
 
                                      10
<PAGE>
 
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 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."
 
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
have been 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."
 
FORWARD-LOOKING STATEMENTS
 
  Certain of the statements contained in this Prospectus may be considered
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, that are based on management's
beliefs, as well as assumptions made by, and information currently available
to, management. When used herein, words such as "anticipate," "estimate,"
"expect," "objective," "projection," "forecast," "goal," or similar words are
intended to identify forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, projected or expected. Important
factors that could cause future results to differ include the effects of
competition, legislative and regulatory changes, fluctuations in the weather
and changes in the economy.
 
                                      11
<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. To this end, the Company purchased the 24 companies described
below. 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 has approximately 3,000 employees at operations in
37 cities in 21 states, with combined 1996 revenues of $307.5 million, and is
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 GroupMAC Companies were 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
                            --------
<CAPTION>
OFFERING ACQUISITION COMPANIES:
-------------------------------
<S>                      <C>             <C>     <C>                  <C>
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 Mechani-
 cal(2)..........              3,337      1988   Little Rock, AR      Commercial HVAC
Mechanical(2)....              2,900      1993   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>
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...........
<CAPTION>
OFFERING ACQUISITION COMPANIES:
-------------------------------
<S>                      <C>          <C>
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 Mechani-
 cal(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 now the year end of all of the GroupMAC
    Companies.
(2) Operates through multiple locations.
(3) Includes Callahan/Roach Products & Publications, Inc. ("CRPP") and
    Callahan/Roach & Associates ("CRA" and, together with CRPP, "Callahan
    Roach").
 
                                      12
<PAGE>
 
  The consideration 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.
 
                          PRICE RANGE OF COMMON STOCK
 
  The Common Stock trades on the New York Stock Exchange under the symbol
"MAK." The following table sets forth the high and low sale prices for the
Common Stock (based on the NYSE Composite Transactions Reporting System) for
the periods indicated:
 
<TABLE>
<CAPTION>
                                                                     HIGH   LOW
                                                                     ----- -----
      <S>                                                            <C>   <C>
      1997:
        Fourth Quarter (From November 7, 1997 through
         December 5, 1997).......................................... 14.50 14.00
</TABLE>
 
  On December 5, 1997, the closing price of the Common Stock on the New York
Stock Exchange (as reported on the Composite Transactions Reporting System) was
$14.00 and there were 140 holders of record of Common Stock, as shown on the
records of the transfer agent and registrar for the Common Stock. The number of
record holders does not bear any relationship to the number of beneficial
owners of the Common Stock. The Company has never declared a dividend with
respect to its Common Stock.
 
                                       13
<PAGE>
 
                                 CAPITALIZATION
 
  The following table sets forth (i) the historical capitalization of the
Company as of September 30, 1997, (ii) the pro forma capitalization of the
Company as of September 30, 1997, giving effect to the acquisition of the
GroupMAC Companies, and (iii) the pro forma capitalization of the Company as of
September 30, 1997, giving effect to such acquisitions and related financings,
as adjusted to reflect the application of the net proceeds from the IPO. 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 SEPTEMBER 30, 1997
                                                         (IN THOUSANDS)
                                                  ------------------------------
                                                                      PRO FORMA
                                                  ACTUAL   PRO FORMA AS ADJUSTED
                                                  -------  --------- -----------
<S>                                               <C>      <C>       <C>
Short-Term Debt, Including Current Maturities...  $ 3,561   $11,307   $  3,178
                                                  =======   =======   ========
Long-Term Debt, Net of Current Maturities.......  $28,510   $32,085   $     --
Preferred Stock: $1.00 par value, 50,000,000
 shares authorized; 19,271,593 shares issued and
 outstanding....................................   19,271    19,271         --
Shareholders' Equity:
Common Stock: $0.001 par value, 100,000,000
 shares authorized; 9,486,395 shares issued and
 outstanding; 12,684,719 shares issued and
 outstanding, pro forma; and 21,024,719 shares
 issued and outstanding, pro forma as
 adjusted(1)....................................        9        12         21
Additional Paid-In Capital......................   28,980    62,614    165,792
Retained Earnings (Deficit).....................  (33,669)  (33,667)   (33,667)
                                                  -------   -------   --------
Total Shareholders' Equity......................   (4,680)   28,959    132,146
                                                  -------   -------   --------
Total Capitalization............................  $43,101   $80,315   $132,146
                                                  =======   =======   ========
</TABLE>
--------
(1) Excludes (i) approximately 600,000 shares of Common Stock issuable upon
    exercise of outstanding stock options and warrants issued in connection
    with certain acquisitions, (ii) approximately 400,000 shares of Common
    Stock issuable upon exercise of outstanding stock options held by employees
    of the Company, and (iii) an aggregate of approximately 1.9 million shares
    of Common Stock subject to options granted upon consummation of the IPO 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."
 
                                       14
<PAGE>
 
               SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
 
  The Company previously acquired the Pre-Offering Companies and acquired the
Offering Acquisition Companies simultaneously with the closing of the IPO. 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 seven month periods ended September 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
September 30, 1997 include A-ABC/A-1, Hallmark and K&N, which were acquired
effective June 1, 1997; Charlie's, Costner, Jarrell and the assets of Way
Residential, which were acquired effective June 30, 1997; Callahan/Roach and
Sibley Services which were acquired as of July 1, 1997; and USA which was
acquired as of July 31, 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 seven months ended
September 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 seven months ended September
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 nine
months ended September 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 IPO
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
Unaudited Consolidated Condensed Financial Statements, the Financial
Statements and the related notes thereto and the Unaudited Pro Forma Combined
Financial Statements and the notes thereto included elsewhere herein.
 
                                      15
<PAGE>
 
                            SELECTED FINANCIAL DATA
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                      HISTORICAL       PRO FORMA AS
                                                                       PRO FORMA     SEVEN MONTHS      ADJUSTED NINE
                           FISCAL YEAR ENDED FEBRUARY 28 OR 29,      AS ADJUSTED(2) ENDED SEPTEMBER    MONTHS ENDED
                                            (1)                        YEAR ENDED         30,          SEPTEMBER 30,
                          ------------------------------------------  DECEMBER 31,  ---------------  -----------------
                           1993    1994    1995       1996    1997        1996       1996   1997(3)  1996(2)  1997(2)
                          ------- ------- -------    ------- ------- -------------- ------- -------  -------- --------
<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    $48,826 $70,468  $232,695 $244,321
Gross Profit............   15,565  18,977  21,766     21,091  23,374      71,596     13,434  19,491    53,059   57,281
Selling, General and Ad-
 ministrative
 Expenses(4)............   12,648  15,760  20,282(5)  17,615  19,811      48,953(6)  10,003  21,617    36,860   41,544(7)
Goodwill Amortiza-
 tion(8)................       --      --      --         --      --       1,991         --     204     1,493    1,493
                          ------- ------- -------    ------- -------    --------    ------- -------  -------- --------
Income (Loss) from Oper-
 ations ................    2,917   3,217   1,484      3,476   3,563      20,652      3,431  (2,330)   14,706   14,244
Interest Income (Ex-
 pense), Net............      152     127      76         68      89          90         18    (909)       73      261
Other Income, Net.......      114      33     140        246     256         297         22      41       303      641
                          ------- ------- -------    ------- -------    --------    ------- -------  -------- --------
Income (Loss) Before In-
 come Tax Provision.....    3,183   3,377   1,700      3,790   3,908      21,039      3,471  (3,198)   15,082   15,146
Income Tax Provision....    1,332   1,300     911      1,651   1,572       9,212      1,396   1,602     6,594    6,627
                          ------- ------- -------    ------- -------    --------    ------- -------  -------- --------
Net Income..............  $ 1,851 $ 2,077 $   789    $ 2,139 $ 2,336    $ 11,827    $ 2,075 $(4,800) $  8,488 $  8,519
                          ======= ======= =======    ======= =======    ========    ======= =======  ======== ========
Net Income Per Share....                                                $   0.56                     $   0.40 $   0.40
                                                                        ========                     ======== ========
Weighted Average Shares
 Outstanding(9).........                                                  21,220                       21,220   21,220
                                                                        ========                     ======== ========
OTHER DATA:
EBITDA(10)..............  $ 3,074 $ 3,417 $ 1,853    $ 3,960 $ 4,027    $ 26,061    $ 4,592 $(1,555) $ 18,744 $ 18,872
                          ======= ======= =======    ======= =======    ========    ======= =======  ======== ========
</TABLE>
 
<TABLE>
<CAPTION>
                          FISCAL YEAR ENDED FEBRUARY 28 OR 29,           SEPTEMBER 30, 1997
                         --------------------------------------- -----------------------------------
                                                                              PRO       PRO FORMA
                          1993    1994    1995    1996    1997   ACTUAL(3) FORMA(2)   AS ADJUSTED(2)
                         ------- ------- ------- ------- ------- --------- ---------  --------------
<S>                      <C>     <C>     <C>     <C>     <C>     <C>       <C>        <C>            <C>
BALANCE SHEET DATA:
Cash and Cash Equiva-
 lents.................. $   700 $   186 $   650 $ 1,774 $ 4,339  $ 7,801  $  10,580     $ 26,266
Working Capital.........   3,633   3,473   4,561   3,285   6,337    3,334    (17,252)      38,819
Total Assets............  12,438  15,221  23,528  28,282  27,153   81,156    176,880      188,320
Total Debt..............      --      --      --      --   1,290   32,071     43,392        3,178
Preferred Stock.........      --      --      --      --      --   19,271     19,271           --
Shareholders' Equity
 (Deficit)..............   3,257   2,175   5,955   6,373   5,990   (4,680)    28,959      132,146
</TABLE>
-------
(1) Concurrent with the IPO, the Company changed its fiscal year end from
    February 28 to December 31.
(2) Pro forma financial data give effect to the 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 September 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 IPO 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 nine
    months ended September 30, 1997, which is excluded in the Pro Forma As
    Adjusted nine months ended September 30, 1997. Reflects a decrease of $11.1
    million, $6.7 million and $6.9 million for the Pro Forma As Adjusted year
    ended December 31, 1996, and the Pro Forma As Adjusted nine months ended
    September 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.
(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 $2.8 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 the 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.
 
                                       16
<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.
 
                                      17
<PAGE>
 
  As a result of the acquisition of the GroupMAC Companies, $79.6 million,
representing the excess of the fair value of the consideration paid over the
fair value of the net assets to be acquired, is recorded as goodwill on the
Company's balance sheet. Goodwill is 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 $2.0 million per year on an after-tax basis.
 
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, A-ABC/A-1, Charlie's, Costner, Hallmark, Jarrell
and K&N and the assets of Way Residential in June 1997 and Callahan/Roach,
Sibley Services and USA in July 1997.
 
RESULTS OF OPERATIONS--GROUPMAC AND SUBSIDIARIES (FORMERLY AIRTRON)
 
  The following table sets forth certain financial data for the periods
indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                                                                                                   SEVEN MONTHS ENDED
                                                                                                      SEPTEMBER 30,
                                                                                               -----------------------------
                                                    FISCAL YEAR ENDED FEBRUARY 28 OR 29,               HISTORICAL
                                                  -------------------------------------------  -----------------------------
                                                      1995           1996           1997           1996           1997
                                                  -------------  -------------  -------------  -------------  --------------
<S>                                               <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>    <C>      <C>
Revenues........                                  $72,226 100.0% $73,765 100.0% $81,880 100.0% $48,826 100.0% $70,468  100.0%
Cost of
 Services.......                                   50,460  69.9   52,674  71.4   58,506  71.5   35,392  72.5   50,977   72.3
                                                  ------- -----  ------- -----  ------- -----  ------- -----  -------  -----
Gross Profit....                                   21,766  30.1   21,091  28.6   23,374  28.5   13,434  27.5   19,491   27.7
Selling, General
 and Administrative
 Expenses.......                                   20,282  28.0   17,615  23.9   19,811  24.1   10,003  20.5   21,821   31.0
                                                  ------- -----  ------- -----  ------- -----  ------- -----  -------  -----
Income (Loss)
 from
 Operations.....                                    1,484   2.1    3,476   4.7    3,563   4.4    3,431   7.0   (2,330)  (3.3)
<CAPTION>
                                                        NINE MONTHS ENDED
                                                          SEPTEMBER 30,
                                                  -------------------------------
                                                            PRO FORMA
                                                  -------------------------------
                                                       1996            1997
                                                  --------------- ---------------
<S>                                               <C>      <C>    <C>      <C>
Revenues........                                  $232,695 100.0% $244,321 100.0%
Cost of
 Services.......                                   179,636  77.2   187,040  76.6
                                                  -------- ------ -------- ------
Gross Profit....                                    53,059  22.8    57,281  23.4
Selling, General
 and Administrative
 Expenses.......                                    38,353  16.5    43,037  17.6
                                                  -------- ------ -------- ------
Income (Loss)
 from
 Operations.....                                    14,706   6.3    14,244   5.8
</TABLE>
 
 Historical Seven Months Ended September 30, 1997 Compared to Historical Seven
Months Ended  September 30, 1996
 
  Revenues. Revenues increased $21.7 million, or 44.5%, to $70.5 million for
the seven months ended September 30, 1997 from $48.8 million for the seven
months ended September 30, 1996. The majority of the increase was due to
revenues associated with the Pre-Offering Companies. The acquisitions of the
Pre-Offering Companies and GroupMAC Parent have been accounted for as purchases
and, accordingly, the operations of these acquired businesses are included in
the operating results of the Company from the effective date of their
respective acquisition.
 
  Gross Profit. Gross profit increased $6.1 million, or 45.5%, to $19.5 million
for the seven months ended September 30, 1997 from $13.4 million for the seven
months ended September 30, 1996. The majority of the increase was due to gross
profit associated with the Pre-Offering Companies. The acquisitions of the Pre-
Offering Companies and GroupMAC Parent have been accounted for as purchases
and, accordingly, the operations of these acquired businesses are included in
the operating results of the Company from the effective date of their
respective acquisition.
 
  Income (Loss) from Operations. Operating income decreased $5.7 million, or
167.6%, to a loss of $2.3 million for the seven months ended September 30, 1997
from income of $3.4 million for the seven months ended September 30, 1996. The
decrease was due to a non-recurring, non-cash compensation expense of $7.0
million related
 
                                       18
<PAGE>
 
to the reverse acquisition of GroupMAC Parent, partially offset by operating
income associated with the Pre-Offering Companies. The acquisitions of the
Pre-Offering Companies and GroupMAC Parent have been accounted for as
purchases and, accordingly, the operations of these acquired businesses are
included in the operating results of the Company from the effective date of
their respective acquisition.
 
 Pro Forma Nine Months Ended September 30, 1997 Compared to Pro Forma Nine
 Months Ended September 30, 1996
 
  Revenues. Pro forma revenues increased $11.6 million, or 5.0%, to $244.3
million for the nine months ended September 30, 1997 from $232.7 million for
the nine months ended September 30, 1996. The increase in pro forma revenues
was primarily volume driven and was attributable to continuing strength in the
Seattle and Portland commercial markets including a $20.0 million contract
with a large software company to be completed during 1997, increased market
penetration at Airtron's Columbus, Dayton, Austin, and Northern Kentucky
locations, obtaining a new supermarket chain as a client and attaining
increased pricing in the California commercial markets, incremental
construction business from existing customers and further market penetration
in the commercial service sector in Minnesota and incremental residential new
installation business from existing customers in the Washington, D.C. area.
 
  Gross Profit. Pro forma gross profit increased $4.2 million, or 7.9%, to
$57.3 million for the nine months ended September 30, 1997 from $53.1 million
for the nine months ended September 30, 1996. Pro forma gross profit margin
increased to 23.4% for the nine month period ended September 30, 1997 from
22.8% for the nine months ended September 30, 1996. The increase in pro forma
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 commercial work in the Pacific
Northwest, a higher mix of fire sprinkler installations in the Washington,
D.C. market that typically produce higher margins and overall pricing
increases experienced in California.
 
  Income from Operations. Pro forma operating income decreased $0.5 million,
or 3.4%, to $14.2 million for the nine months ended September 30, 1997 from
$14.7 million for the nine months ended September 30, 1996. This decrease was
attributable to $2.8 million in corporate expenses representing the formation
of the corporate management team and infrastructure necessary to execute the
Company's operating and acquisition strategies. As the Company was formed in
October 1996, no such expenses were incurred during the corresponding period
of the prior year. Because of the $2.8 million in corporate expenses
highlighted above, operating income margin decreased to 5.8% for the nine
months ended September 30, 1997 from 6.3% from the nine month period ended
September 30, 1996.
 
 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.
 
                                      19
<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.
 
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 used 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
 Administrative
 Expenses...............   49,410  21.0    53,143  20.5    60,162  19.6    28,319  18.7    39,273   24.9
                         -------- -----  -------- -----  -------- -----  -------- -----  --------  -----
Income (Loss) from          7,076   3.0     8,844   3.4    11,434   3.7     5,160   3.4    (2,691)  (1.7)
 Operations.............
</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.
 
  For a discussion of periods subsequent to June 30, 1997, see "--Results of
Operations--GroupMAC and Subsidiaries (formerly Airtron)".
 
 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
 
                                      20
<PAGE>
 
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-Miler"), 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 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 18.8%, 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.
 
 
                                      21
<PAGE>
 
 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 7.5%, 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%.
 
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 nine months ended September
30, 1997.
 
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.
 
                                      22
<PAGE>
 
RESULTS OF OPERATIONS--MACDONALD-MILLER
 
  The following table sets forth certain financial data for the periods
indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                              FISCAL YEAR ENDED DECEMBER 31,                 SEPTEMBER 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% $52,184 100.0% $54,560 100.0%
Cost of Services........  32,256  81.6   36,927  81.1   56,373  85.3   45,192  86.6   46,400  85.0
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Gross Profit............   7,278  18.4    8,581  18.9    9,686  14.7    6,992  13.4    8,160  15.0
Selling, General and
 Administrative
 Expenses...............   6,088  15.4    7,338  16.2    7,632  11.6    5,567  10.7    6,239  11.5
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Income from Operations..   1,190   3.0    1,243   2.7    2,054   3.1    1,425   2.7    1,921   3.5
</TABLE>
 
 Nine Months Ended September 30, 1997 Compared to Nine Months Ended September
30, 1996
 
  Revenues. Revenues increased $2.4 million, or 4.6%, from $52.2 million for
the nine months ended September 30, 1996 to $54.6 million for the nine months
ended September 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, an increase in revenues
from the company's Special Projects and Tenant Improvement operations, and an
increase in revenues from the company's Commercial Service operations.
 
  Gross Profit. Gross Profit increased $1.2 million, or 17.1%, from $7.0
million for the nine months ended September 30, 1996 to $8.2 million for the
nine months ended September 30, 1997. Gross margin increased from 13.4% for
the first nine months of 1996 to 15.0% 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 $0.6 million, or 10.7%, from $5.6 million
for the nine months ended September 30, 1996 to $6.2 million for the nine
months ended September 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 increased slightly from 10.7% for the nine months of 1996 to 11.5%
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 $0.3 million, or 4.1%, 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
 
                                      23
<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.
 
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.
 
RESULTS OF OPERATIONS--MASTERS
 
  The following table sets forth certain financial data for the periods
indicated (dollars in thousands).
 
<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                              FISCAL YEAR ENDED DECEMBER 31,                 SEPTEMBER 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% $29,088 100.0% $31,166 100.0%
Cost of Services........  28,018  92.4   31,746  90.3   35,854  90.0   26,308  90.4   27,956  89.7
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Gross Profit............   2,309   7.6    3,414   9.7    3,972  10.0    2,780   9.6    3,210  10.3
Selling, General and
 Administrative
 Expenses...............   1,664   5.5    2,373   6.7    2,484   6.3    1,739   6.0    2,015   6.5
                         ------- -----  ------- -----  ------- -----  ------- -----  ------- -----
Income from Operations..     645   2.1    1,041   3.0    1,488   3.7    1,041   3.6    1,195   3.8
</TABLE>
 
 Nine Months Ended September 30, 1997 Compared to Nine Months Ended
 September 30, 1996
 
  Revenues. Revenues increased $2.1 million, or 7.2%, from $29.1 million for
the nine months ended September 30, 1996 to $31.2 million for the nine months
ended September 30, 1997. The increase in revenues was primarily attributable
to an additional volume of housing starts generated from existing customers.
 
 
                                       24
<PAGE>
 
  Gross Profit. Gross profit increased $0.4 million, or 14.3%, from $2.8
million for the nine months ended September 30, 1996 to $3.2 million for the
nine months ended September 30, 1997. Gross margin increased from 9.6% for the
nine months ended September 30, 1996 to 10.3% for the nine months ended
September 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 $0.3 million, or 17.6%, from $1.7 million
for the nine months ended September 30, 1996 to $2.0 million for the nine
months ended September 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 6.0% to 6.5% 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.
 
  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.
 
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
 
                                      25
<PAGE>
 
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   0.9       88   0.7
</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.
 
  For a discussion of periods subsequent to June 30, 1997, see "--Results of
Operations--GroupMAC and Subsidiaries (formerly Airtron)".
 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.
 
  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
 
                                      26
<PAGE>
 
March 31, 1997. As a percentage or 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 ended 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%.
 
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.
 
 
                                      27
<PAGE>
 
  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.
 
  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 service
and 16% from light commercial service. The following table sets forth certain
unaudited financial data for 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 IPO.
 
                                      28
<PAGE>
 
(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.
 
  For a discussion of periods subsequent to June 30, 1997, see "--Results of
Operations--GroupMAC and Subsidiaries (formerly Airtron)".
 
 Unaudited Six Months Ended June 30, 1997 Compared to Unaudited Six Month
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 $195,000, or 2.4%, from $8.1 million for the
six months ended June 30, 1996 to $8.3 million for the six months 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 $116,000. 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.
 
                                      29
<PAGE>
 
  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, 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.
 
                                      30
<PAGE>
 
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.
 
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 IPO.
 
  For a discussion of periods subsequent to June 30, 1997, see "--Results of
Operations--GroupMAC and Subsidiaries (formerly Airtron)".
 
 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
 
                                      31
<PAGE>
 
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.
 
  Selling, General and Administrative Expenses. 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.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Historically, the operations and growth of the Founding Companies have been
financed through internally generated working capital and borrowings from
commercial banks or other lenders. These borrowings were generally secured by
substantially all of the assets of the respective Founding 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. With respect to the
Offering Acquisition Companies, the Company used $12.5 million of the net
proceeds of the IPO to repay debt assumed and certain obligations resulting
from the respective acquisitions. The Company may also utilize proceeds of the
IPO to pay additional amounts, if any, due to the former owners of the
Offering Acquisition Companies under working capital adjustments to the
purchase prices.
 
 
                                      32
<PAGE>
 
  The Company has entered into the Bank Credit Agreement with an initial
borrowing capacity of $75 million which replaced a $35 million credit
agreement (the "Original Credit Agreement"). Under the Bank Credit Agreement,
the Company is required to maintain (i) a minimum fixed charge coverage ratio;
(ii) a minimum tangible net worth that is positive; (iii) a maximum ratio of
total indebtedness for borrowed money to Capitalization (as defined in the
Bank Credit Agreement) and (iv) a minimum Consolidated Net Worth (as defined
in the Bank Credit Agreement). The Company is in compliance with such
covenants.
 
  Prior to the closing of the IPO, certain of the Offering Acquisition
Companies that were S corporations distributed cash and certain non-operating
assets to their shareholders in an amount not in excess of 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.
 
  For the seven months ended September 30, 1996 and 1997, the Company
generated $0.1 million and $5.2 million in cash from operating activities,
respectively. For the seven months ended September 30, 1996, net income and
depreciation generated $2.1 million and changes in assets and liability
accounts utilized a net $2.0 million. During the seven months ended September
30, 1997, net income, depreciation, deferred taxes and non cash compensation
generated $2.9 million and changes in asset and liability accounts generated a
net $2.2 million.
 
  Cash used in investing activities by the Company was $34,000 and $10.6
million for the seven months ended September 30, 1996 and 1997, respectively.
The cash expended during the seven months ended September 30, 1997 consisted
of $8.9 million for acquisitions and $1.5 million for capital expenditures.
During the seven months ended September 30, 1997, the Company generated $8.9
million from its financing activities. These activities principally consisted
of proceeds of long-term debt of $32.5 million and issuances of common stock
of $6.2 million, less distributions to shareholders of $20.4 million, payments
of long-term debt of $5.1 million and payment of deferred offering costs of
$4.2 million.
 
  The Company intends to aggressively pursue 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.
 
                                      33
<PAGE>
 
                                   BUSINESS
 
GENERAL
 
  The Company was founded in 1996 to create the leading nationwide provider of
heating, ventilation and air conditioning, plumbing and electrical services to
residential and commercial customers. Since inception, the Company has
acquired 24 companies totaling $307.5 million in combined 1996 revenues.
Thirteen of the companies were acquired on November 13, 1997 concurrently with
the closing of the IPO and 11 of the companies had been acquired previously.
The Company believes it is one of the largest diversified providers of HVAC,
plumbing and electrical services in the United States.
 
  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 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.
 
 
                                      34
<PAGE>
 
  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 established a Council
  of Presidents consisting of the key operating management of acquired
  companies that meets 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 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.
 
 
                                      35
<PAGE>
 
    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 and 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 to 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 while resulting in projected cost
savings to the Company. The Company issued options to purchase approximately
1.9 million shares to eligible employees. 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
 
                                      36
<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 issuing to
  them stock options 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 other companies providing both new
installation and maintenance, repair and replacement services in the
residential and commercial HVAC, plumbing and electrical markets. The Company
has operations in 37 cities in 21 states with combined 1996 revenues of $307.5
million. The Company has two or more companies offering complementary services
in four markets (Houston, Dallas, Austin and Indianapolis). Within certain of
its markets (Dallas, Houston, San Antonio and Cincinnati), the Company has
acquired 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.
 
                                      37
<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 executives 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 tables 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>
 
                                      38
<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 installations
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.
 
                                      39
<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 payments 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 services.
 
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.
 
 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
 
                                      40
<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.
 
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.
 
                                      41
<PAGE>
 
  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 service operations if they decide to enter the field.
 
EMPLOYEES
 
  The Company had approximately 3,000 full and part-time employees,
approximately 2,000 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
 
                                      42
<PAGE>
 
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, were recently solicited to join a union, and
from time to time other operating locations of the Company may experience
union organizing efforts. 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 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.
 
                                      43
<PAGE>
 
  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.
 
                                      44
<PAGE>
 
                                  MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
  The following table sets forth certain information concerning the directors
and executive officers of the Company.
 
    NAME                           AGE                POSITION
    ----                           ---                --------    
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 President of Masters; Director   
David L. Henninger...............  53 President of Van's; Director     
Andrew Jeffrey Kelly.............  43 President of K&N; Director               
Thomas B. McDade.................  74 Director          
Lucian Morrison..................  60 Director                           
Fredric Sigmund..................  56 President of MacDonald-Miller,Director
                                      

  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 shareholder 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
Director of Batteries Batteries, Inc. From 1991 to 1995, Mr. Luke served as
President and Chief Executive
 
                                      45
<PAGE>
 
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 a 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
 
                                      46
<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 became a Director upon consummation of the IPO. He founded
Masters in 1986 and has served as its president since that time.
 
  DAVID L. HENNINGER became a Director upon consummation of the IPO. He
acquired Van's in 1975 and has served as its president since that time.
 
  ANDREW JEFFREY KELLY became a Director upon consummation of the IPO. He
founded K&N in 1979 and has served as its president since that time.
 
  THOMAS B. MCDADE became a Director upon consummation of the IPO. 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 became a Director upon consummation of the IPO. 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 became a Director upon consummation of the IPO. Since 1986,
he has served as Chief Executive Officer of MacDonald-Miller. From 1967 to
1986, he served in various positions with MacDonald-Miller.
 
  The Board of Directors of the Company consists 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.
 
                                      47
<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. The Company intends to grant or has granted to each director
of the Company who is not an employee 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 1,000 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 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.
 
                                      48
<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   
                                      INDIVIDUAL GRANTS                      VALUE AT ASSUMED     
                                    ---------------------                  ANNUAL RATES OF STOCK  
                          OPTIONS    % OF TOTAL  EXERCISE                   PRICE APPRECIATION    
                          GRANTED     OPTIONS     PRICE                     FOR 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
                           56,500        3.0%      14.00  November 6, 2002  1,289,330  2,048,690
J. Patrick Millinor,
 Jr.....................   50,000       13.2        3.08  October 24, 2006     96,850    245,436
                           56,500        3.0       14.00  November 6, 2002  1,289,330  2,048,690
Donald L. Luke..........   14,000        3.7        3.08   August 1, 2007      27,118     68,722
                           56,500        3.0       14.00  November 6, 2002  1,289,330  2,048,690
James D. Jennings.......   54,953        2.9       14.00  November 6, 2002  1,254,027  1,992,596
Timothy Johnston........   54,953        2.9       14.00  November 6, 2002  1,254,027  1,992,596
W. Michael Callahan.....   53,300        2.8       14.00  November 6, 2002  1,216,306  1,932,658
Alfred R. Roach, Jr.....   53,300        2.8       14.00  November 6, 2002  1,216,306  1,932,658
</TABLE>
 
--------
(1) Twenty-five percent of the options that expire on November 6, 2002 will
    become exercisable each year, and the other 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 such
    option. In the case of Mr. Millinor's options that vest over three years,
    the vesting periods will be 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 378,800 shares of Common Stock subject to options granted having
    an exercise price of $3.08 and 1,899,581 shares of Common Stock subject to
    options having an exercise price of $14.00.
 
(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 63% and
    159%, respectively, above the base exercise price. Because the Common
    Stock was not publicly traded prior to the IPO, the amounts with respect
    to the options granted prior to the IPO (which have an exercise price of
    $3.08) 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 December 1, 1997, by the Named Executive Officers.
 
<TABLE>
<CAPTION>
                                  NUMBER OF SECURITIES
                                 UNDERLYING UNEXERCISED   VALUE OF UNEXERCISED
                                       OPTIONS AT        IN-THE-MONEY OPTIONS AT
                                    DECEMBER 1, 1997       DECEMBER 1, 1997(1)
                                 ----------------------- -----------------------
                                                 NOT                     NOT
NAME                             EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
----                             ----------- ----------- ----------- -----------
<S>                              <C>         <C>         <C>         <C>
James P. Norris.................      --        84,500        --      $305,760
J. Patrick Millinor, Jr.........      --       106,500        --       546,000
Donald L. Luke..................      --        70,500        --       152,880
James D. Jennings...............      --        54,593        --            --
Timothy Johnston................      --        54,593        --            --
W. Michael Callahan.............      --        53,300        --            --
Alfred R. Roach, Jr.............      --        53,300        --            --
</TABLE>
--------
(1) Based on a fair market value of $14.00 per share.
 
                                      49
<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
 
                                      50
<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 the control of the Company. Under
the terms of each agreement, the Company must pay the executive an amount
equal to 12 months compensation at the executive's current salary and provide
benefits to the executive for 12 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 salary 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
granted options to purchase approximately 1.9 million shares of Common Stock
in November 1997 at an exercise price equal to $14.00 per share (the IPO
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.
 
                                      51
<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 Award 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
 
                                      52
<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 to
which he is providing services 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 rights to receive amounts
equal to the appreciation in the price of a share of Common Stock 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,
 
                                      53
<PAGE>
 
together with 330,764 shares of Common Stock and 1,057,473 shares of Series A
Preferred Stock. All of such shares of preferred stock were redeemed at a
redemption price of $1.00 per share out of the net proceeds of the IPO.
 
  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 were redeemed at a redemption price of $1.00 per share out of the net
proceeds of the IPO. Each of them will 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 as a result of the occurrence of certain
events.
 
  In the Company's acquisition of K&N, Andrew Jeffrey Kelly 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 were
redeemed at a redemption price of $1.00 per share out of the net proceeds of
the IPO. Mr. Kelly may receive contingent consideration based on the operating
results of K&N for the 15 month period ending June 30, 1998. The Company
estimates that such payments will be $640,000. K&N entered into a five year
renewable lease with Sigma Management, a company owned by Mr. Kelly, to
replace the prior lease for the Company's Arlington, Texas facility. The
annual base rent payable 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 acquisition of MacDonald-Miller, Fredric J. Sigmund
received or will receive $1,923,881 and 206,120 shares of Common Stock
(subject to a post-closing adjustment). 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 entered into a new ten year
renewable lease with F&V Investments, a company owned by Mr. Sigmund, to
replace the prior lease for MacDonald-Miller's Seattle, Washington facility.
The annual base rent payable 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 acquisition of Masters, Ronald D. Bryant received or will
receive $7,483,850 and 466,806 shares of Common Stock (subject to a post-
closing adjustment). Additionally, Masters entered into a new six year
renewable lease with Mr. Bryant to replace the prior lease for Masters'
Gaithersburg, Maryland facility. The initial annual base rent payable 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 acquisition of Van's, David L. Henninger received or will
receive, together with his spouse, $1,568,034 and 112,203 shares of Common
Stock (subject to a post-closing adjustment). Additionally, Van's entered into
a new five-year renewable lease with Mr. Henninger to replace the prior lease
for Van's Delray Beach, Florida facility. The initial annual base rent payable
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.
 
                                      54
<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 beneficial owners of 5% or more of
the outstanding shares of Common Stock, (ii) each director, (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 8 Greenway Plaza, Suite 1500,
Houston, Texas 77046.
 
<TABLE>
<CAPTION>
                                                     AMOUNT AND
                                                     NATURE OF
                                                     BENEFICIAL     PERCENT OF
                                                    OWNERSHIP OF   OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER                COMMON STOCK   COMMON STOCK
------------------------------------                ------------   ------------
<S>                                                 <C>            <C>
James P. Norris....................................        100            *
J. Patrick Millinor, Jr............................    236,812(1)       1.2%
Donald L. Luke.....................................        100            *
William Michael Callahan...........................    301,029(2)         *
Alfred R. Roach, Jr................................    301,029(2)         *
James D. Jennings..................................    653,866(4)       3.3%
Timothy Johnston...................................    330,762(4)       1.7%
Ronald D. Bryant...................................    466,806          2.3%
David L. Henninger.................................    112,203(5)         *
Andrew Jeffrey Kelly...............................    403,111          2.0%
Fredric Sigmund....................................    206,120(6)         *
John M. Sullivan...................................    112,050(3)         *
James D. Weaver....................................     86,500            *
Thomas B. McDade...................................      8,000            *
Lucian L. Morrison.................................      5,500            *
Gordon A. Cain.....................................  2,417,950         12.1%
 Eight Greenway Plaza, Suite 702
 Houston, Texas 77046
All executive officers and named directors of the
 Company as a group
 (19 persons)......................................  2,982,904         14.9%
</TABLE>
--------
 * Beneficially owns less than 1% of the outstanding shares of Common Stock.
(1) Includes 16,667 shares subject to options exercisable on December 31,
    1997.
(2) Includes warrants to purchase 257,000 shares of Common Stock at $17.50 per
    share and 44,029 shares to be issued. See "Related Party Transactions."
(3) 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.
(4) Includes shares held in employee benefit plans (Jennings--195,728 shares;
    and Johnston--285,334 shares).
(5) Includes 49,501 shares held by Mr. Henninger's spouse.
(6) Includes shares held by the MacDonald-Miller Industries, Inc. Employee
    Stock Ownership Plan and Trust.
 
                                      55
<PAGE>
 
                               THE ACQUISITIONS
 
  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 in
(i) cash, (ii) Common Stock, (iii) preferred stock and (iv) assumed debt.
 
<TABLE>
<CAPTION>
                                           SHARES OF  SHARES OF
                                            COMMON    PREFERRED
                             CASH(1)(3)   STOCK(1)(3)  STOCK(4)     ASSUMED DEBT
                             -----------  ----------- ----------    ------------
<S>                          <C>          <C>         <C>           <C>
PRE-OFFERING COMPANIES:
Airtron....................  $20,848,637   4,652,140  14,873,131    $ 1,289,927
A-ABC/A-1..................    1,886,000     359,302          --        947,937
Charlie's..................    1,502,502     157,256          --        112,741
CRPP.......................      450,000     192,123     550,000(2)      78,236
CRA (asset purchase).......    2,000,000          --     500,000             --
Costner(2).................      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 pur-
 chase)(2).................       16,500       6,428          --             --
                             -----------   ---------  ----------    -----------
                              32,641,375   6,066,086  19,271,593      4,963,011
                             -----------   ---------  ----------    -----------
OFFERING ACQUISITION COMPA-
 NIES:
All Service................    2,405,491     210,001          --             --
Arkansas Mechanical........    2,299,330     164,236          --        566,623
Central Carolina...........    3,751,176     290,268          --             --
Evans......................    1,164,531     103,937          --             --
Linford(2).................      655,448     120,750          --      1,470,000
MacDonald-Miller(2)........    6,588,632     705,890          --      2,860,008
Masters....................    7,483,850     466,806          --      1,969,140
Mechanical.................      240,913      17,205          --             --
Paul E. Smith..............           --     233,829          --        401,133
Southeast Mechanical.......    2,875,872     178,911          --        243,783
Van's......................    1,568,034     112,203          --        278,810
Willis.....................    2,604,934     279,096          --             --
Yale.......................    2,436,659     174,044          --        268,519
                             -----------   ---------  ----------    -----------
                              34,074,870   3,057,176          --      8,058,016
                             -----------   ---------  ----------    -----------
S Corporation Distribu-
 tions.....................   (3,505,213)    (76,190)         --             --
                             -----------   ---------  ----------    -----------
      Total................  $63,211,032   9,047,072  19,271,593    $13,021,027
                             ===========   =========  ==========    ===========
</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 cash and Common Stock consideration is presented before anticipated
    Subchapter S distributions.
(4) Includes 1,713,622 warrants for preferred stock. The warrants were
    exercised, and all shares of preferred stock were redeemed for $1 per
    share, in connection with the closing of the IPO.
 
                                      56
<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 20,629,167 shares of Common Stock and no shares of Preferred Stock.
 
  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. The Board of Directors is 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.
 
  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. 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 will be entitled to receive pro rata all remaining assets of the
Company available to such holders.
 
  Miscellaneous. Holders of Common Stock have no preemptive, subscription,
redemption or conversion rights.
 
  The Common Stock is listed on the New York Stock Exchange under the symbol
"MAK."
 
                                       57
<PAGE>
 
  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 Combination" with an "Interested Shareholder" (generally the
beneficial owner of at least 10 percent of the Company's voting stock) be
approved by the holders of a 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 or (ii) certain "fair price" and procedural requirements are satisfied.
The Articles define "Business Combination" 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 to or with any Interested Shareholder, (iii)
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 to or with any Interested Shareholder, (iv) 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 an Interested Shareholder,
(v) any liquidation, spinoff, splitoff, splitup or dissolution of the Company
proposed by or on behalf of any Interested Shareholder, and (vi) any
agreement, contract or other arrangement providing for any of the transactions
described in this definition of Business Combination. "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 Interested Shareholder became an
Interested Shareholder 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 an Interested
Shareholder and the Business Combination to be voted upon is with such
Interested Shareholder or is one in which such Interested Shareholder
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.
 
                                      58
<PAGE>
 
                     DESCRIPTION OF BANK CREDIT AGREEMENT
 
GENERAL
 
  The Company has entered into a credit agreement (the "Bank Credit
Agreement") with certain lenders (the "Lenders") and Texas Commerce Bank
National Association, as Agent (the "Agent"). The Lenders are committed 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 of 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, filed as an exhibit to the registration
statement relating to this Prospectus.
 
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 must 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 is payable in full on December 9, 2000.
 
SECURITY; GUARANTEES
 
  Borrowings under the Bank Credit Agreement are 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 are 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 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 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 paid various underwriting and arrangement fees
and closing costs in connection with the origination and syndication of the
Bank Credit Agreement.
 
  The Company is 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 must 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
 
                                      59
<PAGE>
 
relating to the Bank Credit Agreement and the transactions contemplated
thereby. The Lenders also are 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 contains 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 contains covenants that, among other
things and with certain exceptions, 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 is required to satisfy certain
financial covenants and tests, including (i) a minimum fixed charge coverage
ratio; (ii) a minimum tangible net worth that is positive; (iii) a maximum
ratio of total indebtedness for borrowed money to Capitalization (as defined
in the Bank Credit Agreement); and (iv) a minimum Consolidated Net Worth (as
defined in the Bank Credit Agreement). 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 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).
 
                                      60
<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
  The Company has outstanding 20,629,167 shares of Common Stock. Of these
shares, the 8,340,000 shares sold in the IPO are freely tradeable 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 approximately 9.5 million shares of Common Stock held
by existing shareholders of the Company immediately prior to the IPO and the
3.2 million shares of Common Stock which have or will be issued in connection
with the acquisition of the Offering Acquisition Companies, Costner, Way
Residential and Callahan Roach, are "restricted securities" within the meaning
of Rule 144, except for the approximately 700,000 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 approximately 3.0 million
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 May 6,
1998 without the prior written consent of The Robinson-Humphrey Company, LLC.
All such approximately 3.0 million shares will become available for sale on
May 6, 1998 upon expiration of these lock-up agreements, subject to compliance
with Rule 144 promulgated under the Securities Act. Furthermore, the former
shareholders of the Pre-Offering Companies and most of the shareholders of the
Offering Acquisition Companies, who collectively will hold approximately 9
million shares of Common Stock, have entered into Stock Transfer Restriction
Agreements that impose restrictions on the transferability of their shares.
See "--Transfer Restrictions."
 
  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 at
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. At the date of this Prospectus,
approximately 1.2 million "restricted" shares of Common Stock are 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 approximately 2.3 million shares of Common Stock, approximately
100,000 of which are vested. Options to purchase 20,000 shares of Common Stock
have been exercised. The Company has filed a registration statement on Form S-
8 under the Securities Act to register the shares of Common Stock issuable
upon the exercise of options granted under the Stock Awards Plan and the stock
option plan for nonmanagement employees. 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 the IPO, there was 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.
 
 
                                      61
<PAGE>
 
TRANSFER RESTRICTIONS
 
  Purchasers of Common Stock in the acquisitions of the GroupMAC Companies
entered into substantially similar Stock Transfer Restrictions Agreements,
which 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, 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 subsidiaries 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 originally held.
 
  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 up to 12,462,525 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 the IPO 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 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
 
                                      62
<PAGE>
 
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 IPO 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.
 
                             PLAN OF DISTRIBUTION
 
  This Prospectus covers the offer and sale of up to 7,000,000 shares of
Common Stock, which the Company may issue from time to time in connection with
future direct and indirect acquisitions of other businesses, properties or
securities in business combination transactions.
 
  The Company expects that the (i) terms on which it may issue the shares of
Common Stock covered hereby will be determined by direct negotiations with the
owners or controlling persons of the businesses or assets to be acquired and
(ii) the shares of Common Stock issued will be valued at prices reasonably
related to market prices prevailing either at the time an acquisition
agreement is executed or at or about the time of delivery of shares.
 
                                    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,
Incorporated, 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.
 
 
                                      63
<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 is listed on the NYSE under the symbol "MAK," 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.
 
  The Company is subject to the reporting requirements under the Exchange Act
and, in accordance therewith, files 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.
 
                                      64
<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.)
  UNAUDITED FINANCIAL STATEMENTS
  Consolidated Condensed Balance Sheets.................................... F-29
  Consolidated Condensed Statements of Operations.......................... F-30
  Consolidated Condensed Statements of Cash Flows.......................... F-31
  Notes to Unaudited Consolidated Condensed Financial Statements........... F-32
  AUDITED FINANCIAL STATEMENTS
  Report of Independent Public Accountants................................. F-33
  Consolidated Balance Sheets.............................................. F-34
  Consolidated Statements of Operations.................................... F-35
  Consolidated Statements of Shareholders' Equity.......................... F-36
  Consolidated Statements of Cash Flows.................................... F-37
  Notes to Consolidated Financial Statements............................... F-38
MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
  Report of Independent Public Accountants................................. F-51
  Consolidated Balance Sheets.............................................. F-52
  Consolidated Statements of Operations.................................... F-53
  Consolidated Statements of Shareholders' Equity.......................... F-54
  Consolidated Statements of Cash Flows.................................... F-55
  Notes to Consolidated Financial Statements............................... F-56
MASTERS, INC.
  Report of Independent Public Accountants................................. F-66
  Balance Sheets........................................................... F-67
  Statements of Operations................................................. F-68
  Statements of Shareholder's Equity....................................... F-69
  Statements of Cash Flows................................................. F-70
  Notes to Financial Statements............................................ F-71
K&N PLUMBING, HEATING AND AIR CONDITIONING, INC.
  Report of Independent Public Accountants................................. F-78
  Balance Sheet............................................................ F-79
  Statement of Operations.................................................. F-80
  Statement of Shareholders' Equity........................................ F-81
</TABLE>
 
                                      F-1
<PAGE>
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
  Statement of Cash Flows.................................................  F-82
  Notes to Financial Statements...........................................  F-83
A-ABC APPLIANCE, INC. AND A-1 APPLIANCE & AIR
 CONDITIONING, INC.
  Report of Independent Public Accountants................................  F-88
  Combined Balance Sheets.................................................  F-89
  Combined Statements of Operations.......................................  F-90
  Combined Statements of Shareholders' Equity.............................  F-91
  Combined Statements of Cash Flows.......................................  F-92
  Notes to Combined Financial Statements..................................  F-93
ARKANSAS MECHANICAL SERVICES, INC. AND MECHANICAL
 SERVICES, INC.
  Report of Independent Public Accountants................................  F-98
  Combined Balance Sheets.................................................  F-99
  Combined Statements of Operations....................................... F-100
  Combined Statements of Shareholders' Equity............................. F-101
  Combined Statements of Cash Flows....................................... F-102
  Notes to Combined Financial Statements.................................. F-103
CALLAHAN ROACH PRODUCTS AND PUBLICATIONS, INC.
  Report of Independent Public Accountants................................ F-109
  Balance Sheets.......................................................... F-110
  Statements of Operations................................................ F-111
  Statements of Shareholders' Equity...................................... F-112
  Statements of Cash Flows................................................ F-113
  Notes to Financial Statements........................................... F-114
CENTRAL CAROLINA AIR CONDITIONING COMPANY
  Report of Independent Public Accountants................................ F-117
  Balance Sheets.......................................................... F-118
  Statements of Operations................................................ F-119
  Statements of Shareholders' Equity...................................... F-120
  Statements of Cash Flows................................................ F-121
  Notes to Financial Statements........................................... F-122
HALLMARK AIR CONDITIONING, INC. AND SUBSIDIARY
  Report of Independent Public Accountants................................ F-127
  Consolidated Balance Sheets............................................. F-128
  Consolidated Statements of Operations................................... F-129
  Consolidated Statements of Shareholders' Equity......................... F-130
  Consolidated Statements of Cash Flows................................... F-131
  Notes to Consolidated Financial Statements.............................. F-132
SIBLEY SERVICES, INCORPORATED
  Report of Independent Public Accountants................................ F-138
  Balance Sheets.......................................................... F-139
  Statements of Operations................................................ F-140
  Statements of Shareholders' Equity...................................... F-141
  Statements of Cash Flows................................................ F-142
  Notes to Financial Statements........................................... F-143
</TABLE>
 
                                      F-2
<PAGE>
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
SOUTHEAST MECHANICAL SERVICE, INC.
  Report of Independent Public Accountants................................ F-149
  Balance Sheets.......................................................... F-150
  Statements of Operations................................................ F-151
  Statements of Shareholders' Equity...................................... F-152
  Statements of Cash Flows................................................ F-153
  Notes to Financial Statements........................................... F-154
WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
  Report of Independent Public Accountants................................ F-158
  Balance Sheets.......................................................... F-159
  Statements of Operations................................................ F-160
  Statements of Shareholders' Equity...................................... F-161
  Statements of Cash Flows................................................ F-162
  Notes to Financial Statements........................................... F-163
YALE, INCORPORATED
  Report of Independent Public Accountants................................ F-168
  Balance Sheets.......................................................... F-169
  Statements of Operations................................................ F-170
  Statements of Shareholders' Equity...................................... F-171
  Statements of Cash Flows................................................ F-172
  Notes to Financial Statements........................................... F-173
</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 through September 30, 1997 ("the Pre-Offering Companies")
and 13 additional companies which were acquired in connection with the IPO
(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............................................. 11/13/97
Arkansas Mechanical Services, Inc..................................... 11/13/97
Central Carolina Air Conditioning Company............................. 11/13/97
Evans Services, Inc................................................... 11/13/97
Linford Service Company............................................... 11/13/97
MacDonald-Miller Industries, Inc...................................... 11/13/97
Masters, Inc.......................................................... 11/13/97
Mechanical Services, Inc.............................................. 11/13/97
Paul E. Smith Co., Inc................................................ 11/13/97
Southeast Mechanical Service, Inc..................................... 11/13/97
Van's Comfortemp Air Conditioning, Inc................................ 11/13/97
Willis Refrigeration, Air Conditioning & Heating, Inc................. 11/13/97
Yale Incorporated..................................................... 11/13/97
</TABLE>
 
  All of the acquisitions are accounted for utilizing the purchase method of
accounting. The acquisitions subsequent to September 30, 1997 occurred
concurrently with 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 sheet combines the historical
consolidated balance sheet of the Company and the balance sheets of the
acquisitions completed subsequent to September 30, 1997, as if these
acquisitions had occurred on September 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
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. Certain acquisitions
are subject to 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 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
 
                              SEPTEMBER 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......          $ 7,801     $    --   $   635      $3,049            $   312      $ 11,797   $ (1,217)  $ 10,580
 Accounts receiv-
 able--
 Trade, net of al-
 lowance..........           14,567      10,692     6,988       2,339              7,229        41,815         --     41,815
 Other............              258          85       478          54                 25           900         --        900
 Due from related
 parties..........              233         389        --          82                 41           745       (510)       235
 Inventories......            5,344         986       417         989                988         8,724         --      8,724
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on uncom-
 pleted contracts.              119         927     1,604          31                608         3,289         --      3,289
 Refundable income
 taxes............               --          --        --          15                 73            88         --         88
 Deferred tax as-
 set..............            1,575          --        --          --                 --         1,575         --      1,575
 Prepaid expenses
 and other current
 assets...........              859         145        90         155                 74         1,323         --      1,323
                            -------     -------   -------      ------            -------      --------   --------   --------
  Total current
  assets..........           30,756      13,224    10,212       6,714              9,350        70,256     (1,727)    68,529
PROPERTY AND
EQUIPMENT, net....            5,658       1,497       596       1,714              1,901        11,366       (211)    11,155
GOODWILL, net.....           27,992          --        --          --                 14        28,006     51,632     79,638
DEFERRED TAX AS-
SETS..............           10,095         196        --          --                 --        10,291         --     10,291
OTHER NONCURRENT
ASSETS............            6,655          67       673          18                  3         7,416       (149)     7,267
                            -------     -------   -------      ------            -------      --------   --------   --------
  Total assets....          $81,156     $14,984   $11,481      $8,446            $11,268      $127,335   $ 49,545   $176,880
                            =======     =======   =======      ======            =======      ========   ========   ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
-----------------------------
CURRENT
LIABILITIES:
<S>                       <C>          <C>        <C>     <C>               <C>               <C>       <C>         <C>
 Accounts payable
 and accrued ex-
 penses...........          $15,032     $ 5,212   $ 3,541      $1,186            $ 3,426      $ 28,397   $    172   $ 28,569
 Short-term debt,
 including current
 maturities.......            3,561       2,552     1,222          34                775         8,144      3,163     11,307
 Billings in
 excess of costs
 and estimated
 earnings on
 uncompleted
 contracts........            1,757       1,829       792           8                142         4,528         --      4,528
 Liability for
 warranty costs...              710         103       192         141                 --         1,146         --      1,146
 Deferred service
 revenue..........            1,779          --        --       1,371                 --         3,150         --      3,150
 Income taxes
 payable..........            1,580         279        --          66                 --         1,925         --      1,925
 Deferred tax
 liabilities......               --          --        --          26                 --            26      1,506      1,532
 Other current
 liabilities......            1,316          27        --          25                 --         1,368         --      1,368
 Due to
 shareholders/affiliates.     1,687          --        --          41                470         2,198     30,058     32,256
                            -------     -------   -------      ------            -------      --------   --------   --------
  Total current
  liabilities.....           27,422      10,002     5,747       2,898              4,813        50,882     34,899     85,781
LONG-TERM DEBT,
net of current
maturities........           28,482         288       747         770              1,849        32,136       (101)    32,035
LEASE OBLIGATIONS.               28          --        --           4                 18            50         --         50
DEFERRED SERVICE
REVENUE...........              145          --        --          --                 --           145         --        145
DEFERRED TAX LIA-
BILITY............               --          --        --          40                 --            40        111        151
DEFERRED COMPENSA-
TION..............               --         190        --          30                 --           220       (220)        --
DUE TO SHAREHOLD-
ERS...............            9,745          --        --          --                 --         9,745         --      9,745
OTHER LONG-TERM
LIABILITIES.......              743          --        --          --                 --           743         --        743
REDEEMABLE PRE-
FERRED STOCK AND
RELATED WARRANTS..           19,271          --        --          --                 --        19,271         --     19,271
SHAREHOLDERS' EQ-
UITY (DEFICIT)
 Common stock.....                9         356         5          53                481           904       (892)        12
 Additional paid-
 in capital.......           28,980          --        --          37                107        29,124     33,490     62,614
 Retained earnings
 (deficit)........          (33,669)      4,148     4,982       4,615              4,047       (15,877)   (17,790)   (33,667)
 Treasury stock...               --          --        --          (1)               (47)          (48)        48         --
                            -------     -------   -------      ------            -------      --------   --------   --------
  Total sharehold-
  ers' equity
  (deficit).......           (4,680)      4,504     4,987       4,704              4,588        14,103     14,856     28,959
                            -------     -------   -------      ------            -------      --------   --------   --------
  Total liabili-
  ties and share-
  holders' equity
  (deficit).......          $81,156     $14,984   $11,481      $8,446            $11,268      $127,335   $ 49,545   $176,880
                            =======     =======   =======      ======            =======      ========   ========   ========
<CAPTION>
                              IPO      PRO FORMA
ASSETS                    ADJUSTMENTS AS ADJUSTED
------                    ----------- -----------
<S>                       <C>         <C>
CURRENT ASSETS:
 Cash and cash
 equivalents......         $ 15,686    $ 26,266
 Accounts receiv-
 able--
 Trade, net of al-
 lowance..........               --      41,815
 Other............               --         900
 Due from related
 parties..........               --         235
 Inventories......               --       8,724
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on uncom-
 pleted contracts.               --       3,289
 Refundable income
 taxes............               --          88
 Deferred tax as-
 set..............               --       1,575
 Prepaid expenses
 and other current
 assets...........               --       1,323
                          ----------- -----------
  Total current
  assets..........           15,686      84,215
PROPERTY AND
EQUIPMENT, net....               --      11,155
GOODWILL, net.....               --      79,638
DEFERRED TAX AS-
SETS..............               --      10,291
OTHER NONCURRENT
ASSETS............           (4,246)      3,021
                          ----------- -----------
  Total assets....         $ 11,440    $188,320
                          =========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
EQUITY:
-----------------------------
CURRENT
LIABILITIES:
<S>                       <C>         <C>
 Accounts payable
 and accrued ex-
 penses...........         $     --    $ 28,569
 Short-term debt,
 including current
 maturities.......           (8,129)      3,178
 Billings in
 excess of costs
 and estimated
 earnings on
 uncompleted
 contracts........               --       4,528
 Liability for
 warranty costs...               --       1,146
 Deferred service
 revenue..........               --       3,150
 Income taxes
 payable..........               --       1,925
 Deferred tax
 liabilities......               --       1,532
 Other current
 liabilities......               --       1,368
 Due to
 shareholders/affiliates.   (32,256)         --
                          ----------- -----------
  Total current
  liabilities.....          (40,385)     45,396
LONG-TERM DEBT,
net of current
maturities........          (32,035)         --
LEASE OBLIGATIONS.              (50)         --
DEFERRED SERVICE
REVENUE...........               --         145
DEFERRED TAX LIA-
BILITY............               --         151
DEFERRED COMPENSA-
TION..............               --          --
DUE TO SHAREHOLD-
ERS...............               --       9,745
OTHER LONG-TERM
LIABILITIES.......               (6)        737
REDEEMABLE PRE-
FERRED STOCK AND
RELATED WARRANTS..          (19,271)         --
SHAREHOLDERS' EQ-
UITY (DEFICIT)
 Common stock.....                9          21
 Additional paid-
 in capital.......          103,178     165,792
 Retained earnings
 (deficit)........               --     (33,667)
 Treasury stock...               --          --
                          ----------- -----------
  Total sharehold-
  ers' equity
  (deficit).......          103,187     132,146
                          ----------- -----------
  Total liabili-
  ties and share-
  holders' equity
  (deficit).......         $ 11,440    $188,320
                          =========== ===========
</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
 
                               SEPTEMBER 30, 1997
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                           OTHER RESIDENTIAL SERVICE COMPANIES                    OTHER COMMERCIAL SERVICE COMPANIES
                     ------------------------------------------------ -----------------------------------------------------------
                     CENTRAL            OTHER        TOTAL OTHER              ARKANSAS  SOUTHEAST    OTHER       TOTAL OTHER
 ASSETS              CAROLINA WILLIS  COMPANIES RESIDENTIAL COMPANIES  YALE  MECHANICAL MECHANICAL COMPANIES COMMERCIAL COMPANIES
 ------              -------- ------  --------- --------------------- ------ ---------- ---------- --------- --------------------
 <S>                 <C>      <C>     <C>       <C>                   <C>    <C>        <C>        <C>       <C>
 CURRENT ASSETS:
 Cash and cash
 equivalents.......   $1,107  $1,470   $  472          $3,049         $   --   $   95     $    5    $  212         $   312
 Accounts receiv-
 able--
  Trade, net of
  allowance........      578   1,012      749           2,339          2,218    1,144        747     3,120           7,229
  Other............       20       1       33              54             --        9          1        15              25
 Due from related
 parties...........        7      --       75              82             --       41         --        --              41
 Inventories.......      231     170      588             989             95       80         64       749             988
 Costs and esti-
 mated earnings in
 excess of bill-
 ings on
 uncompleted con-
 tracts............       --      --       31              31             97       --          1       510             608
 Refundable income
 taxes.............       --      --       15              15             34       --          6        33              73
 Deferred tax as-
 set...............       --      --       --              --             --       --         --        --              --
 Prepaid expenses
 and other current
 assets............       56      22       77             155             11       28         26         9              74
                      ------  ------   ------          ------         ------   ------     ------    ------         -------
   Total current
   assets..........    1,999   2,675    2,040           6,714          2,455    1,397        850     4,648           9,350
 PROPERTY AND
 EQUIPMENT, net....      615     170      929           1,714            645      610        403       243           1,901
 GOODWILL, net.....       --      --       --              --             --       14         --        --              14
 DEFERRED TAX AS-
 SETS..............       --      --       --              --             --       --         --        --              --
 OTHER NONCURRENT
 ASSETS............       --      --       18              18             --       --         --         3               3
                      ------  ------   ------          ------         ------   ------     ------    ------         -------
   Total assets....   $2,614  $2,845   $2,987          $8,446         $3,100   $2,021     $1,253    $4,894         $11,268
                      ======  ======   ======          ======         ======   ======     ======    ======         =======
<CAPTION>
 LIABILITIES
 AND
 SHAREHOLDERS'
 EQUITY
 -------------
 <S>                 <C>      <C>     <C>       <C>                   <C>    <C>        <C>        <C>       <C>
 CURRENT LIABILI-
 TIES:
 Accounts payable
 and accrued ex-
 penses............   $  254  $  315   $  617          $1,186         $1,144   $  440     $   80    $1,762         $ 3,426
 Short-term debt,
 including current
 maturities........       --      --       34              34             --      322        113       340             775
 Billings in ex-
 cess of costs and
 estimated earn-
 ings on
 uncompleted con-
 tracts............        8      --       --               8              6       95         41        --             142
 Liability for
 warranty costs....      114      27       --             141             --       --         --        --              --
 Deferred service
 revenue...........      844     268      259           1,371             --       --         --        --              --
 Income taxes pay-
 able..............        2      41       23              66             --       --         --        --              --
 Deferred tax lia-
 bilities..........       --      --       26              26             --       --         --        --              --
 Other current li-
 abilities.........       --      --       25              25             --       --         --        --              --
 Due to related
 parties...........       --      --       41              41             --       99        371        --             470
                      ------  ------   ------          ------         ------   ------     ------    ------         -------
   Total current
   liabilities.....    1,222     651    1,025           2,898          1,150      956        605     2,102           4,813
 LONG-TERM DEBT,
 net of current ma-
 turities..........       --      --      770             770            279      245        194     1,131           1,849
 LEASE OBLIGATIONS.       --      --        4               4             --       --         --        18              18
 DEFERRED SERVICE
 REVENUE...........       --      --       --              --             --       --         --        --              --
 DEFERRED TAX LIA-
 BILITY............       --      28       12              40             --       --         --        --              --
 DEFERRED COMPENSA-
 TION..............       30      --       --              30             --       --         --        --              --
 DUE TO SHAREHOLD-
 ERS...............       --      --       --              --             --       --         --        --              --
 OTHER LONG-TERM
 LIABILITIES.......       --      --       --              --             --       --         --        --              --
 REDEEMABLE PRE-
 FERRED STOCK AND
 RELATED WARRANTS..       --      --       --              --             --       --         --        --              --
 SHAREHOLDERS' EQ-
 UITY (DEFICIT)
 Common stock......       20       4       29              53              1       26         --       454             481
 Additional paid-
 in capital........       23      --       14              37            101       --          6        --             107
 Retained earnings
 (deficit).........    1,319   2,163    1,133           4,615          1,569      841        448     1,189           4,047
 Treasury stock....       --      (1)      --              (1)            --      (47)        --        --             (47)
                      ------  ------   ------          ------         ------   ------     ------    ------         -------
   Total sharehold-
   ers' equity
   (deficit).......    1,362   2,166    1,176           4,704          1,671      820        454     1,643           4,588
                      ------  ------   ------          ------         ------   ------     ------    ------         -------
   Total liabili-
   ties and share-
   holders' equity
   (deficit).......   $2,614  $2,845   $2,987          $8,446         $3,100   $2,021     $1,253    $4,894         $11,268
                      ======  ======   ======          ======         ======   ======     ======    ======         =======
</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         --       --       1,860 (b)      1,991
                          -------     -------   -------  -------    -------    -------    -----    --------       --------
 Income (loss) from
 operations...........      3,563       2,054     1,488      936      1,830      2,287     (724)      9,218         20,652
OTHER INCOME (EX-
PENSE):
 Interest expense.....        (82)       (520)     (135)     (97)      (295)      (210)      (1)      1,149 (c)       (191)
 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)     10,173         21,039
INCOME TAX PROVISION..      1,572         574        --      315        275         46       --       6,430 (e)      9,212
                          -------     -------   -------  -------    -------    -------    -----    --------       --------
NET INCOME (LOSS).....    $ 2,336     $   968   $ 1,353  $   521    $ 1,577    $ 2,052    $(723)   $  3,743       $ 11,827
                          =======     =======   =======  =======    =======    =======    =====    ========       ========
PRO FORMA NET INCOME
PER SHARE.............                                                                                            $   0.56
                                                                                                                  ========
SHARES USED IN COMPUT-
ING PRO FORMA NET IN-
COME PER SHARE........                                                                                      (f)     21,220
                                                                                                                  ========
</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
 
                     NINE MONTHS ENDED SEPTEMBER 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................  $59,996   $52,184   $29,088  $18,708    $36,828    $35,891     $--      $    --      $232,695
COST OF SERVICES........   43,384    45,192    26,308   16,100     22,911     25,741      --           --       179,636
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
 Gross profit...........   16,612     6,992     2,780    2,608     13,917     10,150      --           --        53,059
SELLING, GENERAL AND AD-
MINISTRATIVE EXPENSES...   14,012     5,567     1,739    2,073     12,494      7,687      --       (6,712)(a)    36,860
GOODWILL AMORTIZATION...       --        --        --       --         61         27      --        1,405 (b)     1,493
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
 Income from operations.    2,600     1,425     1,041      535      1,362      2,436      --        5,307        14,706
OTHER INCOME (EXPENSE):
 Interest expense.......      (40)     (386)     (116)     (68)      (219)      (158)     --          891 (c)       (96)
 Interest income........       80        --        15        2         55         17      --           --           169
 Other..................      199        24        --       (3)        31         41      --           11 (d)       303
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
INCOME BEFORE INCOME TAX
PROVISION ..............    2,839     1,063       940      466      1,229      2,336      --        6,209        15,082
INCOME TAX PROVISION....    1,130       402        --       75         42        315      --        4,630 (e)     6,594
                          -------   -------   -------  -------    -------    -------     ---      -------      --------
NET INCOME (LOSS).......  $ 1,709   $   661   $   940  $   391    $ 1,187    $ 2,021     $--      $ 1,579      $  8,488
                          =======   =======   =======  =======    =======    =======     ===      =======      ========
PRO FORMA NET INCOME PER
SHARE...................                                                                                       $   0.40
                                                                                                               ========
SHARES USED IN COMPUTING
PRO FORMA NET INCOME PER
SHARE...................                                                                                  (f)    21,220
                                                                                                               ========
</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
 
                     NINE MONTHS ENDED SEPTEMBER 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.........   $6,114  $6,758  $4,898   $5,045  $1,145   $12,868    $36,828
COST OF SERVICES.    3,584   4,265   3,935    2,327     256     8,544     22,911
                    ------  ------  ------   ------  ------   -------    -------
 Gross profit....    2,530   2,493     963    2,718     889     4,324     13,917
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........    2,167   1,892   1,017    2,571     876     3,971     12,494
GOODWILL AMORTI-
ZATION...........       --      58      --        3      --        --         61
                    ------  ------  ------   ------  ------   -------    -------
 Income (loss)
 from operations.      363     543     (54)     144      13       353      1,362
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........       (8)    (97)    (12)     (27)     (7)      (68)      (219)
 Interest income.       11       2      11       15      --        16         55
 Other...........       25      34      17      (48)     --         3         31
                    ------  ------  ------   ------  ------   -------    -------
INCOME (LOSS) BE-
FORE INCOME TAX
PROVISION........      391     482     (38)      84       6       304      1,229
INCOME TAX PROVI-
SION.............       --      --     (16)      46      --        12         42
                    ------  ------  ------   ------  ------   -------    -------
NET INCOME
(LOSS)...........   $  391  $  482  $  (22)  $   38  $    6   $   292    $ 1,187
                    ======  ======  ======   ======  ======   =======    =======
<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.........  $8,179  $5,715    $4,755     $4,092    $13,150   $35,891
COST OF SERVICES.   6,361   4,439     3,639      2,911      8,391    25,741
                   ------- ------- ---------- ---------- --------- ----------
 Gross profit....   1,818   1,276     1,116      1,181      4,759    10,150
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........   1,423   1,017       783        675      3,789     7,687
GOODWILL AMORTI-
ZATION...........      --      --        --         --         27        27
                   ------- ------- ---------- ---------- --------- ----------
 Income (loss)
 from operations.     395     259       333        506        943     2,436
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........     (22)    (23)      (38)       (41)       (34)     (158)
 Interest income.      --       1        --         --         16        17
 Other...........     (21)     20        27         (3)        18        41
                   ------- ------- ---------- ---------- --------- ----------
INCOME (LOSS) BE-
FORE INCOME TAX
PROVISION........     352     257       322        462        943     2,336
INCOME TAX PROVI-
SION.............      --     242        --         --         73       315
                   ------- ------- ---------- ---------- --------- ----------
NET INCOME
(LOSS)...........  $  352  $   15    $  322     $  462    $   870   $ 2,021
                   ======= ======= ========== ========== ========= ==========
</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
 
                     NINE MONTHS ENDED SEPTEMBER 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..............    $82,226     $54,560   $31,166  $10,061    $30,359    $35,949   $    --    $     --       $244,321
COST OF SERVICES......     59,210      46,400    27,955    8,670     18,858     25,947        --          --        187,040
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
 Gross profit.........     23,016       8,160     3,211    1,391     11,501     10,002        --          --         57,281
SELLING, GENERAL AND
ADMINISTRATIVE EX-
PENSES................     26,507       6,239     2,015    1,376      9,643      7,827     1,783     (13,846)(a)     41,544
GOODWILL AMORTIZATION.        204          --        --       --         55         27        --       1,207 (b)      1,493
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
 Income (loss) from
 operations...........     (3,695)      1,921     1,196       15      1,803      2,148    (1,783)     12,639         14,244
OTHER INCOME (EX-
PENSE):
 Interest expense.....     (1,135)       (333)     (102)     (40)      (158)      (199)       (2)      1,873 (c)        (96)
 Interest income......        244           1        11        1         80         16         4          --            357
 Other................        266         182        --       (9)       161         63        --         (22)(d)        641
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION..     (4,320)      1,771     1,105      (33)     1,886      2,028    (1,781)     14,490         15,146
INCOME TAX PROVISION..      1,151         650        --      (55)       228         24        --       4,629 (e)      6,627
                          -------     -------   -------  -------    -------    -------   -------    --------       --------
NET INCOME (LOSS).....    $(5,471)    $ 1,121   $ 1,105  $    22    $ 1,658    $ 2,004   $(1,781)   $  9,861       $  8,519
                          =======     =======   =======  =======    =======    =======   =======    ========       ========
PRO FORMA NET INCOME
PER SHARE.............                                                                                             $   0.40
                                                                                                                   ========
SHARES USED IN COMPUT-
ING PRO FORMA NET IN-
COME PER SHARE........                                                                                      (f)      21,220
                                                                                                                   ========
</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
 
                     NINE MONTHS ENDED SEPTEMBER 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.........   $6,259  $3,419  $5,144   $2,168  $844   $12,525    $30,359
COST OF SERVICES.    3,603   2,227   3,805    1,005   184     8,034     18,858
                    ------  ------  ------   ------  ----   -------    -------
 Gross profit....    2,656   1,192   1,339    1,163   660     4,491     11,501
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........    2,021     949     714    1,455   532     3,972      9,643
GOODWILL AMORTI-
ZATION...........       --      48      --        7    --        --         55
                    ------  ------  ------   ------  ----   -------    -------
 Income (loss)
 from operations.      635     195     625     (299)  128       519      1,803
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........       (2)    (34)    (13)     (11)   (8)      (90)      (158)
 Interest income.       34       4      29        4    --         9         80
 Other...........        8      (8)     30       63    (1)       69        161
                    ------  ------  ------   ------  ----   -------    -------
INCOME (LOSS) BE-
FORE INCOME
TAX PROVISION....      675     157     671     (243)  119       507      1,886
INCOME TAX PROVI-
SION.............       --      --     225      (21)   22         2        228
                    ------  ------  ------   ------  ----   -------    -------
NET INCOME
(LOSS)...........   $  675  $  157  $  446   $ (222) $ 97   $   505    $ 1,658
                    ======  ======  ======   ======  ====   =======    =======
<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.........  $9,229  $2,259    $5,963     $3,731    $14,767   $35,949
COST OF SERVICES.   6,938   1,679     4,497      2,780     10,053    25,947
                   ------- ------- ---------- ---------- --------- ----------
 Gross profit....   2,291     580     1,466        951      4,714    10,002
SELLING, GENERAL
AND
ADMINISTRATIVE
EXPENSES.........   1,627     627       890        629      4,054     7,827
GOODWILL AMORTI-
ZATION...........      --      --        --         --         27        27
                   ------- ------- ---------- ---------- --------- ----------
 Income (loss)
 from operations.     664     (47)      576        322        633     2,148
OTHER INCOME (EX-
PENSE):
 Interest ex-
 pense...........     (30)    (10)      (41)       (63)       (55)     (199)
 Interest income.      --      --        --         --         16        16
 Other...........     (10)     --         8         --         65        63
                   ------- ------- ---------- ---------- --------- ----------
INCOME (LOSS) BE-
FORE INCOME
TAX PROVISION....     624     (57)      543        259        659     2,028
INCOME TAX PROVI-
SION.............      --      (4)       --         --         28        24
                   ------- ------- ---------- ---------- --------- ----------
NET INCOME
(LOSS)...........  $  624  $  (53)   $  543     $  259    $   631   $ 2,004
                   ======= ======= ========== ========== ========= ==========
</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 acquired 11 companies through September 30, 1997 (the "Pre-
Offering Companies") and an additional 13 companies (the "Offering Acquisition
Companies") concurrently with the IPO.
 
  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 nine months ended September 30,
1996 and 1997, the respective companies' actual financial statements for the
nine month periods ended September 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 nine
months ended September 30, 1997 to determine the pro forma results of
operations for the nine months ended September 30, 1997.
 
2. 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 transactions are included in the actual
results of operations of the Company from the date of acquisition and the
historical balance sheet at September 30, 1997 includes the acquisitions
completed as of that date. In addition, the Company acquired the Offering
Acquisition Companies concurrently with the IPO. All of the acquisitions are
accounted for as purchases. The cash consideration associated with the
acquisition of the Offering Acquisition Companies was provided by proceeds from
the IPO.
 
  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 was 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. Redemption of
all outstanding Preferred Stock occurred in connection with the 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 initial public
offering price of $14.00 due primarily to restrictions on the sale and
transferability of both the privately issued shares and shares issued
simultaneous with the IPO. 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)
$95.0 million for the Pre-Offering and Offering Acquisition Companies
(excluding Airtron, the accounting acquirer) is comprised of (a) cash of $42.4
million, (b) Preferred Stock of $4.4 million and (c) Common Stock of $48.2
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 $15.4
million) will approximate fair value. This results in an allocation to
goodwill of approximately $79.6 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 $4.6 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 $0.4
million of other distributions of real estate and non operating assets offset
by related liabilities of $0.3 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
  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
  Callahan Roach.....................   2,450    1,050       192        5,517
  Sibley.............................   1,202      665        62        2,518
  USA (asset purchase)...............     436      436        50        1,395
                                      -------   ------     -----     --------
Total Pre-Offering Acquisitions......  32,642   19,272     6,066       89,230
                                      -------   ------     -----     --------
OFFERING ACQUISITION COMPANIES
  All Service........................   2,406       --       210        4,578
  Arkansas Mechanical................   2,299       --       164        3,449
  Central Carolina...................   3,751       --       290        6,588
  Evans .............................   1,165       --       104        2,328
  Linford ...........................     655       --       121        2,008
  MacDonald-Miller...................   6,589       --       706       14,494
  Masters............................   7,484       --       467       11,038
  Mechanical.........................     240       --        17          297
  Paul E. Smith......................      --       --       234        2,414
  Southeast Mechanical...............   2,876       --       179        4,880
  Van's..............................   1,568       --       112        2,825
  Willis.............................   2,605       --       279        5,731
  Yale...............................   2,437       --       174        3,327
                                      -------   ------     -----     --------
                                       34,075       --     3,057       63,957
                                      -------   ------     -----     --------
Sub S Corp Distributions.............  (3,505)      --       (76)          --
                                      -------   ------     -----     --------
    Totals........................... $63,212   19,272     9,047     $153,187
                                      =======   ======     =====     ========
</TABLE>
--------
1) The preferred stock is valued at $1 per share. This stock was redeemed for
   $1 per share in connection with the IPO.
 
                                     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 $4.6 million of which $1.4
million is paid using cash on hand of the applicable company and $3.2 million
is 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 settlement of all shareholder receivables and payables with
cash at closing.
 
  c) Records the elimination of all assets and liabilities of the acquired
companies that are specifically excluded as part of the purchase transaction.
 
  d) Records the elimination of the historical equity accounts of the 13
Offering Acquisition Companies that closed concurrently with the IPO.
 
  e) Records the purchase of the 13 Offering Acquisition Companies that closed
concurrently with the IPO, including the cash 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 and shares of Common Stock. Amounts earned under the terms
of the agreements will be recorded as additional goodwill and amortized over
the remaining amortization period.
 
  f) Records the proceeds from the issuance of 8,340,000 shares of GroupMAC
Common Stock, net of estimated offering costs of $13,575,000. Offering costs
primarily consist of underwriting discounts and commissions, accounting fees,
legal fees and printing expenses.
 
  g) Records the repayment of the Revolving Credit Facility, the Airtron Term
Loan and the Acquisition Line of Credit with proceeds from the IPO.
 
  h) Records the cash portion paid or to be paid to the Offering Acquisition
Companies in connection with the acquisition of such companies.
 
  i) Records the retirement of GroupMAC preferred stock.
 
  j) 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)    ADJUSTMENTS
                            -------  -----  -----  -------  -------  -----------
<S>                         <C>      <C>    <C>    <C>      <C>      <C>
Cash and cash equivalents.  $(1,394) $  (1) $ 178                      $(1,217)
Due from related parties..            (510)                               (510)
Property and equipment,
 net......................                   (211)                        (211)
Goodwill..................    1,617          (154) (14,208)  64,377     51,632
Other noncurrent assets...                   (149)                        (149)
Accounts payable and
 accrued expenses.........                                     (172)      (172)
Short-term debt, including
 current maturities.......   (3,178)           15                       (3,163)
Deferred tax liabilities,
 current..................   (1,506)                                    (1,506)
Due to
 shareholder/affiliates...             511                  (30,569)   (30,058)
Long-term debt, net of
 current maturities.......                    101                          101
Deferred tax liabilities,
 long-term................     (111)                                      (111)
Deferred compensation.....                    220                          220
Common stock..............                             895       (3)       892
Additional paid-in
 capital..................                             143  (33,633)   (33,490)
Retained earnings
 (deficit)................    4,572                 13,218              17,790
Treasury stock............                             (48)                (48)
                            -------  -----  -----  -------  -------    -------
  Total...................  $    --  $  --  $  --  $    --  $    --    $    --
                            =======  =====  =====  =======  =======    =======
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                IPO
                             (F)       (G)       (H)       (I)       (J)    ADJUSTMENTS
                          ---------  --------  --------  --------  -------  -----------
<S>                       <C>        <C>       <C>       <C>       <C>      <C>
Cash and cash
 equivalents............  $ 107,433  $(31,167) $(32,256) $(19,271) $(9,053)  $  15,686
Other noncurrent assets.     (4,246)                                            (4,246)
Short-term debt,
 including current
 maturities.............                3,333                        4,796       8,129
Due to
 shareholder/affiliates.                         32,256                         32,256
Long-term debt, net of
 current maturities.....               27,834                        4,201      32,035
Lease obligations.......                                                50          50
Other long-term
 liabilities............                                                 6           6
Preferred stock.........                                   19,271               19,271
Common stock............         (9)                                                (9)
Additional paid-in
 capital................   (103,178)                                          (103,178)
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, $9.7 million and $9.9 million for the twelve month period ended
at or around December 31, 1996 and the nine month periods ended September 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, $3.0 million and $3.0 million for the twelve month period ended at or
around December 31, 1996 and the nine month periods ended September 30, 1996
and 1997, respectively. The differences between these amounts for the periods
noted herein equate to $11.1 million, $6.7 million and $6.9 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 IPO. 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 was
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 outstanding on completion of the IPO include the
following:
 
<TABLE>
<S>                                                                   <C>
Shares issued in Initial Public Offering.............................  8,340,000
Shares issued under Subscription Agreement dated October 24, 1996....  2,600,000
Shares issued to Pre-Offering Companies..............................  6,066,086
Shares issued to Offering Acquisition Companies......................  2,980,986
Shares issued to Founding Management and Directors...................  1,037,638
Incremental effect of options and warrants on shares outstanding.....    195,643
                                                                      ----------
Shares estimated to be outstanding................................... 21,220,353
                                                                      ==========
</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>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT PAR VALUE)
 
<TABLE>
<CAPTION>
                                                      FEBRUARY 28, SEPTEMBER 30,
                                                          1997         1997
                                                      ------------ -------------
                                                                    (UNAUDITED)
<S>                                                   <C>          <C>
                       ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.........................    $ 4,339       $ 7,801
  Accounts receivable...............................      7,811        15,058
  Inventories.......................................      3,354         5,344
  Costs and estimated earnings in excess of billings
   on uncompleted contracts.........................         13           119
  Prepaid expenses and other current assets.........        359           859
  Deferred tax assets...............................        765         1,575
  Refundable income taxes...........................      3,236           --
                                                        -------       -------
   Total current assets.............................     19,877        30,756
PROPERTY AND EQUIPMENT, net.........................      1,289         5,658
GOODWILL, net.......................................        --         27,992
DEFERRED TAX ASSET..................................      3,195        10,095
OTHER NONCURRENT ASSETS.............................      2,792         6,655
                                                        -------       -------
   Total assets.....................................    $27,153       $81,156
                                                        =======       =======
   LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Short-term borrowings and current maturities of
   long-term debt...................................    $   149       $ 3,561
  Accounts payable and accrued expenses.............     10,647        15,032
  Due to related parties............................        --          1,687
  Billings in excess of costs and estimated earnings
   on uncompleted contracts.........................      1,469         1,757
  Deferred service contract revenue.................        739         1,779
  Income taxes payable..............................        536         1,580
  Other current liabilities.........................        --          2,026
                                                        -------       -------
   Total current liabilities........................     13,540        27,422
LONG-TERM DEBT, net of current maturities...........      1,141        28,482
COMPENSATION AND BENEFITS PAYABLE...................      5,831           --
DUE TO SHAREHOLDERS.................................        --          9,745
OTHER LONG-TERM LIABILITIES.........................        650           916
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK AND RELATED WARRANTS.....        --         19,271
SHAREHOLDERS' EQUITY (DEFICIT):
  Common stock, $0.001 par value; 100,000 shares au-
   thorized; 4,652 and 9,486 shares issued and out-
   standing, respectively...........................          5             9
  Additional paid-in capital........................      2,646        28,980
  Retained earnings (deficit).......................      3,340       (33,669)
                                                        -------       -------
   Total shareholders' equity (deficit).............      5,991        (4,680)
                                                        -------       -------
   Total liabilities and shareholders' equity.......    $27,153       $81,156
                                                        =======       =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated condensed
                             financial statements.
 
                                      F-29
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)
 
                                                        SEVEN MONTHS ENDED     
                                                           SEPTEMBER 30,       
                                                      ---------------------    
                                                         1996        1997      
                                                      ----------  ---------    
REVENUES ......................................       $48,826       $70,468    
COST OF SERVICES ..............................        35,392        50,977    
                                                      -------       -------    
  Gross profit ................................        13,434        19,491    
                                                                               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES...        10,003        14,639    
AMORTIZATION OF GOODWILL.......................           --            204    
COMPENSATION EXPENSE FROM REVERSE ACQUISITION..           --          6,978    
                                                      -------       -------    
    Income from operations.....................         3,431        (2,330)   
                                                                               
OTHER INCOME (EXPENSE):                                                        
  Interest expense.............................           (40)       (1,093)   
  Interest income..............................            58           184    
  Other........................................            22            41    
                                                      -------       -------    
    Income before income tax provision.........         3,471        (3,198)   
INCOME TAX PROVISION ..........................         1,396         1,602    
                                                      -------       -------    
NET INCOME.....................................       $ 2,075       $(4,800)   
                                                      =======       =======    
  WEIGHTED AVERAGE SHARES OUTSTANDING..........         5,172        (9,086)   
                                                      =======       =======    
  NET INCOME PER COMMON SHARE..................       $  0.40       $ (0.53)   
                                                      =======       =======     

 
 
  The accompanying notes are an integral part of these consolidated condensed
                             financial statements.
 
                                      F-30
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              SEVEN MONTHS
                                                           ENDED SEPTEMBER 30,
                                                           -------------------
                                                              1996       1997
                                                           --------- ----------
<S>                                                        <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss).......................................  $  2,075  $   (4,800)
 Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
   Depreciation and amortization.........................        60         724
   Deferred income taxes.................................       --           64
   Non-cash compensation expense from reverse acquisi-
    tion.................................................       --        6,978
   Changes in operating assets and liabilities, net of
    effect of acquisitions accounted for as purchases:
    (Increase) decrease in -
     Accounts receivable.................................    (3,073)       (905)
     Inventories.........................................     1,184        (207)
     Costs and estimated earnings in excess of billings
      on uncompleted contracts...........................        36         (51)
     Prepaid expenses and other current assets...........        25         367
     Refundable income taxes.............................       --        3,324
     Other noncurrent assets.............................        12      (2,228)
    Increase (decrease) in -
     Accounts payable....................................       429         907
     Accrued expenses....................................       975      (1,906)
     Billings in excess of costs and estimated earnings
      on uncompleted contracts...........................       427         215
     Deferred service contract revenue...................        27         124
     Income tax payable..................................    (1,000)        850
     Other current liabilities...........................        35       1,628
     Compensation and benefits payable...................    (1,082)         (9)
     Other long-term liabilities.........................       --          120
                                                           --------  ----------
     Net cash provided by operating activities...........       130       5,195
                                                           --------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Cash paid for acquisitions, net of cash acquired of
  $1,787.................................................       --       (8,852)
 Deferred acquisition costs..............................       --         (261)
 Purchases of property and equipment.....................       (34)     (1,536)
                                                           --------  ----------
     Net cash used in investing activities...............       (34)    (10,649)
                                                           --------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from long-term debt............................       --       32,500
 Payments of long-term debt..............................       --       (5,155)
 Deferred offering costs.................................       --       (4,248)
 Proceeds from issuance of stock.........................       --        6,186
 Distributions to shareholders...........................       --      (20,367)
                                                           --------  ----------
     Net cash provided by financing activities...........       --        8,916
                                                           --------  ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS................        96       3,462
CASH AND CASH EQUIVALENTS, beginning of period...........     1,774       4,339
                                                           --------  ----------
CASH AND CASH EQUIVALENTS, end of period.................  $  1,870  $    7,801
                                                           ========  ==========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated condensed
                             financial statements.
 
                                      F-31
<PAGE>
 
                        GROUP MAINTENANCE AMERICA CORP.
                           (FORMERLY AIRTRON, INC.)
 
        NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
  1. The accompanying unaudited consolidated condensed financial statements of
Group Maintenance America Corp., ("the Company") have been prepared in
accordance with Rule 10-01 of Regulation S-X and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Those adjustments, which include only
normal recurring adjustments, that are, in the opinion of management,
necessary for a fair presentation of the results of the interim periods have
been made. The results of operations for such interim periods are not
necessarily indicative of results of operations for a full year. The unaudited
consolidated condensed financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto of the Company
contained elsewhere herein.
 
  2. Net income (loss) per share is calculated by dividing net income (loss)
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. Primary and
fully diluted shares are the same.
 
  The following table summarizes weighted average shares outstanding for each
of the historical periods presented (in thousands):
 
<TABLE>
<CAPTION>
                                                                  SEVEN MONTHS
                                                                      ENDED
                                                                  SEPTEMBER 30,
                                                                  -------------
                                                                   1996   1997
                                                                  ------ ------
<S>                                                               <C>    <C>
Shares issued in the acquisition of Airtron......................  5,172  4,652
Group Maintenance America Corp. shares outstanding, excluding
 acquisitions....................................................    --   3,126
Shares issued for the acquisition of the Pre-Offering Companies..    --   1,142
Stock options, net of assumed repurchase of common shares as
 treasury stock..................................................    --     166
                                                                  ------ ------
                                                                   5,172  9,086
                                                                  ====== ======
</TABLE>
 
  3. On November 13, 1997, the Company completed the IPO, which involved the
sale of 7,500,000 shares of Common Stock at a price to the public of $14.00
per share. The net proceeds from the Offering (after deducting underwriting
discounts and commissions and offering expenses) were approximately $92.2
million. Of this amount, $31.6 million has been used to pay the cash portion
of the purchase prices relating to the acquisitions of the GroupMAC Companies,
$41.0 million to repay corporate indebtedness and debt assumed in connection
with the acquisition of the Offering Acquisition Companies and $19.3 million
to retire all of the then outstanding preferred stock. On December 5, 1997,
the underwriters gave notice of the exercise of their overallotment option for
840,000 shares of Common Stock at $14.00 per share (representing net proceeds
to the Company of $10.9 million after underwriting discounts and commissions).
 
  4. 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 accompanying unaudited consolidated condensed financial
statements have been restated to reflect the stock split. 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 approximately 1.9 million shares of Common Stock at an exercise
price equal to the initial public offering price of $14.00 per share.
 
  5. The acquisition of the GroupMAC Companies included in the accompanying
financial statements are 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.
 
                                     F-32
<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-33
<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      918,479
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK AND RELATED
 WARRANTS................................           --          --   17,121,131
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-34
<PAGE>
 
                GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
                            (FORMERLY AIRTRON, INC.)
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                             
                         YEAR ENDED  YEAR ENDED   YEAR ENDED  FOUR MONTHS ENDED JUNE 30, 
                        FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, ------------------------
                             1995       1996         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-35
<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-36
<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-37
<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, 14,873,131 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 (together with the Acquired Companies, the Pre-Offering 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-38
<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-39
<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-40
<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-41
<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-42
<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-43
<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-44
<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-45
<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-46
<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 15,407,509
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-47
<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-48
<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 the IPO. 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. See Note 17.
 
  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
have been restated to reflect the stock split.
 
17. EVENTS SUBSEQUENT TO INDEPENDENT AUDITORS REPORT (UNAUDITED)
 
  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
 
                                      F-49
<PAGE>
 
               GROUP MAINTENANCE AMERICA CORP. AND SUBSIDIARIES
 
                           (FORMERLY AIRTRON, INC.)
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
stock option plan for non-management employees, the Company granted options to
purchase approximately 1.9 million shares of Common Stock at an exercise price
equal to the initial public offering price of $14.00 per share.
 
  On November 13, 1997, the Company completed the IPO, which involved the sale
of 7,500,000 shares of Common Stock at a price to the public of $14.00 per
share. The net proceeds from the IPO (after deducting underwriting discounts
and commissions and offering expenses) were approximately $92.2 million. Of
this amount, $31.6 million was used to pay the cash portion of the purchase
prices relating to the acquisitions of the GroupMAC Companies, $41.0 million
to repay corporate indebtedness and debt assumed in connection with the
acquisition of the Offering Acquisition Companies and $19.3 million to retire
all of the then outstanding preferred stock. On December 5, 1997 the
underwriters gave notice of the exercise of their overallotment option for
840,000 shares of Common Stock at $14.00 per share (which represents net
proceeds to the Company of approximately $10.9 million after underwriting
discounts and commissions).
 
  The Company has entered into a new credit facility with an initial borrowing
capacity of $75 million (the "New Credit Facility") which replaced a $35
million credit agreement. Under the New Credit Facility, the Company is
required to maintain (i) a minimum fixed charge coverage ratio; (ii) a minimum
tangible net worth that is positive; (iii) a maximum ratio of total
indebtedness for borrowed money to capitalization (as defined in the New
Credit Facility); and (iv) a minimum consolidated net worth (as defined in the
New Credit Facility).
 
                                     F-50
<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-51
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                        DECEMBER 31,        JUNE 30,   SEPTEMBER 30,
                                   ----------------------- ----------- -------------
                                      1995        1996        1997         1997
                                   ----------- ----------- ----------- -------------
           ASSETS                                                       (UNAUDITED)
<S>                                <C>         <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   10,691,894
    Related parties and employees.     108,840     341,186     672,407       85,169
    Unconsolidated affiliate......     279,000     321,000     388,000      388,000
  Inventories.....................     651,442     713,726     814,093      986,467
  Costs and estimated earnings in
   excess of billings on
   uncompleted contracts..........   1,356,980   1,342,213   1,015,468      926,113
  Prepaid expenses................      45,835     117,368      63,403      144,991
  Income taxes refundable.........          --     114,396          --           --
                                   ----------- ----------- -----------  -----------
      Total current assets........  12,214,090  16,237,603  17,681,661   13,222,634
PROPERTY AND EQUIPMENT, net.......   1,159,820   1,436,293   1,555,323    1,496,919
OTHER NONCURRENT ASSETS
  Real estate held for investment.     510,000     508,066     411,066           --
  Other assets....................     106,610     145,861     107,523       66,668
  Deferred income taxes...........     148,000     105,000     196,000      196,000
                                   ----------- ----------- -----------  -----------
                                       764,610     758,927     714,589      262,668
                                   ----------- ----------- -----------  -----------
      Total assets................ $14,138,520 $18,432,823 $19,951,573  $14,982,221
                                   =========== =========== ===========  ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
           EQUITY
<S>                                <C>         <C>         <C>         <C>
CURRENT LIABILITIES:
  Current maturities of long-term
   debt........................... $   100,136 $    96,000 $    96,000  $    96,000
  Accounts payable................   4,525,382   5,148,905   5,241,881    3,139,915
  Notes payable:
    Bank..........................   2,199,134   5,395,816   4,790,113    2,476,008
    Shareholders and related
     parties......................     673,523      30,000      35,340           --
  Accrued expenses................   1,915,968   1,840,699   2,416,748    2,182,373
  Income taxes payable............      28,764          --     396,001      278,880
  Billings in excess of costs and
   estimated earnings on
   uncompleted contracts..........   1,076,700   1,660,159   1,715,783    1,828,520
                                   ----------- ----------- -----------  -----------
      Total current liabilities...  10,519,607  14,171,579  14,691,866   10,001,696
LONG-TERM DEBT, net of current
 maturities.......................     699,098     758,149     708,285      288,000
DEFERRED COMPENSATION.............     355,085     189,848     189,848      189,848
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock, no par value;
   150,000 shares authorized......     198,473     291,539     355,133      355,971
  Retained earnings...............   2,366,257   3,021,708   4,006,441    4,146,706
                                   ----------- ----------- -----------  -----------
      Total shareholders' equity..   2,564,730   3,313,247   4,361,574    4,502,677
                                   ----------- ----------- -----------  -----------
      Total liabilities and
       shareholders' equity....... $14,138,520 $18,432,823 $19,951,573  $14,982,221
                                   =========== =========== ===========  ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-52
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED          NINE MONTHS ENDED
                               YEARS ENDED DECEMBER 31,                 JUNE 30,                SEPTEMBER 30,
                          -------------------------------------  ------------------------  ------------------------
                             1994         1995         1996         1996         1997         1996         1997
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                 (UNAUDITED)                     (UNAUDITED)
<S>                       <C>          <C>          <C>          <C>          <C>          <C>          <C>
REVENUES................  $39,534,230  $45,508,339  $66,058,958  $36,382,305  $38,835,662  $52,184,305  $54,560,008
COST OF SERVICES........   32,256,651   36,927,012   56,372,933   31,590,195   33,451,024   45,192,195   46,400,433
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------
   Gross profit.........    7,277,579    8,581,327    9,686,025    4,792,110    5,384,638    6,992,110    8,159,575
SELLING, GENERAL AND AD-
 MINISTRATIVE EXPENSES..    6,088,076    7,338,381    7,631,851    3,705,694    3,787,822    5,566,694    6,239,243
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------
   Income from opera-
    tions...............    1,189,503    1,242,946    2,054,174    1,086,416    1,596,816    1,425,416    1,920,332
OTHER INCOME (EXPENSE):
 Interest expense.......     (275,490)    (370,603)    (519,842)    (244,135)    (214,381)    (386,135)    (333,334)
 Other..................      (25,865)     (42,527)       7,926       66,751      167,209       23,751      183,510
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------
                             (301,355)    (413,130)    (511,916)    (177,384)     (47,172)    (362,384)    (149,824)
   Income before income
    tax provision.......      888,148      829,816    1,542,258      909,032    1,549,644    1,063,032    1,770,508
INCOME TAX PROVISION....      325,730      344,238      574,000      347,059      569,001      402,059      649,600
                          -----------  -----------  -----------  -----------  -----------  -----------  -----------
NET INCOME..............  $   562,418  $   485,578  $   968,258  $   561,973  $   980,643  $   660,973  $ 1,120,908
                          ===========  ===========  ===========  ===========  ===========  ===========  ===========
</TABLE>
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-53
<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-54
<PAGE>
 
               MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED          NINE MONTHS ENDED
                             YEARS ENDED DECEMBER 31,                JUNE 30,                SEPTEMBER 30,
                         -----------------------------------  ------------------------  ------------------------
                           1994        1995         1996         1996         1997         1996         1997
                         ---------  -----------  -----------  -----------  -----------  -----------  -----------
                                                              (UNAUDITED)                     (UNAUDITED)
<S>                      <C>        <C>          <C>          <C>          <C>          <C>          <C>
CASH FLOWS FROM OPERAT-
 ING ACTIVITIES:
 Net income............. $ 562,418  $   485,578  $   968,258  $   561,973  $   980,643  $   660,973  $ 1,120,908
 Adjustments to
  reconcile net income
  to cash flows provided
  by (used in) operating
  activities:
 Depreciation and
  amortization..........   250,162      266,763      376,391      167,654      210,208      277,842      319,756
 (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       25,000           --
 Deferred income taxes..    (9,000)     (67,000)      43,000      (81,000)     (91,000)          --      (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)  (2,395,546)   2,599,910
   Receivables from
    related parties and
    employees...........  (141,194)      32,354     (232,346)       7,226     (331,221)      21,187      256,016
   Receivable from
    unconsolidated
    affiliate...........  (176,000)    (103,000)     (42,000)     (21,000)     (67,000)     (21,000)     (67,000)
   Inventories..........   (76,019)      66,366      (62,284)    (310,598)    (100,367)    (370,944)    (272,741)
   Costs and estimated
    earnings in excess
    of billings on
    uncompleted
    contracts...........    41,276     (325,574)      14,767   (1,038,698)     326,745      203,850      416,100
   Prepaid expenses.....    51,746        1,525      (71,533)    (106,776)      53,965      112,072      (27,621)
   Income taxes
    refundable..........        --           --     (114,396)    (154,537)     114,396           --      114,396
   Other assets.........    57,860      (43,860)     (39,251)    (145,625)      38,338       (6,750)      79,193
  Increase (decrease)
   in:
   Accounts payable.....  (105,101)     906,917       83,013     (652,636)     691,425      885,865   (1,249,558)
   Accrued expenses.....   446,596      353,195      (75,269)     551,774      576,049      285,685      321,341
   Income taxes payable.  (216,105)      25,894      (28,764)     (28,764)     396,001      (21,960)     278,880
   Billings in excess of
    costs and estimated
    earnings on
    uncompleted
    contracts...........  (159,552)     649,570      583,459      643,626       55,624   (1,076,700)     168,361
   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   (1,420,426)   3,966,941
                         ---------  -----------  -----------  -----------  -----------  -----------  -----------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Purchases of property
  and equipment.........  (452,306)    (654,940)    (686,586)    (534,042)    (365,461)    (607,845)    (380,382)
 Proceeds from sale of
  property and
  equipment.............     9,975       73,841       14,865           --       11,929           --      508,066
 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)    (607,845)     127,684
                         ---------  -----------  -----------  -----------  -----------  -----------  -----------
CASH FLOWS FROM
 FINANCING ACTIVITIES:
 Disbursements in
  transit...............        --      198,590      540,510    1,338,474     (598,449)      13,835     (739,100)
 Increase (decrease) of
  notes payable to bank,
  net...................   895,548      394,297    3,196,682    1,331,530     (605,703)   2,904,742   (2,919,808)
 Effect of adjustment
  related to
  unconsolidated
  affiliate.............  (738,816)    (470,165)    (312,807)    (345,641)       4,090     (345,641)          --
 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)    (643,523)          --
 Proceeds (payments) of
  long-term borrowings..        --      816,932      312,021           --           --       61,332     (500,149)
 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       37,526       64,432
 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)   2,028,271   (4,094,625)
                         ---------  -----------  -----------  -----------  -----------  -----------  -----------
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-55
<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 (the "GroupMAC IPO"). 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. See Note 17.
 
  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-56
<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 September 30, 1997
and for the six and nine months then ended, respectively, 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-57
<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-58
<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
                                              ---------- ----------- -----------
                                              $9,771,993 $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-59
<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-60
<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-61
<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-62
<PAGE>
 
              MACDONALD-MILLER INDUSTRIES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Rental expense under operating leases:
 
     YEARS ENDING                                     RELATED
     DECEMBER 31,                                      PARTY    OTHER    TOTAL
     ------------                                     -------- -------- --------
     1994............................................ $380,000 $368,000 $748,000
     1995............................................  380,000  521,000  901,000
     1996............................................  380,000  582,000  962,000

     PERIOD ENDING                 
       JUNE 30,                   
     -------------                 
     1996............................................ $190,000 $300,000 $490,000
     1997............................................  190,000  320,000  510,000
 

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-63
<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-64
<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>
 
17. EVENTS SUBSEQUENT TO INDEPENDENT AUDITORS REPORT (UNAUDITED)
 
  GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the GroupMAC IPO (acquisition to be effective
October 31, 1997).
 
                                      F-65
<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-66
<PAGE>
 
                                 MASTERS, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                               DECEMBER 31, DECEMBER 31,  JUNE 30,    SEPTEMBER
                                   1995         1996        1997      30, 1997
           ASSETS              ------------ ------------ ----------- -----------
                                                                     (UNAUDITED)
<S>                            <C>          <C>          <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents..  $   535,255  $   670,776  $   637,330 $   635,196
  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   7,465,103
  Costs and estimated
   earnings in excess of
   billings on uncompleted
   contracts.................    1,506,793    1,866,172    1,419,830   1,603,699
  Inventories................      489,063      588,715      621,912     417,064
  Prepaid expenses and other
   assets....................       50,166       48,829       70,818      90,803
                               -----------  -----------  ----------- -----------
    Total current assets.....    8,838,899   10,033,799    9,609,511  10,211,865
PROPERTY AND EQUIPMENT, net..      590,229      625,125      609,719     596,024
OTHER NONCURRENT ASSETS......      673,570      673,570      673,570     673,570
                               -----------  -----------  ----------- -----------
    Total assets.............  $10,102,698  $11,332,494  $10,892,800 $11,481,459
                               ===========  ===========  =========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S
           EQUITY
<S>                            <C>          <C>          <C>         <C>
CURRENT LIABILITIES:
  Short-term borrowings and
   current maturities of
   long-term debt............  $ 1,406,634  $ 1,979,616  $ 1,069,777 $ 1,221,742
  Accounts payable...........    1,781,218    1,761,200    2,152,392   2,164,751
  Accrued expenses...........    1,042,627    1,241,727    1,160,127   1,250,206
  Billings in excess of costs
   and estimated earnings on
   uncompleted contracts.....      721,159      627,052      850,687     792,035
  Other current liabilities..      406,163      319,904      395,275     318,130
                               -----------  -----------  ----------- -----------
    Total current
     liabilities.............    5,357,801    5,929,499    5,628,258   5,746,864
LONG-TERM DEBT, net of
 current maturities..........      827,492      800,238      764,932     747,397
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       5,100
  Retained earnings..........    3,912,305    4,597,657    4,494,510   4,982,098
                               -----------  -----------  ----------- -----------
    Total shareholder's
     equity..................    3,917,405    4,602,757    4,499,610   4,987,198
                               -----------  -----------  ----------- -----------
    Total liabilities and
     shareholder's equity....  $10,102,698  $11,332,494  $10,892,800 $11,481,459
                               ===========  ===========  =========== ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-67
<PAGE>
 
                                 MASTERS, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED        NINE MONTHS ENDED
                                YEAR ENDED DECEMBER 31,              JUNE 30,              SEPTEMBER 30,
                          ----------------------------------- ----------------------- -----------------------
                             1994        1995        1996        1996        1997        1996        1997
                          ----------- ----------- ----------- ----------- ----------- ----------- -----------
                                                              (UNAUDITED)                   (UNAUDITED)
<S>                       <C>         <C>         <C>         <C>         <C>         <C>         <C>
REVENUES................  $30,327,333 $35,160,419 $39,825,843 $18,278,841 $19,318,196 $29,088,014 $31,166,233
COST OF SERVICES........   28,018,280  31,746,287  35,854,155  16,639,076  17,457,471  26,308,282  27,955,896
                          ----------- ----------- ----------- ----------- ----------- ----------- -----------
 Gross profit...........    2,309,053   3,414,132   3,971,688   1,639,765   1,860,725   2,779,732   3,210,337
SELLING, GENERAL AND AD-
 MINISTRATIVE
 EXPENSES...............    1,664,069   2,373,300   2,483,875   1,008,650   1,196,777   1,738,751   2,014,689
                          ----------- ----------- ----------- ----------- ----------- ----------- -----------
 Income from operations.      644,984   1,040,832   1,487,813     631,115     663,948   1,040,981   1,195,648
INTEREST EXPENSE........       86,940     102,428     134,718      58,888      64,672     100,546      90,934
                          ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET INCOME..............  $   558,044 $   938,404 $ 1,353,095 $   572,227 $   599,276 $   940,435 $ 1,104,714
                          =========== =========== =========== =========== =========== =========== ===========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-68
<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-69
<PAGE>
 
                                 MASTERS, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED        NINE MONTHS ENDED
                                YEAR ENDED DECEMBER 31,                 JUNE 30,              SEPTEMBER 30,
                          -------------------------------------  -----------------------  ----------------------
                             1994         1995         1996         1996        1997        1996        1997
                          -----------  -----------  -----------  ----------- -----------  ---------  -----------
                                                                 (UNAUDITED)                   (UNAUDITED)
<S>                       <C>          <C>          <C>          <C>         <C>          <C>        <C>
CASH FLOWS FROM OPERAT-
 ING
 ACTIVITIES:
 Net income.............  $   558,044  $   938,404  $ 1,353,095   $572,227   $   599,276  $ 940,435  $ 1,104,714
 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    189,589      210,017
 Loss(Gain) on disposal
  of assets.............       20,576        8,480        2,223         --          (305)     2,223        1,601
 Bad debt expense.......      425,602      626,625      434,250    100,000       169,741    223,250      279,241
 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)  (910,274)    (885,037)
   Costs and estimated
    earnings in excess
    of billings on un-
    completed contracts.     (104,401)    (278,186)    (359,379)  (667,721)      446,342   (825,871)     262,473
   Inventories..........      116,978        9,039      (99,652)    31,423       (33,197)    86,925      171,651
   Prepaid expenses and
    other assets........      (16,255)     (17,607)       1,337      9,945       (21,989)    16,862      (41,974)
  Increase (decrease)
   in--
   Accounts payable.....      380,925      120,221      (20,018)   326,793       391,192    435,238      403,551
   Billings in excess of
    costs and estimated
    earnings on uncom-
    pleted contracts....       43,624      209,499      (94,107)    26,087       223,635     (6,538)     164,983
   Accrued salaries and
    wages...............        2,662       16,042       17,360     58,963        40,363     93,177       70,593
   Accrued profit shar-
    ing and bonus.......      143,148      256,752      189,431    (43,433)     (162,176)    86,425     (150,903)
   Accrued vacation ben-
    efits...............       53,589       40,105       61,561     29,600        35,858     68,284       66,769
   Payroll taxes and
    withholding.........       22,291       (5,665)     (69,252)    57,517         4,356     61,390       22,021
   Other current liabil-
    ities...............      238,406       80,814      (86,259)   (52,484)       75,371    (29,779)      (1,774)
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
Net cash provided by
 (used in) operating ac-
 tivities...............    1,595,666      358,838      552,734   (108,137)    1,738,152    431,336    1,677,926
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
CASH FLOWS FROM INVEST-
 ING
 ACTIVITIES:
 Purchases of property
  and equipment.........     (284,326)  (1,045,919)    (295,198)  (169,080)     (130,357)  (226,027)    (188,846)
 Proceeds from sale of
  equipment.............       18,208          566           --         --         6,327         --        6,327
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
 Net cash used in in-
  vesting activities....     (266,118)  (1,045,353)    (295,198)  (169,080)     (124,030)  (226,027)    (182,519)
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
CASH FLOWS FROM FINANC-
 ING
 ACTIVITIES:
 Proceeds from long-term
  debt..................      160,000    1,604,746      659,234    944,234            --    659,234           --
 Payments of long-term
  debt..................   (1,237,110)    (345,617)    (113,506)   (51,018)     (945,145)   (83,925)    (810,714)
 Dividends paid.........     (219,912)    (489,345)    (667,743)  (567,324)     (702,423)  (609,348)    (720,273)
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
 Net cash provided by
  (used in) financing
  activities............   (1,297,022)     769,784     (122,015)   325,892    (1,647,568)   (34,039)  (1,530,987)
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
NET INCREASE (DECREASE)
 IN CASH AND CASH EQUIV-
 ALENTS.................       32,526       83,269      135,521     48,675       (33,446)   171,270      (35,580)
CASH AND CASH EQUIVA-
 LENTS, beginning of pe-
 riod...................      419,460      451,986      535,255    535,255       670,776    535,255      670,776
                          -----------  -----------  -----------   --------   -----------  ---------  -----------
CASH AND CASH EQUIVA-
 LENTS, end of
 period.................  $   451,986  $   535,255  $   670,776   $583,930   $   637,330  $ 706,525  $   635,196
                          ===========  ===========  ===========   ========   ===========  =========  ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-70
<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 and
as of September 30, 1997 and for the nine months ended September 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 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-71
<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-72
<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-73
<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-74
<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-75
<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-76
<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 (the "GroupMAC IPO").
 
14. EVENTS SUBSEQUENT TO INDEPENDENT AUDITORS REPORT (UNAUDITED)
 
  GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the GroupMAC IPO (acquisition to be effective
October 31, 1997).
 
  The Company made distributions in respect to the Company's estimated S
Corporation accumulated adjustment account of approximately $1.7 million at
the time of closing.
 
                                     F-77
<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-78
<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-79
<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-80
<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-81
<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-82
<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-83
<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-84
<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-85
<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-86
<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 were redeemed for cash
concurrent with the consummation of the initial public offering of the common
stock of GroupMAC.
 
                                     F-87
<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-88
<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-89
<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-90
<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-91
<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-92
<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-93
<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-94
<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-95
<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-96
<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-97
<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-98
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                            COMBINED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                         DECEMBER 31,  JUNE 30,   SEPTEMBER 30,
                                             1996        1997         1997
               ASSETS                    ------------ ----------  -------------
                                                                   (UNAUDITED)
<S>                                      <C>          <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents.............  $  124,687  $   20,123   $   94,626
  Accounts receivable...................     960,574   1,337,571    1,153,299
  Inventories...........................      55,036      75,862       80,063
  Costs and estimated earnings in excess
   of billings on uncompleted contracts.      52,310      36,203           --
  Due from related parties..............      21,291      17,553       41,440
  Prepaid expenses and other current
   assets...............................       8,795      11,508       27,690
                                          ----------  ----------   ----------
    Total current assets................   1,222,693   1,498,820    1,397,118
PROPERTY AND EQUIPMENT, net.............     634,996     632,862      610,222
GOODWILL, net of accumulated
 amortization of $11,265, $11,922 and
 $12,249, respectively..................      14,975      14,318       13,991
OTHER NONCURRENT ASSETS.................       1,217       1,383           --
                                          ----------  ----------   ----------
    Total assets........................  $1,873,881  $2,147,383   $2,021,331
                                          ==========  ==========   ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                      <C>          <C>         <C>
CURRENT LIABILITIES:
  Short-term borrowings and current
   maturities of long-term debt.........  $  513,157  $  500,352   $  321,703
  Accounts payable......................     529,497     725,177      387,349
  Accrued expenses......................     157,811      69,571      113,363
  Billings in excess of costs and
   estimated earnings on uncompleted
   contracts............................     117,526      99,690       35,268
  Due to related parties................          --      35,150       98,780
                                          ----------  ----------   ----------
    Total current liabilities...........   1,317,991   1,429,940      956,463
LONG-TERM DEBT, net of current
 maturities.............................     205,170     192,645      244,920
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Common stock..........................      26,000      26,000       26,000
  Retained earnings.....................     371,983     546,061      841,211
  Treasury stock, at cost...............     (47,263)    (47,263)     (47,263)
                                          ----------  ----------   ----------
    Total shareholders' equity..........     350,720     524,798      819,948
                                          ----------  ----------   ----------
    Total liabilities and shareholders'
     equity.............................  $1,873,881  $2,147,383   $2,021,331
                                          ==========  ==========   ==========
</TABLE>
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                      F-99
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                       COMBINED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                      SIX MONTHS ENDED JUNE     NINE MONTHS ENDED
                          YEAR ENDED           30,                SEPTEMBER 30,
                         DECEMBER 31, ----------------------  ----------------------
                             1996        1996        1997        1996        1997
                         ------------ ----------  ----------  ----------  ----------
                                    (UNAUDITED)                    (UNAUDITED)
<S>                      <C>          <C>         <C>         <C>         <C>
REVENUES................  $6,237,166  $3,460,144  $4,028,775  $4,755,144  $5,962,959
COST OF SERVICES........   4,773,451   2,663,083   3,168,537   3,639,083   4,497,390
                          ----------  ----------  ----------  ----------  ----------
    Gross profit........   1,463,715     797,061     860,238   1,116,061   1,465,569
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES...............   1,082,470     525,206     583,120     783,206     890,309
                          ----------  ----------  ----------  ----------  ----------
    Income from
     operations.........     381,245     271,855     277,118     332,855     575,260
OTHER INCOME (EXPENSE):
  Interest expense......     (51,408)    (22,908)    (32,160)    (37,908)    (41,323)
  Other.................      30,104      17,321       2,120      27,321       8,269
                          ----------  ----------  ----------  ----------  ----------
NET INCOME..............  $  359,941  $  266,268  $  247,078  $  322,268  $  542,206
                          ==========  ==========  ==========  ==========  ==========
</TABLE>
 
 
 
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                     F-100
<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-101
<PAGE>
 
                     ARKANSAS MECHANICAL SERVICES, INC. AND
                           MECHANICAL SERVICES, INC.
 
                       COMBINED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                       SIX MONTHS ENDED     NINE MONTHS ENDED
                          YEAR ENDED       JUNE 30,           SEPTEMBER 30,
                         DECEMBER 31, --------------------  ------------------
                             1996       1996       1997       1996      1997
                         ------------ ---------  ---------  --------  --------
                                   (UNAUDITED)                 (UNAUDITED)
<S>                      <C>          <C>        <C>        <C>       <C>
CASH FLOWS FROM OPERAT-
 ING ACTIVITIES:
 Net income............   $ 359,941   $ 266,268  $ 247,078  $322,268  $542,206
 Adjustments to
  reconcile net income
  to net cash provided
  by operating
  activities--
  Depreciation and am-
   ortization..........     109,624      65,735     89,354   100,008   114,932
  Gain on sale of prop-
   erty and equipment..          --          --         --        --    (5,627)
  Changes in operating
   assets and liabili-
   ties:
  (Increase) decrease
   in--
   Accounts receivable.    (368,388)   (366,932)  (376,997)  (81,715) (192,725)
   Inventories.........     (10,142)        (34)   (20,826)  (10,117)  (25,027)
   Costs and estimated
    earnings in excess
    of billings on un-
    completed con-
    tracts.............     (27,750)    (52,223)    16,107    12,542   112,313
   Due from related
    parties............      69,661      85,066      3,738    90,952   (20,149)
   Prepaid expenses and
    other current as-
    sets...............      (5,009)    (20,847)    (2,879)  (23,044)  (17,678)
  Increase (decrease)
   in--
   Accounts payable....     215,954     367,492    195,680    75,850  (142,147)
   Accrued expenses....      43,524      10,842    (88,240)    4,933  (104,452)
   Billings in excess
    of costs and esti-
    mated earnings on
    uncompleted con-
    tracts.............      23,641     (71,807)   (17,836)  (89,241)  (82,258)
   Due to related par-
    ties...............     (41,609)    (41,609)    35,150   (41,609)   98,780
   Other long-term lia-
    bilities...........          --          --         --   (55,000)       --
                          ---------   ---------  ---------  --------  --------
     Net cash provided
      by operating ac-
      tivities.........     369,447     241,951     80,329   305,827   278,168
                          ---------   ---------  ---------  --------  --------
CASH FLOWS FROM INVEST-
 ING ACTIVITIES:
 Purchases of property
  and equipment........    (237,113)   (130,895)   (86,563)  (31,898)  (95,525)
 Proceeds from sales of
  property and equip-
  ment.................      15,000          --         --        --    12,000
                          ---------   ---------  ---------  --------  --------
     Net cash used in
      investing activi-
      ties.............    (222,113)   (130,895)   (86,563)  (31,898)  (83,525)
                          ---------   ---------  ---------  --------  --------
CASH FLOWS FROM FINANC-
 ING ACTIVITIES:
 Proceeds from short-
  term borrowings......     590,000     440,000    110,000        --   110,000
 Payments of short-term
  borrowings...........    (410,000)   (260,000)  (100,000)       --  (191,454)
 Proceeds from long-
  term debt............     194,326      98,775     37,499   120,764    39,750
 Payments of long-term
  debt.................    (145,389)    (39,145)   (72,829)       --  (110,000)
 Distributions to
  shareholders.........    (295,714)   (155,000)   (73,000) (370,715)  (73,000)
                          ---------   ---------  ---------  --------  --------
     Net cash provided
      by (used in)
      financing
      activities.......     (66,777)     84,630    (98,330) (249,951) (224,704)
                          ---------   ---------  ---------  --------  --------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS...........      80,557     195,686   (104,564)   23,978   (30,061)
CASH AND CASH EQUIVA-
 LENTS, beginning of
 period................      44,130      44,130    124,687    44,130   124,687
                          ---------   ---------  ---------  --------  --------
CASH AND CASH EQUIVA-
 LENTS, end of period..   $ 124,687   $ 239,816  $  20,123  $ 68,108  $ 94,626
                          =========   =========  =========  ========  ========
</TABLE>
 
    The accompanying notes are an integral part of these combined financial
                                  statements.
 
                                     F-102
<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 and as of September 30, 1997 and for the nine months ended September 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 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-103
<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-104
<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-105
<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-106
<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-107
<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. EVENT SUBSEQUENT TO INDEPENDENT AUDITORS REPORT--ACQUISITION OF COMPANY
    (UNAUDITED)
 
  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.
GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the initial public offering of the common
stock of GroupMAC (acquisition to be effective October 31, 1997).
 
  The Company made distributions in respect to the Company's estimated S
Corporation accumulated adjustment account of approximately $0.9 million at
the time of closing.
 
                                     F-108
<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-109
<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-110
<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-111
<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-112
<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-113
<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-114
<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-115
<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 were redeemed for cash concurrent with the
consummation of the initial public offering of the common stock of GroupMAC.
 
                                     F-116
<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-117
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                             OCTOBER 31,  JUNE 30,  SEPTEMBER 30,
                                                1996        1997        1997
                                             ----------- ---------- -------------
                                                                     (UNAUDITED)
 <S>                                         <C>         <C>        <C>
                   ASSETS
 CURRENT ASSETS:
  Cash and cash equivalents................  $  440,289  $  457,132  $1,107,250
  Accounts receivable......................     627,783     867,913     598,271
  Inventories..............................     292,215     246,225     231,435
  Costs and estimated earnings in excess of
   billings on uncompleted contracts.......     113,653     168,226          --
  Due from related parties.................     505,003     175,448       7,000
  Prepaid expenses and other current
   assets..................................     240,089     219,149      54,620
                                             ----------  ----------  ----------
   Total current assets....................   2,219,032   2,134,093   1,998,576
 PROPERTY AND EQUIPMENT, net...............     459,553     674,948     615,057
 OTHER NONCURRENT ASSETS...................      37,098      38,498          --
                                             ----------  ----------  ----------
   Total assets............................  $2,715,683  $2,847,539  $2,613,633
                                             ==========  ==========  ==========
    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     131,494
  Accrued expenses.........................     261,300     232,751     124,682
  Billings in excess of costs and estimated
   earnings on uncompleted contracts.......      48,399      39,131       8,083
  Deferred service contract revenue........     755,047     762,821     794,931
                                             ----------  ----------  ----------
   Total current liabilities...............   1,451,877   1,310,569   1,059,190
 DEFERRED SERVICE CONTRACT REVENUE.........     211,397     204,304     162,865
 DEFERRED COMPENSATION LIABILITY...........      55,373      60,670      29,600
 COMMITMENTS AND CONTINGENCIES
 SHAREHOLDERS' EQUITY:
  Common stock--$10 par value; 2,000 shares
   authorized,
   issued and outstanding..................      20,000      20,000      20,000
  Additional paid-in capital...............      23,140      23,140      23,140
  Retained earnings........................     953,896   1,228,856   1,318,838
                                             ----------  ----------  ----------
   Total shareholders' equity..............     997,036   1,271,996   1,361,978
                                             ----------  ----------  ----------
   Total liabilities and shareholders'
    equity.................................  $2,715,683  $2,847,539  $2,613,633
                                             ==========  ==========  ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-118
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                       EIGHT MONTHS ENDED      ELEVEN MONTHS ENDED
                         YEAR ENDED         JUNE 30,              SEPTEMBER 30,
                         OCTOBER 31,  ----------------------  ----------------------
                            1996         1996        1997        1996        1997
                         -----------  ----------  ----------  ----------  ----------
                                    (UNAUDITED)                    (UNAUDITED)
<S>                      <C>          <C>         <C>         <C>         <C>
REVENUES................ $8,161,356   $5,139,628  $5,463,051  $7,581,628  $7,552,586
COST OF SERVICES........  5,182,045    3,267,848   3,224,802   4,710,848   4,619,763
                         ----------   ----------  ----------  ----------  ----------
  Gross profit..........  2,979,311    1,871,780   2,238,249   2,870,780   2,932,823
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES...............  2,598,253    1,672,596   1,648,388   2,419,596   2,184,021
                         ----------   ----------  ----------  ----------  ----------
  Income from
   operations...........    381,058      199,184     589,861     451,184     748,802
OTHER INCOME (EXPENSE):
 Interest expense.......     (9,841)      (6,073)     (3,087)     (2,073)      4,137
 Interest income........     30,219       17,611      28,472      14,611      28,472
 Other..................    (40,166)      13,487      11,233      28,487       9,727
                         ----------   ----------  ----------  ----------  ----------
NET INCOME.............. $  361,270   $  224,209  $  626,479  $  492,209  $  791,138
                         ==========   ==========  ==========  ==========  ==========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-119
<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-120
<PAGE>
 
                   CENTRAL CAROLINA AIR CONDITIONING COMPANY
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                       EIGHT MONTHS ENDED    ELEVEN MONTHS ENDED
                         YEAR ENDED         JUNE 30,            SEPTEMBER 30,
                         OCTOBER 31,  ---------------------  ---------------------
                            1996         1996       1997       1996        1997
                         -----------  ----------  ---------  ---------  ----------
                                   (UNAUDITED)                   (UNAUDITED)
<S>                      <C>          <C>         <C>        <C>        <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net income............  $  361,270   $  224,209  $ 626,479  $ 492,209  $  791,138
 Adjustments to
  reconcile net income
  to net cash
  provided by (used in)
  operating activities:
   Depreciation........     200,548      140,707    142,535    135,838     102,760
   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)  (253,900)     49,839
     Inventories.......       6,516       62,058     45,990     35,210      60,780
     Costs and
      estimated
      earnings in
      excess of
      billings on
      uncompleted
      contracts........     (73,301)     (52,611)   (54,573)  (518,822)    113,653
     Due from related
      parties..........    (340,792)    (481,044)   329,555     19,736     498,003
     Prepaid expenses
      and other current
      assets...........     (55,800)      91,214     20,940     86,692     165,142
     Other noncurrent
      assets...........       1,750        1,050     (1,400)  (597,685)     37,098
    Increase (decrease)
     in--
     Accounts payable..      75,239        7,192    (47,961)  (126,068)   (191,354)
     Accrued expenses..     (82,481)    (123,859)   (28,549)   (84,685)    (22,759)
     Billings in excess
      of costs and
      estimated
      earnings on
      uncompleted
      contracts........      31,913       71,245     (9,268)   712,099     (40,316)
     Deferred service
      contract revenue.      17,670      (31,809)       681    (13,160)   (122,508)
     Deferred
      compensation
      liability........       7,945        5,297      5,297         --     (25,773)
                         ----------   ----------  ---------  ---------  ----------
      Net cash provided
       by (used in)
       operating
       activities......      (7,429)    (332,910)   789,596   (112,536)  1,415,703
                         ----------   ----------  ---------  ---------  ----------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Purchases of property
  and equipment........    (244,128)    (266,117)  (357,930)  (412,493)   (216,409)
 Proceeds from sales of
  property and
  equipment............      25,615        3,344        --         --          --
                         ----------   ----------  ---------  ---------  ----------
      Net cash used in
       investing
       activities......    (218,513)    (262,773)  (357,930)  (412,493)   (216,409)
                         ----------   ----------  ---------  ---------  ----------
CASH FLOWS FROM
 FINANCING ACTIVITIES
 Proceeds from short-
  and long-term debt...     125,000      125,000        --     102,154         --
 Payments of short- and
  long-term debt.......    (120,203)     (14,655)   (63,304)   (45,203)    (64,283)
 Distributions to
  shareholders.........    (380,969)    (196,994)  (351,519)   (82,772)   (468,050)
                         ----------   ----------  ---------  ---------  ----------
      Net cash used in
       financing
       activities......    (376,172)     (86,649)  (414,823)   (25,821)   (532,333)
                         ----------   ----------  ---------  ---------  ----------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS...........    (602,114)    (682,332)    16,843   (550,850)    666,961
CASH AND CASH
 EQUIVALENTS, beginning
 of period.............   1,042,403    1,042,403    440,289    911,809     440,289
                         ----------   ----------  ---------  ---------  ----------
CASH AND CASH
 EQUIVALENTS, end of
 period................  $  440,289   $  360,071  $ 457,132  $ 360,959  $1,107,250
                         ==========   ==========  =========  =========  ==========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-121
<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
and as of September 30, 1997 and for the eleven months ended September 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 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-122
<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-123
<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-124
<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-125
<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. EVENT SUBSEQUENT TO INDEPENDENT AUDITORS REPORT--ACQUISITION OF COMPANY
  (UNAUDITED)
 
  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.
GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the initial public offering of the common
stock of GroupMAC (acquisition to be effective October 31, 1997).
 
  The Company made distributions in respect to the Company's estimated S
Corporation accumulated adjustment account of approximately $0.5 million at
the time of closing.
 
                                     F-126
<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-127
<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-128
<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-129
<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-130
<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-131
<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-132
<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-133
<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-134
<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-135
<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-136
<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 were redeemed for
cash concurrent with the consummation of the initial public offering of the
common stock of GroupMAC.
 
                                     F-137
<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-138
<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-139
<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-140
<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-141
<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-142
<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-143
<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-144
<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-145
<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-146
<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-147
<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 were redeemed for
cash concurrent with the consummation of the initial public offering of the
common stock of GroupMAC.
 
                                     F-148
<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-149
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                            DECEMBER 31,  JUNE 30,  SEPTEMBER 30,
                                                1996        1997        1997
                                            ------------ ---------- -------------
                                                                     (UNAUDITED)
 <S>                                        <C>          <C>        <C>
                  ASSETS
 CURRENT ASSETS:
   Cash and cash equivalents..............   $   45,852  $   74,466  $    5,202
   Accounts receivable....................      726,944     935,433     747,335
   Inventories............................       63,530      64,133      64,079
   Costs and estimated earnings in excess
    of billings on uncompleted contracts..        1,910       1,229       1,230
   Due from related parties and employees.        2,268      42,420         820
   Prepaid expenses and other current
    assets................................       30,471      35,955      31,528
                                             ----------  ----------  ----------
     Total current assets.................      870,975   1,153,636     850,194
 PROPERTY AND EQUIPMENT, net..............      498,762     430,188     403,040
                                             ----------  ----------  ----------
     Total assets.........................   $1,369,737  $1,583,824  $1,253,234
                                             ==========  ==========  ==========
   LIABILITIES AND SHAREHOLDERS' EQUITY
 CURRENT LIABILITIES:
   Short-term borrowings and current
    maturities of long-term debt..........   $  311,779  $  135,254  $  112,639
   Accounts payable.......................       94,911     218,453      48,245
   Accrued expenses.......................       23,585     136,127      32,403
   Billings in excess of costs and
    estimated earnings on uncompleted
    contracts.............................       24,531     125,317      40,692
   Due to related parties.................          --      371,042     371,000
                                             ----------  ----------  ----------
     Total current liabilities............      454,806     986,193     604,979
 LONG-TERM DEBT, net of current
  maturities..............................      273,403     220,726     194,378
 COMMITMENTS AND CONTINGENCIES
 SHAREHOLDERS' EQUITY:
   Common stock--$1.00 par value; 1,500
    shares authorized,
    300 shares issued and outstanding.....          300         300         300
   Additional paid-in capital.............        5,700       5,700       5,700
   Retained earnings......................      635,528     370,905     447,877
                                             ----------  ----------  ----------
     Total shareholders' equity...........      641,528     376,905     453,877
                                             ----------  ----------  ----------
     Total liabilities and shareholders'
      equity..............................   $1,369,737  $1,583,824  $1,253,234
                                             ==========  ==========  ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-150
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                        SIX MONTHS ENDED        NINE MONTHS ENDED
                          YEAR ENDED        JUNE 30,              SEPTEMBER 30,
                         DECEMBER 31, ----------------------  ----------------------
                             1996        1996        1997        1996        1997
                         ------------ ----------  ----------  ----------  ----------
                                    (UNAUDITED)                    (UNAUDITED)
<S>                      <C>          <C>         <C>         <C>         <C>
REVENUES................  $5,281,777  $2,847,310  $2,358,229  $4,092,310  $3,731,471
COST OF SERVICES........   3,830,398   2,006,815   1,724,977   2,910,815   2,780,443
                          ----------  ----------  ----------  ----------  ----------
  Gross profit..........   1,451,379     840,495     633,252   1,181,495     951,028
SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES...............     865,939     388,095     408,957     675,095     629,484
                          ----------  ----------  ----------  ----------  ----------
  Income from
   operations...........     585,440     452,400     224,295     506,400     321,544
OTHER INCOME (EXPENSE):
  Interest expense......     (54,682)    (28,379)    (42,905)    (41,379)    (63,099)
  Other.................     (15,360)     (3,304)         29      (3,304)        (55)
                          ----------  ----------  ----------  ----------  ----------
NET INCOME..............  $  515,398  $  420,717  $  181,419  $  461,717  $  258,390
                          ==========  ==========  ==========  ==========  ==========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-151
<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-152
<PAGE>
 
                       SOUTHEAST MECHANICAL SERVICE, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                        SIX MONTHS ENDED     NINE MONTHS ENDED
                                            JUNE 30,           SEPTEMBER 30,
                         DECEMBER 31, ---------------------  ------------------
                             1996        1996       1997       1996      1997
                         ------------ ----------- ---------  --------  --------
                                      (UNAUDITED)               (UNAUDITED)
<S>                      <C>          <C>         <C>        <C>       <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net income............   $ 515,398    $ 420,717  $ 181,419  $461,717  $258,390
 Adjustments to
  reconcile net income
  to net cash provided
  by operating
  activities:
   Depreciation........     124,074       62,625     74,826    33,994    67,734
   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) (159,612)  (20,391)
     Inventories.......         --        (1,290)      (603)   (1,944)     (549)
     Costs and
      estimated
      earnings in
      excess of
      billings on
      uncompleted
      contracts........      23,664      (12,705)       681    25,574       680
     Due from related
      parties and
      employees........         536        1,949    (40,152)   (3,042)  372,448
     Prepaid expenses
      and other current
      assets...........     (11,937)     (26,155)    (5,484)   (3,250)   (1,057)
    Increase (decrease)
     in--
     Accounts payable..     (51,579)      49,418    123,542    (2,386)  (46,666)
     Accrued expenses..      (8,360)       3,542    112,542    12,863     8,818
     Billings in excess
      of costs and
      estimated
      earnings on
      uncompleted
      contracts........     (11,874)      25,678    100,786   (36,405)   16,161
                          ---------    ---------  ---------  --------  --------
      Net cash provided
       by operating
       activities......     506,026      336,866    339,068   327,509   655,568
                          ---------    ---------  ---------  --------  --------
CASH FLOWS PROVIDED BY
 (USED IN) INVESTING
 ACTIVITIES:
 Purchases of property
  and equipment........    (185,972)     (60,537)    (6,252)  (38,995)   27,988
                          ---------    ---------  ---------  --------  --------
CASH FLOWS FROM
 FINANCING ACTIVITIES:
 Proceeds from short-
  term borrowings and
  long-term debt.......     163,552      120,863        --     48,089       --
 Payments of short-term
  borrowings and long-
  term debt............    (168,518)     (68,110)  (229,202)  (84,005) (278,165)
 Dividends paid........    (319,905)    (319,905)   (75,000) (294,020) (446,041)
                          ---------    ---------  ---------  --------  --------
      Net cash used in
       financing
       activities......    (324,871)    (267,152)  (304,202) (329,936) (724,206)
                          ---------    ---------  ---------  --------  --------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS...........      (4,817)       9,177     28,614   (41,422)  (40,650)
CASH AND CASH
 EQUIVALENTS, beginning
 of period.............      50,669       50,669     45,852    50,669    45,852
                          ---------    ---------  ---------  --------  --------
CASH AND CASH
 EQUIVALENTS, end of
 period................   $  45,852    $  59,846  $  74,466  $  9,247  $  5,202
                          =========    =========  =========  ========  ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-153
<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 and
as of September 30, 1997 and for the nine months ended September 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 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-154
<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-155
<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-156
<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. EVENT SUBSEQUENT TO INDEPENDENT AUDITORS REPORT--ACQUISITION OF COMPANY
  (UNAUDITED)
 
  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.
GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the initial public offering of the common
stock of GroupMAC (acquisition to be effective October 31, 1997).
 
                                     F-157
<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-158
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                                 BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                             MARCH 31,   JUNE 30,  SEPTEMBER 30,
                                                1997       1997        1997
                                             ---------- ---------- -------------
                                                                    (UNAUDITED)
 <S>                                         <C>        <C>        <C>
                   ASSETS
 CURRENT ASSETS:
  Cash and cash equivalents................. $  774,445 $  788,191  $1,469,984
  Accounts receivable, net of allowance for
   doubtful accounts
   of $564,648 and $539,673, respectively...  1,288,442  1,390,882   1,012,741
  Inventories...............................    190,276    194,272     170,018
  Deferred income taxes.....................    240,441    229,950      37,000
  Prepaid expenses..........................     12,377      8,873      22,177
                                             ---------- ----------  ----------
   Total current assets.....................  2,505,981  2,612,168   2,711,920
 PROPERTY AND EQUIPMENT, net................    513,888    512,485     169,909
 MARKETABLE SECURITIES......................    263,175    278,850          --
 OTHER NONCURRENT ASSETS....................     80,585     81,538          --
                                             ---------- ----------  ----------
   Total assets............................. $3,363,629 $3,485,041  $2,881,829
                                             ========== ==========  ==========
    LIABILITIES AND SHAREHOLDERS' EQUITY
 CURRENT LIABILITIES:
  Short-term borrowings..................... $  222,828 $  220,731  $       --
  Accounts payable..........................    409,302    270,115     249,698
  Accrued expenses..........................     86,843    111,099      92,421
  Deferred service contract revenue.........    199,194    229,235     267,872
  Income taxes payable......................    230,913    283,747     195,662
                                             ---------- ----------  ----------
   Total current liabilities................  1,149,080  1,114,927     805,653
 DEFERRED INCOME TAXES......................    142,005    147,072      28,202
 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       4,050
  Retained earnings.........................  1,918,330  2,059,767   2,043,924
  Net unrealized gain on marketable
   securities...............................    150,164    159,225          --
                                             ---------- ----------  ----------
   Total shareholders' equity...............  2,072,544  2,223,042   2,047,974
                                             ---------- ----------  ----------
   Total liabilities and shareholders'
    equity.................................. $3,363,629 $3,485,041  $2,881,829
                                             ========== ==========  ==========
</TABLE>
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-159
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                        THREE MONTHS ENDED       SIX MONTHS ENDED
                           YEAR ENDED        JUNE 30,              SEPTEMBER 30,
                           MARCH 31,   ----------------------  ----------------------
                              1997        1996        1997        1996        1997
                           ----------  ----------  ----------  ----------  ----------
                                     (UNAUDITED)                    (UNAUDITED)
 <S>                       <C>         <C>         <C>         <C>         <C>
 REVENUES................  $6,780,747  $1,643,275  $1,743,102  $3,482,275  $3,415,947
 COST OF SERVICES........   5,033,377   1,318,762   1,257,766   2,584,762   2,649,505
                           ----------  ----------  ----------  ----------  ----------
   Gross profit..........   1,747,370     324,513     485,336     897,513     766,442
 SELLING, GENERAL AND
  ADMINISTRATIVE
  EXPENSES...............   1,205,393     369,048     275,694     761,048     995,828
                           ----------  ----------  ----------  ----------  ----------
   Income (loss) from
    operations...........     541,977     (44,535)    209,642     136,465    (229,386)
 OTHER INCOME (EXPENSE):
  Interest expense.......     (25,379)     (7,343)     (4,864)     (5,343)     (5,990)
  Interest income........       7,926       3,257      10,449       2,257       7,553
  Other..................      48,464       9,655       6,353      17,655     439,042
                           ----------  ----------  ----------  ----------  ----------
   Income (loss) before
    income tax provision.     572,988     (38,966)    221,580     151,034     211,219
 INCOME TAX PROVISION....     237,962         --       80,143      79,000      84,500
                           ----------  ----------  ----------  ----------  ----------
 NET INCOME (LOSS).......  $  335,026  $  (38,966) $  141,437  $   72,034  $  126,719
                           ==========  ==========  ==========  ==========  ==========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-160
<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-161
<PAGE>
 
             WILLIS REFRIGERATION, AIR CONDITIONING & HEATING, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED      SIX MONTHS ENDED
                         YEAR ENDED       JUNE 30,            SEPTEMBER 30,
                         MARCH 31,   --------------------  ---------------------
                            1997       1996       1997       1996        1997
                         ----------  ---------  ---------  ---------  ----------
                                  (UNAUDITED)                  (UNAUDITED)
<S>                      <C>         <C>        <C>        <C>        <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net income (loss).....  $ 335,026   $ (38,966) $ 141,437  $  72,034  $  126,719
 Adjustments to
  reconcile net income
  (loss) to net
  cash provided by
  (used in) operating
  activities:
   Depreciation and
    amortization.......     82,328      22,419     22,591     35,986      45,182
   Gain from sale of
    marketable
    securities.........        --          --         --         --     (150,164)
   Gain from sale of
    property and
    equipment..........        --          --         --         --     (226,493)
   Warrant
    compensation.......        --          --         --         --       (1,125)
   Deferred income
    taxes..............     80,900         --       8,944      5,162      89,638
   Changes in operating
    assets and
    liabilities:
    (Increase) decrease
     in--
     Accounts
      receivable.......    (39,157)   (332,559)  (102,440)  (191,161)    276,408
     Inventories.......     21,111         --      (3,996)       --       20,258
     Prepaid expenses..     41,737     (22,000)     3,504    (51,077)     (9,800)
    Increase (decrease)
     in--
     Accounts payable..   (125,073)    111,473   (139,187)   (18,169)   (159,604)
     Accrued expenses..    (74,603)    (48,077)    24,256    (23,719)      5,578
     Deferred service
      contract revenue.     16,154      25,242     30,041     47,392      68,678
     Income taxes
      payable..........     46,885         --      52,834        --      (35,251)
                         ---------   ---------  ---------  ---------  ----------
      Net cash provided
       by (used in)
       operating
       activities......    385,308    (282,468)    37,984   (123,552)     50,024
                         ---------   ---------  ---------  ---------  ----------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Purchases of property
  and equipment........    (34,821)     (2,099)   (21,188)       --          --
 Proceeds from sale of
  property and
  equipment............        --          --         --         --      525,290
 Proceeds from sale of
  marketable
  securities...........        --          --         --     (56,799)    263,175
 Increase in cash
  surrender value of
  life insurance
  policy...............    (10,943)        --        (953)    52,642      79,878
                         ---------   ---------  ---------  ---------  ----------
      Net cash used in
       investing
       activities......    (45,764)     (2,099)   (22,141)    (4,157)    868,343
                         ---------   ---------  ---------  ---------  ----------
CASH FLOWS FROM
 FINANCING ACTIVITIES:
 Payments of short-term
  borrowings...........    (84,942)        --      (2,097)       --     (222,828)
                         ---------   ---------  ---------  ---------  ----------
      Net cash used in
       financing
       activities......    (84,942)        --      (2,097)       --     (222,828)
                         ---------   ---------  ---------  ---------  ----------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS...........    254,602    (284,567)    13,746   (127,709)    695,539
CASH AND CASH
 EQUIVALENTS, beginning
 of period.............    519,843     519,843    774,445    693,606     774,445
                         ---------   ---------  ---------  ---------  ----------
CASH AND CASH
 EQUIVALENTS, end of
 period................  $ 774,445   $ 235,276  $ 788,191  $ 565,897  $1,469,984
                         =========   =========  =========  =========  ==========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                     F-162
<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
and the six months ended September 30, 1997 and September 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-163
<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-164
<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-165
<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-166
<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. EVENT SUBSEQUENT TO INDEPENDENT AUDITORS REPORT ACQUISITION OF COMPANY
  (UNAUDITED)
 
  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.
GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the initial public offering of the common
stock of GroupMAC (acquisition to be effective October 31, 1997).
 
                                     F-167
<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-168
<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-169
<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-170
<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-171
<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-172
<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-173
<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-174
<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-175
<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-176
<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. EVENT SUBSEQUENT TO INDEPENDENT AUDITORS REPORT--ACQUISITION OF COMPANY
  (UNAUDITED)
 
  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.
GroupMAC's acquisition of the Company was completed on November 13, 1997
simultaneous with the closing of the initial public offering of the common
stock of GroupMAC (acquisition to be effective October 31, 1997).
 
   The Company made distributions in respect to the Company's estimated S
Corporation accumulated adjustment account of approximately $1.1 million at
the time of closing of the initial public offering of the common stock of
GroupMAC.
 
                                     F-177
<PAGE>
 
                                    PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  Article 2.02A of the TBCA provides, in relevant part, as follows:
 
  Subject to the provisions of Sections B and C of this Article, each
  corporation shall have 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.
 
    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 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.
 
                                     II-1
<PAGE>
 
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  (a) Exhibits
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
  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 $0.001
         per share, of the Company.
 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 Option Agreement of Stock Awards Plan.
 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 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.
</TABLE>
 
 
                                      II-2
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
 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 1, 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.
 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 Accusation 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
         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.
</TABLE>
 
 
                                      II-3
<PAGE>
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER  DESCRIPTION OF EXHIBIT
 ------- ----------------------
 <C>     <S>
 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   Airtron, Inc. 1997 Corporate Staff Bonus Plan (filed as Exhibit 10.36
         to the Company's Form S-1 (Registration No. 33-34067)).
 10.36   Form of 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
         December 9, 1997.
 10.37   Form of Group Maintenance America Corp. 1997 Stock Option Plan (filed
         as Exhibit 10.38 to the Company's Form S-1 (Registration No. 33-
         34067)).
 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.
 24      Powers of attorney.
 27*     Financial Data Schedule.
</TABLE>
--------
* FILED AS AN EXHIBIT TO THE COMPANY'S FORM S-1 (REGISTRATION NO. 333-34067)
UNDER AN EXHIBIT NUMBER IDENTICAL TO THAT DESCRIBED HEREIN AND INCORPORATED
HEREIN BY THIS REFERENCE.
 
  (b) Financial Statement Schedules
 
  No financial statement schedules are included herein. 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
have therefore been omitted.
 
  (c) Reports, Opinions, and Appraisals
 
  The following reports, opinions and appraisals are included herein.
 
    None.
 
ITEM 22. UNDERTAKINGS.
 
  (a) Regulation S-K, Item 512 Undertakings
 
    (1) The undersigned registrant hereby undertakes:
 
      (i) To file, during any period in which offers or sales are being
    made, a post-effective amendment to this registration statement:
 
        (a) To include any prospectus required by section 10(a)(3) of the
      Securities Act of 1933;
 
        (b) To reflect in the prospectus any facts or events arising after
      the effective date of the registration statement (or the most recent
      post-effective amendment thereof) which, individually or in the
      aggregate, represent a fundamental change in the information set
      forth in the registration statement. Notwithstanding the foregoing,
      any increase or decrease in volume of securities offered
 
                                     II-4
<PAGE>
 
      (if the total dollar value of securities offered would not exceed
      that which was registered) and any deviation from the low or high
      end of the estimated maximum offering range may be reflected in the
      form of prospectus filed with the Commission pursuant to Rule 424(b)
      if, in the aggregate, the changes in volume and price represent no
      more than a 20% change in the maximum offering price set forth in
      the "Calculation of Registration Fee" table in the effective
      registration statement.
 
        (c) To include any material information with respect to the plan
      of distribution not previously disclosed in the registration
      statement or any material change to such information in the
      registration statement;
 
      (ii) That, for the purpose of determining any liability under the
    Securities Act of 1933, each such post-effective amendment shall be
    deemed to be a new registration statement relating to the securities
    offered therein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.
 
      (iii) To remove from registration by means of a post-effective
    amendment any of the securities being registered which remain unsold at
    the termination of the offering.
 
    (2) Registration on Form S-4 of Securities Offered for Resale.
 
      (i) The undersigned hereby undertakes as follows: That prior to any
    public reoffering of the securities registered hereunder through the
    use of a prospectus which is a part of this registration statement, by
    any person or party who is deemed to be an underwriter within the
    meaning of Rule 145(c), the issuer undertakes that such reoffering
    prospectus will contain the information called for by the applicable
    registration form with respect to reofferings by person who may be
    deemed underwriters, in addition to the information called for by the
    other Items of the applicable form.
 
      (ii) The registrant undertakes that every prospectus (a) that is
    filed pursuant to the paragraph immediately preceding, or (b) that
    purports to meet the requirements of section 10(a)(3) of the Act and is
    used in connection with an offering of securities subject to Rule 415,
    will be filed as a part of an amendment to the registration statement
    and will not be used until such amendment is effective, and that, for
    purposes of determining any liability under the Securities Act of 1933,
    each such post-effective amendment shall be deemed to be a new
    registration statement relating to the securities offered therein, and
    the offering of new securities at that time shall be deemed to be the
    initial bona fide offering thereof.
 
    (3) 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 foregoing provisions, 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.
 
  (b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4 of this Form, within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of the registration statement through the date of
responding to the request.
 
  (c) The undersigned hereby undertakes to supply by means of a supplement or
a post-effective amendment all information concerning a transaction, and the
company being acquired therein, that was not the subject of and included in
the registration statement when it became effective.
 
                                     II-5
<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 DECEMBER 8, 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 19933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE INDICATED CAPACITIES ON DECEMBER 8, 1997.
 
 
<TABLE>
<CAPTION>
                      SIGNATURE                                 TITLE
                      ---------                                 -----
 
     <S>                                         <C>
                  James P. Norris*               Chairman of the Board; Director
     ___________________________________________
                  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)
 
                   Donald L. Luke*               Director, President and Chief
     ___________________________________________ Operating Officer
                   Donald L. Luke
 
                 Ronald D. Bryant*               Director
     ___________________________________________
                  Ronald D. Bryant
 
                David L. Henninger*              Director
     ___________________________________________
                 David L. Henninger
 
               Chester J. Jachimiec*             Director
     ___________________________________________
                Chester J. Jachimiec
 
                 James D. Jennings*              Director
     ___________________________________________
                 James D. Jennings
 
                 Timothy Johnston*               Director
     ___________________________________________
                  Timothy Johnston
 
               Andrew Jeffrey Kelly*             Director
     ___________________________________________
                Andrew Jeffery Kelly
 
                 Thomas B. McDade*               Director
     ___________________________________________
                  Thomas B. McDade
</TABLE>
 
                                     II-6
<PAGE>
 
<TABLE>
<CAPTION>
                      SIGNATURE                                 TITLE
                      ---------                                 -----
 
     <S>                                         <C>
                  Lucian Morrison*               Director
     ___________________________________________
                   Lucian Morrison
 
                  Richard S. Rouse*              Director
     ___________________________________________
                  Richard S. Rouse
 
                  Fredric Sigmund*               Director
     ___________________________________________
                   Fredric Sigmund
 
                  John M. Sullivan*              Director
     ___________________________________________
                  John M. Sullivan
 
                  James D. Weaver*               Director
     ___________________________________________
                   James D. Weaver
</TABLE>
 
          /s/ Randolph W. Bryant
    *By:_________________________________
             Randolph W. Bryant
        (Attorney-in-fact for persons
                 indicated)
 
                                      II-7