UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-Q
[Mark One]

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the quarterly period ended June 30, 2001.

                                       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 No. 0-19727

                          CUMBERLAND TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)


     Florida                                           59-3094503
     -----------------------------------------------   -------------------------
     (State  or other  jurisdiction of incorporation)  (I.R.S. Employer
                                                        Identification No.)

     4311 West Waters Avenue, Suite 501
     Tampa, Florida                                    33614
     -----------------------------------------------   -------------------------
     (Address of principal executive office)           (Zip code)

                                 (813) 885-2112
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.

                                 Yes [x] No [ ]

                      Applicable Only to Corporate Issuers

The  number  of shares  of the  Registrant's  common  stock,  $.001  par  value,
outstanding as of August 14, 2001 was 5,597,244 shares.


<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

                                    FORM 10-Q

                                      INDEX

PART I  FINANCIAL INFORMATION
------  ---------------------
                                                                            Page
                                                                            ----

        Item 1.  Condensed (unaudited) consolidated balance sheets
                   at June 30, 2001 and December 31, 2000 ...................1-2

                 Condensed (unaudited) consolidated statements of
                   operations for the six months ended June 30, 2001
                   and June 30, 2000 ..........................................3

                 Condensed (unaudited) consolidated statements of
                   operations for the three months ended June 30, 2001
                   and June 30, 2000 ..........................................4

                 Condensed consolidated statements of stockholders' equity
                   for the six months ended June 30, 2001 (unaudited)
                   and for the year ended December 31, 2000 ...................5

                 Condensed (unaudited) consolidated statements of cash flows
                   for the six months ended June 30, 2001 and
                   June 30, 2000 ..............................................6

                 Notes to condensed (unaudited) consolidated financial
                   statements ..............................................7-14

        Item 2.  Management's discussion and analysis of financial condition
                   and results of operations ..............................15-17

        Item 3.  Quantitative and qualitative disclosures about
                   market risk ...............................................18

PART II OTHER INFORMATION
------- -----------------

        Item 1.  Legal proceedings ...........................................19

        Item 2.  Changes in securities .......................................19

        Item 3.  Defaults upon senior securities .............................19

        Item 4.  Submission of matters to a vote of security holders..........19

        Item 5.  Other information............................................19

        Item 6.  Exhibits and reports of form 8-k.............................19

                 Signatures...................................................20

<PAGE>

           UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q
                         PART I - FINANCIAL INFORMATION


Item 1.    FINANCIAL STATEMENTS
-------    --------------------

                          CUMBERLAND TECHNOLOGIES, INC.

                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                     ASSETS
                                     ------


                                                       -------------------------
                                                        June 30,    December 31,
                                                          2001          2000
                                                       -------------------------

Investments:
-----------
   Securities available-for-sale at fair value:
     Debt securities ...............................   $ 8,713,859   $ 7,553,010
     Equity securities .............................          --           2,716
   Debt securities held-to-maturity at amortized
     cost (fair value, 2001 - $366,419
     2000 - $1,227,130) ............................       359,318     1,223,593
   Mortgage loans on real estate, at unpaid
     principal .....................................       741,419       742,068
   Short-term investments ..........................       433,993       433,993
                                                       -----------   -----------
     Total investments .............................    10,248,589     9,955,380

Cash and cash equivalents ..........................       959,276       693,778
Accrued investment income ..........................       190,115       185,011

Reinsurance recoverable ............................     4,127,105     4,910,443

Accounts receivable:
-------------------
   Nonaffiliate less allowance for doubtful
     accounts of $13,750 ...........................     5,486,955     3,821,206
   Affiliate .......................................       443,862       436,997
Income tax recoverable .............................       235,388       167,588
Deferred income tax asset ..........................       175,234       175,234
Deferred policy acquisition costs ..................     2,260,885     1,955,018
Intangibles, net ...................................     1,043,011     1,115,316
Other investment ...................................       605,161       582,532
Other assets .......................................       454,329       311,082
                                                       -----------   -----------
                                                       $26,229,910   $24,309,585
                                                       ===========   ===========


            See notes to condensed consolidated financial statements.


<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------


                                                   -----------------------------
                                                     June 30,     December 31,
                                                       2001           2000
                                                   -----------------------------

Policy liabilities and accruals:
-------------------------------
   Loss and loss adjustment expenses .............  $  4,010,023   $  5,185,626
   Unearned premiums .............................     6,674,820      5,775,524
Ceded reinsurance payable ........................     1,298,517        721,513
Derivative liability .............................     1,004,087           --
Accounts payable and other liabilities ...........     3,071,296      2,637,748
Debt:
----
   Nonaffiliate ..................................       945,890      1,102,683
   Affiliate .....................................     1,000,000      1,000,000
                                                    ------------   ------------
   Total liabilities .............................    18,004,633     16,423,094
                                                    ------------   ------------
Stockholders' equity:
--------------------
   Preferred stock, $.001 par value; 10,000,000
       shares authorized, no shares issued .......          --             --
   Common stock, $.001 par value; 10,000,000
       shares authorized; 5,915,356 and 5,871,356
       shares issued, respectively ...............         5,916          5,872
   Capital in excess of par value ................     7,270,316      7,264,860
   Accumulated other comprehensive income ........       189,156        104,485
   Retained earnings .............................     1,023,608        774,993
                                                    ------------   ------------
                                                       8,488,996      8,150,210
   Less treasury stock, at cost, 318,612  shares .      (263,719)      (263,719)
                                                    ------------   ------------
   Total stockholders' equity ....................     8,225,277      7,886,491
                                                    ------------   ------------
                                                    $ 26,229,910   $ 24,309,585
                                                    ============   ============



            See notes to condensed consolidated financial statements.


<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


                                                    ----------------------------
                                                      Six Months Ended June 30,
                                                       2001             2000
                                                    ----------------------------

Revenue:
-------
Direct premiums earned .........................    $ 6,958,863     $ 5,817,912
Reinsurance premiums assumed ...................      1,531,775       1,214,056
Less reinsurance ceded .........................     (2,231,004)     (1,523,602)
                                                    -----------     -----------
Net premium income .............................      6,259,634       5,508,366
Net investment income ..........................        299,596         271,933
Net realized investment (losses) gains .........        (16,440)        270,067
Other income ...................................      1,073,073         904,030
                                                    -----------     -----------
Total revenue ..................................      7,615,863       6,954,396
                                                    -----------     -----------
Benefits and Expenses:
----------------------
Losses and loss adjustment expenses ............      1,831,741       1,406,219
Amortization of deferred policy acquisition
    costs ......................................      2,038,957       1,689,258
Operating expenses .............................      3,293,745       2,552,812
Interest expense ...............................         87,979         103,611
                                                    -----------     -----------
Total expenses .................................      7,252,422       5,751,900
                                                    -----------     -----------
Income before income tax expense ...............        363,441       1,202,496
Income tax expense .............................        114,826         402,091
                                                    -----------     -----------
Net income .....................................    $   248,615     $   800,405
                                                    ===========     ===========
Weighted average number of shares
    outstanding - basic ........................      5,580,957       5,504,088
                                                    ===========     ===========
Net income per share - basic ...................    $      0.04     $      0.15
                                                    ===========     ===========
Weighted average number of shares
    outstanding - diluted ......................      5,650,457       5,585,088
                                                    ===========     ===========
Net income per share - diluted .................    $      0.04     $      0.14
                                                    ===========     ===========



            See notes to condensed consolidated financial statements.


<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


                                                    ----------------------------
                                                     Three Months Ended June 30,
                                                       2001              2000
                                                    ----------------------------

Revenue:
--------
Direct premiums earned .........................    $ 3,573,710     $ 3,093,281
Reinsurance premiums assumed ...................        780,760         511,191
Less reinsurance ceded .........................     (1,179,533)       (806,993)
                                                    -----------     -----------
Net premium income .............................      3,174,937       2,797,479
Net investment income ..........................        143,662         132,363
Net realized investment (losses) gains .........        (16,440)         56,809
Other income ...................................        473,635         507,616
                                                    -----------     -----------
Total revenue ..................................      3,775,794       3,494,267
                                                    -----------     -----------
Benefits and Expenses:
---------------------
Losses and loss adjustment expenses ............        949,349         656,123
Amortization of deferred policy acquisition
    costs ......................................        942,336         802,775
Operating expenses .............................      1,827,445       1,442,829
Interest expense ...............................         25,660          50,809
                                                    -----------     -----------
Total expenses .................................      3,744,790       2,952,536
                                                    -----------     -----------
Income before income tax expense ...............         31,004         541,731
Income tax expense .............................          4,406         180,000
                                                    -----------     -----------
Net income .....................................    $    26,598     $   361,731
                                                    ===========     ===========
Weighted average number of shares
    outstanding - basic ........................      5,597,244       5,510,782
                                                    ===========     ===========
Net income per share - basic ...................    $      0.01     $      0.07
                                                    ===========     ===========
Weighted average number of share
    outstanding - diluted ......................      5,666,744       5,594,582
                                                    ===========     ===========
Net income per share - diluted .................    $      0.01     $      0.06
                                                    ===========     ===========




            See notes to condensed consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>



                          CUMBERLAND TECHNOLOGIES, INC.
     CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


                                                                            Accumulated
                                                            Capital in         Other       Retained
                                      Common Shares          Excess of      Comprehensive  Earnings                      Total
                                      -------------           Par              Income     (Accumulated   Treasury      Stockholders'
                                   Stock       Amount        Value            (Loss)       Deficit)      Stock           Equity
                                   -----       ------        -----          -------------  --------      -----          ------
<S>                                <C>          <C>           <C>           <C>            <C>            <C>            <C>

Balance at January 1, 2000 ....     5,815,356   $     5,816   $ 7,257,916   $   (40,897)   $  (266,756)   $  (263,719)   $ 6,692,360

   Exercise of 56,000 shares
       under 1991 stock
       option plan ............        56,000            56         6,944                                                      7,000

   Net increase in unrealized
       appreciation of
       available-for-sale
       securities, net of
       income tax .............                                                 145,382                                      145,382

   Net income .................                                                              1,041,749                     1,041,749
                                                                                                                         -----------

   Comprehensive income .......                                                                                            1,187,131
                                    -----------   -----------   -----------    -----------    -----------    ----------- -----------
Balance at December 31, 2000 ..      5,871,356        5,872     7,264,860       104,485        774,993       (263,719)     7,886,491

   Exercise of 44,000 shares
       under 1991 stock
       option plan.............         44,000           44         5,456                                                      5,500

   Net increase in unrealized
       appreciation of
       available-for-sale
       securities, net of
       income tax ............                                                   84,671                                       84,671

   Net income ................                                                                 248,615                       248,615
                                                                                                                          ----------
   Comprehensive income .......                                                                                              333,286
                                  -----------   -----------   -----------   -----------    -----------    -----------    -----------
Balance at June 30, 2001 ......     5,915,356   $     5,916   $ 7,270,316   $   189,156    $ 1,023,608    $  (263,719)   $ 8,225,277
                                  ===========   ===========   ===========   ===========    ===========    ===========    ===========



            See notes to condensed consolidated financial statements.
</TABLE>


<PAGE>




                          CUMBERLAND TECHNOLOGIES, INC.

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                      --------------------------
                                                       Six Months Ended June 30,
                                                            2001        2000
                                                      --------------------------
Operating activities:
---------------------
Net income .........................................  $   248,615   $   800,405
Adjustments to reconcile net income to cash
   provided by operating activities:
       Accretion of investment discounts ...........      (16,729)       (4,586)
       Policy acquisition costs amortized ..........    2,038,957     1,689,258
       Policy acquisition costs deferred ...........   (2,344,824)   (2,051,278)
       Amortization ................................       72,305        79,131
       Net realized losses (gains) on sales of
           investments .............................       16,440      (270,067)
       (Increase) decrease in:
           Accrued investment income ...............       (5,104)     (118,699)
           Reinsurance recoverable .................      783,338    (1,319,542)
           Accounts receivable .....................   (1,665,749)     (668,914)
           Income tax recoverable ..................      (67,800)         --
           Other assets ............................     (143,247)        2,915
       Increase (decrease) in:
           Policy liabilities and accruals .........     (276,307)    1,115,220
           Derivative liability ....................    1,004,087          --
           Ceded reinsurance payable ...............      577,004       545,680
           Accounts payable and other liabilities ..      433,548       400,372
           Income tax payable ......................         --         250,000
                                                      -----------   -----------
Net cash provided by operating activities ..........      654,534       449,895
Investing activities:
---------------------
Securities available-for-sale:
       Purchases - fixed maturities ................   (1,228,810)   (6,218,716)
       Proceed from sales - fixed maturities .......      154,912     3,098,991
       Proceeds from investment settlement .........         --         228,874
       Purchases - equities ........................         --         354,956
Securities held-to-maturity:
       Purchases- fixed maturities .................         --       1,500,000
       Maturities ..................................      865,000          --
Proceeds from mortgage loan ........................          649           602
Purchase - short-term assets .......................         --         (10,000)
Increase in other investment .......................      (22,629)      (12,013)
                                                      -----------   -----------
Net cash used in investing activities...............     (230,878)   (1,057,306)
Financing activities:
---------------------
Payments on debt, affiliate and
   non-affiliate ...................................     (156,793)     (151,316)
Stock options exercised ............................        5,500         7,000
Net change in advances from affiliates .............       (6,865)      (47,247)
                                                      -----------   -----------
Net cash used in financing activities ..............     (158,158)     (191,563)
                                                      -----------   -----------
Increase (decrease) in cash and cash equivalents ...      265,498      (798,974)
Cash and cash equivalents, beginning of period .....      693,778     2,000,147
                                                      -----------   -----------
Cash and cash equivalents, end of period ...........  $   959,276   $ 1,201,173
                                                      ===========   ===========

Supplemental cash flows disclosure:
-----------------------------------
Cash paid for interest .............................  $    27,611   $    53,611
                                                      -----------   -----------
Cash paid for income taxes .........................  $    64,000   $   144,650
                                                      ===========   ===========


            See notes to condensed consolidated financial statements.


<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                  JUNE 30, 2001

1.   Ownership and Organization
     --------------------------

     Cumberland  Technologies,  Inc. ("CTI" or the "Company")  f/k/a  Cumberland
     Holdings, Inc., a Florida corporation,  was formed on November 18, 1991, to
     be a Holding company and a wholly-owned subsidiary of Kimmins Corp. ("KC").
     Effective  October 1, 1992, KC contributed  all of the  outstanding  common
     stock of two of its other wholly-owned subsidiaries,  Cumberland Casualty &
     Surety Company ("CCS") and Surety Specialists, Inc. ("SSI") to CTI. KC then
     distributed  to its  stockholders  CTI's  common  stock on the basis of one
     share of common  stock of CTI for each five  shares of KC common  stock and
     Class B common stock owned (the Distribution).  Effective January 30, 1997,
     Cumberland Holdings, Inc. changed its name to Cumberland Technologies, Inc.
     CTI  conducts  its  business  through  five  subsidiaries.  CCS,  a Florida
     corporation formed in May 1988, provides  underwriting for specialty surety
     and  performance  and payment bonds for  contractors.  The surety  services
     provided include direct surety and to a lesser extent, assumed reinsurance.
     SSI, a Florida corporation formed in August 1988, is a general lines agency
     which operates as an independent  agent. The Surety Group ("SG"), a Georgia
     corporation,  and  Associates  Acquisition  Corp.  d/b/a Surety  Associates
     ("SA"), a South Carolina corporation,  purchased in February and July 1995,
     respectively,  are general  lines  agencies  which  operate as  independent
     agencies.   Official  Notary  Service  of  Texas,  Inc.  ("ONS"),  a  Texas
     corporation  formed in February  1994, is an inactive  corporation.  Qualex
     Consulting Group, Inc. ("Qualex"), a Florida corporation formed in November
     1994,  provides  claim and  contracting  consulting  services.  CTI and its
     subsidiaries are referred to herein as the "Company."

2.   Summary of Significant Accounting Policies
     ------------------------------------------

     Principles of Consolidation
     ---------------------------

     The consolidated  financial  statements include the accounts of CTI and its
     wholly owned  subsidiaries.  All  material  intercompany  transactions  and
     balances have been eliminated in consolidation.



<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


2.   Summary of Significant Accounting Policies (continued)
     ------------------------------------------------------

     Basis of Presentation
     ---------------------

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in conformity with generally accepted  accounting  principles
     for interim  financial  information and with the instructions to Form 10-Q.
     Accordingly,  they do not include all of the information and notes required
     by accounting principles generally accepted in the United States of America
     for  complete  financial  statements.  In the  opinion of  management,  all
     adjustments  (consisting of normal recurring accruals) considered necessary
     for a fair presentation have been included. Operating results for the three
     and six month periods ended June 30, 2001 are not necessarily indicative of
     the results that may be expected for any future quarters or the year ending
     December 31, 2001. For further information, refer to consolidated financial
     statements  as of and for the  years  ended  December  31,  2000 and  1999,
     included in the Company's Form 10-K for the year ended December 31, 2000 as
     filed with the United States  Securities  and Exchange  Commission on April
     17, 2001.

     Reclassifications
     -----------------

     Certain amounts in the 2000 financial  statements have been reclassified to
     conform to the 2001 financial statement presentations.

     Use of Estimates
     ----------------

     The  preparation of  consolidated  financial  statements in conformity with
     accounting  principles  generally  accepted in the United States of America
     requires  management  to make  estimates  and  assumptions  that affect the
     amounts reported in the consolidated  financial statements.  Such estimates
     and  assumptions  could  change in the future as more  information  becomes
     known which would affect the amounts reported and disclosed herein.

3.   Earnings Per Share
     ------------------

     Earnings  per share for the three and six month  periods  June 30, 2001 and
     2000 is  based  on the  weighted  average  number  of  shares  outstanding,
     adjusted for the dilutive effect of stock options.


<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


4.   Investments
     -----------

     The  components  of  unrealized  appreciation  of  investments  recorded in
     stockholders' equity are as follows:
                                                       June 30,     December 31,
                                                         2001           2000
                                                       ---------     -----------
     Fixed maturities, net of
       income tax ..............................       $ 189,156      $ 126,607
     Equities ..................................             --         (22,122)
                                                       ---------      ---------
     Total unrealized appreciation,
       net of taxes ............................       $ 189,156      $ 104,485
                                                       =========      =========

5.   Income Taxes
     ------------

     The Company's  provision  for income taxes for the six-month  periods ended
     June 30,  2001 and 2000 has  been  calculated  using an  effective  rate of
     approximately 32% and 33%, respectively.


6.   Related Party Transactions
     --------------------------

     In 1988,  CCS issued a surplus  debenture to KC in exchange for  $3,000,000
     which  bears  interest  at 10 percent  per annum.  Interest  and  principal
     payments are subject to approval by the Florida Department of Insurance. On
     April 1, 1997, CTI forgave $375,000 of its $3,000,000 surplus debenture due
     to CCS. As a result, CCS increased paid in capital by $375,000. On June 30,
     1999,  CTI forgave  $576,266 of its $2,625,000  surplus  debenture due from
     CCS. As a result,  CCS increased paid-in capital to $1,000,000.  As of June
     30, 2001, no payments could be made under the terms of the debenture.

     KC and SSI entered into an agreement with an independent  contractor,  AEC,
     on August 16, 1989 on a  construction  contract with the United States Navy
     (the "Navy").  Pursuant to this contract, the Company, as surety,  executed
     and  delivered  to the Navy  certain  performance  and  payment  bonds (the
     "Bonds").  At the time that the  Bonds  were  issued,  KC  entered  into an
     indemnification  agreement  with the Company,  whereby KC  indemnified  the
     Company from any and all losses,  costs,  and expenses  incurred related to
     the Bonds.  In 1991,  the Navy default and  terminated AEC on the contract.
     The  contract  has  been  in  litigation  since  the  termination  in  1991
     generating  a  subrogation   receivable  in  the  amount  of  approximately
     $1,851,000 as of June 30, 2001 and December 31, 2000. In the event that the
     Company  is  unsuccessful  in its  litigation  activities  with  the  Navy,
     management of the Company  believes that KC will  reimburse the Company for
     the losses and expenses incurred related to the Bonds.


<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


7.   Notes Payable
     -------------

     Affiliate
     ---------

     Effective November 10, 1998, CTI entered into a $1,000,000 convertible term
     note agreement with TransCor Waste Services,  Inc., a subsidiary of KC. The
     note is due  November  10, 2001 and bears  interest at 10%.  The lender may
     convert the principal amount of the note or a portion thereof into a common
     stock at $3.00 per share subsequent to a six-month anniversary and prior to
     the maturity date.

     Nonaffiliate
     ------------

     In connection  with the  acquisition of certain  agencies  during 1995, the
     Company entered into two notes payable with the agencies'  previous owners.
     One note is due March 1, 2002 and bears interest at 8% through February 28,
     2001 and 10%  thereafter.  Principal  payments of $150,000 are due annually
     beginning  March 1, 2000. The other is due June 30, 2010 and bears interest
     at 9%. Principal and interest payments of $11,104 are due monthly beginning
     April 1, 1997.

8.   Intangibles
     -----------

     Intangible  assets are stated at cost and principally  represent  purchased
     customer accounts,  noncompete  agreements,  purchased contract agreements,
     and the  excess of costs  over the fair  value of  identifiable  net assets
     acquired ("Goodwill").  Goodwill is amortized on a straight-line basis over
     15 years and all other  intangible  assets are amortized on a straight-line
     basis over the related  estimated lives and contract  periods,  which range
     from 3 to 15 years.  Purchased  customer  accounts  are  records  and files
     obtained from acquired  businesses  that contain  information  on insurance
     policies  and the  related  insured  parties  that is  essential  to policy
     renewals.

     The  carrying  value of Goodwill and other  intangible  assets are reviewed
     periodically  for impairment.  If this review indicates that the intangible
     assets will not be  recoverable,  as determined  based on the  undiscounted
     cash flows of the entity acquired over the remaining  amortization  period,
     the Company's  carrying value of the Goodwill and other  intangible  assets
     will be reduced by the estimated shortfall of cash flows.



<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


8.   Intangibles (continued)
     -----------------------

     New Accounting Pronouncements
     -----------------------------

     On June 29, 2001,  Statement of Financial  Accounting  Standards (SFAS) No.
     141,  "Business  Combinations"  was  approved by the  Financial  Accounting
     Standards  Board (FASB).  SFAS No. 141 requires that the purchase method of
     accounting be used for all business  combinations  initiated after June 30,
     2001.  Goodwill  and certain  intangible  assets will remain on the balance
     sheet and not be amortized. On an annual basis, and when there is reason to
     suspect that their values have been  diminished  or impaired,  these assets
     must be tested  for  impairment,  and  write-downs  may be  necessary.  The
     Company is required to implement SFAS No. 141 on July 1, 2001.

     On June 29, 2001, SFAS No. 142,  "Goodwill and Other Intangible Assets" was
     approved by the FASB. SFAS No. 142 changes the accounting for goodwill from
     an  amortization  method to an  impairment-only  approach.  Amortization of
     goodwill,  including goodwill recorded in past business combinations,  will
     cease upon adoption of this statement. The Company is required to implement
     SFAS No. 142 on January 1, 2002 and it has not  determined  the impact,  if
     any, that this statement will have on its consolidated  financial  position
     or results of operations.

9.   Loss and Loss Adjustment Expenses
     ---------------------------------

     The liability for unpaid claims including  incurred but not reported losses
     is based on the estimated  ultimate  cost of settling the claim  (including
     the effects of inflation and other  societal and economic  factors),  using
     past  experience  adjusted  for current  trends and any other  factors that
     would modify past experience. These estimates are subject to the effects of
     trends in loss severity and frequency. Although considerable variability is
     inherent in such estimates,  management believes that the reserves for loss
     and loss  adjustment  expenses are adequate.  The estimates are continually
     reviewed  and  adjusted  as  necessary  as   experience   develops  or  new
     information  becomes  known.  Such  adjustments  are  included  in  current
     operations. A liability for all costs expected to be incurred in connection
     with the settlement of unpaid claims (loss  adjustment  expense) is accrued
     when the related  liability  for unpaid loss is  accrued.  Loss  adjustment
     expenses include costs associated  directly with specific claims paid or in
     the  process  of  settlement,  such as  legal  and  adjusters'  fees.  Loss
     adjustment expenses also include other costs that cannot be associated with
     specific  claims  but are  related  to  claims  paid or in the  process  of
     settlement, such as internal costs of the claims function.

     The Company does not  discount its reserves for losses and loss  adjustment
     expenses.  The Company writes primarily surety contracts which are of short
     duration.

     The Company does not consider investment income in determining if a premium
     deficiency relating to short duration contracts exists.


<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


10.  Unearned Premiums
     -----------------

     Unearned premiums are deferred and amortized on a pro-rated basis.

11.  Reinsurance
     -----------

     The  Company  assumes and cedes  reinsurance  and  participates  in various
     pools. The financial  statements reflect premiums,  benefits and settlement
     expenses,  and deferred policy acquisition costs, net of reinsurance ceded.
     Amounts  recoverable  from reinsurers are estimated in a manner  consistent
     with the future  policy  benefit and claim  liability  associated  with the
     reinsured policies.

     Accounts  recoverable from reinsurers for unpaid losses are presented as an
     asset in the accompanying consolidated financial statements.

12.  Accounting for Derivatives
     --------------------------

     SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
     is effective for all fiscal years  beginning  after June 15, 2000. SFAS No.
     133,  as  amended,  establishes  accounting  and  reporting  standards  for
     derivative  instruments,  including certain derivative instruments embedded
     in other contracts, and for hedging activities. Under SFAS No. 133, certain
     contracts  that  were  not  formerly  considered  derivatives  now meet the
     definition of a derivative.  The Company  identified one product that meets
     the  definition of a derivative  instrument as defined in SFAS No. 133. The
     policy provides  coverage to the Registered  Investment  Advisor who writes
     insured's investing in mutual funds and other investment  instruments.  The
     loss on any policy is determined  by a reduction  below cost in the account
     of the insured  over a five-year  period.  The  identified  derivative  was
     accounted for as an insurance  contract  within the policy  liabilities for
     loss and loss adjustment expenses account in the consolidated balance sheet
     prior to January 1, 2001.

     Effective  January 1, 2001 the Company adopted SFAS No. 133. The transition
     adjustment of $600,000 was  reclassified  from the policy  liabilities  for
     loss and loss  adjustment  expenses  account to a liability for  derivative
     instruments account on the condensed  consolidated balance sheet at January
     1, 2001. The increase in the derivative  liability account in the amount of
     $404,087  is  included  in  losses  and  loss  adjustment  expenses  in the
     condensed  consolidated  statement of operations  for the six-month  period
     ended June 30, 2001.

     Estimates  and  assumption  were  used  in  determining  the  valuation  of
     derivative instruments.  Such estimates and assumptions could change in the
     future as more  information  becomes  known which would  affect the amounts
     reported and disclosed herein.


<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


13.  Statutory Accounting Practices
     ------------------------------

     CCS is domiciled in Florida and prepares its  statutory-basis  consolidated
     financial  statements in accordance with accounting practices prescribed or
     permitted  by the  Florida  Insurance  Department.  "Prescribed"  statutory
     accounting   practices  include  state  laws,   regulations,   and  general
     administrative  rules, as well as a variety of publications of the National
     Association  of Insurance  Commissioners  ("NAIC").  "Permitted"  statutory
     accounting  practices  encompass  all  accounting  practices  that  are not
     prescribed;  such practices may differ from state to state, may differ from
     company to company within a state,  and may change in the future.  In 1998,
     the National Association of Insurance Commissioner adopted the Codification
     of Statutory Accounting Principles  (Codification) for insurance companies.
     Codification,  which is intended to standardize  regulatory  accounting and
     reporting for the insurance  industry,  is effective  January 1, 2001.  The
     Company  implemented  codification  at  January  1,  2001.  On a  statutory
     accounting  basis,  CCS's  underwriting  operations  reported losses net of
     income  taxes of $855,502 for the six months ended June 30, 2001 and income
     net of income  taxes of  $511,624  for the year ended  December  31,  2000.
     Statutory surplus (shareholders' equity) of these operations was $6,011,205
     as of June 30, 2001.

14.  Comprehensive Income
     --------------------

     Comprehensive  income is defined as any change in equity from  transactions
     and other events originating from nonowner sources.  In the Company's case,
     those changes are principally  comprised of reported net income and changes
     in  the  unrealized   appreciation   and   depreciation  of  the  Company's
     available-for-sale  securities.  SFAS No.  130  requires  that the  Company
     report all  components of  comprehensive  income.  The following  summaries
     present the  components  of  comprehensive  income for the six months ended
     June 30, 2001 and June 30, 2000, respectively.

                                                        Consolidated Statements
                                                        of Comprehensive Income
                                                       -------------------------
                                                       Six Months Ended June 30,
                                                           2001            2000
                                                       -------------------------
     Net income .....................................    $ 248,615     $ 800,405
     Other comprehensive income:
       Unrealized appreciation of available-
         for-sale securities arising during
         period .....................................       81,955       104,228
       Less: reclassification adjustment for
             losses included in net income ..........       (2,716)      270,067
                                                         ---------     ---------
     Comprehensive income ...........................    $ 333,286     $ 634,566
                                                         =========     =========


<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


     Forward-looking Statement Disclosure
     ------------------------------------

     All  statements,  other than  statements of historical  facts,  included or
     incorporated  by  reference  in this Form 10-Q  which  address  activities,
     events or developments which the Company expects or anticipates will or may
     occur  in  the  future,   including   statements  regarding  the  Company's
     competitive   position,   changes  in  business   strategy  or  plans,  the
     availability  and price of  reinsurance,  the Company's  ability to pass on
     price  increases,  plans to install the Bond-Pro(R)  program in independent
     insurance  agencies,  the  impact of  insurance  laws and  regulation,  the
     availability of financing, reliance on-key management personnel, ability to
     manage growth, the Company's expectations regarding the adequacy of current
     financing  arrangements,  product  demand  and  market  growth,  and  other
     statements  regarding  future plans and strategies,  anticipated  events or
     trends similar expressions concerning matters that are not historical facts
     are  forward-looking  statements.  These  statements  are based on  certain
     assumptions and analysis made by the Company in light of its experience and
     its perception of historical trends, current conditions and expected future
     developments  as  well  as  factors  it  believes  are  appropriate  in the
     circumstances.  However,  whether  actual  results  and  developments  will
     conform with the Company's  expectations  and  predictions  is subject to a
     number of risks and  uncertainties  which  could  cause  actual  results to
     differ  significantly  and  materially  from  past  results  and  from  the
     Company's expectations.  All of the forward-looking statements made in this
     Form 10-Q are qualified by these cautionary  statements and there can be no
     assurance that the actual results or development anticipated by the Company
     will be realized or, even if substantially realized that they will have the
     expected  consequences  to or effects on the  Company  or its  business  or
     operations.


<PAGE>


Item 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-------           FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                         LIQUIDITY AND CAPITAL RESOURCES
                         -------------------------------

     The capacity of a surety company to underwrite insurance and reinsurance is
based on maintaining  liquidity and capital  resources  sufficient to pay claims
and expenses as they become due. Based on standards  established by the National
Association  of Insurance  Commissioners  (NAIC) and  promulgated by the Florida
Department of Insurance, the Company is permitted to write net premiums up to an
amount equal to three times its statutory surplus, or approximately  $16,300,000
at December 31, 2000.  Statutory  guidelines impose an additional  limitation on
increasing net written  premiums to no more than 33% of prior year's net written
premiums.  Under  these  guidelines,  the  Company  could  increase  net written
premiums by  approximately  $4,200,000  in the year 2001  subject to  risk-based
capital limitations.

     At June 30, 2001,  $26,229,910  of the  Company's  total assets  calculated
based on  accounting  principles  generally  accepted  in the  United  States of
America were comprised as follows: 43 percent in cash and investments (including
accrued   investment   income),   38  percent  in  receivables  and  reinsurance
recoverables,  13 percent in intangibles and deferred policy  acquisition  costs
and 6 percent in other assets.

     The Company follows  investment  guidelines that are intended to provide an
acceptable return on investment while maintaining  sufficient  liquidity to meet
its obligations.

     Net cash provided by operating activities was $654,534 and $449,895 for the
six months  ended June 30,  2001 and 2000,  respectively.  Net cash  provided by
operating  activities  is  primarily  attributed  to a decrease  in  reinsurance
recoverable  and an increase  in  derivative  liability,  which are offset by an
increase  in  accounts  receivable  and a  decrease  in policy  liabilities  and
accruals.

     Net cash used in investing  activities  was $230,878 and $1,057,306 for the
six months ended June 30, 2001,  and 2000,  respectively.  Investing  activities
consist of purchases, sales, and maturities of investments.

     As of June 30, 2001 the Company had  sufficient  capital  resources to fund
foreseeable future requirements.


<PAGE>


Item 2.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-------         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                              RESULTS OF OPERATIONS

              COMPARISON OF SIX MONTHS ENDED JUNE 30, 2001 AND 2000
              -----------------------------------------------------

     During the six months  ended June 30,  2001,  net  premium  income  totaled
$6,259,634  representing  a net  increase  of 14  percent  from that of the same
period in 2000  ($5,508,366).  The increase is attributed to the underwriting of
small and medium size surety bonds and specialty insurance services.  During the
six  months of 2001 as  compared  to the same  period in 2000,  direct  premiums
earned increased  $1,140,951 or 20%; assumed premiums  increased $317,719 or 26%
and ceded premiums  increased  $707,402 or 46%.  Ceded premiums  increase as the
volume of direct and  assumed  premiums  increased  based on their  relationship
under the Company's reinsurance treaties.

     Net investment income for the first six months of 2001 remained  consistent
when  compared to the same period of 2000.  The realized loss of $16,440 in 2001
is attributed  to the write-off of an equity  security and is offset by realized
gains on the disposal of fixed  maturities.  Other income  increased by $169,043
during  the six months of 2001 when  compared  to the same  period of 2000.  The
increase in other income is  attributable  to the  Company's  claims  consulting
subsidiary growth.

     During  the six  months  ended  June 30,  2001,  loss  and loss  adjustment
expenses were $1,831,741 as compared to $1,406,219, for the same period of 2000.
Incurred loss and loss adjustment  expenses  represent the net reserve  increase
after  deduction  of paid claims and  fluctuates  based on premiums  written and
earned  as well as claims  incurred  and  paid.  The  increase  of  $425,522  is
consistent with the increase in net premium income.

     During the six months ended June 30, 2001,  amortization of deferred policy
acquisition  costs was  $2,038,957 as compared to $1,689,258 for the same period
in 2000.  The  amortization  of deferred  policy  acquisition  costs increase is
attributed to the increase in premiums written and earned.

     Operating  expenses  increased  by $740,933 or 29% for the six months ended
June 30,  2001  when  compared  to the same  period  in 2000.  The  increase  is
primarily  attributed to increases in salary  expenses and legal fees associated
with the Company's growth.

     Interest  expense  is  attributed  to the  interest  on  notes  payable  to
affiliates.

     Income taxes in the six months ended June 30, 2001 and 2000 were calculated
using effective rates of approximately 32% and 33%, respectively.


<PAGE>




Item 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-------           FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                              RESULTS OF OPERATIONS

             COMPARISON OF THREE MONTHS ENDED JUNE 30, 2001 AND 2000
             -------------------------------------------------------

     During the three  months ended June 30, 2001,  net premium  income  totaled
$3,174,937  representing  a net  increase  of 13  percent  from that of the same
period in 2000  ($2,797,479).  During the three  months  ending June 30, 2001 as
compared  to the same period  during  2000,  direct  premiums  earned  increased
$480,429 or 16%; assumed premiums  increased  $269,569 or 53% and ceded premiums
increased  $372,540 or 46%. Ceded premiums  increase as the volume of direct and
assumed  premiums  increase  based on their  relationship  under  the  Company's
reinsurance treaties.

     Net  investment  income for the three months  ending June 30, 2001 remained
consistent when compared to the same period of 2000.  Other income  decreased by
$33,981 or 7% during the three months  ended June 30, 2001 when  compared to the
same period of 2000.

     During the three  months  ended  June 30,  2001,  loss and loss  adjustment
expenses  were  $949,349 as compared to  $656,123,  for the same period of 2000.
Incurred loss and loss adjustment  expenses  represent the net reserve  increase
after  deduction  of paid claims and  fluctuates  based on premiums  written and
earned  as well as claims  incurred  and  paid.  The  increase  of  $293,226  is
attributed to increasing certain factors in calculating reserves.

     During the three  months  ended June 30,  2001,  amortization  of  deferred
policy  acquisition  costs was  $942,336 as  compared  to $802,775  for the same
period in 2000. The amortization of deferred policy  acquisition  costs increase
is attributed to the increase in premiums written and earned.

     Operating  expenses increased by $384,616 or 27% for the three months ended
June 30,  2001  when  compared  to the same  period  in 2000.  The  increase  is
attributed  to  increases  in  salary  expenses,  legal  fees and  other  office
expenditures associated with the Company's growth.

     Interest  expense  is  attributed  to the  interest  on  notes  payable  to
affiliates.

     Income  taxes  in the  three  months  ended  June  30,  2001  and  2000 was
calculated using an effective rate of approximately  14% and 33%,  respectively.
The 2001 tax rate is lower due to the  decrease in taxable  income for the three
months ended June 30, 2001.



<PAGE>


Item 3.               QUANTITATIVE AND QUALITATIVE DISCLOSURES
-------                         ABOUT MARKET RISK
                                -----------------

     The Company had  approximately  $10.2 million of investments as of June 30,
2001. These investments largely consist of state government obligations and have
either variable rates of interest or stated interest rates ranging from 4.75% to
8.5%.  The Company's  investments  are exposed to certain  market risks inherent
with such assets. These risks are mitigated by the Company's policy of investing
in securities  with high credit  ratings and investing  through major  financial
institutions with high credit ratings.

     The Company  has notes  payable of  approximately  $2 million at an average
interest  rate  of  8.5%.  The  terms  of the  note  agreements  are  such  that
pre-payment  of such debt may not be  advantageous  to the  Company in the event
that funds may not be available to the Company at a lower rate of interest.




<PAGE>



                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.         Legal proceedings
                -----------------

                None

Item 2.         Changes in securities
                ---------------------

                None

Item 3.         Defaults upon senior securities
                -------------------------------

                None

Item 4.         Submission of matters to a vote of security holders
                ---------------------------------------------------

                None

Item 5.         Other Information
                -----------------

                None

Item 6.         Exhibits and reports on Form 8-K
                --------------------------------

                (a)     None

                (b)     No reports on Form 8-K were filed during the quarter for
                        which this report is filed.


<PAGE>



                                   SIGNATURES
                                   ----------

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


                                    CUMBERLAND TECHNOLOGIES, INC.


Date:    August 14, 2001            By:  /s/  Joseph M. Williams
                                    --------------------------------------------
                                    Joseph M. Williams
                                    President and Chief Executive Officer
                                    (Principle Executive Officer)

Date:    August 14, 2001            By:  /s/  Carol S. Black
                                    --------------------------------------------
                                    Carol S. Black
                                    Secretary and Chief Financial Officer
                                    (Principle Accounting and Financial Officer)