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 September 30, 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 September 30, 2000
                 -----                        ---------------------------------
      Common Stock, $.001 par value                  7,275,015 shares


<PAGE>

                                   NUCO2 INC.

                                      Index

PART I.     FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS

            Consolidated Balance Sheets as of September 30, 2000 and         3
                June 30, 2000

            Consolidated Statements of Operations for the Three Months
                Ended September 30, 2000 and September 30, 1999              4

            Consolidated Statement  of Shareholders' Equity for the Three
                Months Ended September 30, 2000                              5

            Consolidated Statements of Cash Flows for the Three Months
                Ended September 30, 2000 and September 30, 1999              6

            Notes to Consolidated Financial Statements                       7

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF                         10
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES
              ABOUT MARKET RISK                                             14

PART II.    OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                                15

SIGNATURES                                                                  16

                                       2

<PAGE>

PART I.     FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS

                                   NUCO2 INC.

                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)


                                     ASSETS
<TABLE>
<CAPTION>


                                                                        September 30, 2000   June 30, 2000
                                                                        ------------------   -------------
                                                                               (unaudited)

Current assets:
<S>                                                                             <C>          <C>
       Cash and cash equivalents                                                $     198    $     279
       Trade accounts receivable; net of allowance for doubtful
           accounts of $666 and $622, respectively                                  8,901        8,862
       Inventories                                                                    230          222
       Prepaid expenses and other current assets                                    1,052          912
                                                                                ---------    ---------
              Total current assets                                                 10,381       10,275
                                                                                ---------    ---------

   Property and equipment, net                                                    107,752      107,120
                                                                                ---------    ---------

   Other assets:
       Goodwill, net                                                               20,131       20,434
       Deferred charges, net                                                        3,072        3,425
       Customer lists, net                                                          1,654        1,871
       Restrictive covenants, net                                                   1,485        1,567
       Deferred lease acquisition costs, net                                        3,728        3,685
       Deposits                                                                       245          172
                                                                                ---------    ---------
                                                                                   30,315       31,154
                                                                                ---------    ---------

                                                                                $ 148,448    $ 148,549
                                                                                =========    =========


                      LIABILITIES AND SHAREHOLDERS' EQUITY
   Current liabilities:
       Current maturities of long-term debt                                     $      34    $      33
       Accounts payable                                                             8,010        8,120
       Accrued expenses                                                               928          582
       Accrued interest                                                             2,226        1,485
       Accrued payroll                                                                400          376
       Other current liabilities                                                      330          263
                                                                                ---------    ---------
           Total current liabilities                                               11,928       10,859

   Long-term debt, excluding current maturities                                    54,072       53,080
   Subordinated debt                                                               39,024       38,969
   Customer deposits                                                                2,526        2,351
                                                                                ---------    ---------
              Total liabilities                                                   107,550      105,259
                                                                                ---------    ---------

   Commitments and contingencies
   Redeemable Preferred Stock                                                       5,151        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 7,275,015 shares at September 30, 2000
           and June 30, 2000                                                            7            7
       Additional paid-in capital                                                  64,621       64,722
       Accumulated deficit                                                        (28,881)     (26,489)
                                                                                ---------    ---------
              Total shareholders' equity                                           35,747       38,240
                                                                                ---------    ---------
                                                                                $ 148,448    $ 148,549
                                                                                =========    =========
</TABLE>

                                       3

<PAGE>


                                   NUCO2 INC.

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

<TABLE>
<CAPTION>
                                                 Three Months Ended September 30,
                                                 --------------------------------
                                                         2000       1999
                                                         ----       ----


<S>                                                   <C>         <C>
   Net Sales                                          $ 16,113    $ 13,595

   Costs and expenses:
       Cost of products sold                             8,077       6,996
       Selling, general and administrative expenses      3,492       2,930
       Depreciation and amortization                     4,244       3,615
                                                      --------    --------
                                                        15,813      13,541
                                                      --------    --------

       Operating Income                                    300          54

       Interest expense net                              2,692       2,434
                                                      --------    --------

       Net  (loss)                                    $ (2,392)   $ (2,380)
                                                      ========    ========

   Basic and Diluted EPS:

       Net (loss)                                     $  (0.34)   $  (0.33)
                                                      ========    ========

       Weighted average number of common and common
            equivalent shares outstanding

           Basic and Diluted                             7,275       7,217
                                                      ========    ========
</TABLE>

                                       4


<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

Redeemable Preferred Stock dividend        --          --          (101)         --               (101)

Net (loss)                                 --          --          --          (2,392)          (2,392)
                                      ---------   ---------   ---------     ---------        ---------

Balance, September 30, 2000           7,275,015   $       7   $  64,621     $ (28,881)       $  35,747
                                      =========   =========   =========     =========        =========
</TABLE>





                                       5






<PAGE>
                                   NUCO2 INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  Three Months Ended September 30,
                                                                  --------------------------------
                                                                          2000        1999*
                                                                          ----        -----

Cash flows from operating activities:
<S>                                                                     <C>        <C>
       Net (loss)                                                       $(2,392)   $(2,380)

       Adjustments  to  reconcile  net  (loss) to net cash  provided
         by operating activities:
              Depreciation and amortization of property and equipment     2,993      2,497
              Amortization of other assets                                1,251      1,118
              Amortization of original issue discount                        55         55
              Loss on disposal of property and equipment                     47          7
              Loss on abandonment                                           152        198
              Changes in operating assets and liabilities:
              Decrease (increase) in:
                   Trade accounts receivable                                (39)       206
                   Inventories                                               (8)       (10)
                   Prepaid expenses and other current assets               (140)      (798)
              Increase (decrease) in:
                    Accounts payable                                       (110)     1,872
                   Accrued expenses                                         346       (707)
                   Accrued payroll                                           25         86
                   Accrued interest                                         741        821
                   Other current liabilities                                 68          1
                   Customer deposits                                        175        158
                                                                        -------    -------

                   Net cash provided by operating activities              3,164      3,124
                                                                        -------    -------

   Cash flows from investing activities:
       Proceeds from disposal of property and equipment                    --            2
       Purchase of property and equipment                                (3,803)    (4,875)
       (Increase) in deposits                                               (73)      --
       Increase in deferred lease acquisition costs                        (353)      (363)
                                                                        -------    -------
              Net cash (used in) investing activities                    (4,229)    (5,236)
                                                                        -------    -------

   Cash flows from financing activities:
       Repayment of long-term debt                                           (8)       (37)
       Proceeds from issuance of long-term debt                           1,000      1,000
       Increase in deferred charges                                          (8)       (40)
                                                                        -------    -------
           Net cash provided by financing activities                        984        923
                                                                        -------    -------

   Decrease in cash and cash equivalents                                    (81)    (1,189)
   Cash and cash equivalents at the beginning of period                     279      1,579
                                                                        -------    -------
   Cash and cash equivalents at the end of period                       $   198    $   390
                                                                        =======    =======

   Supplemental  disclosure of cash flow  information:
       Cash paid during the period for:
           Interest                                                     $ 1,896    $ 1,591
                                                                        =======    =======
           Income taxes                                                 $  --      $  --
                                                                        =======    =======
</TABLE>

In 2000, the Company  increased the carrying amount of the redeemable  preferred
stock by $101 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.

                                       6
<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 months ended  September 30,
2000 were  202,960.  These  shares were not included in diluted EPS because they
would have been antidilutive for such period. Additionally, options and warrants
to purchase  1,073,715  shares,  254,810  shares and 415,224 shares for $14.64 -
$17.00  per  share,  $11.25 - $12.50  per share and  $7.75 - $11.00  per  share,
respectively, were outstanding during the three months ended September 30, 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 months ended  September 30,
1999 were  162,213.  These  shares were not included in diluted EPS because they
would have been antidilutive for such period. Additionally, options and warrants
to  purchase   1,073,715   shares,   255,310   shares  and  385,416  shares  for
$14.64-$17.00  per share,  $11.25-$12.50  per share and $8.938-$11.00 per share,
respectively, were outstanding during the three months ended September 30, 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 Convertible  Preferred Stock
(See  Note 5) using the "if  converted"  method,  because  the  effect  would be
antidilutive.

                                                            Years Ended June 30,
                                                            --------------------
                                                             2000        1999
                                                             ----        ----
   Net (loss)                                            $    (2,392)   $(2,380)
   Preferred Stock dividends                                    (101)      --
                                                             -------    -------
   Net (loss) available for common shareholders          $    (2,493)   $(2,380)
                                                             =======    =======

   Weighted average outstanding shares of Common Stock         7,275      7,217
   (Loss) per share - Basic and Diluted                      $ (0.34)   $ (0.33)
                                                             =======    =======

                                       7

<PAGE>
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 senior
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 1.75% to 3.5%.  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
Convertible  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 September  2000,  the Amended  SunTrust  Facility was
amended to adjust a certain  financial  covenant for the quarter ended September
30, 2000 and prospectively.

            A total of $53.75  million was  outstanding  pursuant to the Amended
SunTrust  Facility with interest from 10.38% to 10.43% per annum as of September
30, 2000.

            As of September  30, 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 June 30, 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.

NOTE 5.     REDEEMABLE PREFERRED STOCK

        In May  2000,  the  Company  sold  5,000  shares  of  its 8%  Cumulative
Convertible  Preferred Stock, no par value (the "Convertible  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
three months ended  September  30, 2000,  the carrying  amount (and  Liquidation
Preference) of the  Convertible  Preferred  Stock was increased by $50 and $101,
respectively,  for dividends accrued.  Shares of the Convertible Preferred Stock
may be converted  into shares of Common Stock at any time at a conversion  price
of $9.47 per share,

                                       8

<PAGE>

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 Convertible  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 Convertible Preferred Stock from
the Mandatory Redemption Date through the fourth anniversary date.

        In addition,  outstanding shares of Convertible  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.






                                       9

<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 September
30, 2000,  we operated a national  network of 93 service  locations in 45 states
servicing  approximately 74,000 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 $28.9 million
at September 30, 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.

                                       10
<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. At September 30, 2000 and September 30, 1999, gross margins were in excess
of 60% at nine service locations and four service locations, respectively. 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  September  30, 2000,  EBITDA was $4.5  million,  or $18.0  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:

                                                             Three Months Ended
                                                                September 30,
                                                                -------------

                                                              2000       1999
                                                              ----       ----
   Income Statement Data:

   Net sales                                                 100.0%    100.0%
   Cost of products sold                                      50.1      51.5
   Selling, general and administrative expenses               21.7      21.5
   Depreciation and amortization                              26.3      26.6
                                                           -------   -------
   Operating income                                            1.9        .4
   Interest expense, net                                      16.7      17.9
                                                           -------   -------

   Net (loss)                                                (14.8)    (17.5)
                                                           =======   =======

   Other Data:
   Operating income before depreciation and amortization
   (EBITDA)                                                   28.2%     27.0%
                                                           =======   =======

THREE MONTHS ENDED  SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 1999

NET SALES

            Net sales  increased $2.5 million,  or 18.5%,  from $13.6 million in
1999 to $16.1  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 September 30, 2000, there were approximately 60,000 Company
owned and 10,000  customer  owned bulk CO2  systems in  service,  an increase of
9,000, or 14.8%, over the approximately 51,000 Company owned and 10,000 customer
owned bulk CO2 systems in service at September 30, 1999.

COST OF PRODUCTS SOLD

            Cost of products sold increased by $1.1 million, or 15.4%, from $7.0
million in 1999 to $8.1 million in 2000,  and  decreased as a percentage  of net
sales from 51.5% in 1999 to 50.1% in 2000. The dollar  increase is  attributable
to our continued growth.  Purchases  increased by $0.2 million from $2.2 million
in 1999 to $2.4 million in 2000 and  decreased as a percentage of net

                                       11

<PAGE>

sales from 16.1% in 1999 to 15.1% in 2000. Fully loaded route drivers  increased
by $0.6 million from $2.3 million in 1999 to $2.9 million in 2000 and  increased
as a percentage of net sales from 17.2% in 1999 to 17.8% in 2000. Auto and truck
expenses  increased  $0.2  million  from $1.3 million in 1999 to $1.5 million in
2000 and  decreased  as a  percentage  of net sales from 9.3% in 1999 to 9.1% in
2000.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

            Selling,  general  and  administrative  expenses  increased  by $0.6
million,  or 19.2%,  from $2.9  million  in 1999 to $3.5  million  in 2000,  and
increased as a percentage of net sales from 21.5% in 1999 to 21.7% in 2000.  The
dollar increase is primarily  attributable to (1) an increase in  administrative
salaries and related  expenses,  (2) an increase in telephone expense and (3) an
increase  in  bad  debt  expense.  Fully  loaded  administrative  and  executive
personnel increased by $0.2 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 10.0 in
2000. Telephone expense increased $0.1 million from $0.2 million in 1999 to $0.3
million  in  2000  and is  attributable  to  the  introduction  of a new  mobile
information  system for use in our field operations.  Bad debt expense increased
$0.2 million from $0.1 million in 1999 to $0.3 million in 2000 and  increased as
a  percentage  of  sales  from  0.7% 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 $0.6 million from $3.6
million in 1999 to $4.2  million in 2000.  As a  percentage  of net sales,  such
expense  decreased  from 26.6% in 1999 to 26.3 % in 2000.  Depreciation  expense
increased  by $0.5  million  from $2.5  million in 1999 to $3.0  million in 2000
principally  due to the increase in bulk CO2 systems  leased to customers.  As a
percentage of net sales,  depreciation  expense  increased from 18.4% in 1999 to
18.6% in 2000.  Amortization expense increased by $0.1 million from $1.1 million
in 1999 to $1.2 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 8.2% in 1999 to 7.8% in 2000.

OPERATING INCOME

            For the reasons described above,  operating income was $0.3 million,
or 1.9% of net sales,  in 2000 compared to an operating  income of $0.1 million,
or 0.4% of net sales, in 1999.

INTEREST EXPENSE

            Net interest expense increased by $0.3 million, from $2.4 million in
1999 to $2.7 million in 2000,  and  decreased as a percentage  of net sales from
17.9% in 1999 to 16.7% in 2000. The dollar increase is attributable to increased
levels of long-term  debt and  increased  interest  rates in 2000 as compared to
1999.

NET LOSS

             For the reasons  described above, net (loss) remained  unchanged at
$(2.4)  million in 1999 and 2000.  No provision for income tax expense in either
the 1999 period or 2000 period has been made due to historical net losses.


                                       12

<PAGE>
EBITDA

             For the reasons  described above,  EBITDA,  representing  operating
income plus depreciation and amortization,  increased by $0.8 million, or 23.8%,
from $3.7 million in 1999 to $4.5 million in 2000 and  increased as a percentage
of net sales from 27.0% to 28.2%.

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 September 30, 2000, we
anticipated  making cash capital  expenditures of at least $5.0 million to $10.0
million during the remaining nine 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 May 2000, we sold 5,000 shares of our 8%  Cumulative  Convertible
Preferred Stock, no par value (the "Convertible  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  Convertible  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 Convertible 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
senior 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 1.75% to 3.5%.  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
Convertible  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 September
2000, the Amended  SunTrust  Facility was amended to adjust a certain  financial
covenant for the quarter ended September 30, 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 three  months  ended  September  30,  2000,  our capital
resources  included cash flows from operations and available  borrowing capacity
under the Amended SunTrust Facility. As of September 30, 2000, a total of $53.75
million was  outstanding  under the Amended  SunTrust  Facility with interest at
three hundred  seventy-five  basis points above the applicable  LIBOR (10.38% to
10.43% at September 30, 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 September 30, 2000,  we had negative  working
capital of $1.5 million.  At June 30, 2000, we had negative  working  capital of
$0.6 million.
                                       13
<PAGE>

             Cash Flows from  Operating  Activities.  For the three months ended
September  30, 2000 and  September  30,  1999,  net cash  provided by  operating
activities was $3.2 million and $3.1 million, respectively. The increase of $0.1
million in 2000 compared to 1999 is primarily attributable to the following: (1)
depreciation and  amortization of property and equipment  increased $0.5 million
from $2.5  million in 1999 to $3.0  million in 2000,  (2) prepaid  expenses  and
other current assets  increased $0.1 million in 2000 and increased $0.8 in 1999,
(3) accounts  payable  decreased $0.1 million in 2000 and increased $1.9 million
in 1999 and (4) accrued  expenses  increased  $0.3 million in 2000 and decreased
$0.7 million in 1999.

             Cash Flows from  Investing  Activities.  For the three months ended
September 30, 2000 and September 30, 1999, net cash used in investing activities
was $4.2 million and $5.2 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 three months ended
September  30, 2000 and  September  30, 1999,  cash flows  provided by financing
activities  were $1.0  million  and $0.9  million,  respectively.  For the three
months ended  September 30, 2000 and  September  30, 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 September 30, 2000, a total of $53.75 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 10.43% at  September  30,  2000).
Based upon $53.75 million  outstanding  under the Amended  SunTrust  Facility at
September 30, 2000, our annual interest cost under the Amended SunTrust Facility
would  increase by $0.5  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.

                                       14

<PAGE>

PART II.  OTHER INFORMATION


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

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

                  10.1            --    Fourth Amendment to Amended and Restated
                                        Revolving  Credit  Agreement dated as of
                                        September  28,  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.

                  27              --    Financial Data Schedule.

            (b)   Reports on Form 8-K.

                  (1) No reports on Form 8-K were filed during the quarter ended
                      September 30, 2000.







                                       15



<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:  November 14, 2000                       By:  /s/ Joann Schirripa
                                                     -------------------
                                                     Joann Schirripa
                                                     Chief Financial Officer




                                       16