`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, 2002

                                       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:    (772) 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 by check /x/ whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
  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, 2002
              -----                             --------------------------------
  Common Stock, $.001 par value                         10,633,405 shares





                                   NUCO2 INC.

                                      INDEX
                                      -----

  PART I.     FINANCIAL INFORMATION

  ITEM 1.     FINANCIAL STATEMENTS

              Balance Sheets as of December 31, 2002 and June 30, 2002         3

              Statements of Operations for the Three Months
                     Ended December 31, 2002 and December 31, 2001             4

              Statements of Operations for the Six Months
                     Ended December 31, 2002 and December 31, 2001             5

              Statement of Shareholders' Equity for the Six Months
                     Ended December 31, 2002                                   6

              Statements of Cash Flows for the Six Months
                     Ended December 31, 2002 and December 31, 2001             7

              Notes to Financial Statements                                    8

  ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     FINANCIAL CONDITION AND RESULTS OF
                     OPERATIONS                                               12

  ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES
                     ABOUT MARKET RISK                                        20

  ITEM 4.     CONTROLS AND PROCEDURES                                         20

  PART II.    OTHER INFORMATION

  ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                     HOLDERS                                                  20

  ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                                21

  SIGNATURES                                                                  22


                                       2





PART I.     FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

                                   NUCO2 INC.

                                 BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)


                                     ASSETS

                                                                         December 31, 2002    June 30, 2002
                                                                         -----------------    -------------
                                                                            (unaudited)

Current assets:
    Cash and cash equivalents                                                $     195          $   1,562
    Trade accounts receivable, net of allowance for doubtful
        accounts of $2,211 and $3,085, respectively                              6,825              7,171
    Inventories                                                                    213                235
    Prepaid expenses and other current assets                                    2,550              1,966
                                                                             ---------          ---------
        Total current assets                                                     9,783             10,934
                                                                             ---------          ---------

Property and equipment, net                                                     93,815             95,084
                                                                             ---------          ---------

Other assets:
    Goodwill, net                                                               19,222             19,222
    Non-competition agreements, net                                              1,111              1,282
    Customer lists, net                                                             33                281
    Deferred financing costs, net                                                1,808              2,524
    Deferred lease acquisition costs, net                                        2,924              2,991
    Other assets                                                                   357                320
                                                                             ---------          ---------
                                                                                25,455             26,620
                                                                             ---------          ---------

           Total assets                                                      $ 129,053          $ 132,638
                                                                             =========          =========


                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term debt                                     $      42          $      40
    Accounts payable                                                             1,847              3,512
    Accrued expenses                                                             2,119              2,304
    Accrued interest                                                             1,279              1,479
    Accrued payroll                                                                744                897
    Other current liabilities                                                      365                371
                                                                             ---------          ---------
        Total current liabilities                                                6,396              8,603

Long-term debt, less current maturities                                         35,732             48,254
Subordinated debt                                                               39,476             39,366
Customer deposits                                                                2,975              2,644
                                                                             ---------          ---------
        Total liabilities                                                       84,579             98,867
                                                                             ---------          ---------

Commitments and contingencies
Redeemable preferred stock                                                       8,898              8,552
                                                                             ---------          ---------

Shareholders' equity:
    Preferred stock; no par value; 5,000,000 shares authorized;
        7,500 shares issued and outstanding                                         --                 --
    Common stock; par value $.001 per share; 30,000,000 shares authorized;
        issued and outstanding 10,633,405 shares at December 31, 2002
        and 8,969,059 shares at June 30, 2002                                       11                  9
    Additional paid-in capital                                                  93,297             78,584
    Accumulated deficit                                                        (57,369)           (52,945)
    Accumulated other comprehensive loss                                          (363)              (429)
                                                                             ---------          ---------

        Total shareholders' equity                                              35,576             25,219
                                                                             ---------          ---------
           Total liabilities and shareholders' equity                        $ 129,053          $ 132,638
                                                                             =========          =========


See accompanying Notes to Financial Statements.

                                        3



                                   NUCO2 INC.
                            STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)



                                                                               Three Months Ended December 31,
                                                                               -------------------------------
                                                                                 2002                  2001*
                                                                                 ----                  ----

Net sales                                                                      $ 18,101              $ 18,607
                                                                               --------              --------

Costs and expenses:
    Cost of products sold, excluding depreciation
        and amortization                                                          8,702                 8,981
    Selling, general and administrative expenses                                  5,132                 3,771
    Depreciation and amortization                                                 4,397                 4,090
    Loss on asset disposals                                                         254                   399
                                                                               --------              --------
                                                                                 18,485                17,241
                                                                               --------              --------

    Operating (loss) income                                                        (384)                1,366

    Interest expense                                                              1,930                 2,155
                                                                               --------              --------

    Net (loss)                                                                 $ (2,314)             $   (789)
                                                                               ========              ========


    Basic and diluted (loss) per share                                         $  (0.23)             $  (0.11)
                                                                               ========              ========

    Weighted average number of common and common
            equivalent shares outstanding, basic and diluted                     10,633                 8,691
                                                                               ========              ========





*Restated - See Notes 1, 2 and 7 to the Financial Statements.

See accompanying Notes to Financial Statements.

                                       4



                                   NUCO2 INC.
                            STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)



                                                                              Six Months Ended December 31,
                                                                              -----------------------------
                                                                               2002                  2001*
                                                                               ----                  ----

Net sales                                                                    $ 36,779              $ 36,696
                                                                             --------              --------

Costs and expenses:
    Cost of products sold, excluding depreciation
        and amortization                                                       17,841                17,794
    Selling, general and administrative expenses                                9,759                 7,323
    Depreciation and amortization                                               8,816                 8,198
    Loss on asset disposals                                                       865                   961
                                                                             --------              --------
                                                                               37,281                34,276
                                                                             --------              --------

    Operating (loss) income                                                      (502)                2,420

    Loss on early extinguishment of debt -
        write-off of deferred financing costs                                      --                   796
    Interest expense                                                            3,922                 4,326
                                                                             --------              --------


    Net (loss)                                                               $ (4,424)             $ (2,702)
                                                                             ========              ========



    Basic and diluted (loss) per share                                       $  (0.47)             $  (0.34)
                                                                             ========              ========


    Weighted average number of common and common
            equivalent shares outstanding, basic and diluted                   10,163                 8,672
                                                                             ========              ========




*Restated - See Notes 1, 2 and 7 to the Financial Statements.

See accompanying Notes to Financial Statements.

                                                5



                                   NUCO2 INC.

                        STATEMENT OF SHAREHOLDERS' EQUITY
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)



                                                                                                    Accumulated
                                                Common Stock           Additional                      Other           Total
                                         ------------------------       Paid-In      Accumulated   Comprehensive   Shareholders'
                                            Shares       Amount         Capital        Deficit         Loss           Equity
                                            ------       ------         -------        -------         ----           ------

Balance, June 30, 2002                   8,969,059    $         9    $    78,584   $   (52,945)   $      (429)   $    25,219

Comprehensive (loss):

  Net (loss)                                                                            (4,424)                       (4,424)

  Other comprehensive expense:

    Interest rate swap transaction                                                                         66             66
                                                                                                                 -----------

Total comprehensive (loss)                                                                                            (4,358)

Redeemable preferred stock dividend                                         (348)                                       (348)

Issuance of common stock,
   net of issuance costs                 1,663,846              2         15,055                                      15,057

Exercise of options                            500                             6                                           6
                                       -----------    -----------    -----------   -----------    -----------    -----------


Balance, December 31, 2002              10,633,405    $        11    $    93,297   $   (57,369)   $      (363)   $    35,576
                                       ===========    ===========    ===========   ===========    ===========    ===========





See accompanying Notes to Financial Statements.

                                                                                   6




                                   NUCO2 INC.

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


                                                                                         Six Months Ended December 31,
                                                                                            2002             2001*
                                                                                            ----             -----

Cash flows from operating activities:
    Net loss                                                                             $ (4,424)         $ (2,702)
    Adjustments to reconcile net loss to net cash provided
        by operating activities:
        Depreciation and amortization of property and equipment                             6,896             6,293
        Amortization of other assets                                                        1,920             1,905
        Amortization of original issue discount                                               110                98
        Loss on asset disposals                                                               865               961
        Loss on early extinguishment of debt                                                   --               796
        Changes in operating assets and liabilities
          Decrease (increase) in:
             Trade accounts receivable                                                        346              (775)
             Inventories                                                                       22               (24)
             Prepaid expenses and other current assets                                       (584)              319
          Increase (decrease) in
             Accounts payable                                                              (1,665)             (278)
             Accrued expenses                                                                (317)           (1,039)
             Other current liabilities                                                         (4)               29
             Customer deposits                                                                331               338
                                                                                          -------          --------

          Net cash provided by operating activities                                         3,496             5,921
                                                                                         --------          --------

Cash flows from investing activities:
    Purchase of property and equipment                                                     (6,582)           (6,163)
    Increase in deferred lease acquisition costs                                             (535)             (447)
    Increase in other assets                                                                  (34)             (315)
                                                                                         --------          --------
        Net cash used in investing activities                                              (7,151)           (6,925)
                                                                                         --------          --------

Cash flows from financing activities:
    Repayment of long-term debt                                                           (12,520)          (50,370)
    Proceeds from issuance of long-term debt                                                   --            51,500
    Proceeds from issuance of common stock                                                 16,222
    Issuance costs - common stock                                                          (1,167)               --
    Proceeds from issuance of redeemable preferred stock                                       --             2,500
    Exercise of stock options                                                                   6               554
    Increase in deferred charges                                                             (253)           (2,115)
                                                                                         --------          --------
        Net cash provided by financing activities                                           2,288             2,069
                                                                                         --------          --------

    Increase (decrease) in cash and cash equivalents                                       (1,367)            1,065
    Cash and cash equivalents at the beginning of period                                    1,562               626
                                                                                         --------          --------


    Cash and cash equivalents at the end of period                                       $    195          $  1,691
                                                                                         ========          ========


Supplemental disclosure of cash flow information: Cash paid during the period
    for:

        Interest                                                                         $  3,946          $  4,312
                                                                                         ========          ========
        Income taxes                                                                     $     --          $     --
                                                                                         ========          ========





*Restated - See Notes 1, 2 and 7 to the Financial Statements.
See accompanying Notes to Financial Statements.

                                                                         7



                                   NUCO2 INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.     BASIS OF PRESENTATION

            The accompanying  unaudited 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 financial  position,  results of  operations  and cash flows in
conformity with generally accepted accounting principles.  The accounts of NuCo2
Inc. (the "Company") and its wholly-owned subsidiaries,  NuCo2 Acquisition Corp.
and Koch Compressed Gases, Inc. were merged during fiscal 2002.

            Net loss as  presented  herein,  for the three and six months  ended
December  31,  2001  differs  from the net loss as  previously  reported  in the
Company's Form 10-Qs for such periods due to fiscal year-end adjustments.  These
adjustments  related to the  amortization  of  customer  lists and loss on asset
disposals (see Note 7).

            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 financial statements for the fiscal year
ended June 30, 2002 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, 2002.  The results of  operations
for the periods  presented are not  necessarily  indicative of the results to be
expected for the full fiscal year.

NOTE 2.     ACCOUNTING PRONOUNCEMENTS

            In the first  quarter of fiscal 2003,  the Company  adopted SFAS No.
145,  "RESCISSION  OF FASB  STATEMENTS  NO.  4, 44,  AND 64,  AMENDMENT  OF FASB
STATEMENT NO. 13, AND TECHNICAL  CORRECTIONS"  ("SFAS 145"). Among other things,
SFAS  145  rescinds  the  provisions  of SFAS No. 4 that  require  companies  to
classify  certain gains and losses from debt  extinguishments  as  extraordinary
items.   The  provisions  of  SFAS  145  related  to   classification   of  debt
extinguishments  are  effective for fiscal years  beginning  after May 15, 2002.
Gains and losses from extinguishment of debt will be classified as extraordinary
items only if they meet the criteria in APB Opinion No. 30 ("APB 30"); otherwise
such losses will be classified  within  income from  continuing  operations.  In
accordance with APB 30 and SFAS 145, the Company has  reclassified  the $796,000
extraordinary loss on the early  extinguishment of debt for the six months ended
December 31, 2001 to a component of continuing operations.

            In the first quarter of fiscal 2003,  the Company  adopted SFAS 146,
"ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL  ACTIVITIES" ("SFAS 146")
which  addresses  financial  accounting and reporting for costs  associated with
exit or  disposal  activities  and  nullifies  EITF  Issue No.  94-3  "LIABILITY
RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN
ACTIVITY  (INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING)"  ("EITF 94-3").
The  principal  difference  between SFAS 146 and EITF 94-3 relates to SFAS 146's
requirements  for  recognition of a liability for a cost associated with an exit
or disposal activity.  SFAS 146 requires that a liability be recognized when the
liability  is  incurred.  Under  EITF  94-3,  a  liability  for an exit cost was
recognized at the date of an entity's  commitment to an exit plan. SFAS 146 also
establishes  that fair value is the  objective  for initial  measurement  of the
liability.  The  provisions  of SFAS  146 are  effective  for  exit or  disposal
activities that are initiated after December 31, 2002, but early  application is
encouraged.  The adoption of SFAS 146 had no impact on the Company's  results of
operations and financial position.

            In the first quarter of fiscal 2003, the Company  adopted SOP 01-06,
"ACCOUNTING BY CERTAIN ENTITIES (INCLUDING ENTITIES WITH TRADE RECEIVABLES) THAT
LEND TO OR FINANCE THE ACTIVITIES OF OTHERS" ("SOP 01-06").  SOP 01-06 addresses
disclosures on accounting  policies relating to trade accounts receivable and is
effective  prospectively  for  financial  statements  issued  for  fiscal  years
beginning  after  December 15, 2001.  The adoption of SOP 01-06 had no impact on
the Company's results of operations or financial position.

NOTE 3.     NET LOSS PER COMMON SHARE

            Basic loss per common  share has been  computed by dividing  the net
loss, after giving effect to redeemable  preferred stock dividends (see Note 6),
by the weighted average number of common shares outstanding during the


                                       8



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  earnings per common share  because they would have been  anti-dilutive.
Also, not included in the  computation of diluted  earnings per common share was
the effect of  outstanding  shares of redeemable  preferred  stock using the "if
converted" method, because the effect would be anti-dilutive.

            The following table presents the Company's net (loss) available to
common shareholders and (loss) per share, basic and diluted (in thousands,
except per share amounts):

                                                               Three Months Ended               Six Months Ended
                                                                  December 31,                    December 31,
                                                                  ------------                    ------------
                                                              2002            2001            2002            2001
                                                            --------        --------        --------        --------

Net (loss)                                                  $ (2,314)       $   (789)       $ (4,424)       $ (2,702)
Redeemable preferred stock dividends                            (177)           (145)           (348)           (255)
                                                            --------        --------        --------        --------
Net (loss) available to common shareholders                 $ (2,491)       $   (934)       $ (4,772)       $ (2,957)
                                                            ========        ========        ========        ========

Weighted average outstanding shares of common stock           10,633           8,691          10,163           8,672
(Loss) per share - basic and diluted                        $  (0.23)       $  (0.11)       $  (0.47)       $  (0.34)

NOTE 4.     LONG-TERM DEBT

            In September  2001, the Company  entered into a $60.0 million second
amended  and  restated  revolving  credit  facility  with a  syndicate  of banks
("Amended  Credit  Facility").  This new facility  replaced the Company's  prior
facility,  which  was due to expire in May 2002.  The  Amended  Credit  Facility
contains  interest  rates and an unused  commitment  fee based on a pricing grid
calculated  quarterly  on total  debt to  annualized  EBITDA (as  defined).  The
Company is entitled to select the Base Rate or LIBOR,  plus  applicable  margin,
for principal  drawings under the Amended Credit Facility.  The applicable LIBOR
margin  pursuant to the pricing grid currently  ranges from 2.50% to 4.75%,  the
applicable unused commitment fee pursuant to the pricing grid ranges from 0.375%
to 0.50% and the  applicable  Base Rate  margin  pursuant  to the  pricing  grid
currently  ranges  from 1.50% to 3.75%.  Interest  only is payable  periodically
until the expiration of the Amended Credit Facility. The Amended Credit Facility
is collateralized  by substantially  all of the Company's assets.  Additionally,
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.  The Company is also required to meet certain  affirmative and
negative covenants including, but not limited to, financial covenants.

            The Company is required to assess compliance with its debt covenants
under  the  Amended  Credit  Facility  on a  quarterly  basis.  These  financial
covenants  are  based  on a  measure  that  is not  consistent  with  accounting
principles  generally accepted in the United States of America.  Such measure is
EBITDA (as defined),  which represents  earnings (loss) before interest,  taxes,
depreciation and amortization,  as modified by certain defined adjustments.  The
failure to meet these covenants,  absent a waiver or amendment,  would place the
Company in  default  and cause the debt  outstanding  under the  Amended  Credit
Facility to become immediately due and payable. The Amended Credit Facility also
includes   certain   cross-default   provisions  to  the  Company's  12%  Senior
Subordinated Promissory Notes (see Note 5).

            Prior to June 30, 2002, the Amended  Credit  Facility was amended to
adjust  certain  financial  covenants  for the quarter  ended March 31, 2002 and
prospectively, and non-compliance with the minimum EBITDA covenant for the three
months ended March 31, 2002 was waived. As of June 30, 2002, the Company was not
in compliance  with certain of its financial  covenants.  On September 27, 2002,
the Amended Credit  Facility was amended to adjust certain  financial  covenants
for the quarter ended June 30, 2002, and prospectively,  non-compliance with its
financial covenants for the three months ended June 30, 2002 was waived, and the
maturity of the Amended Credit Facility was extended to November 17, 2003. As of
September  30, 2002,  the Company was in  compliance  with all of the  financial
covenants  under the Amended Credit  Facility.  On February 7, 2003, the Amended
Credit Facility was amended to adjust certain financial covenants prospectively,
non-compliance  with the minimum  EBITDA  covenant  for the three  months  ended
December 31, 2002 was waived,  the maturity of the Amended  Credit  Facility was
extended to April 29, 2004, and the Amended Credit Facility was reduced to $45.0
million.

            On August 22, 2002, the Company  completed the private  placement of
1,663,846  shares of its common stock to 24  accredited  investors at a price of
$9.75 per share realizing net cash proceeds of approximately $15.1 million after
issuance  costs of $1.1  million.  Pursuant to the  requirements  of the Amended
Credit  Facility,  the Company  used $14.5  million of the  proceeds to pay down
outstanding debt under the Amended Credit Facility.

                                       9



            As of December 31, 2002,  a total of $35.8  million was  outstanding
pursuant  to the  Amended  Credit  Facility  with  interest at 3.25% above LIBOR
(4.63% to 5.05%)

            Effective July 1, 2000, the Company adopted SFAS No. 133 "ACCOUNTING
FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," which establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments  embedded  in  other  contracts  and  for  hedging  activities.  All
derivatives, whether designated in hedging relationships or not, are required to
be recorded on the balance sheet at fair value. For a derivative designated as a
cash flow  hedge,  the  effective  portions  of changes in the fair value of the
derivative are recorded in other comprehensive  income and are recognized in the
income statement when the hedged item affects earnings.  Ineffective portions of
changes in the fair value of cash flow hedges are recognized in earnings.

            The  Company  uses  derivative  instruments  to manage  exposure  to
interest rate risks.  The Company's  objectives for holding  derivatives  are to
minimize the risks using the most  effective  methods to eliminate or reduce the
impacts of this exposure. As of December 31, 2002, the Company was a party to an
interest  rate swap  agreement  (the  "Swap")  with a  notional  amount of $12.5
million and a  termination  date of  September  28,  2003.  Under the Swap,  the
Company pays a fixed interest rate of 5.23% per annum and receives a LIBOR-based
floating rate.

            The Swap,  which is designated as a cash flow hedge, is deemed to be
a highly  effective  transaction,  and  accordingly,  the loss on the derivative
instrument is reported as a component of other  comprehensive  loss. For the six
months ended December 31, 2002 and 2001, the Company  recorded a gain of $66,000
and a loss of $101,000,  respectively,  representing the change in fair value of
the Swap, as other  comprehensive  loss.  The net  derivative  gain/loss will be
classified into earnings over the term of the underlying cash flow hedge.

NOTE 5.     SUBORDINATED DEBT

            In October 1997,  the Company issued $30.0 million of its 12% Senior
Subordinated  Promissory  Notes (the "1997  Notes") with  interest  only payable
semi-annually  on April 30 and October 31, due October 31, 2004.  The 1997 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.  At the
date of issuance,  in accordance with APB 14,  "ACCOUNTING FOR CONVERTIBLE  DEBT
AND DEBT ISSUED WITH PURCHASE WARRANTS," the Company allocated proceeds of $29.7
million to the debt and $0.3 million to warrants, with the resulting discount on
the debt referred to as the Original Issue Discount. The Original Issue Discount
is being amortized as interest  expense over the life of the debt,  resulting in
an  effective  interest  rate on the 1997 Notes of 12.1% per  annum.  The amount
allocated  to the  warrants  was  credited to  Additional  Paid-In  Capital.  In
conjunction with the issuance of the 1997 Notes, the Company is required to meet
certain affirmative and negative covenants. In addition,  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 (the "1999 Notes").  Except for their
October 31, 2005 maturity  date, the 1999 Notes are  substantially  identical to
the 1997 Notes described  above.  The 1999 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 return for modifying  certain financial  covenants  governing the
1997 Notes,  the exercise price of 612,053 of the warrants  issued in connection
with the 1997 Notes was reduced to $6.65 per share.  On May 4, 1999, the trading
range of the Company's common stock was $6.44 to $6.88 per share. To assist with
the  valuation of the newly  issued  warrants  and the  repriced  warrants,  the
Company hired an outside  consultant.  Utilizing the  Black-Scholes  Model,  the
warrants  issued  with the 1997 Notes were  valued at $1.26 per  warrant,  or an
aggregate  value of  $773,702,  and the  warrants  issued with the 1999 Notes at
$1.47 per warrant, or an aggregate value of $549,032. Both amounts are reflected
as Additional Paid-In Capital,  offset by the Original Issue Discount,  which is
netted against the outstanding  balance of the 1997 Notes and 1999 Notes.  After
giving effect to the amortization of the Original Issue Discount,  the effective
interest rate on the 1999 Notes is 13.57% per annum.

            As of December 31, 2002,  the Company was in compliance  with all of
the  financial  covenants  under the 1997 Notes and 1999  Notes.  On February 7,
2003, the interest  coverage  ratio  governing the 1997 Notes and 1999 Notes was
amended for the quarter ending March 31, 2003 and prospectively.

NOTE 6.     REDEEMABLE PREFERRED STOCK

            In May 2000,  the  Company  sold  5,000  shares  of its  Series A 8%
Cumulative  Convertible  Preferred  Stock, no par value (the "Series A 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,


                                       10



and, to the extent not paid in cash,  are added to the  Liquidation  Preference.
Shares of the Series A Preferred  Stock may be  converted  into shares of common
stock  at any  time at a  current  conversion  price  of  $9.28  per  share.  In
connection with the sale, costs in the amount of $65,000 were charged to paid-in
capital.

            In November  2001,  the Company sold 2,500 shares of its Series B 8%
Cumulative  Preferred Stock, no par value (the "Series B Preferred  Stock"),  at
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.  Shares of
the Series B Preferred Stock may be converted into shares of common stock at any
time at a current conversion price of $12.92 per share.

            During the fiscal year ended June 30, 2002 and the six months  ended
December 31, 2002,  the carrying  amount (and  Liquidation  Preferences)  of the
Series A Preferred  Stock and Series B Preferred Stock  ("Preferred  Stock") was
increased by $348,000 and $255,000,  respectively,  for dividends  accrued.  The
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 Preferred  Stock,  the amount of any  dividends  that would have
accrued and been payable on the Preferred  Stock from the  Mandatory  Redemption
Date through the fourth anniversary date.

            In addition,  outstanding  shares of 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 7.     PRIOR PERIOD ADJUSTMENTS

            Net loss as  presented  herein,  for the three and six months  ended
December  31,  2001,  differs  from  the net  loss  previously  reported  in the
Company's Form 10-Qs for such periods due to fiscal year-end adjustments.  These
adjustments  related to the  amortization  of  customer  lists and loss on asset
disposals.  Customer  list  amortization  was increased by $0.2 million and $0.4
million,  respectively,   based  on  the  determination  that  the  decision  to
reclassify  customer lists into goodwill at the time of the initial  adoption of
SFAS  142,  "GOODWILL  AND  OTHER  INTANGIBLE  ASSETS,"  was  inappropriate.  In
addition, during the fiscal year ended June 30, 2001, the Company decided not to
replace  its 50 and  100 lb.  tanks  as  they  were  removed  from  service.  In
conjunction  with this  decision,  the loss on asset  disposals was increased by
$0.1 million and $0.4 million, respectively, as a result of 50 and 100 lb. tanks
that were removed from  service  during the three and six months ended  December
31,  2001,  but which were not written off until June 2002.  The impact of these
adjustments on the Company's net (loss) and (loss) per share are provided in the
following table (in thousands, except per share amounts):


                                                                          Three Months         Six Months
                                                                          ------------         ----------
                                                                              Ended December 31, 2001
                                                                        ----------------------------------

Net (loss) originally reported                                              $  (478)            $(1,885)
    Adjustments:
           Amortization of customers lists                                     (202)               (412)
           Loss on asset disposals                                             (109)               (405)
                                                                            -------             -------

Net (loss) as adjusted                                                      $  (789)            $(2,702)
                                                                            =======             =======


Basic and diluted earnings
per common share:

           Net (loss) originally reported                                   $ (0.07)            $ (0.25)
           Adjustments                                                        (0.04)              (0.09)
                                                                            -------             -------

           Net (loss) as adjusted                                           $ (0.11)            $ (0.34)
                                                                            =======             =======



            The Company's  accumulated  deficit,  as  previously  reported as of
December 31, 2001,  was $43.9  million  compared to the  accumulated  deficit of
$44.7 million, as adjusted.

                                               11




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 believe that we are the largest  supplier in the United States of
bulk CO2 systems and bulk CO2 for  carbonating  fountain  beverages based on the
number of bulk CO2 systems leased to our customers.  As of December 31, 2002, we
operated a national  network of 103  service  locations  in 45 states  servicing
approximately  72,000  bulk  and  high  pressure  customers.  Currently,  99% of
fountain beverage users in the continental  United States are within our present
service  area.  Historically,  due  to a  combination  of  internal  growth  and
acquisitions,  we have  experienced  high levels of growth in terms of number of
customers  and net sales,  averaging 20% to 50% per year from 1995 through 2000.
Today,  the majority of our growth is internal  resulting from the conversion of
high pressure CO2 users to bulk CO2 systems.

            During  the  fiscal   years  ended  June  30,  2001  and  2002,   we
deliberately slowed new customer contract signings and the related  installation
rate of bulk  CO2  systems.  This  decision  was made to  enable  us to focus on
improving our operating  effectiveness in order to better position us for future
growth.  We decentralized  service location  management from our headquarters in
Stuart,  Florida to the depot  locations  themselves and in connection with this
decision hired new full-time depot and regional managers.  This slowed our gross
margin  improvement plan in fiscal 2001 and 2002,  although it is anticipated to
enhance it in the future.  We also devoted  significant  resources to developing
and  implementing our new  AccuRoute(TM)  system to improve our productivity and
better service our  customers.  The result of this decision was that our revenue
growth slowed from prior years although  revenue still grew at 16.7% and 6.9% in
fiscal 2001 and 2002,  respectively.  The ramp down in growth  enabled our sales
force to  concentrate  on signing  higher margin new  customers  and  re-signing
existing customers at increased rates. As a result of these initiatives, we feel
that we will be ready to accelerate our growth in the last part of fiscal 2003.

            We believe that our future revenue growth, gains in gross margin and
profitability  will be dependent upon (i) increases in route density in existing
markets and the expansion and  penetration of bulk CO2 system  installations  in
new market  regions,  both resulting from  successful  ongoing  marketing,  (ii)
improved  operating  efficiencies  and (iii)  price  increases.  New  multi-unit
placement   agreements   combined  with   single-unit   placements   will  drive
improvements in achieving route density. Our success in reaching multi-placement
agreements is due in part to our national  delivery  system.  We maintain a "hub
and spoke" route structure and establish additional  stationary bulk CO2 service
locations as service areas expand through geographic growth. Our entry into many
states was  accomplished  largely through the  acquisition of businesses  having
thinly  developed route networks.  We expect to benefit from route  efficiencies
and other  economies  of scale as we build  our  customer  base in these  states
through  intensive  regional and local  marketing  initiatives.  Greater density
should lead to enhanced  utilization  of vehicles and other fixed assets and the
ability  to spread  fixed  marketing  and  administrative  costs  over a broader
revenue base.

            Generally,  our  experience  has been that as our service  locations
mature their gross profit  margins  improve as a result of their volume  growing
while fixed costs remain essentially unchanged.  New service locations typically
operate at low or negative  gross  margins in the early  stages and detract from
our highly  profitable  service  locations in more mature markets.  Fiscal 2001,
2002 and the first  part of fiscal  2003 were  periods of  transition  for us in
which we achieved significant  progress in better positioning  ourselves for the
next phase of growth. We continue to focus on improving operating effectiveness,
increasing  prices  and  strengthening  management.  We  anticipate  that  these
initiatives will contribute positively to all areas of our Company.

GENERAL

            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 $18.9 million in


                                       12



fiscal 1997 to $72.3 million in fiscal 2002. We believe that our revenue base is
stable due to the  existence of long-term  contracts  with our  customers  which
generally  rollover with a limited number  expiring  without  renewal in any one
year. 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  having rental
plus per pound charge  contracts  and (ii)  customers who own their own bulk CO2
systems, and (3) price increases.

            Cost of products  sold is comprised of  purchased  CO2,  vehicle and
service location costs associated with the storage and delivery of CO2. Selling,
general and administrative expenses consist of wages and benefits,  dispatch and
communications   costs,   as  well  as  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
and related  installation  costs,  amortization  of deferred  lease  acquisition
costs, and amortization of deferred financing costs and other intangible assets.

            With  respect  to bulk CO2  systems,  we  capitalize  costs that are
associated  with specific  installations  of such systems with  customers  under
non-cancelable  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  costs  of  this  expansion  and the
significant  depreciation  expense  recognized  on our  installed  network  have
contributed to accumulated net losses of $57.4 million at December 31, 2002.

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                  Six Months Ended
                                                                  December 31,                       December 31,
                                                             --------------------              ----------------------
                                                             2002            2001*             2002             2001*
                                                             ----            -----             ----             -----

Income Statement Data:

Net sales                                                   100.0%           100.0%           100.0%           100.0%
Cost of products sold, excluding
  depreciation and amortization                              48.1             48.3             48.5             48.5
Selling, general and administrative expenses                 28.3             20.2             26.4             20.0
Depreciation and amortization                                24.3             22.0             24.0             22.3
Loss on asset disposals                                       1.4              2.1              2.4              2.6
                                                             ----            -----             ----             -----
Operating (loss) income                                      (2.1)             7.4             (1.3)             6.6
Loss on early extinguishment of debt                         --               --               --                2.2
Interest expense                                             10.7             11.6             10.7             11.8
                                                             ----            -----             ----             -----


Net (loss)                                                  (12.8)%           (4.2)%          (12.0)%           (7.4)%
                                                             ====              ===             ====              ===


*RESTATED, SEE NOTES 1, 2 AND 7 TO THE FINANCIAL STATEMENTS.

THREE MONTHS ENDED DECEMBER 31, 2002 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2001

NET SALES

            Net sales decreased by $0.5 million,  or 2.7%, from $18.6 million in
2001 to $18.1 million in 2002. Sales increased by $0.3 million, or 1.4%, from an
increased bulk CO2 customer base, offset by $0.5 million due to reduced fuel and
other  surcharges and $0.3 million from customers  utilizing fewer high pressure
cylinders.  The decrease in revenues derived from high pressure cylinders is due
in part to a $0.1  million  decrease in revenues  from  customers  who rent high
pressure cylinders only (stand-alone high pressure cylinder customers).

            During the fiscal  year  ended June 30,  2002,  we adopted a plan to
phase out those  customers that use only high pressure  cylinders and who do not
utilize one of our bulk CO2 service plans. Revenues derived from our stand-alone
high pressure  cylinder  customers may not be fully  eliminated from our ongoing
revenues  inasmuch  as our  goal is to  convert  these  customers  to a bulk CO2
service  plan.  Accordingly,   the  expected  declining  revenues  derived  from
stand-alone high pressure cylinder  customers is not expected to have a material
impact on our results of operations.


                                       13



            The  following  table sets  forth,  for the periods  indicated,  the
percentage relationship which our service plans bear to net sales:




                                                                 Three Months December 31,
                                                                 -------------------------
                                                                   2002             2001
Service Plan
     Bulk budget plan(1)                                          79.5%             78.0%
     Equipment lease/product purchase plan(2)                      8.8               8.2
     Product purchase plan(3)                                     11.2              12.7
     Stand alone high pressure cylinder(4)                         0.5               1.1
                                                                 -----             -----

                                                                 100.0%            100.0%
                                                                 =====             =====


        (1) Combined fee for bulk CO2 tank and bulk CO2.
        (2) Fee for bulk CO2 tank and, separately, bulk CO2 usage.
        (3) Bulk CO2 only.
        (4) High pressure CO2 cylinders, not used in conjunction with a bulk CO2 plan.


COST OF PRODUCTS SOLD

            Costs of products sold decreased by $0.3 million, or 3.2%, from $9.0
million  in 2001 to $8.7  million  in 2002,  and as a  percentage  of net sales,
decreased from 48.3% in 2001 to 48.1% in 2002.  Product costs  decreased by $0.1
million,  while  representing 14.7% of sales in both 2002 and 2001. In addition,
operational  wages and truck delivery costs declined by $0.5 million,  offset by
$0.3 million in increased depot and other operational  costs. The improvement in
operational  wages and truck delivery costs is due in part to increased  routing
efficiencies realized in 2002 and reduced headcount.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

            Selling,  general  and  administrative  expenses  increased  by $1.3
million,  or 36.0%,  from $3.8  million  in 2001 to $5.1  million  in 2002,  and
increased as a percentage of net sales from 20.3% in 2001 to 28.3% in 2002.

            Selling  expenses  increased by $0.2  million,  from $0.7 million in
2001 to $0.9  million in 2002.  The  increase is  primarily  attributable  to an
increase in selling wages and benefits of $0.2 million from $0.5 million in 2001
to $0.7 million in 2002.

            General and  administrative  expenses increased by $1.1 million from
$3.1 million in 2001 to $4.2 million in 2002. The increase is attributable to an
increase in  administrative  wages and benefits of $0.5  million,  of which $0.4
million is due to  severance  costs  recognized  during the three  months  ended
December 31, 2002.  Other general and  administrative  expenses  increased  $0.7
million,  primarily  the  result  of a  $0.4  million  increase  in  consulting,
professional fees, and contract labor expenses.

DEPRECIATION AND AMORTIZATION

            Depreciation and amortization increased from $4.1 million in 2001 to
$4.4  million  in  2002.  As  a  percentage  of  net  sales,   depreciation  and
amortization expense increased from 22.0% in 2001 to 24.3% in 2002. Depreciation
expense  increased from $3.2 million in 2001 to $3.4 million in 2002 principally
due to the  acceleration  of  depreciation  expense  resulting  from our plan to
replace all 50 and 100 lb. tanks over the next three to four years. Amortization
expense increased from $0.9 million in 2001 to $1.0 million in 2002.

LOSS ON ASSET DISPOSALS

            Loss on asset disposals  decreased from $0.4 million in 2001 to $0.3
million in 2002,  while  decreasing  as a  percentage  of net sales from 2.1% to
1.4%.

OPERATING INCOME (LOSS)

            For  the  reasons  previously  discussed,  operating  income  (loss)
decreased by $1.7  million from $1.4 million in 2001 to ($0.4)  million in 2002.
As a percentage of net sales,  operating  income  decreased from 7.4% in 2001 to
(2.1)% in 2002.


                                       14



INTEREST EXPENSE

            Interest  expense  decreased by $0.3  million,  from $2.2 million in
2001 to $1.9 million in 2002,  and  decreased as a percentage  of net sales from
11.6% in 2001 to 10.7% in 2002,  due to lower average debt levels.  During 2002,
$14.5 million  generated from the private placement of 1.7 million shares of our
common stock was used to reduce the  outstanding  balance of our long-term debt.
The effective  interest rate of all debt  outstanding  during 2002 was 10.2%, as
compared to 9.6% in 2001.


NET (LOSS)

            For the reasons  described  above,  net (loss)  increased  from $0.8
million in 2001 to $2.3 million in 2002. No provision for income tax expense has
been made due to historical net losses in 2001 and 2002.

EBITDA

            We believe that earnings before  interest,  taxes,  depreciation and
amortization  ("EBITDA") is one of the principal  financial measures by which we
should be measured as we continue to achieve  national  market  presence  and to
build route density.  EBITDA is a widely  accepted  financial  indicator used by
many  investors,  lenders and  analysts to analyze and compare  companies on the
basis of  operating  performance,  and we believe  that EBITDA  provides  useful
information  regarding  our ability to service  our debt and other  obligations.
However,  EBITDA does not represent cash flow from  operations,  nor has it been
presented as a substitute to operating income or net income as indicators of our
operating  performance.  EBITDA excludes significant costs of doing business and
should not be  considered  in  isolation  or as a  substitute  for  measures  of
performance prepared in accordance with accounting principles generally accepted
in the United States of America.  In addition,  our calculation of EBITDA may be
different  from  the  calculation  used  by  our   competitors,   and  therefore
comparability may be affected.

            EBITDA decreased by approximately $1.5 million,  or 26.4%, from $5.5
million in 2001 to $4.0 million in 2002 and  decreased  as a  percentage  of net
sales from 29.3% to 22.2%.

                                                             Three Months Ended December 31,
                                                            ----------------------------------
                                                              2002                      2001
                                                             -------                   -------

Net (loss)                                                  $(2,314)                   $  (789)
Interest expense                                              1,930                      2,155
Depreciation and amortization                                 4,397                      4,090
                                                            -------                    -------
EBITDA                                                      $ 4,013                    $ 5,456
                                                            =======                    =======


Cash flows provided by (used in):
  Operating activities                                      $   408                    $ 2,262
  Investing activities                                      $(3,297)                   $(3,278)
  Financing activities                                      $ 1,945                    $ 1,938


SIX MONTHS ENDED DECEMBER 31, 2002 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2001

            Net sales increased by $0.1 million,  or 0.2%, from $36.7 million in
2001 to $36.8 million in 2002.  Sales  increased by $1.3 million,  or 3.5%, from
pricing  initiatives and $0.3 million, or 0.7%, from an increased customer base,
offset by $1.0 million due to reduced fuel and other surcharges and $0.5 million
from customers utilizing fewer high pressure cylinders. The decrease in revenues
derived from high pressure  cylinders is due in part to a $0.2 million  decrease
in revenues from customers who rent high pressure  cylinders  only  (stand-alone
high pressure cylinder customers).

            During the fiscal  year  ended June 30,  2002,  we adopted a plan to
phase out those  customers that use only high pressure  cylinders and who do not
utilize one of our bulk CO2 service plans. Revenues derived from our stand-alone
high pressure  cylinder  customers may not be fully  eliminated from our ongoing
revenues  inasmuch  as our  goal is to  convert  these  customers  to a bulk CO2
service  plan.  Accordingly,   the  expected  declining  revenues  derived  from
stand-alone high pressure cylinder  customers is not expected to have a material
impact on our results of operations.

            The  following  table sets  forth,  for the periods  indicated,  the
percentage relationship which our service plans bear to net sales:


                                       15



                                                           Six Months Ended December 31,
                                                           -----------------------------
Service Plan                                               2002                  2001
                                                           ----                  ----
        Bulk budget plan(1)                                79.1%                 77.5%

        Equipment lease/product purchase plan(2)            8.8                   8.7

        Product purchase plan(3)                           11.5                  12.8

        Stand alone high pressure cylinder(4)               0.6                   1.0
                                                           ----                  ----

                                                          100.0%                100.0%
                                                          =====                 =====

        (1) Combined fee for bulk CO2 tank and bulk CO2.
        (2) Fee for bulk CO2 tank and, separately, bulk CO2 usage.
        (3) Bulk CO2 only.
        (4) High pressure CO2 cylinders, not used in conjunction with a bulk CO2
            plan.

COST OF PRODUCTS SOLD

            Costs of products sold remained constant at $17.8 million,  or 48.5%
of sales in both 2002 and 2001.  Product costs decreased by $0.1 million,  while
representing  14.7%  and  15.2%  of sales in 2002  and  2001,  respectively.  In
addition,  operational  wages and truck delivery costs declined by $0.4 million,
offset by $0.5  million in  increased  depot and other  operational  costs.  The
improvement  in  operational  wages and truck  delivery  costs is due in part to
increased routing efficiencies realized in 2002.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

            Selling,  general  and  administrative  expenses  increased  by $2.5
million,  or 33.3%,  from $7.3  million  in 2001 to $9.8  million  in 2002,  and
increased as a percentage of net sales from 20.0% in 2001 to 26.4% in 2002.

            Selling  expenses  increased by $0.6  million,  from $1.3 million in
2001 to $1.9  million in 2002.  The  increase is  primarily  attributable  to an
increase in selling wages and benefits of $0.4 million from $1.0 million in 2001
to $1.4 million in 2002 and a $0.1 million increase in marketing and promotional
expenses.

            General and  administrative  expenses increased by $1.8 million from
$6.0 million in 2001 to $7.8 million in 2002. The increase is attributable to an
increase in  administrative  wages and benefits of $0.6  million,  of which $0.4
million is due to  severance  costs  recognized  during the three  months  ended
December 31, 2002.  Other general and  administrative  expenses  increased  $1.2
million,  primarily  the result of a $0.6  million  increase in  consulting  and
professional fees, a $0.2 million increase in our reserves for customer accounts
receivable, and a $0.1 million increase in contract labor expenses.

DEPRECIATION AND AMORTIZATION

            Depreciation and amortization increased from $8.2 million in 2001 to
$8.8  million  in  2002.  As  a  percentage  of  net  sales,   depreciation  and
amortization expense increased from 22.3% in 2001 to 24.0% in 2002. Depreciation
expense  increased from $6.3 million in 2001 to $6.9 million in 2002 principally
due to the  acceleration  of  depreciation  expense  resulting  from our plan to
replace all 50 and 100 lb. tanks over the next three to four years. Amortization
expense was $1.9 million in both 2001 and 2002.

LOSS ON ASSET DISPOSALS

            Loss on asset disposals  decreased from $1.0 million in 2001 to $0.9
million in 2002,  while  decreasing  as a  percentage  of net sales from 2.6% to
2.4%.

OPERATING INCOME (LOSS)

            For  the  reasons  previously  discussed,  operating  income  (loss)
decreased by $2.9  million from $2.4 million in 2001 to ($0.5)  million in 2002.
As a percentage of net sales,  operating  income  decreased from 6.6% in 2001 to
(1.4)% in 2002.

LOSS ON EARLY EXTINGUISHMENT OF DEBT

            We accelerated the recognition of $0.8 million in deferred financing
costs in 2001 associated with the refinancing of our long-term debt.

                                       16

INTEREST EXPENSE

            Interest  expense  decreased by $0.4  million,  from $4.3 million in
2001 to $3.9 million in 2002,  and  decreased as a percentage  of net sales from
11.8% in 2001 to 10.7% in 2002,  due to lower average debt levels.  During 2002,
$14.5 million  generated from the private placement of 1.7 million shares of our
common stock was used to reduce the  outstanding  balance of our long-term debt.
The  effective  interest rate of all debt  outstanding  during 2002 was 9.8%, as
compared to 9.7% in 2001.

NET (LOSS)

            For the reasons  described  above,  net (loss)  increased  from $2.7
million in 2001 to $4.4 million in 2002. No provision for income tax expense has
been made due to historical net losses in 2001 and 2002.

EBITDA

            We believe that earnings before  interest,  taxes,  depreciation and
amortization  ("EBITDA") is one of the principal  financial measures by which we
should be measured as we continue to achieve  national  market  presence  and to
build route density.  EBITDA is a widely  accepted  financial  indicator used by
many  investors,  lenders and  analysts to analyze and compare  companies on the
basis of  operating  performance,  and we believe  that EBITDA  provides  useful
information  regarding  our ability to service  our debt and other  obligations.
However,  EBITDA does not represent cash flow from  operations,  nor has it been
presented as a substitute to operating income or net income as indicators of our
operating  performance.  EBITDA excludes significant costs of doing business and
should not be  considered  in  isolation  or as a  substitute  for  measures  of
performance prepared in accordance with accounting principles generally accepted
in the United States of America.  In addition,  our calculation of EBITDA may be
different  from  the  calculation  used  by  our   competitors,   and  therefore
comparability may be affected.

            EBITDA  decreased by $2.3 million,  or 21.7%,  from $10.6 million in
2001 to $8.3 million in 2002 and  decreased  as a  percentage  of net sales from
28.9% to 22.6%.

                                                       Six Months Ended December 31,
                                                   ------------------------------------
                                                     2002                        2001
                                                   --------                    --------

Net (loss)                                         $ (4,424)                   $ (2,702)
Interest expense                                      3,922                       4,326
Depreciation and amortization                         8,816                       8,198
Early Extinguishment of Debt                             --                         796
                                                   --------                    --------
EBITDA                                             $  8,314                    $ 10,618
                                                   ========                    ========

Cash flows provided by (used in):
  Operating activities                             $  3,496                    $  5,921
  Investing activities                             $ (7,151)                   $ (6,925)
  Financing activities                             $  2,288                    $  2,069

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, 2002, we
anticipated  making cash capital  expenditures of approximately $17 million over
the next twelve  months,  primarily  for  purchases  of bulk CO2 systems for new
customers,  the replacement  with larger bulk CO2 systems of 50 and 100 lb. bulk
CO2 systems in service at existing  customers,  as appropriate,  and replacement
units for our truck fleet. In June 2002, we adopted a plan to replace all 50 and
100 lb.  bulk CO2  systems  in service  at  customers  over a three to four year
period.  While this  decision may not  increase  revenues  generated  from these
customers, it is expected to improve operating  efficiencies,  gross margins and
profitability.  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 accounts, and may require cash in an amount dictated by
the scale and terms of any such transactions successfully concluded.

            On  September  24,  2001,  we entered  into a $60.0  million  second
amended and restated revolving credit facility

                                       17



with a  syndicate  of banks  ("Amended  Credit  Facility").  This  new  facility
replaced our prior  facility,  which was due to expire in May 2002.  The Amended
Credit Facility  contains interest rates and an unused commitment fee based on a
pricing  grid  calculated  quarterly  on total  debt to  annualized  EBITDA  (as
defined).  We are  entitled  to select the Base Rate or LIBOR,  plus  applicable
margin, for principal drawings under the Amended Credit Facility. The applicable
LIBOR margin pursuant to the pricing grid currently  ranges from 2.50% to 4.75%,
the  applicable  unused  commitment fee pursuant to the pricing grid ranges from
0.375% to 0.50% and the applicable Base Rate margin pursuant to the pricing grid
currently  ranges  from 1.50% to 3.75%.  Interest  only is payable  periodically
until the expiration of the Amended Credit Facility. The Amended Credit Facility
is  collateralized  by  substantially  all of our assets.  Additionally,  we are
precluded from declaring or paying any cash dividends,  except 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.

            We are  required to assess our  compliance  with our debt  covenants
under  the  Amended  Credit  Facility  on a  quarterly  basis.  These  financial
covenants  are  based  on a  measure  that  is not  consistent  with  accounting
principles  generally accepted in the United States of America.  Such measure is
EBITDA (as defined),  which represents  earnings (loss) before interest,  taxes,
depreciation   and   amortization,   as  further  modified  by  certain  defined
adjustments.  The failure to meet these covenants, absent a waiver or amendment,
would  place us in  default  and cause the debt  outstanding  under the  Amended
Credit  Facility to become  immediately  due and  payable.  The  Amended  Credit
Facility  also  includes  certain  cross-default  provisions  to our 12%  Senior
Subordinated Promissory Notes.

            Prior to June 30, 2002, the Amended  Credit  Facility was amended to
adjust  certain  financial  covenants  for the quarter  ended March 31, 2002 and
prospectively, and non-compliance with the minimum EBITDA covenant for the three
months  ended  March 31, 2002 was waived.  As of June 30,  2002,  we were not in
compliance with certain of the financial  covenants.  On September 27, 2002, the
Amended Credit  Facility was amended to adjust certain  financial  covenants for
the  quarter  ended  June  30,  2002,  and  prospectively,  non-compliance  with
financial covenants for the three months ended June 30, 2002 was waived, and the
maturity of the Amended  Credit  Facility was extended to November 17, 2003.  On
August 22, 2002, we completed the private  placement of 1,663,846  shares of our
Common Stock to 24 accredited  investors at a price of $9.75 per share realizing
net cash proceeds of approximately  $15.1 million after $1.1 million of issuance
costs.  Pursuant to the  requirements  of the Amended Credit  Facility,  we used
$14.5  million of the  proceeds to pay down  outstanding  debt under the Amended
Credit Facility. As of September 30, 2002, we were in compliance with all of the
financial covenants under the Amended Credit Facility.  On February 7, 2003, the
Amended  Credit  Facility  was  amended to adjust  certain  financial  covenants
prospectively,  non-compliance  with the minimum  EBITDA  covenant for the three
months ended  December 31, 2002 was waived,  the maturity of the Amended  Credit
Facility  was extended to April 29, 2004,  and the Amended  Credit  Facility was
reduced to $45.0 million.

            As of December 31, 2002,  a total of $35.8  million was  outstanding
under the Amended  Credit  Facility  with  interest  3.25% above LIBOR (4.63% to
5.05%).

            In  October  1997,  we  issued  $30.0  million  of  our  12%  Senior
Subordinated   Promissory  Notes  ("1997  Notes")  with  interest  only  payable
semi-annually  on April 30 and October 31, due October 31, 2004. On May 4, 1999,
we sold an additional  $10.0 million of our 12% Senior  Subordinated  Promissory
Notes ("1999 Notes").  Except for their October 31, 2005 maturity date, the 1999
Notes are substantially  identical to the 1997 Notes. As of June 30, 2002 and at
various  dates in the past we have been unable to meet certain  covenants  under
the 1997 Notes and 1999 Notes and have had to obtain  waivers or  modifications.
On September 27, 2002,  concurrently  with the  amendment to the Amended  Credit
Facility,  certain  financial  covenants  of the 1997  Notes and 1999 Notes were
amended to adjust  certain  financial  covenants  for the quarter ended June 30,
2002, and prospectively. As of September 30, 2002 and December 31, 2002, we were
in compliance with all of the financial  covenants under the 1997 Notes and 1999
Notes. On February 7, 2003, the interest coverage ratio governing the 1997 Notes
and  1999  Notes  was  amended  for  the  quarter   ended  March  31,  2003  and
prospectively.

            During the six months  December  31,  2002,  our  capital  resources
included cash flows from operations,  proceeds from the private placement of our
Common Stock and available borrowing capacity under the Amended Credit Facility.
We believe that cash flows from  operations and available  borrowings  under the
Amended  Credit  Facility will be sufficient to fund proposed  operations for at
least the next twelve months.

            The  table  below  sets  forth  our  contractual  obligations,   (in
thousands):


                                       18




                                                     Less than
Contractual obligations               Total            1 Year         2-3 Years         4-5 Years      Thereafter
                                   -------------------------------------------------------------------------------
Senior debt                          $35,732          $    42          $35,458          $   195          $    37
Subordinated debt                     39,476               --           39,476               --               --
Non-competition agreements               160              160               --               --               --
Operating leases                       9,326            3,193            3,626            1,663              844
                                     -------          -------          -------          -------          -------
Total obligations                    $84,694          $ 3,395          $78,560          $ 1,858          $   881
                                     =======          =======          =======          =======          =======


            WORKING  CAPITAL.  At December  31, 2002 and June 30,  2002,  we had
working capital of $3.4 million and $2.3 million, respectively.

            CASH FLOWS FROM  OPERATING  ACTIVITIES.  Cash flows  generated  from
operating  activities  decreased  from $5.9  million in 2001 to $3.5  million in
2002, primarily the result of a $2.0 million decrease in net income and non-cash
adjustments  to  income  and a $0.4  million  decrease  in cash  generated  from
operating assets.

            CASH FLOWS FROM INVESTING ACTIVITIES. During 2002 and 2001, net cash
used in investing  activities  was $7.2 million and $6.9 million,  respectively.
These  investing  activities  were primarily  attributable  to the  acquisition,
installation and direct placement costs of bulk CO2 systems.

            CASH FLOWS FROM  FINANCING  ACTIVITIES.  During 2002 and 2001,  cash
flows  provided by  financing  activities  were $2.3  million and $2.1  million,
respectively.  In 2002,  cash flows from  financing  activities  included  $15.1
million from the issuance of 1.7 million shares of Common Stock, offset by $12.5
million  from the net  repayment  of long-term  debt.  In 2001,  cash flows from
financing  activities included $50.0 million from the refinancing of the Amended
Credit Facility that occurred in September 2001,  offset by the net repayment of
long-term debt, and deferred financing costs.

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  exclusive  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.

RECENT ACCOUNTING PRONOUNCEMENTS

            In April 2002,  the FASB issued  SFAS No. 145,  "RESCISSION  OF FASB
STATEMENTS NO. 4, 44, AND 64,  AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL
CORRECTIONS"  ("SFAS 145"). Among other things, SFAS 145 rescinds the provisions
of SFAS No. 4 that require  companies to classify  certain gains and losses from
debt  extinguishments as extraordinary items. The provisions of SFAS 145 related
to  classification  of debt  extinguishments  are  effective  for  fiscal  years
beginning after May 15, 2002. Gains and losses from  extinguishment of debt will
be  classified  as  extraordinary  items only if they meet the  criteria  in APB
Opinion  No.  30 ("APB  30");  otherwise  such  losses will be  classified  as a
component of continuing operations. We adopted SFAS 145 during the quarter ended
September 30, 2002. In accordance with APB 30 and SFAS 145, we have reclassified
the $796,000  extraordinary loss on the early extinguishment of debt for the six
months ended December 31, 2001 to a component of continuing operations.

            In June  2002,  the FASB  issued  SFAS  146,  "ACCOUNTING  FOR COSTS
ASSOCIATED  WITH EXIT OR  DISPOSAL  ACTIVITIES"  ("SFAS  146")  which  addresses
financial  accounting and reporting for costs  associated  with exit or disposal
activities and nullifies EITF Issue No. 94-3 "LIABILITY  RECOGNITION FOR CERTAIN
EMPLOYEE  TERMINATION  BENEFITS  AND OTHER COSTS TO EXIT AN ACTIVITY  (INCLUDING
CERTAIN  COSTS  INCURRED  IN A  RESTRUCTURING)"  ("EITF  94-3").  The  principal
difference between SFAS 146 and EITF 94-3 relates to SFAS 146's requirements for
recognition  of a  liability  for a cost  associated  with an  exit or  disposal
activity. SFAS 146 requires that a liability be recognized when the liability is
incurred.  Under EITF 94-3, a liability  for an exit cost was  recognized at the
date of an entity's  commitment to an exit plan. SFAS 146 also  establishes that
fair value is the  objective  for  initial  measurement  of the  liability.  The
provisions of SFAS 146 are effective  for exit or disposal  activities  that are
initiated  after  December 31, 2002, but early  application  is encouraged.  The
adoption  of SFAS 146 during the first  quarter of fiscal  2003 had no impact on
our results of operations and financial position.


                                       19




            In  the  first  quarter  of  fiscal  2003,  we  adopted  SOP  01-06,
"Accounting by Certain Entities (Including Entities with Trade Receivables) That
Lend to or Finance the Activities of Others" ("SOP 01-06").  SOP 01-06 addresses
disclosures on accounting  policies relating to trade accounts receivable and is
effective  prospectively  for  financial  statements  issued  for  fiscal  years
beginning  after  December 15, 2001.  The adoption of SOP 01-06 had no impact on
our results of operations or financial position.

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, 2002, a total of $35.8 million was  outstanding  under
the Amended Credit Facility with interest at 3.25% above LIBOR (4.63% to 5.05%).
Based upon $35.8  million  outstanding  under the  Amended  Credit  Facility  at
December 31, 2002, our annual  interest cost under the Amended  Credit  Facility
would increase by $0.3 million for each 1% increase in LIBOR.

            In  order  to  reduce  our  exposure  to  increases  in  LIBOR,  and
consequently to increases in interest payments, we entered into an interest rate
swap  transaction  (the "Swap") in the amount of $12.5  million  (the  "Notional
Amount") which terminates on September 28, 2003.  Pursuant to the Swap, we pay a
fixed interest rate of 5.23% 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 the LIBOR based rate decreases below 5.23% 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.

ITEM 4.   CONTROLS AND PROCEDURES

            As  previously  reported  in our  Form  10-Q for the  quarter  ended
September 30, 2002,  the Chief  Executive  Officer and Chief  Financial  Officer
concluded  that our  disclosure  controls  and  procedures  (as defined in Rules
13a-14 and 15d-14 under the Securities  Exchange Act of 1934),  while  generally
effective,  were deficient in certain  areas.  During the quarter ended December
31, 2002,  we undertook  certain  corrective  actions.  While there have been no
significant  changes  in  internal  controls  or in  other  factors  that  could
significantly  affect these controls subsequent to the date of their most recent
evaluation,  we continue to improve the effectiveness of our disclosure controls
and procedures.

PART II.    OTHER INFORMATION

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

            (a)  Our Annual  Meeting of  Shareholders  was held on December  12,
                 2002 (the "Annual Meeting").

            (b)  Michael E. DeDomenico,  Craig L. Burr, Robert L. Frome,  Daniel
                 Raynor,  John L. Walsh, Jr., 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
       ------------------------------------------------------------------------
       Michael E. DeDomenico                  9,265,214         74,415
       Craig L. Burr                          9,304,253         35,376
       Robert L. Frome                        9,304,343         35,286
       Daniel Raynor                          9,304,349         35,280
       John L. Walsh, Jr.                     9,302,939         36,690
       Richard D. Waters, Jr.                 9,244,353        124,276
       John E. Wilson                         9,302,939         36,690


                                       20



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibit No.      Exhibit


      10.1     -     Third  Amendment and Waiver to Second  Amended and Restated
                     Revolving  Credit Agreement dated as of February 7, 2003 by
                     and among the Company,  SunTrust  Bank,  Heller  Financial,
                     Inc. and BNP Paribas.

      10.2     -     Amendment  No.  10 to  Senior  Subordinated  Note  Purchase
                     Agreement dated as of February 7, 2003.

      99.1     -     Certification  of Chief Executive  Officer,  dated February
                     14, 2003.

      99.2     -     Certification  of Chief Financial  Officer,  dated February
                     14, 2003.


(b) Reports on Form 8-K.

    No reports on Form 8-K were filed during the quarter ended December 31,
    2002.


                                       21




                                   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, 2003                By:      /s/ Robert R. Galvin
                                                  ------------------------------
                                                  Robert R. Galvin
                                                  Chief Financial Officer


                                       22




                         SECTION 302 10-Q CERTIFICATIONS


I, Michael E. DeDomenico, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of NuCo2 Inc.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.



          Date:  February 14, 2003            /s/ Michael E. DeDomenico
                                              ----------------------------------
                                              Michael E. DeDomenico
                                              Chief Executive Officer


                                       23




                         SECTION 302 10-Q CERTIFICATIONS

I, Robert R. Galvin, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of NuCo2 Inc.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.


          Date:   February 14, 2003             /s/ Robert R. Galvin
                                                --------------------------------
                                                Robert R. Galvin
                                                Chief Financial Officer


                                       24`