SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   -----------


                                    FORM 10-Q


/ X /    QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934.

For the quarterly period ended December 31, 2000

                                       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 0-27378

                                   NUCO2 INC.
             (Exact Name of Registrant as Specified in Its Charter)


                Florida                                   65-0180800
 (State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
  Incorporation or Organization)


  2800 Southeast Market Place, Stuart, FL                    34997
 (Address of Principal Executive Offices)                 (Zip Code)


Registrant's Telephone Number, Including Area Code:    (561) 221-1754



                                       N/A
               Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report.


            Indicate by check /X/ whether  the  registrant:  (1) has  filed  all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days Yes /X/   No / /

            Indicate  the number of shares  outstanding  of each of the issuer's
classes of Common Stock, as of the latest practicable date:

                    Class                       Outstanding at December 31, 2000
                    -----                       --------------------------------
          Common Stock, $.001 par value                  8,386,126 shares



<PAGE>


                                   NUCO2 INC.

                                      Index
                                      -----

      PART I.    FINANCIAL INFORMATION

      ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS

                 Consolidated Balance Sheets as of December 31, 2000 and       3
                     June 30, 2000

                 Consolidated Statements of Operations for the Three Months
                     Ended December 31, 2000 and December 31, 1999             4

                 Consolidated Statements of Operations for the Six Months
                     Ended December 31, 2000 and December 31, 1999             5

                 Consolidated Statement of Shareholders' Equity for the
                     Six Months Ended  December 31, 2000                       6

                 Consolidated Statements of Cash Flows for the Six Months
                     Ended December 31, 2000 and December 31, 1999             7

                 Notes to Consolidated Financial Statements                    8

      ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF                      11
                     FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES                     16
                     ABOUT MARKET RISK

      PART II.   OTHER INFORMATION

      ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS                    17

      ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS          17

      ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                             17

      SIGNATURES                                                              18


                                       2

<PAGE>

PART I.     FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS

                                   NUCO2 INC.
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>

                                     ASSETS

                                                                                    December 31, 2000      June 30, 2000
                                                                                    -----------------      -------------
                                                                                       (unaudited)

Current assets:
<S>                                                                                  <C>                   <C>
    Cash and cash equivalents                                                        $        75           $      279
    Trade accounts receivable; net of allowance for doubtful
        accounts of $728 and $622, respectively                                            8,644                8,862
    Inventories                                                                              239                  222
    Prepaid expenses and other current assets                                              1,547                  912
                                                                                     -----------           ----------
           Total current assets                                                           10,505               10,275
                                                                                     -----------           ----------

Property and equipment, net                                                              106,132              107,120
                                                                                     -----------           ----------

Other assets:
    Goodwill, net                                                                         19,828               20,434
    Deferred charges, net                                                                  2,844                3,425
    Customer lists, net                                                                    1,438                1,871
    Restrictive covenants, net                                                             1,403                1,567
    Deferred lease acquisition costs, net                                                  3,676                3,685
    Deposits                                                                                 313                  172
                                                                                     -----------           ----------
                                                                                          29,502               31,154
                                                                                     -----------           ----------

                                                                                     $   146,139           $  148,549
                                                                                     ===========           ==========


                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term debt                                             $        35           $       33
    Accounts payable                                                                       5,588                8,120
    Accrued expenses                                                                         439                  582
    Accrued interest                                                                       1,144                1,485
    Accrued payroll                                                                          363                  376
    Other current liabilities                                                                349                  263
                                                                                     -----------           ----------
        Total current liabilities                                                          7,918               10,859

Long-term debt, excluding current maturities                                              48,462               53,080
Subordinated debt                                                                         39,079               38,969
Customer deposits                                                                          2,119                2,351
                                                                                     -----------           ----------
           Total liabilities                                                              97,578              105,259
                                                                                     -----------           ----------

Commitments and contingencies
Redeemable Preferred Stock                                                                 5,254                5,050
                                                                                     -----------           ----------

Shareholders' equity:
    Preferred Stock; no par value; 5,000,000 shares authorized;
        5,000 shares issued and outstanding                                                    -                    -
    Common Stock; par value $.001 per share; 30,000,000 shares authorized;
        issued and outstanding 8,386,126 shares and 7,275,015 shares at
        December 31, 2000, and June 30, 2000, respectively                                     8                    7
    Additional paid-in capital                                                            74,509               64,722
        Accumulated deficit                                                              (31,210)             (26,489)
                                                                                     -----------           ----------
           Total shareholders' equity                                                     43,307               38,240
                                                                                     -----------           ----------
                                                                                     $   146,139           $  148,549
                                                                                     ===========           ==========
</TABLE>


                                       3

<PAGE>

                                   NUCO2 INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                             Three Months Ended December 31,
                                                             -------------------------------
                                                                2000                1999
                                                                ----                ----


<S>                                                        <C>                    <C>
Net Sales                                                  $     16,432           $   13,694
                                                           ------------           ----------

Costs and expenses:
    Cost of products sold                                         8,207                6,745
    Selling, general and administrative expenses                  3,472                2,859
    Depreciation and amortization                                 4,382                3,813
                                                           ------------           ----------
                                                                 16,061               13,417
                                                           ------------           ----------

    Operating Income                                                371                  277

    Interest expense, net                                         2,700                2,442
                                                           ------------           ----------

    Net  (loss)                                            $     (2,329)          $   (2,165)
                                                           ============           ==========

Basic and Diluted EPS:

    Net (loss)                                             $      (0.32)          $    (0.30)
                                                           ============           ==========

    Weighted average number of common and common
         equivalent shares outstanding

        Basic and Diluted                                         7,577                7,217
                                                           ============           ==========
</TABLE>

                                       4

<PAGE>


                                   NUCO2 INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                            Six  Months Ended December 31,
                                                            ------------------------------
                                                                  2000              1999
                                                                  ----              ----

<S>                                                       <C>                  <C>
Net Sales                                                 $      32,545        $    27,289
                                                          -------------        -----------

Costs and expenses:
    Cost of products sold                                        16,284             13,741
    Selling, general and administrative expenses                  6,964              5,789
    Depreciation and amortization                                 8,626              7,428
                                                          -------------        -----------
                                                                 31,874             26,958
                                                          -------------        -----------

    Operating Income                                                671                331

    Interest expense, net                                         5,392              4,877
                                                          -------------        -----------

    Net  (loss)                                           $      (4,721)       $    (4,546)
                                                          =============        ===========

Basic and Diluted EPS:

    Net (loss)                                            $       (0.66)       $     (0.63)
                                                          =============        ===========

    Weighted average number of common and common
         equivalent shares outstanding

        Basic and Diluted                                         7,426              7,217
                                                          =============        ===========
</TABLE>


                                       5

<PAGE>


                                   NUCO2 INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                      (In thousands, except share amounts)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                    Common Stock       Additional                          Total
                                                    ------------        Paid-in        Accumulated      Shareholders'
                                              Shares        Amount       Capital          Deficit          Equity
                                              ------        ------     ----------      -----------     ---------------
<S>                                         <C>            <C>         <C>             <C>            <C>
Balance, June 30, 2000                      7,275,015      $     7     $  64,722       $  (26,489)    $    38,240

Issuance of 1,111,111 shares of             1,111,111            1         9,991             -              9,992
      of Common Stock

Redeemable Preferred Stock dividend               -              -          (204)            -               (204)

Net (loss)                                        -              -            -            (4,721)         (4,721)
                                            ---------      -------     ---------       ----------     -----------

Balance, December 31, 2000                  8,386,126      $     8     $  74,509       $  (31,210)    $    43,307
                                            =========      =======     =========       ==========     ===========
</TABLE>


                                       6


<PAGE>

                                   NUCO2 INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                Six Months Ended December 31,
                                                                                  2000                  1999*

<S>                                                                           <C>                 <C>
Net (loss)                                                                    $    (4,721)        $  (4,546)

Cash flows from operating activities:
    Adjustments to reconcile net (loss) to net cash provided
     by  operating activities:
           Depreciation and amortization of property and equipment                  6,099             5,159
           Amortization of other assets                                             2,527             2,268
           Amortization of original issue discount                                    110               110
           Loss on disposal of property and equipment                                  86                32
           Loss on abandonment                                                        485               394
           Changes in operating assets and liabilities:
           Decrease (increase) in:
              Trade accounts receivable                                               217               333
              Inventories                                                             (17)              (23)
              Prepaid expenses and other current assets                              (635)           (1,002)
           Increase (decrease) in:
              Accounts payable                                                     (2,532)            1,797
              Accrued expenses                                                       (143)              (48)
              Accrued payroll                                                         (13)             (207)
              Accrued interest                                                       (341)             (468)
              Other current liabilities                                                86               236
              Customer deposits                                                      (232)              233
                                                                              -----------         ---------

              Net cash provided by operating activities                               976             4,268
                                                                              -----------         ---------

Cash flows from investing activities:
  Proceeds from disposal of property and equipment                                      -                54
  Purchase of property and equipment                                               (5,616)          (10,187)
  Increase in deposits                                                               (141)             (120)
  Increase in deferred lease acquisition costs                                       (642)             (763)
                                                                              -----------         ---------
       Net cash (used in) investing activities                                     (6,399)          (11,016)
                                                                              -----------         ---------

Cash flows from financing activities:
  Proceeds from issuance of Common Stock                                            9,992                 -
  Repayment of long-term debt                                                      (6,515)              (73)
  Proceeds from issuance of long-term debt                                          1,900             5,500
  Increase in deferred charges                                                       (158)              (92)
  Exercise of options                                                                  -                  2
                                                                              -----------         ---------
     Net cash provided by financing activities                                      5,219             5,337
                                                                              -----------         ---------

Net (Decrease) in cash and cash equivalents                                          (204)           (1,411)
Cash and cash equivalents at the beginning of period                                  279             1,579
                                                                              -----------         ---------
Cash and cash equivalents at the end of period                                $        75         $     168
                                                                              ===========         =========

Supplemental  disclosure of cash flow  information:
  Cash paid during the period for:
    Interest                                                                  $     5,623         $   5,239
                                                                              ===========         =========
    Income taxes                                                              $         -         $       -
                                                                              ===========         =========
</TABLE>


In 2000, the Company  increased the carrying amount of the redeemable  preferred
stock by $204 for  dividends  that  have not been paid and  accordingly  reduced
additional paid-in capital by a like amount.

*Restated to conform to current year's classification.


                                       7

<PAGE>

                                   NUCO2 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In thousands, except per share amounts)
                                   (UNAUDITED)

Note 1.     Basis of Presentation

            The accompanying  unaudited  consolidated  financial statements have
been  prepared  in  accordance  with  the  instructions  to Form  10-Q  used for
quarterly  reports under Section 13 or 15 (d) of the Securities  Exchange Act of
1934, and therefore,  do not include all information and footnotes necessary for
a fair presentation of consolidated  financial  position,  results of operations
and cash flows in conformity with generally accepted accounting principles.  The
accompanying unaudited consolidated financial statements include the accounts of
NuCo2 Inc. (the "Company") and its wholly-owned  subsidiary,  NuCo2  Acquisition
Corp.  which was formed to acquire the stock of Koch Compressed  Gases,  Inc. in
October 1997.  All material  intercompany  accounts and  transactions  have been
eliminated.

            The financial  information included in this report has been prepared
in  conformity  with the  accounting  principles  and methods of applying  those
accounting  principles,  reflected in the consolidated  financial statements for
the  fiscal  year  ended  June 30,  2000  included  in Form 10-K  filed with the
Securities and Exchange Commission.

            All  adjustments  necessary for a fair  statement of the results for
the interim periods presented have been recorded.  This quarterly report on Form
10-Q  should  be  read in  conjunction  with  the  Company's  audited  financial
statements for the fiscal year ended June 30, 2000. The consolidated  results of
operations  for the periods  presented  are not  necessarily  indicative  of the
results to be expected for the full fiscal year.


Note 2.     Net (Loss) per Common Share

            Incremental  shares  for  stock  options  and  warrants   calculated
pursuant  to the  treasury  stock  method  for the  three and six  months  ended
December 31, 2000 were 37,333 and 120,146,  respectively.  These shares were not
included  in diluted  EPS  because  they would have been  antidilutive  for such
periods.  Additionally,  options  and  warrants to  purchase  1,073,715  shares,
254,810 shares and 415,224  shares for $14.65- $17.00 per share,  $11.25- $12.50
per share and $7.75 - $11.00 per share,  respectively,  were outstanding  during
all or a portion of the three and six months ended  December 31, 2000,  but were
not included in the  computation of diluted EPS because the options and warrants
exercise price was greater than the average market price of the Common Stock.

            Incremental  shares  for  stock  options  and  warrants   calculated
pursuant  to the  treasury  stock  method  for the  three and six  months  ended
December 31, 1999 were 402,737 and 282,475, respectively.  These shares were not
included  in diluted  EPS  because  they would have been  antidilutive  for such
periods. Additionally, options and warrants to purchase 1,043,715 shares, 36,000
shares and 555,671 shares for $16.40-$17.00  per share,  $12.50-$14.64 per share
and  $10.25-$11.28  per share,  respectively,  were outstanding  during all or a
portion  of the three and six  months  ended  December  31,  1999,  but were not
included in the  computation  of diluted  EPS  because the options and  warrants
exercise price was greater than the average market price of the Common Stock.

            Basic (loss) per common share has been  computed by dividing the net
(loss),  after  giving  effect to  preferred  stock  dividends,  by the weighted
average number of common shares  outstanding  during the period.  Diluted (loss)
per common share has been computed on the basis of the weighted  average  number
of common and, if dilutive,  common  equivalent  shares  outstanding  during the
period.  Common  equivalent  shares for stock  options and  warrants  calculated
pursuant to the  treasury  stock method were not included in diluted EPS because
they would have been  antidilutive.  Also,  not included in the  computation  of
diluted EPS was the effect of outstanding  shares of Redeemable  Preferred Stock
(See  Note 5) using the "if  converted"  method,  because  the  effect  would be
antidilutive.
<TABLE>
<CAPTION>

                                                               Three Months Ended      Six Months Ended
                                                                              December 31,
                                                                              ------------
                                                                2000         1999        2000       1999
                                                                ----         ----        ----       ----
<S>                                                         <C>          <C>         <C>          <C>
        Net (loss)                                          $  (2,329)   $  (2,165)  $  (4,721)   $ (4,546)
        Redeemable Preferred Stock dividends                     (101)           -        (204)         -
                                                            ---------    ---------   ---------    -------
        Net (loss) available for common shareholders        $  (2,430)   $  (2,165)  $  (4,925)   $ (4,546)
                                                            =========    =========   =========    =======

        Weighted average outstanding shares of Common Stock     7,577        7,217       7,426       7,217
        (Loss) per share - Basic and Diluted                $   (0.32)   $   (0.30)  $   (0.66)   $  (0.63)
                                                            =========    =========   =========    ========
</TABLE>

                                       8

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In thousands, except per share amounts)
                                   (UNAUDITED)


Note 3.     Long-Term Debt

           The Company has a $75.0 million amended and restated revolving credit
facility  with a syndicate  of banks led by  SunTrust  Bank  ("Amended  SunTrust
Facility").  The Amended  SunTrust  Facility  amended and restated the Company's
existing $50.0 million  revolving credit facility which had been entered into in
October 1997.  The Amended  SunTrust  Facility  contains  interest  rates and an
unused facility fee based on a pricing grid calculated quarterly on total funded
debt to  annualized  EBITDA.  The Company is entitled to select the Base Rate or
LIBOR, plus applicable margin, for principal drawings under the Amended SunTrust
Facility.  The applicable  LIBOR margin pursuant to the pricing grid ranges from
2.75% to 3.75%.  The  applicable  Base Rate margin  pursuant to the pricing grid
ranges from 1.25% to 2.25%.  The applicable  unused facility fee pursuant to the
pricing grid ranges from 0.375% to 0.50%.  Interest only is payable periodically
until the expiration of the Amended SunTrust  Facility on May 4, 2002; there is,
however,  a two year renewal  option subject to approval.  The Amended  SunTrust
Facility is  collateralized  by substantially  all of the assets of the Company.
The Company is precluded from declaring or paying any cash dividends, except the
Company may accrue and accumulate, but not pay, cash dividends on the Redeemable
Preferred  Stock (See Note 5).  The  Company is also  required  to meet  certain
affirmative  and negative  covenants  including,  but not limited to,  financial
covenants.  Pursuant to the Amended SunTrust  Facility,  drawings are limited to
availability  under a formula  predicated  upon  multiples  of EBITDA  and gross
margin factors.  In December 2000, the Amended SunTrust  Facility was amended to
adjust a certain financial  covenant for the quarter ended December 31, 2000 and
prospectively.

            A total of $48.2  million  was  outstanding  pursuant to the Amended
SunTrust Facility with interest from 10.38% to 10.52% per annum as of December
31, 2000.

            As of December 31, 2000,  the Company  maintained  an interest  rate
swap  transaction  (the "Swap") with SunTrust  Bank,  Atlanta,  in the amount of
$10.0  million  (the  "Notional  Amount").  The  effective  date of the  Swap is
September 1, 2000 and it terminates on September 3, 2002.  Pursuant to the Swap,
the  Company  pays a fixed  rate of 7% per  annum  and  receives  a  LIBOR-based
floating rate.

            In  June  1998,  the  FASB  issued  Statement  133  "Accounting  for
Derivative Instruments and Hedging Activities",  which was later amended by FASB
137, and is effective for all fiscal periods  beginning  after June 15, 2000. As
of December 31, 2000, the fair value of the Company's interest rate swap was not
material.

Note 4.     Subordinated Debt

            In October 1997,  the Company issued $30.0 million of its 12% Senior
Subordinated Promissory Notes ("Notes") with interest only payable semi-annually
on April 30 and  October  31, due  October  31,  2004.  The Notes were sold with
detachable  seven year  warrants to purchase an aggregate  of 655,738  shares of
Common Stock at an exercise  price of $16.40 per share.  The effective  interest
rate on the Notes is 12.1% per annum after giving effect to the  amortization of
the original issue discount. The Company is required to meet certain affirmative
and negative covenants.  Additionally,  NationsBanc Montgomery Securities, Inc.,
the  placement  agent,  received a warrant to  purchase an  aggregate  of 30,000
shares of Common Stock at an exercise price of $14.64 per share which expires on
October 31, 2004.

               On May 4, 1999,  the Company sold an additional  $10.0 million of
its 12% Senior Subordinated  Promissory Notes ("Additional  Notes").  Except for
their October 31, 2005 maturity  date, the  Additional  Notes are  substantially
identical to the Notes  described  above.  The  Additional  Notes were sold with
detachable  6-1/2 year  warrants to purchase an aggregate  of 372,892  shares of
Common Stock at an exercise  price of $6.65 per share.  In  connection  with the
sale of the Additional Notes,  certain financial  covenants  governing the Notes
and the  Additional  Notes were adjusted as of March 31, 1999 and  prospectively
and the exercise price for 612,023 of the warrants issued in connection with the
sale of the Notes was reduced to $6.65 per share. The effective interest rate on
the Additional Notes is 13.57% per annum after giving effect to the amortization
of the original issue discount.  Additionally, from May 4, 1999 to September 30,
1999, the interest rate on the original $30.0 million of Notes  increased to 14%
from 12% per annum.  Interest will increase from 12% to 14% per annum during any
quarter in which certain financial ratios are not met.

                                       9

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (In thousands, except per share amounts)
                                   (UNAUDITED)


Note 5.     Redeemable Preferred Stock

            In May 2000,  the  Company  sold 5,000  shares of its 8%  Cumulative
Convertible  Redeemable Preferred Stock, no par value (the "Redeemable Preferred
Stock"), for $1,000 per share (the initial "Liquidation Preference"). Cumulative
dividends  are payable  quarterly  in arrears at the rate of 8% per annum on the
Liquidation  Preference,  and, to the extent not paid in cash,  are added to the
Liquidation Preference.  During the fiscal year ended June 30, 2000, and for the
six months  ended  December  31,  2000,  the  carrying  amount (and  Liquidation
Preference)  of the  Redeemable  Preferred  Stock was increased by $50 and $204,
respectively,  for dividends accrued.  Shares of the Redeemable  Preferred Stock
may be converted  into shares of Common Stock at any time at a conversion  price
of $9.47 per share,  which represents a 20% premium to the average closing price
of the Common Stock on the Nasdaq  National Market for the 20 trading days prior
to May 12, 2000.  In connection  with the sale,  costs in the amount of $65 were
charged to paid-in capital.  The Redeemable Preferred Stock shall be mandatorily
redeemed by the Company within 30 days after a Change in Control (as defined) of
the Company (the date of such redemption being the "Mandatory  Redemption Date")
at an amount equal to the then effective Liquidation Preference plus accrued and
unpaid  dividends  thereon from the last dividend  payment date to the Mandatory
Redemption  Date,  plus if the Mandatory  Redemption  Date is on or prior to the
fourth  anniversary  of the issuance of the stock,  the amount of any  dividends
that would have accrued and been payable on the Redeemable  Preferred Stock from
the Mandatory Redemption Date through the fourth anniversary date.

        In addition, outstanding shares of Redeemable Preferred Stock vote on an
"as  converted  basis" with the holders of the Common Stock as a single class on
all matters that the holders of the Common Stock are entitled to vote upon.

Note 6.       Shareholders' Equity

            In December 2000, The BOC Group,  Inc. ("BOC")  purchased  1,111,111
shares of Common Stock for $9.00 per share. In addition,  the warrant previously
held by BOC to purchase  1,000,000 shares of Common Stock was reduced to 400,000
shares.  On the date of issuance of the Common  Stock,  the closing price of the
Common Stock on the Nasdaq National Market was $8.00 per share.




                                       10


<PAGE>


ITEM 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

            THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THESE  FORWARD-LOOKING  STATEMENTS.  FACTORS THAT MAY CAUSE SUCH  DIFFERENCES
INCLUDE,  BUT ARE NOT LIMITED TO, OUR EXPANSION  INTO NEW MARKETS,  COMPETITION,
TECHNOLOGICAL ADVANCES, RELIANCE ON KEY SUPPLIERS AND AVAILABILITY OF MANAGERIAL
PERSONNEL.  THE FORWARD-LOOKING  STATEMENTS ARE MADE AS OF THE DATE OF THIS FORM
10-Q AND WE ASSUME NO OBLIGATION TO UPDATE THE FORWARD-LOOKING  STATEMENTS OR TO
UPDATE THE REASONS WHY ACTUAL  RESULTS COULD DIFFER FROM THOSE  PROJECTED IN THE
FORWARD-LOOKING STATEMENTS.

Overview

            We are the largest supplier in the United States of bulk CO2 systems
and bulk CO2 for carbonating and dispensing fountain  beverages.  As of December
31, 2000,  we operated a national  network of 93 service  locations in 45 states
servicing  approximately 75,000 bulk and high pressure customers.  Currently 99%
of  fountain  beverage  users in the  Continental  United  States are within our
service area.

             Growth in our customer  base has averaged 50% annually from 1996 to
2000.  Our rapid  growth has been due to a  combination  of internal  growth and
acquisitions.  Today,  the majority of our growth is driven by the conversion of
high  pressure  CO2 users to bulk CO2  systems.  Our success in  conversions  is
demonstrated  in the Florida market where we continue to add new bulk CO2 system
installations, even after actively marketing in the state since 1990.

            Substantially  all of our revenues have been derived from the rental
of bulk CO2 systems  installed  at  customers'  sites,  the sale of CO2 and high
pressure  cylinder  revenues.  Revenues  have grown from $12.0 million in fiscal
1996 to $58.0  million in fiscal 2000, an average  increase of 50% annually.  We
believe  that our  revenue  base is stable  due to the  existence  of  long-term
contracts with our customers  which  generally  roll-over  without a significant
portion  expiring  without renewal in any one year. In each of fiscal 1998, 1999
and 2000,  less than 5% of our bulk CO2 systems in service  experienced  service
termination.  Service  termination  is typically  caused by restaurant  closure.
Affected bulk CO2 systems are either removed and reconditioned, or left in place
when prospects for a new restaurant at the same location appear likely.  Revenue
growth  is  largely   dependent   on  (1)  the  rate  of  new  bulk  CO2  system
installations,  (2) the growth in bulk CO2 sales at (i) customers on rental plus
per  pound  charge  contracts  and (ii)  customers  that own  their own bulk CO2
systems and (3) price increases.

            Cost of  products  sold is  comprised  of  purchased  CO2 and labor,
vehicle and service  location costs  associated with the storage and delivery of
CO2 to  customers.  Selling,  general  and  administrative  expenses  consist of
salaries,  dispatch  and  communications  costs,  and expenses  associated  with
marketing, administration, accounting and employee training. Consistent with the
capital intensive nature of our business, we incur significant  depreciation and
amortization expenses. These stem from the depreciation of our bulk CO2 systems;
depreciation   and   amortization  of  bulk  CO2  system   installation   costs;
amortization  of sales  commissions;  and  amortization  of  goodwill,  deferred
financing costs and other intangible assets.

            With respect to bulk CO2 systems,  we only capitalize costs that are
associated  with specific  successful  placements of such systems with customers
under  noncancelable  contracts  and  which  would  not be  incurred  but  for a
successful placement. All other service,  marketing and administrative costs are
expensed as incurred.

            Since 1990,  we have  devoted  significant  resources  to building a
sales and marketing organization, adding administrative personnel and developing
a  national  infrastructure  to  support  the rapid  growth in the number of our
installed  base  of bulk  CO2  systems.  The  cost  of  this  expansion  and the
significant  depreciation  expense of our  installed  network  have  resulted in
significant operating losses to date and accumulated net losses of $31.2 million
at December 31, 2000.

            We believe that our future revenue growth, gains in gross margin and
profitability will be dependent upon increases in route density, price increases
for  our  services,   improved   operating   efficiencies   resulting  from  the
implementation  of our leading  edge  delivery  system  technology  and targeted
marketing  of  customers.  Our route  density is highest in Florida  and is less
developed in the other areas where we presently have operations.

                                       11

<PAGE>

             Our  experience  has been that as our  depots  mature  their  gross
profit margins  improve as volume grows and fixed costs remain  essentially  the
same.  Since our new depot  openings  have slowed  drastically  over the last 24
months, on a weighted average basis, we expect that gross margin improvements at
our mature depots will accelerate. We believe that over time many of our service
locations are capable of gross  margins in excess of 60%. New service  locations
typically  operate at low or  negative  gross  margins  in the early  stages and
detract from our highly profitable service locations in mature markets.

            We believe that earnings before  interest,  taxes,  depreciation and
amortization ("EBITDA") is the principal financial measure by which we should be
measured.  Our revolving credit facility  utilizes EBITDA for its calculation of
financial  leverage,  affecting  the amount of funds  available to us to borrow.
Information  regarding  EBITDA  is  presented  because  of its  use  by  certain
investors  as one  measure of a  corporation's  ability to  generate  cash flow.
EBITDA should not be considered as an alternative to, or more  meaningful  than,
operating  income or cash flows from  operating  activities as an indicator of a
corporation's operating performance.  EBITDA excludes significant costs of doing
business and should not be considered in isolation  from GAAP  measures.  EBITDA
has grown from $3.7 million in fiscal 1996 to $16.1  million in fiscal 2000,  an
average  increase of 46% annually from fiscal 1996 to fiscal 2000. For the three
months ended  December  31,  2000,  EBITDA was $4.8  million,  or $19.1  million
annualized, the highest for any quarter in the our history.

Results of Operations

             The  following  table sets forth,  for the periods  indicated,  the
percentage relationship which various items bear to net sales:
<TABLE>
<CAPTION>

                                                                       Three Months Ended          Six Months Ended
                                                                           December 31,               December 31,
                                                                           ------------               ------------

                                                                       2000          1999          2000         1999
                                                                       ----          ----          ----         ----
            Income Statement Data:
<S>                                                                     <C>            <C>        <C>         <C>
            Net sales...............................................    100.0%         100.0%     100.0%      100.0%
            Cost of products sold...................................     49.9           49.3       50.0        50.4
            Selling, general and administrative expenses............     21.1           20.9       21.4        21.2
            Depreciation and amortization...........................     26.7           27.8       26.5        27.2
                                                                    ---------      ---------    -------      ------
            Operating income........................................      2.3            2.0        2.1         1.2
            Interest expense, net...................................     16.4           17.8       16.6        17.9
                                                                    ---------      ---------    -------      ------

            Net (loss)..............................................    (14.1)         (15.8)     (14.5)      (16.7)
                                                                    ==========     =========    =======      ======

            Other Data:
            Operating income before depreciation and amortization,
            EBITDA..................................................     28.9%          29.9%      28.6%       28.4%
                                                                    =========      =========    =======      ======
</TABLE>

Three Months Ended December 31, 2000 Compared to Three Months Ended December 31,
1999

Net Sales

            Net sales  increased $2.7 million,  or 20.0%,  from $13.7 million in
1999 to $16.4  million in 2000.  The increase in net sales was  primarily due to
internal  growth in the  number of  Company  owned and  customer  owned bulk CO2
systems serviced.  At December 31, 2000, there were approximately 61,000 Company
owned and 10,000  customer  owned bulk CO2  systems in  service,  an increase of
9,000,  or 15%, over the  approximately  53,000 Company owned and 9,000 customer
owned bulk CO2 systems in service at December 31, 1999.


Cost of Products Sold

            Cost of products sold increased by $1.5 million, or 21.7%, from $6.7
million in 1999 to $8.2 million in 2000,  and  increased as a percentage  of net
sales from 49.3% in 1999 to 49.9% in 2000. The dollar  increase is  attributable
to our  continued  growth.  CO2  purchases  increased  by $.2 million  from $1.7
million in 1999 to $1.9 million in 2000 and  decreased  as a  percentage  of net
sales  from  12.7%  in 1999 to  11.8% in 2000.  Fully  loaded  operations  wages
increased  by $.8 million  from $2.3 million in 1999 to $3.2 million in 2000 and
increased  as a  percentage  of net sales  from  17.0% in 1999 to 19.3% in 2000.
Fully loaded


                                       12

<PAGE>

truck  expenses  increased $.3 million from $1.2 million in 1999 to $1.5 million
in 2000 and  increased as a percentage of net sales from 8.5% in 1999 to 8.9% in
2000.

Selling, General and Administrative Expenses

            Selling,  general  and  administrative  expenses  increased  by  $.6
million,  or 21.4%,  from $2.9  million  in 1999 to $3.5  million  in 2000,  and
increased as a percentage of net sales from 20.9% in 1999 to 21.1% in 2000.  The
dollar  increase is primarily  attributable  to (1) an increase in executive and
administrative  salaries  and  related  expenses,  (2) an  increase  in  selling
expenses and (3) an increase in bad debt  expense.  Fully loaded  administrative
and executive  personnel  expense  increased by $.2 million from $1.4 million in
1999 to $1.6 million in 2000 and  decreased  as a  percentage  of net sales from
10.3% in 1999 to 9.6% in 2000.  Selling  expenses  increased by $.4 million from
$.2 million in 1999 to $.6 million in 2000 and  increased as a percentage of net
sales from 1.2% in 1999 to 3.8% in 2000. Bad debt expense  increased $.3 million
from $35,000 in 1999 to $.3 million in 2000 and increased as a percentage of net
sales  from  .3% in  1999  to 2.0% in  2000  and is  primarily  attributable  to
increased reserves associated with certain high pressure customers.

Depreciation and Amortization

            Depreciation  and  amortization  increased  by $.6 million from $3.8
million in 1999 to $4.4  million in 2000.  As a  percentage  of net sales,  such
expenses  decreased from 27.8% in 1999 to 26.7 % in 2000.  Depreciation  expense
increased  by $.4  million  from $2.7  million  in 1999 to $3.1  million in 2000
principally  due to the increase in bulk CO2 systems  leased to customers.  As a
percentage of net sales,  depreciation  expense  decreased from 19.4% in 1999 to
18.9% in 2000.  Amortization  expense increased by $.1 million from $1.2 million
in 1999 to $1.3 million in 2000 primarily due to the increase in amortization of
deferred lease acquisition  costs and deferred  charges.  As a percentage of net
sales, amortization expense decreased from 8.4% in 1999 to 7.8% in 2000.

Operating Income

            For the reasons  described above,  operating income was $.4 million,
or 2.3% of net sales, in 2000,  compared to an operating  income of $.3 million,
or 2.0% of net sales, in 1999.

Interest Expense

            Net interest expense increased by $.3 million,  from $2.4 million in
1999 to $2.7 million in 2000,  and  decreased as a percentage  of net sales from
17.8% in 1999 to 16.4% in 2000. The dollar increase is attributable to increased
levels of long-term  debt and  increased  interest  rates in 2000 as compared to
1999. The percentage decrease is attributable to a slowing in the rate of growth
of long-tem debt as compared to growth in net sales.

Net Loss

             For the  reasons  described  above,  net  (loss)  increased  by $.2
million,  or 7.6%,  from  $2.2  million  in 1999 to $2.3  million  in  2000.  No
provision  for  income tax  expense in either  1999 or 2000 has been made due to
historical net losses.

EBITDA

             For the reasons  described above,  EBITDA,  representing  operating
income plus depreciation and amortization,  increased by $.7 million,  or 16.2%,
from $4.1 million in 1999 to $4.8 million in 2000 and  decreased as a percentage
of net sales from 29.9% to 28.9%.


Six Months  Ended  December 31, 2000  Compared to Six Months Ended  December 31,
1999

Net Sales

            Net sales increased by $5.3 million, or 19.3%, from $27.3 million in
1999 to $32.5  million in 2000.  The increase in net sales was  primarily due to
internal  growth in the  number of  Company  owned and  customer  owned bulk CO2
systems serviced.  At December 31, 2000, there were approximately 61,000 Company
owned and 10,000  customer  owned bulk CO2  systems in  service,  an increase of
9,000,  or 15%, over the  approximately  53,000

                                       13

<PAGE>

Company owned and 9,000  customer  owned bulk CO2 systems in service at December
31, 1999.

Cost of Products Sold

            Cost of products sold increased by $2.5 million, or 18.5% from $13.7
million in 1999 to $16.3  million in 2000 and  decreased as a percentage  of net
sales from 50.4% in 1999 to 50.0% in 2000. The dollar  increase is  attributable
to our  continued  growth.  CO2  purchases  increased  by $.5 million  from $3.5
million in 1999 to $4.0 million in 2000 and  decreased  as a  percentage  of net
sales  from  13.0%  in 1999 to  12.4% in 2000.  Fully  loaded  operations  wages
increased  by $1.4 million from $4.7 million in 1999 to $6.1 million in 2000 and
increased  as a  percentage  of net sales  from  17.2% in 1999 to 18.7% in 2000.
Fully loaded truck  expenses  increased $.5 million from $2.4 million in 1999 to
$2.9 million in 2000 and  increased  as a  percentage  of net sales from 8.8% in
1999 to 8.9% in 2000.

Selling, General and Administrative Expenses

            Selling,  general  and  administrative  expenses  increased  by $1.2
million,  or 20.3%,  from $5.8  million  in 1999 to $7.0  million  in 2000,  and
increased as a percentage of net sales from 21.2% in 1999 to 21.4% in 2000.  The
dollar  increase is primarily  attributable  to (1) an increase in executive and
administrative  salaries  and their  associated  expenses,  (2) an  increase  in
selling  expenses  and  (3)  an  increase  in bad  debt  expense.  Fully  loaded
administrative  and executive  personnel  expense  increased by $.4 million from
$2.8  million in 1999 to $3.2 million in 2000 and  decreased as a percentage  of
nets sales from 10.3% in 1999 to 9.8% in 2000. Selling expenses increased by $.4
million  from $.8  million in 1999 to $1.1  million in 2000 and  increased  as a
percentage  of net  sales  from 2.8% in 1999 to 3.9% in 2000.  Bad debt  expense
increased  by $.5  million  from $.1  million in 1999 to $.6 million in 2000 and
increased as a percentage of net sales from .5% in 1999 to 2.0% in 2000.

Depreciation and Amortization

             Depreciation and  amortization  increased by $1.2 million from $7.4
million in 1999 to $8.6  million in 2000.  As a  percentage  of net sales,  such
expenses  decreased  from 27.2% in 1999 to 26.5% in 2000.  Depreciation  expense
increased  by $.9  million  from $5.2  million  in 1999 to $6.1  million in 2000
principally  due to the increase in bulk CO2 systems  leased to customers.  As a
percentage of net sales,  depreciation  expense  decreased from 18.9% in 1999 to
18.7% in 2000.  Amortization  expense increased by $.2 from $2.3 million in 1999
to $2.5  million in 2000  primarily  due to  amortization  related  to  deferred
charges and deferred  lease  acquisition  costs.  As a percentage  of net sales,
amortization expense decreased from 8.3% in 1999 to 7.8% in 2000.

Operating Income

            For the reasons  described above,  operating income was $.7 million,
or 2.1% of net sales, in 2000,  compared to an operating  income of $.3 million,
or 1.2% of net sales, in 1999.

Interest Expense

             Net interest expense  increased by $.5 million from $4.9 million in
1999 to $5.4 million in 2000 and  decreased  as a  percentage  of net sales from
17.9% in 1999 to 16.6% in 2000. The increase in dollars is  attributable  to the
increased  level of  long-term  debt  and  increased  interest  rates in 2000 as
compared to 1999. The percentage  decrease is  attributable  to a slowing in the
rate of growth of long-term debt as compared to growth in net sales.


Net Loss

             For the reasons described above, net loss increased by $.2 million,
or 3.8%,  from $4.5  million in 1999 to $4.7 million in 2000.  No provision  for
income tax  expense in either 1999 or 2000 has been made due to  historical  net
losses.

EBITDA

             For the reasons  described above,  EBITDA,  representing  operating
income plus depreciation and amortization,  increased by $1.5 million, or 19.8%,
from $7.8 million in 1999 to $9.3 million in 2000 and  increased as a percentage
of net sales from 28.4% to 28.6%.

                                       14

<PAGE>

Liquidity and Capital Resources

            Our  cash   requirements   consist   principally   of  (1)   capital
expenditures  associated  with  purchasing and placing new bulk CO2 systems into
service  at  customers'   sites;   (2)  payments  of  interest  on   outstanding
indebtedness;  and (3) working capital. Whenever possible, we seek to obtain the
use of vehicles,  land, buildings,  and other office and service equipment under
operating leases as a means of conserving  capital.  As of December 31, 2000, we
anticipate  making cash capital  expenditures  of at least $5.0 million to $10.0
million during the remaining six months of fiscal 2001,  primarily for purchases
of bulk CO2 systems that we expect to place into service.  Once bulk CO2 systems
are placed  into  service,  we  generally  experience  positive  cash flows on a
per-unit basis, as there are minimal  additional capital  expenditures  required
for ordinary operations. In addition to capital expenditures related to internal
growth, we review opportunities to acquire bulk CO2 service businesses,  and may
require  cash  in an  amount  dictated  by the  scale  and  terms  of  any  such
transactions successfully concluded.

            In December 2000, we sold  1,111,111  shares of our Common Stock for
aggregate consideration of $10.0 million.

            In May 2000, we sold 5,000 shares of our 8%  Cumulative  Convertible
Redeemable Preferred Stock, no par value (the "Redeemable Preferred Stock"), for
$1,000  per share  (the  "Liquidation  Preference").  Cumulative  dividends  are
payable  quarterly  in arrears at the rate of 8.0% per annum on the  Liquidation
Preference,  and,  to the  extent  not  paid  in  cash,  will  be  added  to the
Liquidation  Preference.  Shares  of  the  Redeemable  Preferred  Stock  may  be
converted into shares of Common Stock at any time at a conversion price of $9.47
per share,  which  represents a 20% premium to the average  closing price of the
Common Stock on the Nasdaq  National Market for the 20 trading days prior to May
12, 2000.  Additionally,  we must redeem the Redeemable Preferred Stock upon the
occurrence of a change in control of the Company.

             On May 4,  1999,  we  entered  into a  $75.0  million  amended  and
restated  revolving  credit  facility  with a syndicate of banks led by SunTrust
Bank ("Amended  SunTrust  Facility").  The Amended SunTrust Facility amended and
restated our existing  $50.0 million  revolving  credit  facility which had been
entered into in October 1997. The Amended SunTrust  Facility  contains  interest
rates and an unused facility fee based on a pricing grid calculated quarterly on
total funded debt to annualized  EBITDA. We are entitled to select the Base Rate
or the London InterBank  Offering Rate ("LIBOR"),  plus applicable  margin,  for
principal  drawings under the Amended  SunTrust  Facility.  The applicable LIBOR
margin  pursuant to the pricing grid ranges from 2.75% to 3.75%.  The applicable
Base Rate margin  pursuant to the pricing  grid ranges from 1.25% to 2.25%.  The
applicable  unused  facility fee pursuant to the pricing grid ranges from 0.375%
to 0.50%.  Interest  only is payable  periodically  until the  expiration of the
Amended  SunTrust  Facility  on May 4,  2002,  however,  it  contains a two year
renewal  option  subject to  approval.  Additionally,  it is  collateralized  by
substantially  all of our assets.  We are precluded from declaring or paying any
cash  dividends,  except that we may accrue and  accumulate,  but not pay,  cash
dividends  on the  Redeemable  Preferred  Stock.  We are also  required  to meet
certain  affirmative  and  negative  covenants,  including  but not  limited  to
financial  covenants.  Pursuant to the Amended SunTrust  Facility,  drawings are
limited to availability  under a formula predicated upon multiples of EBITDA and
gross margin  factors.  At various dates in the past we have been unable to meet
certain  covenants and have had to obtain waivers or modifications of terms from
our lenders.  In December  2000,  the Amended  SunTrust  Facility was amended to
adjust a certain financial  covenant for the quarter ended December 31, 2000 and
prospectively.  Although  we  believe  that we will be able to  comply  with the
current  provisions of our borrowing  arrangements,  circumstances may result in
our having to obtain waivers or further modifications in the future.

             During  the  six  months  ended  December  31,  2000,  our  capital
resources  included cash flows from  operations,  available  borrowing  capacity
under the Amended  SunTrust  Facility and  proceeds  from the issuance of Common
Stock. As of December 31, 2000, a total of $48.2 million was  outstanding  under
the Amended SunTrust Facility with interest at three hundred  seventy-five basis
points above the applicable LIBOR (10.38% to 10.52% at December 31, 2000).

             We believe that cash flows from operations and available borrowings
under  the  Amended  SunTrust  Facility  will be  sufficient  to  fund  proposed
operations for at least the next twelve months.



             Working  Capital.  At December  31, 2000,  we had positive  working
capital of $2.6 million.  At June 30, 2000, we had negative  working  capital of
$.6 million.

             Cash  Flows from  Operating  Activities.  For the six months  ended
December  31,  2000 and  December  31,  1999,  net cash  provided  by  operating
activities was $1.0 million and $4.3 million, respectively. The decrease of $3.3
million in 2000 compared to 1999 is primarily attributable to the following: (1)
depreciation  and  amortization of property and equipment  increased $.9 million
from $5.2  million in 1999 to $6.1  million in 2000,  and (2)  accounts  payable
decreased $2.5 million in 2000 and increased $1.8 million in 1999.

                                       15

<PAGE>

             Cash  Flows from  Investing  Activities.  For the six months  ended
December 31, 2000 and December 31, 1999,  net cash used in investing  activities
was $6.4 million and $11.0 million,  respectively.  These  investing  activities
were primarily  attributable to the  installation and direct placement costs and
acquisition of bulk CO2 systems.

             Cash  Flows from  Financing  Activities.  For the six months  ended
December  31, 2000 and  December  31,  1999,  cash flows  provided by  financing
activities were $5.2 million and $5.3 million,  respectively. For the six months
ended December 31, 2000, net cash provided by financing activities was primarily
from the proceeds  related to the issuance of Common Stock and the net repayment
of long-term  debt of $4.6 million.  For the six months ended December 31, 1999,
net cash provided by financing  activities  was  primarily  from the issuance of
long-term debt.

 Year 2000

            Our computer and other business operating systems were unaffected by
the "Year 2000" problem,  having  successfully rolled over from 1999 to 2000. We
are also  unaware  of any Year  2000  issues  affecting  any of our  significant
business partners, suppliers or customers.

Inflation

             The modest  levels of  inflation  in the general  economy  have not
affected  our  results  of  operations.  Additionally,  our  customer  contracts
generally  provide  for annual  increases  in the  monthly  rental rate based on
increases in the consumer price index. We believe that inflation will not have a
material adverse effect on our future results of operations.

             Our bulk CO2 requirements contract with The BOC Group, Inc. ("BOC")
provides for annual  adjustments  in the purchase  price for bulk CO2 based upon
increases  or  decreases  in the  Producer  Price Index for  Chemical and Allied
Products  or the  average  percentage  increase  in the  selling  price  of bulk
merchant  carbon  dioxide  purchased  by BOC's  large,  multi-location  beverage
customers  in the United  States,  however,  such  increases  are  limited to 3%
annually until June 2002.



ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            As  discussed  under   "Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
above, as of December 31, 2000, a total of $48.2 million was  outstanding  under
the Amended SunTrust Facility with interest at three hundred  seventy-five basis
points  above the 180 day LIBOR rate  (10.38% to 10.52% at December  31,  2000).
Based upon $48.2  million  outstanding  under the Amended  SunTrust  Facility at
December 31, 2000, our annual interest cost under the Amended SunTrust  Facility
would increase by $.5 million for each one percent increase in LIBOR (i.e., from
9.0% to 10.0%).

             In  order to  reduce  our  exposure  to  increases  in  LIBOR,  and
consequently  to increases in interest  payments,  on August 31, 2000 we entered
into an interest rate swap transaction (the "Swap") with SunTrust Bank, Atlanta,
in the amount of $10.0 million (the  "Notional  Amount").  The effective date of
the Swap is September 1, 2000 and it terminates  on September 3, 2002.  Pursuant
to the  Swap,  we pay a  fixed  interest  rate of 7% per  annum  and  receive  a
LIBOR-based  floating  rate. The effect of the Swap is to neutralize any changes
in LIBOR on the Notional  Amount.  If LIBOR decreases below 7% during the period
the Swap is in effect,  interest  payments by us on the Notional  Amount will be
greater than if we had not entered into the Swap,  since by exchanging LIBOR for
a fixed  interest  rate,  we would not benefit  from falling  interest  rates on
LIBOR,  a variable  interest rate. We do not enter into  speculative  derivative
transactions or leveraged swap transactions.

                                       16

<PAGE>

PART II.  OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

          (c)     On December 7, 2000,  we sold  1,111,111  shares of our Common
                  Stock to The BOC  Group,  Inc.,  a Delaware  corporation,  for
                  aggregate  consideration of $10.0 million in reliance upon the
                  exemption  provided by Section 4(2) of the  Securities  Act of
                  1933, as amended.  No  underwriting  discounts or  commissions
                  were paid.

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

          (a)     Our Annual  Meeting of  Shareholders  was held on  December 6,
                  2000 (the "Annual Meeting").
          (b)     Edward M.  Sellian,  Michael E.  DeDomenico,  Robert  Ranieri,
                  Craig L. Burr,  Robert L.  Frome,  Daniel  Raynor,  Richard D.
                  Waters,  Jr.,  and John E. Wilson were elected as Directors to
                  serve until the next  annual  meeting of the  shareholders  or
                  until their  successors  are elected and  qualified.  No other
                  Director's term of office continued after the Annual Meeting.
          (c)     Election of Directors:

                                                 Number of      Number of
                                                 Votes For    Votes Against
                                                 ---------    -------------

                  Edward M. Sellian              6,789,562       37,087
                  Michael E. DeDomenico          6,791,562       34,987
                  Robert Ranieri                 6,793,162       33,487
                  Craig L. Burr                  6,793,662       32,987
                  Robert  L. Frome               6,793,662       32,987
                  Daniel Raynor                  6,793,662       32,987
                  Richard D. Waters, Jr.         6,793,662       32,987
                  John E. Wilson                 6,793,462       33,187

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)     Exhibit No.                                      Exhibit
                  -----------                                      -------

                   10.1           --    Fifth  Amendment to Amended and Restated
                                        Revolving  Credit  Agreement dated as of
                                        December  5,  2000,  by  and  among  the
                                        Company,  SunTrust  Bank,  Bank  Austria
                                        Creditanstalt  Corporate Finance,  Inc.,
                                        The Provident Bank, Bank Leumi Le-Israel
                                        B.M.,  IBJ  Whitehall   Business  Credit
                                        Corporation and Hamilton Bank, N.A. (the
                                        "Lenders")  and SunTrust  Bank, as agent
                                        for the Lenders.
                   10.2           --    Amendment  No. 6 dated as of December 5,
                                        2000   to   Senior   Subordinated   Note
                                        Purchase  Agreement  dated as of October
                                        31,  1997  between  the   Company,   the
                                        Subsidiary Guarantors and the Investors.
                   10.3           --    Stock  Purchase  Agreement  dated  as of
                                        December 7, 2000, by and between the The
                                        BOC Group, Inc., a Delaware  corporation
                                        and the Company.



          (b)      Reports on Form 8-K.

                   (1)   The  Company  filed a Form 8-K dated  December  7, 2000
                         reporting an Item 5 event.



                                       17

<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.


                                                       NuCo2 Inc.


Dated:  February 14, 2001                          By: /s/ Joann Schirripa
                                                       -------------------
                                                       Joann Schirripa
                                                       Chief Financial Officer