<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                      INFORMATION SPECIFIED IN FORM 10-Q
                          (see explanatory note below)

(Mark one)

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

     For the quarterly period ended June 30, 2005

                                       OR

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

     For the transition period from _______________ to ________________

                        COMMISSION FILE NUMBER 333-43335

                                  AIRXCEL, INC.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                                       <C>
           Delaware                                            48-1071795
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                           Identification Number)
</TABLE>

                 3050 North Saint Francis, Wichita, Kansas 67219
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (316) 832-3400
              (Registrant's telephone number, including area code)

                                 Not applicable
              (Former name, former address and former fiscal year,
                          if changed, since last year)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                1,000 shares of Common Stock as of June 30, 2005

NOTE: This information is provided solely to comply with the obligation
      contained in the indenture agreement governing the Company's Senior
      Subordinated Notes.


                                        1
<PAGE>
                         PART 1 - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                                  AIRXCEL, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  June 30, 2005   December 31, 2004
                                                                  -------------   -----------------
                                                                   (Unaudited)         (Note 1)
<S>                                                               <C>             <C>
ASSETS
Current assets:
   Cash and cash equivalents                                        $    421               239
   Accounts receivable, net of allowances for doubtful accounts
      of $318 and $399, in 2005 and 2004, respectively                19,579            12,868
   Inventories                                                        26,627            24,339
   Deferred income taxes                                               2,693             2,627
   Other current assets                                                  627               563
                                                                    --------          --------
      Total current assets                                            49,947            40,636
                                                                    --------          --------
Deferred income taxes                                                  1,797             1,878
Property, plant and equipment, net                                    13,619            14,855
Loan financing costs, net                                                900             1,156
Trademarks                                                             2,900             2,900
Other identifiable intangible assets, net                              1,371             1,418
Goodwill                                                              12,973            12,973
                                                                    --------          --------
      Total assets                                                  $ 83,507          $ 75,816
                                                                    ========          ========

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
Current liabilities:
   Current portion of long-term debt                                $     75          $     72
   Cash overdraft                                                      5,367                --
   Accounts payable                                                   11,260             7,452
   Warranty reserve                                                    3,065             2,707
   Accrued interest                                                    1,119             1,131
   Accrued payroll                                                     2,602             3,776
   Income tax payable                                                  1,929               839
   Accrued expenses and other current liabilities                      2,619             2,721
                                                                    --------          --------
      Total current liabilities                                       28,036            18,698
                                                                    --------          --------
Pension liability                                                      2,982             2,877
Long-term debt, net of current portion                                84,160            89,088
                                                                    --------          --------
      Total liabilities                                              115,178           110,663
                                                                    --------          --------

Commitments and contingencies
Stockholder's equity (deficiency):
   Common stock                                                            1                 1
   Additional paid-in capital                                         27,322            27,322
   Accumulated deficit                                               (54,088)          (57,264)
   Accumulated other comprehensive loss                               (1,459)           (1,459)
   Notes receivable from Holdings                                     (3,447)           (3,447)
                                                                    --------          --------
         Total stockholder's equity (deficiency)                     (31,671)          (34,847)
                                                                    --------          --------
      Total liabilities and stockholder's equity (deficiency)       $ 83,507          $ 75,816
                                                                    ========          ========
</TABLE>

                             See accompanying notes.


                                        2
<PAGE>
                                  AIRXCEL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                              Three Months Ended    Six Months Ended
                                                   June 30,             June 30,
                                              ------------------   -----------------
                                                2005      2004       2005      2004
                                              -------    -------   -------   -------
<S>                                           <C>        <C>       <C>       <C>
Net sales                                     $50,941    $50,045   $99,619   $93,952
Cost of sales                                  41,637     40,269    81,086    75,077
                                              -------    -------   -------   -------
   Gross profit                                 9,304      9,776    18,533    18,875
Selling, general and administrative expense     4,214      4,130     8,322     8,391
                                              -------    -------   -------   -------
   Income from operations                       5,090      5,646    10,211    10,484
Interest expense, net                           2,418      2,635     4,836     5,266
Other expense, net                                391         88       407       114
                                              -------    -------   -------   -------

      Income before income tax expense          2,281      2,923     4,968     5,104
Income tax expense                                881        948     1,792     1,786
                                              -------    -------   -------   -------
   Net income                                 $ 1,400    $ 1,975   $ 3,176   $ 3,318
                                              =======    =======   =======   =======
</TABLE>

                             See accompanying notes.


                                        3
<PAGE>
                                  AIRXCEL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
                                SIX MONTHS ENDED

<TABLE>
<CAPTION>
                                                                  June 30, 2005   June 30, 2004
                                                                  -------------   -------------
<S>                                                               <C>             <C>
Cash flows from operating activities:
   Net income                                                        $  3,176       $  3,318
   Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
      Depreciation and amortization                                     1,516          1,517
      Amortization of financing costs                                     258            236
      Deferred income taxes                                                15            291
      Provision for bad debt                                               35            129
      Loss on sale of property, plant and equipment                         1             64
      Changes in operating assets and liabilities:
         Accounts receivable                                           (6,746)        (5,158)
         Inventories                                                   (2,288)        (2,429)
         Other assets                                                     (64)          (230)
         Accounts payable                                               3,808          5,058
         Accrued expenses and other liabilities                           265          1,857
                                                                     --------       --------
            Net cash provided by (used in) operating activities           (24)         4,653
                                                                     --------       --------

Cash flows from investing activities:
   Proceeds from sale of property, plant and equipment                      1              1
   Capital expenditures                                                  (213)          (686)
   Other                                                                  (22)           (46)
                                                                     --------       --------
            Net cash used in investing activities                        (234)          (731)
                                                                     --------       --------

Cash flows from financing activities:
   Proceeds from issuance of long-term debt                            84,165         80,301
   Principal payments on long-term debt                               (89,090)       (85,037)
   Cash overdraft                                                       5,367          3,352
   Financing costs incurred                                                (2)            --
                                                                     --------       --------
            Net cash provided by (used in) financing activities           440         (1,384)
                                                                     --------       --------

            Net increase in cash and cash equivalents                     182          2,538
   Cash and cash equivalents, beginning of period                         239             33
                                                                     --------       --------
   Cash and cash equivalents, end of period                          $    421       $  2,571
                                                                     ========       ========
</TABLE>

                             See accompanying notes.


                                        4
<PAGE>
                                  AIRXCEL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                                 (in thousands)
                                   (Unaudited)

1.   BASIS OF PRESENTATION:

     The accompanying interim consolidated financial statements have not been
audited but reflect normal recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the Company's financial
position and results of operations and cash flows for the interim periods
presented. The year-end condensed consolidated balance sheet data was derived
from audited financial statements, but does not include all disclosures required
by accounting principles generally accepted in the United States. These interim
financial statements should be read in conjunction with the audited consolidated
financial statements and the notes therein for the fiscal year ended December
31, 2004 included in the Company's Form 10-K filed with the Securities and
Exchange Commission on March 18, 2005. The results of operations for any interim
period are not necessarily indicative of results for the full year or for any
quarter.

2.   ORGANIZATION AND BUSINESS:

     Airxcel, Inc. (the "Company") is a wholly-owned subsidiary of Airxcel
Holdings Corporation (Holdings); formerly known as RV Holdings Corporation. The
Company, formerly known as Recreation Vehicle Products, Inc. is engaged in
designing, manufacturing and marketing recreation vehicle air conditioning
equipment in the United States, Canada and certain international markets. On
November 10, 1997, the Company acquired substantially all of the net assets,
properties and rights and assumed certain related liabilities of Crispaire
Corporation, currently operating as Marvair ("Marvair"), a division of Airxcel,
Inc., which designs, manufactures and markets specialty wall mount air
conditioners, packaged terminal air conditioners with gas heat, environmental
control units, heat pumps for the heating, ventilating and air conditioning
(HVAC) industry and marine reverse cycle air conditioners. Marvair markets its
products to companies involved in modular construction, telecommunications,
utilities, pleasure yacht manufacturers and school districts located throughout
the United States and selected foreign markets. On March 17, 1998 the Company
acquired 100% of the outstanding stock of Suburban Manufacturing Company,
formerly KODA Enterprises Group, Inc. ("Suburban"). Suburban, a wholly-owned
subsidiary is a designer and manufacturer of heating, water heating, and cooking
appliances for the recreation vehicle industry and other specialty products for
the HVAC industry. On November 3, 2000 the Company acquired substantially all of
the net assets, properties and rights and assumed certain related liabilities of
Instafreeze, Inc. ("Insta Freeze"). The operations of Insta Freeze were
consolidated into the Company and the Insta Freeze entity was dissolved December
22, 2003. The Company and its subsidiaries collectively sell HVAC and appliance
related groups of products, as defined by Statement of Financial Accounting
Standards (SFAS) No. 131, to the RV, telecommunications and school customers, as
described above. Due to the similarities of the economic characteristics,
production processes, customers, distribution methods and regulatory environment
of the Company's products, the Company is managed, operated and reported as one
segment.


                                        5
<PAGE>
     A significant part of the Company's operations are directly dependent upon
the conditions in the highly cyclical RV industry, highly competitive
telecommunications industry and the commercial and public construction industry.
Companies within these industries, including the Company's largest customers,
are subject to volatility in operating results due to external factors such as
economic, demographic and political changes. These factors include seasonal
factors, fuel availability and fuel prices, overall consumer confidence and
general economic conditions, the level of discretionary consumer spending,
government regulation, interest rates and unemployment.

3.   INVENTORIES:

     Inventories consist of the following:

<TABLE>
<CAPTION>
                  June 30, 2005   December 31, 2004
                  -------------   -----------------
<S>               <C>             <C>
Raw materials        $11,231           $11,309
Work-in-process        1,881             1,991
Finished goods        13,515            11,039
                     -------           -------
                     $26,627           $24,339
                     =======           =======
</TABLE>

4.   WARRANTY RESERVE:

     The Company offers a one to five year warranty for its products. The
specific terms and conditions of those warranties vary depending upon the
product sold. An estimated cost of product warranty is recognized at the time
the revenue is recognized. The Company estimates the cost of its product
warranty obligation based on historical analysis of sales and warranty costs
incurred. The Company periodically assesses the adequacy of its recorded product
warranty obligation and adjusts the amounts as necessary.

Changes in the Company's product warranty liability during the period are as
follows:

<TABLE>
<CAPTION>
                                                             Three months ended   Six months ended
                                                                June 30, 2005       June 30, 2005
                                                             ------------------   ----------------
<S>                                                          <C>                  <C>
Balance, beginning of period                                       $2,806             $ 2,707
Warranties issued during the period                                   649               1,205
Settlements made during the period                                   (579)             (1,186)
Changes in estimated liability for pre-existing warranties
   during the period, including expirations                           189                 339
                                                                   ------             -------
Balance, end of period                                             $3,065             $ 3,065
                                                                   ======             =======
</TABLE>

5.   INCOME TAXES:

     The effective income tax rate increased during the quarter ended June 30,
2005, to a normalized rate for the Company. The lower effective income tax rate
for the quarter ended June 30, 2004 is impacted by the utilization of
significant state tax credits and certain state tax loss carryforwards realized
in 2004.

6.   CONTINGENCY:

     On February 1, 2005 the Company amended two existing letters of credit. One
letter of credit


                                        6
<PAGE>
was amended which decreased the amount to $376. Another letter of credit was
amended which increased the amount to $1,931. The letters of credit obligate the
Company to make payment in the event of default on the agreements with the
insurance companies to pay workers compensation claims incurred. Management does
not expect any material losses to result from this arrangement because
performance is not expected to be required, and therefore, is of the opinion
that the fair value of these instruments is zero.

7.   BENEFIT PLAN

     The Company's funding policy is to contribute amounts that are sufficient,
when added to participants' contributions, to fund the retirement benefits of
all participants in accordance with the requirements of the Internal Revenue
Code. On December 31, 2004, the Company elected to freeze the Suburban
Manufacturing Company Retirement Plan.

     The components of net periodic pension benefit for the three months and six
months ended June 30, 2005 and 2004 for Suburban Manufacturing Company
Retirement Plan ("Plan 1") and the Suburban Manufacturing Company Retirement
Plan for Bargaining Employees ("Plan 2") were:

<TABLE>
<CAPTION>
                                          Three months ended                   Six months ended
                                  ---------------------------------   ---------------------------------
                                   June 30, 2005     June 30, 2004     June 30, 2005     June 30, 2004
                                  ---------------   ---------------   ---------------   ---------------
                                  Plan 1   Plan 2   Plan 1   Plan 2   Plan 1   Plan 2   Plan 1   Plan 2
                                  ------   ------   ------   ------   ------   ------   ------   ------
<S>                               <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Service cost                       $ --     $ 95     $ 57     $ 90     $  --    $ 190    $ 114    $180
Interest cost                        68       57       69       54       136      114      138     108
Expected return on plan assets      (62)     (53)     (60)     (46)     (124)    (106)    (120)    (92)
Amortization of net loss             20       20       25       24        40       40       50      48
Expected employee contributions      --      (17)      (8)     (16)       --      (34)     (16)    (32)
                                   ----     ----     ----     ----     -----    -----    -----    ----
Net periodic benefit cost          $ 26     $102     $ 83     $106     $  52    $ 204    $ 166    $212
                                   ====     ====     ====     ====     =====    =====    =====    ====
</TABLE>

8.   SUBSEQUENT EVENT

     On July 21, 2005, Airxcel Holdings, Inc., a Delaware corporation (the
"Company") and parent company to Airxcel, Inc., entered into an Agreement and
Plan of Merger (the "Merger Agreement") with AHI Holdings, Inc., a Delaware
corporation ("Parent"), AHI Transitory Sub, Inc., a Delaware corporation
("Merger Sub") and wholly owned subsidiary of Parent, and solely for purposed of
Article VIII of the Merger Agreement, Citigroup Venture Capital, Ltd., a New
York corporation, as Stockholder Representative (the "Stockholder
Representative"), for the purchase of the Company. Pursuant to the Merger
Agreement, and subject to the terms and conditions set forth therein, Merger Sub
will be merged with and into the Company, with the Company being the surviving
corporation (the "Merger").

     The closing of the transactions contemplated by the Merger Agreement is
subject to customary closing conditions, including with respect to Parent's debt
financing of a portion of the aggregate purchase price. The Merger Agreement
permits the Company, Parent or Merger Sub to terminate the Merger Agreement
under certain circumstances if the merger has not been consummated on or before
September 30, 2005. In connection with the closing of the transactions
contemplated by the Merger Agreement, the Company intends to redeem or
repurchase all of its Series A and Series B 11% Senior Subordinated Notes due
2007. The Company expects the transaction to close August 31, 2005.


                                        7
<PAGE>
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     Net sales. Net sales increased 1.8% from $50.0 million to $50.9 million in
the quarter ended June 30, 2005 as compared to the corresponding quarter of
2004. For the six months ended June 30, 2005 net sales increased 6.0% from $94.0
million to $99.6 million in the same six months of 2004. For the quarter ended
June 30, 2005 net sales increased in comparison to the same period of 2004
primarily due to increased sales volume within the telecommunication industry of
approximately $1.6 million and increased school sales of approximately $1.1
million. Reduced sales volume within the RV industry virtually offset a portion
of these increases. For the six months ended June 30, 2005 net sales increased
in comparison to the same period of 2004 by approximately $3.4 million and $1.4
million due to increased sales volume within the telecommunication and school
industries, respectively. The effects of price changes on net sales were not
significant during the year.

     Gross Profit. Gross profit decreased 5.1% from $9.8 million (19% of net
sales) to $9.3 million (18% of net sales) in the quarter ended June 30, 2005 as
compared to the corresponding quarter of 2004. For the six months ended June 30,
2005 gross profit decreased 2.1% from $18.9 million (20% of net sales) to $18.5
million (19% of net sales) in the same six months of 2004. For the six months
ended June 30, 2005, the decrease was attributable to approximately $1.6 million
of higher commodity prices for key raw materials such as steel, aluminum and
copper of which only $.6 million was passed on to customers through price
increases. Increased efficiency in plant operations due to increased volume in
the school and telecommunication industries partially offset the higher
commodity prices.

     Selling, general and administrative expense (including amortization of
intangible assets and computer software). Selling, general and administrative
expense increased 2.4% from $4.1 million (8% of net sales) to $4.2 million (8%
of net sales) in the quarter ended June 30, 2005 as compared to the
corresponding quarter of 2004. For the six months ended June 30, 2005 selling,
general and administrative expense decreased 1.2% from $8.4 million (9% of net
sales) to $8.3 million (8% of net sales) in the same six months as 2004. For the
six months ended June 30, 2005, the decrease as a percent of net sales is due
primarily to the relative fixed nature of these expenses and the increased
sales.

     Interest expense. Interest expense decreased slightly from $2.7 million to
$2.4 million in the quarter ended June 30, 2005 as compared to the corresponding
quarter of 2004. For the six months ended June 30, 2005 interest expense
decreased from $5.3 million to $4.8 million in the same six months of 2004. The
decrease is primarily due to reductions in average long term borrowings
outstanding resulting from improved operating cash flows and the $10 million
bond repurchase in August 2004.

     Other expense, net. Other expense increased from $.1 million to $.4 million
in the quarter ended June 30, 2005 as compared to the corresponding quarter of
2004. For the six months ended June 30, 2005, other expense increased from $.1
million to $.4 million in the same six months of 2004. The increase is primarily
due to transactions costs of $.3 million incurred incidental to the Company
entering into an Agreement and Plan of merger with AHI Holdings, Inc. as
disclosed in the Company's 8-K filing dated July 27, 2005.


                                        8
<PAGE>
     Income tax expense. Income tax expense remained constant at $.9 million in
the quarter ended June 30, 2005 and 2004. For the six months ended June 30, 2005
and 2004 income tax expense remained constant at $1.8 million. The effective
income tax rate increased from 32.4% to 38.6% in the quarter ended June 30, 2005
as compared to the corresponding quarter of 2004 as a result of the utilization
of significant state tax credits and certain state tax loss carryforwards
realized in 2004.

     Net income. Net income decreased 30% from $2.0 million to $1.4 million in
the quarter ended June 30, 2005 as compared to the corresponding quarter of
2004. The decrease is primarily a result of the decrease in gross profit and an
increase in other expenses as discussed above. For the six months ended June 30,
2005, net income decreased from $3.3 million to $3.2 million in the same six
months of 2004, primarily as a result of decreased gross profit and the increase
in other expenses partially offset by decreased interest expense as discussed
above.

LIQUIDITY AND CAPITAL RESOURCES

     For the six months ended June 30, 2005, the Company used $24,000 in net
cash flow from operating activities compared to generating cash from operating
activities of $4.7 million in the six months ended June 30, 2004. The decline
was primarily the result of the effects of an increased working capital
investment, specifically an increase in accounts receivable related to higher
sales volume, coupled with lower growth in accounts payable and accrued expenses
and other liabilities due to the timing of payments in comparison to the same
period of 2004.

     Capital expenditures totaled $.2 million for the six months ended June 30,
2005 compared to $.7 million for the same period in 2004.

     The outstanding borrowing on the Company's credit facility at June 30, 2005
is $4.1 million which is approximately $4.9 million less than that outstanding
at December 31, 2004. The effect of this net repayment was substantially offset
by the cash overdraft position, representing outstanding checks at June 30,
2005.

     Covenants under the Company's revolving credit facility with the bank
restrict the ability, subject to certain exceptions, to dispose of assets, incur
additional indebtedness, guarantee obligations, prepay other indebtedness or
amend other debt instruments, make distributions or pay dividends, redeem or
repurchase capital stock, create liens on assets, make acquisitions, engage in
mergers or consolidations, and change the business conducted by the Company. In
addition, the Company is required to maintain compliance with a fixed charge
coverage ratio of 1.00 and maintain a minimum effective capital balance
(calculated as stockholder's equity (deficiency) plus the $80 million in senior
subordinated notes payable) of $36 million.

     The Company was in compliance with these ratios at June 30, 2005 and 2004.
The Company anticipates that it will continue to comply in 2005 with the
financial covenants. Management's current business plan estimates working
capital levels and operating profitability. The achievement of this plan is
necessary for compliance with various financial covenants during 2005. The
possibility exists that certain financial covenants will not be met if business


                                        9
<PAGE>
conditions are other than as anticipated. In such event, the Company would need
an amendment or waiver of such financial covenants; however, there can be no
assurance that such amendment or waiver will be obtained. In the event that a
waiver cannot be obtained, the Company would be required to refinance the debt
or would be in default of the credit agreement which, in turn, could have a
material adverse effect on the financial position, results of operations or
liquidity of the Company.

     The revolving credit facility also contains a subjective acceleration
clause but does not require a lock-box or other account by which the bank can
apply cash receipts against the revolver balance unless an event of default
occurs. As such, amounts outstanding under this revolving credit facility are
classified as long-term liabilities on the accompanying consolidated balance
sheets, as the application of the subjective acceleration is not anticipated.
The revolving credit facility is collateralized by accounts receivable,
equipment, general intangibles, inventory, and investment property.

     Certain covenants under the $80 million Indenture must be met in the event
the Company incurs any Indebtedness (including Acquired Indebtedness) except for
Permitted Indebtedness, as defined in the Indenture agreement as of November 10,
1997. In such event, the Company must meet a Consolidated Coverage Ratio greater
than 2.25. The calculation of Consolidated Coverage Ratio is defined as Adjusted
EBITDA divided by interest expense. At June 30, 2005, no Indebtedness requiring
such covenant compliance was outstanding. The Company anticipates that, in the
event the Company incurred any Indebtedness, as defined by the Indenture
agreement, it will be in compliance with the financial covenant. The possibility
exists that the covenant will not be met if business conditions are other than
as anticipated. In such event, the Company would need an amendment or waiver of
such financial covenant; however, there can be no assurance that such amendment
or waiver will be obtained. In the event that a waiver cannot be obtained, the
Company would be required to refinance the debt or would be in default of the
Indenture agreement which, in turn, could have a material adverse effect on the
financial position, results of operations or liquidity of the Company.

     On July 21, 2005, Airxcel Holdings, Inc., a Delaware corporation (the
"Company") and parent company to Airxcel, Inc., entered into an Agreement and
Plan of Merger (the "Merger Agreement") with AHI Holdings, Inc., a Delaware
corporation ("Parent"), AHI Transitory Sub, Inc., a Delaware corporation
("Merger Sub") and wholly owned subsidiary of Parent, and solely for purposed of
Article VIII of the Merger Agreement, Citigroup Venture Capital, Ltd., a New
York corporation, as Stockholder Representative (the "Stockholder
Representative"), for the purchase of the Company. Pursuant to the Merger
Agreement, and subject to the terms and conditions set forth therein, Merger Sub
will be merged with and into the Company, with the Company being the surviving
corporation (the "Merger").

     The closing of the transactions contemplated by the Merger Agreement is
subject to customary closing conditions, including with respect to Parent's debt
financing of a portion of the aggregate purchase price. The Merger Agreement
permits the Company, Parent or Merger Sub to terminate the Merger Agreement
under certain circumstances if the merger has not been consummated on or before
September 30, 2005. In connection with the closing of the transactions
contemplated by the Merger Agreement, the Company intends to redeem or
repurchase all of its Series A and Series B 11% Senior Subordinated Notes due
2007. The Company expects the transaction to close August 31, 2005.


                                       10
<PAGE>
     The Company meets its working capital, capital equipment requirements and
cash requirements with funds generated internally and funds from agreements with
a bank. Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities to be sufficient to cover
both short-term and long-term operating requirements. However, this is dependent
upon the future performance of the Company and its subsidiaries which, in turn,
is subject to general economic conditions and to financial, business and other
factors, including factors beyond the Company's control.

     The Company did not have any other relationships with unconsolidated
entities or financial partnerships, such entities often referred to as
structured finance or special purpose entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes. As such, the Company is not
materially exposed to any financing, liquidity, market or credit risk that could
arise if the Company were engaged in such relationships.

SEASONALITY

     A significant part of the Company's operations are directly dependent upon
the conditions in the highly cyclical RV industry, highly competitive
telecommunications industry and the commercial and public construction industry.
Companies within these industries, including the Company's largest customers,
are subject to volatility in operating results due to external factors such as
economic, demographic and political changes. These factors include seasonal
factors, fuel availability and fuel prices, overall consumer confidence and
general economic conditions, the level of discretionary consumer spending,
government regulation, interest rates and unemployment.


                                       11
<PAGE>
CERTAIN IMPORTANT FACTORS

     Except for the historical information contained herein, this Form 10-Q
contains forward-looking statements, and any statements contained in this Form
10-Q that are not statements of historical fact are deemed to be forward-looking
statements. Without limiting the foregoing, words such as "may", "will"
"expect", "believe", "anticipate", "estimate", or "continue", the negative or
other variations thereof, or comparable terminology, are intended
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, including possible changes in economic conditions,
prevailing interest rates or gasoline prices, or the occurrence of unusually
severe weather conditions, that can affect both the purchase and usage of
recreational vehicles, which, in turn, affects purchases by consumers of the
products that the Company sells.


                                       12
<PAGE>
       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk on variable rate financial instruments: The Company maintains a
$25 million credit facility which permits borrowings at interest rates based on
either the bank's base rate or LIBOR. Increases in market interest rates would
cause interest expense to increase and earnings before income taxes to decrease.
The change in interest expense and earnings before income taxes would be
dependent upon the weighted average outstanding borrowings during the reporting
period following an increase in market interest rates. Based on the Company's
outstanding borrowings under the credit facility of $4.1 million as of June 30,
2005 and an average interest rate of 4.7% per annum, a 1% increase in market
interest rates would increase interest expense and decrease earnings before
income taxes by approximately $41,000 annually.

     Market risk on fixed-rate financial instruments: Included in long-term debt
are $80 million of 11% Senior Subordinated Notes due 2007. Increases in market
interest rates would generally cause a decrease in the fair market value of the
Notes and a decrease in market interest rates would generally cause an increase
in fair value of the Notes.


                                       13
<PAGE>
                         ITEM 4. CONTROLS AND PROCEDURES

     (a) Disclosure Controls and Procedures. The Company's management, with the
participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this quarterly report. Based on such evaluation,
the Company's Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the Company's disclosure controls and
procedures are effective.

     (b) Internal Controls Over Financial Reporting. There have not been any
changes in the Company's internal controls over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the fiscal quarter to which this report relates that have materially affected,
or are reasonably likely to materially affect, the Company's internal controls
over financial reporting.


                                       14
<PAGE>
                           PART 2 - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     N/A

ITEM 2. CHANGES IN SECURITIES

     N/A

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     N/A

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

     N/A

ITEM 5. OTHER INFORMATION

     N/A

ITEM 6 (A.) EXHIBITS

<TABLE>
<S>    <C>
31.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
       1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
       2002

31.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
       1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
       2002

32     Certification of Chief Executive Officer and Chief Financial Officer
       pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
       the Sarbanes-Oxley Act of 2002
</TABLE>

ITEM 6 (B.) REPORTS ON FORM 8-K

     Form 8-K filed on July 27, 2005


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<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        Airxcel, Inc.


8-12-05                                 /s/ Melvin L. Adams
Date                                    ----------------------------------------
                                        Melvin L. Adams
                                        President and Chief Executive Officer


8-12-05                                 /s/ Richard L. Schreck
Date                                    ----------------------------------------
                                        Richard L. Schreck
                                        Secretary/Treasurer and
                                        Chief Financial Officer


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