UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                      FORM 10-K

          [MARK ONE]

          [x]  Annual  Report  Pursuant  to  Section  13  or 15(d)  of  the
               Securities Exchange Act of 1934 [Fee Required]

                     For the fiscal year ended December 31, 1996

                                          OR
          [ ]  Transition Report  Pursuant to  Section 13 or  15(d) of  the
               Securities Exchange Act of 1934 [No Fee Required]

                    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                 (I.R.S.Employer
           of incorporation)                             Identification
          No.)

          4311 West Waters Avenue, Suite 501, Tampa, Florida       33614
          (Address of principal executive offices)               (Zip Code)

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

          Securities registered pursuant to Section 12(b) of the Act:

          Title of each Class      Name   of   each   exchange   on   which
          registered:
          -------------------      ----------------------------------------
          Common Stock             NASDAQ                                  

          Securities registered pursuant to Section 12(g) of the Act:

                                         NONE
                  --------------------------------------------------
                                   (Title of Class)

          Indicate by check mark  whether the registrant (1) has  filed all
          reports  required to  be filed  by  Section 13  or  15(d) of  the
          Securities Exchange  Act of 1934  during the preceding  12 months
          (or for such shorter  period that the registrant was  required to<PAGE>





          file  such  reports), and  (2) has  been  subject to  such filing
          requirements for the past 90 days.

                                                       Yes [X]  No  [  ]<PAGE>





          Indicate  by a  check  mark  if  disclosure of  delinquent  files
          pursuant  to Item 405 Regulation S-K is not contained herein, and
          will  not be contained, to the best of registrant's knowledge, in
          definitive   proxy  or  information  statements  incorporated  by
          reference in Part III of this  Form 10-K or any amendment to this
          form 10-K.      [   ]

                                      $6,011,478
                   ------------------------------------------------

            Aggregate market value of voting stock (Common Stock) held by
                        nonaffiliates as of December 31, 1996.

                   5,763,070 shares of Common Stock $.001 par value
                  -------------------------------------------------

                  Number of shares of Common Stock outstanding as of
                                  December 31, 1996.<PAGE>





                                        PART I

          Item 1.        Business
          -------        --------

               Cumberland  Technologies,  Inc.  ("CTI"   or  "Cumberland"),
          (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  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").   CTI conducts its  business through
          its   subsidiaries,  CCS,   SSI,  Surety   Group,  Inc.,   Surety
          Associates, Official  Notary Service  of Texas, Inc.  ("ONS") and
          Qualex  Consulting  Group,  Inc.  ("Qualex"),  collectively,  the
          "Company."    CCS,  a Florida  corporation  formed  in  May 1988,
          provides  performance  and  payment  bonds  for  contractors  and
          miscellaneous  surety  bonds  to  federal  and  local  government
          agencies.  The surety  services provided include reinsurance and,
          to  a lesser extent, direct  surety.  SSI,  a Florida corporation
          formed in August 1988,  is a general lines agency  which operates
          as  an  independent   agent.    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 insurance
          agencies which  operate as  independent agencies.   ONS,  a Texas
          corporation formed  in February  1994, provides  registration and
          sundry  services  to notaries.    Qualex,  a Florida  corporation
          formed  in  November   1995,  provides   claim  and   contracting
          consulting services.  Florida Credit & Collection Services, Inc.,
          a   Florida  corporation  formed   in  December   1996,  provides
          collection services.

               During  1996,  the  Company  introduced  its  bond  software
          program  "Bond Pro".   Cumberland  conducts its  business through
          four of its  subsidiaries and  a number  of independent  agencies
          which focus  on selling and delivering  surety insurance products
          to consumers.  Traditionally, the surety segment of the insurance
          industry has  provided their  services in substantially  the same
          manner  since inception.    The need  to advance  technologically
          created  an  opportunity for  Cumberland  to  develop a  software
          product  to organize its business.  A management team of software
          writers and insurance  executives at Cumberland committed  itself
          to developing and distributing  software that increases the speed
          with which  insurance  companies deliver  their products  through
          their  agents and carriers to  the consumer.   It is Cumberland's
          goal  to reduce operating  costs of insurance  agents through the
          use of the software  Cumberland developed.  Cumberland's business
          strategy  focuses  on niche  industry  consolidation through  the
          implementation of communication technologies.<PAGE>





               CCS is a  property and casualty  insurance company that  was
          incorporated  in Texas  on May 4,  1988.  In  September 1994, CCS
          redomesticated from Texas to  Florida.  CCS is licensed  to write
          insurance  in  twenty-two  states  (Delaware,  Florida,  Georgia,
          Idaho,  Indiana,  Kentucky,  Louisiana, Maryland,  Massachusetts,
          Missouri, Montana,  Nebraska, Nevada, North Dakota, Oregon, South
          Carolina,   South  Dakota,  Tennessee,  Texas,  Washington,  West
          Virginia and Wyoming) and  the District of Columbia and  Guam and
          currently has applications for admission pending in the following
          ten  states:       Alabama,  Arkansas,  Illinois,  Iowa,  Kansas,
          Mississippi,  New York,  Oklahoma,  Pennsylvania, and  Wisconsin.
          Most  of these states have a lengthy application process in which
          filing must  be updated  with certain financial  and nonfinancial
          information until the Insurance  Department decides to approve an
          application.   The Insurance  Department is not  restricted as to
          the amount  of time it may  take to approve an  application.  All
          applications are  updated as  new information  becomes available,
          and Cumberland is waiting for inquiries or actions by the states.

               The  states in which CCS  has not yet  applied for licensing
          generally  require  additional  years  of  operating  history  or
          additional  capital  and  surplus.    Once   CCS  has  met  these
          requirements,  it is  anticipated  that CCS  will apply  in these
          states.

               CCS  is  currently  attempting  to obtain  additional  state
          licenses to spread its risk geographically and increase its sales
          of direct line insurance.  Management believes, however, that CCS
          can  function  profitably  selling   direct  line  insurance  and
          reinsurance in the states in which it is currently licensed.

               Although  licensed for  all property  and casualty  lines of
          insurance in the majority of the states, CCS has in the past, and
          intends  in  the  future,  to  primarily  sell  surety  bonds  to
          contractors and  miscellaneous surety bonds to  federal and local
          government agencies.  Cumberland has been rated B+ (Very Good) by
          A.M. Best, an insurance rating agency.

               SSI  is a  general  lines agency  that  was incorporated  in
          Florida  on  August  22, 1988.    SSI  secures  surety risks  for
          contractors as an  agent and for other  agents (as a  broker) and
          secures insurance or reinsurance with twelve insurance companies,
          one  of which is CCS, SG and  SA are also general lines insurance
          agencies.    The  insurance  companies  pay  SSI,  SG  and  SA  a
          commission ranging from 15 to 30 percent of premiums paid by  the
          policyholders.

               Qualex is  a consulting  company which provides  services to
          the surety and construction industries.

               The percentages of gross  revenue generated by the Company's
          subsidiaries  for  the year  ended  December  31,  1996  were  as
          follows:<PAGE>





                 Subsidiary           Revenue Percentage
          ------------------------ ------------------------

                     CCS                     63  %

                     SSI                     14
                     SG                       6

                     SA                       7

                   Qualex                    10
                                    ------------------------

                                            100  %
                                    ========================

          Insurance Products
          ------------------

               Cumberland  sells   contract,   landfill,  notary,   various
          miscellaneous bonds and registered investment  advisors liability
          insurance.   In addition,  the  Company provides  reinsurance  on
          surety bonds  sold by other small  specialty insurance companies.
          Cumberland  also  assumes  underwriting  risk from  other  surety
          insurance companies.

               Contract surety bonds guarantee satisfactory performance and
          completion of a contractors' work and payment of the contractors'
          debts and obligations relating to the performance of the contract
          covered by  the bond.  A  default in performance or  payment on a
          bonded contract results in the surety  being primarily liable for
          these obligations, to the extent of the penal amount of the bond.

               On insurance or surety products sold directly by Cumberland,
          the exposure to loss would be  the entire amount of the loss less
          any  portion for which  Cumberland has  secured reinsurance.   On
          reinsurance, Cumberland's exposure  to loss would  be limited  to
          the amount of reinsurance provided.  Reinsurance does not relieve
          an  insurer of  its liability  to the  policyholder for  the full
          amount of the policy, however, the reinsurer  is obligated to the
          insurer for the portion assumed by such reinsurer.

               Contract surety  bonds which the Company  sells directly and
          those  for which  it  provides or  assumes  reinsurance are  sold
          primarily   to  contractors   involved  in   asbestos  abatement,
          hazardous remediation and other small contractors in other  lines
          of business.  Typically, the contracts for which surety bonds are
          provided range from $100,000 to  $250,000, and the amount of  the
          surety bond is for the entire project.<PAGE>





               Miscellaneous  bonds  include  license  and  permit,  court,
          fidelity, notary and bonds  for public officials.  The  bonds are
          primarily  required by  state  statute and  are  used to  satisfy
          certain obligations and to  guarantee compliance of certain laws.
          The  bond amounts are typically less than $25,000 and the average
          amount is $5,000.  The Company's emphasis is to write bonds which
          historically have a low ratio in order to minimize loss exposure.

               Registered Investment Advisors (RIA) Liability  Insurance is
          a claims  - made  professional liability insurance  product which
          insures  specific  written warranty's  under  the insured's  risk
          management program.  Each account  is limited to $500,000 maximum
          coverage and loss exposure  is not realized until five  (5) years
          after purchase.

               The  Company  generates  revenues  from  direct  premiums on
          surety bonds it  writes and reinsurance premiums  on surety bonds
          for  which it  provides reinsurance.   Typically,  premiums range
          from 1  percent to 3 percent  of the bond amount,  with the exact
          premium  being  established  based  on  established  underwriting
          procedures.

          Nature of Customers - Underwriting Procedures
          ---------------------------------------------

               Cumberland has  established an underwriting  philosophy that
          centers  on guidelines which  seek to  minimize the  liability of
          issuing surety bonds by  focusing on three principal areas:   the
          financial  strength, experience,  and operating  capacity of  the
          contractor.

               Underwriting guidelines for  financial strength provide that
          a contractor must have  a minimum net worth of  $100,000, minimum
          working  capital of  $50,000,  minimum working  capital to  total
          contract  backlog  of 10  percent,  minimum  net worth  to  total
          contract  backlog  of 20  percent, net  income  for the  past two
          years, and  a debt to equity  ratio less than 5:1.   In addition,
          underwriters analyze the contractor's  access to lines of credit,
          as well as secondary  personal assets which could be  utilized to
          provide additional financial support.

               Underwriting  guidelines related to  experience provide that
          all key managers  of a  contractor must  have a  minimum of  five
          years of experience in the  following areas:  project management,
          project  administration,  accounting,  and   company  management.
          Underwriters also investigate the past performance of the firm by
          contacting prior owners, subcontractors, and  suppliers that have
          been connected with past projects to investigate a firm's ability
          to  perform its work  and to meet its  financial obligations on a
          daily basis.<PAGE>





               When  analyzing a  contractor's capacity,  underwriters look
          for consistent growth patterns  which take into consideration the
          ratio of working capital  to total contract amount and  net worth
          to total  contract amount.  Underwriters  require the outstanding
          backlog  to  be less  than 150  percent  of the  largest previous
          backlog undertaken by  the firm.  Underwriters also  consider the
          insurance  carried  by  the   firm  for  asbestos  abatement  and
          environmental  experience  and  the financial  integrity  of  the
          insurance  carrier.    The  underwriting  guidelines  require the
          carrier to have  an A rating  by A.M.  Best (an insurance  rating
          service) and to provide coverage on an occurrence basis.

               If the firm seeking  surety bonding fails to meet  the above
          requirements,  the  surety  requires  collateral  to  offset  the
          additional risk.   This option is  utilized if the firm  meets 80
          percent to  99 percent of the  requirements.  If a  firm fails to
          meet 80 percent of the requirements, it is denied surety bonding.

               Cumberland  also requires corporate indemnification, as well
          as  personal indemnification  when the  ownership of the  firm is
          closely held in order to mitigate the liability of issuing surety
          bonding.    Management  believes   that  Cumberland  can  achieve
          profitable operating  results with its current  operations of the
          company.    Management  has  entered  into  negotiations  and  is
          actively  pursing additional  customers to  add to  and diversify
          current operations.

          Marketing of Insurance Products
          -------------------------------

               Software
               --------

                    Cumberland  began its  Bond  Pro  software  development
               initiative  in 1995.  The product is designed to service the
               national agency  base that sell primarily  miscellaneous and
               contract surety bonds.

               Miscellaneous Bonds
               -------------------
          
                    These bonds are primarily sold through agents issued in
               small dollar  amounts and written to  governmental bodies as
               part of a  licensing requirement.  There  are numerous types
               of miscellaneous  bonds  sold in  the  United States.    The
               collective  revenue generated  from these  bonds is  over $1
               million annually.<PAGE>





                    Each state and municipality within each state have bond
               requirements.    For  example, if  you  wanted  to  secure a
               license  to  sell  hot  dogs   from  a  vending  cart,  most
               municipalities  required  a   bond  be  posted   before  the
               governmental body would issue a license.  The  bonds usually
               run between $1,000 and  $20,000 and are valid for  one year.
               There is  a very low loss  ratio for these bonds  as they do
               not  guarantee  performance  and  each  individual  risk  is
               relatively small.

                    The premium per bond  ranging from $50 to $500  and the
               number of bonds an agent might write can exceed one thousand
               per  month.  Each state requires numerous bond forms and the
               agent  and issuing  company must  wrestle with  the problems
               associated  with legal requirements,  approval and insurance
               which varies  from  state  to state.    Also,  the  billing,
               collection  and accounts  receivable  associated with  large
               numbers of small invoices must be managed.

               Contract Bonds
               --------------

                    Contract  bonds  center  primarily on  performance  and
               payment  bonds issued  for the  construction industry.   The
               bonds   guarantee  that  a  contractor  will  fulfill  their
               obligations  with respect  to performing  the scope  of work
               defined  in the  contract  and  fulfilling  their  financial
               obligations.   Cumberland's typical  bond is less  than $1.5
               million with  aggregate ongoing  work of  $3  million.   The
               bonds  are provided to  general contractors, subcontractors,
               and specialty contractors and are marketed through insurance
               agencies specializing in this type of coverage.

                    Cumberland's management has  identified agencies  which
               specialize in  bonds with  the above parameters  and solicit
               their business by personal contact  via agency visits.   The
               agency visits also allow for a demonstration of the Bond Pro
               Software  Program   which  helps  to  solidify   a  business
               relationship due to advantages of automating the issuance of
               bid,  performance,  and  payment  bonds.   The  efficiencies
               gained  in using the Bond Pro  system for issuing, tracking,
               and   reporting  bonds  enhances   Cumberland's  ability  to
               increase premium and to  develop relationships which may not
               otherwise be possible  due to competition for  this class of
               business.<PAGE>





                    Prior to Cumberland's software  development initiative,
               the  insurance  industry  supplied  their  products  through
               agents on a manual  basis, and made very  little use of  the
               current technological advancements in communication methods.
               Certainly billings and  receivables in many instances,  have
               been  automated  but  no  integrated  system  existed  which
               effectively combined company approval, forms inventory, bond
               issuance,   invoicing,   accounts  receivable,   collection,
               renewals and  management information reporting,  as well  as
               conforming to the variety of state insurance regulations and
               dealing with the issue  that a single agent might  deal with
               ten to fifteen companies.

                    Starting  in 1995,  Cumberland's management  elected to
               initially focus on this neglected area.  Since the launching
               of the  development of  this product the  company's software
               team has  written, applied  for copyright, field  tested and
               began distributing the "Cumberland Bond Issuance Program" to
               selected agents around the United States on October 1, 1996.
               The full program encompasses  all the required functions and
               agency needs to  run a full scale  bond desk.  The  software
               developed, when  implemented inside the agency  structure is
               designed  to  reduce  the  labor  required  to  provide  the
               service.

                    It is  designed to assist  the agency with  the modules
               they  choose,  and  is  structured  to  allow  CTI  to  sell
               components of the program  to a board section of  the surety
               industry.

                    As  of December 31, 1996 CTI has ten agencies using its
               software and contracts for four installations.

                    It  is  CTI's intention  in  1997 to  create  the first
               simplified version  of the software for  sale through direct
               mail to smaller agencies throughout the United States.  This
               product includes  the basic  forms and issuance  sections of
               the full program and  will be marketed in a  similar fashion
               as America Online markets  its service.  CTI is  producing a
               software disk that will  be mailed to the agents.   All that
               will be required  for them to buy the service  is to put the
               mailed  disk into their  computer, review  the demonstration
               program  and  press   a  button  to   sign  up  for   agency
               authorization.

                    Also in development, is  a marketing program which when
               completed,  will integrate  with the  full package  and will
               identify the customers in a  given geographical area for the
               product offered, and include various marketing  programs for
               the  agents to use in  securing the business.   This program
               will also be sold as a stand-alone product.<PAGE>





                    The  Cumberland  "Bond  Pro"  market  penetration  plan
               directs four  (4) sales field personnel to introduce the 400
               largest surety  agents to  our program, install  the program
               and train the agents personnel in its use.

               General
               -------

                    Cumberland utilizes the services of its subsidiaries as
               well  as  general  agents for  marketing,  underwriting  and
               administration of its direct lines of business.  Reinsurance
               is  provided on  a  treaty and  facultative  basis.   Treaty
               reinsurance   involves  providing  reinsurance  based  on  a
               written agreement  between the two sureties.   The agreement
               describes which  business is covered and  the amount covered
               for each bond.   Facultative reinsurance  is provided on  an
               individual  bond  basis.    Each  bond  is  underwritten  to
               determine  the acceptability of  the risk and  the amount of
               reinsurance  provided is  determined  by  the  underwriter's
               evaluation of the risk.

                    Cumberland  utilizes the  independent agency  system to
               market  its  contract,  landfill  and  miscellaneous  bonds,
               direct mail to market its notary bonds, and a general agency
               to market it's registered investment advisor's insurance.
          
                    Utilizing  its  bond  program,  Cumberland  markets its
               insurance products through a direct sales force and a direct
               mail system as well as the independent agency system.

               Direct Insurance
               ----------------

                    During  1996,  Cumberland  Casualty  &  Surety  Company
               changed  the focus of how  it acquires surety  premium.  The
               Company committed  to enter  the miscellaneous,  license and
               permit,  probate, court  and  performance and  payment  bond
               markets on a direct  basis.  The Company's emphasis  will be
               to  market directly  to  agents for  all  classes of  surety
               business.   This provides  the Company with  greater control
               over marketing  and underwriting functions  which long-term,
               will ensure a high quality and profitable book of business.<PAGE>





                    During 1994,  1995 and  1996 Cumberland had  a Managing
               General  Agent   Agreement  with  Midwest   Indemnity  Corp.
               ("Midwest"), (the  "Managing General Agent").   Midwest is a
               fifty-plus year  old insurance agency which  is primarily an
               underwriter  of surety  bonds.   Based in  Illinois, Midwest
               markets bonds  nationally through  a network of  independent
               agents  which  market  to  contractors  in their  geographic
               areas.   Midwest has  been granted underwriting  and binding
               authority  on bonds  up to  $500,000 and  premium collection
               authority, for which it receives a 35 percent commission  to
               cover  overhead  costs  and   the  cost  of  commissions  to
               subagents.  The profit from this agreement, after deductions
               for commissions, reinsurance and losses is then split evenly
               between Cumberland  and the Managing  General Agent.   As of
               December  31,  1996, the  Company  reported  a profit  split
               recoverable  from  Midwest  of  approximately  $.5  million.
               Effective January 1, 1997 Cumberland dissolved its agreement
               with Midwest Indemnity Corp.

                    Cumberland primarily  writes direct surety bonds for KC
               and its affiliates.   Revenues attributable to direct surety
               transactions with KC and its affiliates were $13,546, $4,535
               and $2,873 for the  years ended December 31, 1994,  1995 and
               1996, respectively.

               Reinsurance
               -----------

                    Effective July  1, 1996,  Cumberland Casualty  & Surety
               Company  entered into  a surety  excess of  loss reinsurance
               agreement  with  Transatlantic  Reinsurance   Company  which
               provides the Company with the ability to write  single bonds
               up  to  $1,500,000  with  a  principal  aggregate  level  of
               $3,000,000.         Transatlantic     Reinsurance    Company
               (Transatlantic   Re)  is  a   carrier  that  specializes  in
               reinsurance   treaties  related  to   the  surety  business.
               Established  in  1952, Transatlantic  Re  is  Best Rated  A+
               (Superior),  with  statutory   surplus  of  $787,403,000  at
               December  31, 1995.    The reinsurance  treaty provides  the
               Company the ability to actively pursue small to medium sized
               contractors with revenues up to $5,000,000.  It  also allows
               the  Company to market  and underwrite  miscellaneous surety
               bonds up to $1,500,000.  The agreement is a principal excess
               of loss  agreement and Cumberland retains  five percent (5%)
               of $900,000 net loss, each principal excess  of $100,000 net
               loss, each principal.  The Company retains ten percent (10%)
               of  the  next $1,000,000  layer.    This reinsurance  treaty
               effectively allows Cumberland Casualty  & Surety Company  to
               market its products in  all twenty-two (22) states  they are
               presently  licensed   in,  which  will  lead   to  a  better
               geographic spread of risk and premium dollars.<PAGE>





                    A  portion of Cumberland's reinsurance premiums written
               were generated through a quota share reinsurance treaty (the
               "Treaty") with an unaffiliated insurer,  Indiana Lumbermen's
               Mutual Insurance  Company ("ILMIC").   ILMIC is  a specialty
               carrier that issues insurance policies related to the lumber
               business  and surety bonds.   Established in  1897, ILMIC is
               Best Rated  B++  (Very Good)  with statutory  policyholders'
               surplus of $25,242,000 at  December 31, 1995.  The  terms of
               this treaty provide that Cumberland assume 40 percent of all
               bonds up to  $250,000 written  by ILMIC and  also assume  40
               percent   of  the   losses  and  loss   adjustment  expenses
               associated  with the  policies.   ILMIC retained  40 percent
               commission to cover agents'  commissions, premium taxes  and
               general overhead expenses.  This treaty has been replaced by
               a  pooling  agreement,  and  although  Cumberland  is  still
               receiving residual  revenues from  this treaty, it  does not
               anticipate receiving  significant future revenues  from this
               agreement.

                    For  the  period  October   1991  to  September   1993,
               Cumberland entered  into  a pooling  agreement  with  ILMIC.
               Connecticut  Indemnity Company  ("CIC") and  American Surety
               Company ("American  Surety") which replaces  the quota share
               reinsurance agreement.  CIC is a member of the Orion Capital
               Companies  which  are  specialty  writers  of  property  and
               casualty   coverages   with    an   emphasis   on   workers'
               compensation,  professional  liability  for  architects  and
               engineers, nonstandard automobile and surety business.   CIC
               was formed  in 1917 and had statutory surplus of $90,381,000
               at  December 31,  1995.   CIC is  Best Rated  A (Excellent),
               based on  the consolidated performance of  the Orion Capital
               Companies by  A.M. Best, an  insurance rating  agency.   The
               Orion   Capital   Companies   had   statutory   surplus   of
               $520,306,000  at  December  31,   1995  and,  based  on  its
               consolidated  performance,  is  Best  Rated  A  (Excellent).
               American Surety is a small  nondomestic surety which is  not
               rated.   This  pooling  arrangement  increased  Cumberland's
               diversification  geographically and  reduced  the amount  of
               dependence on ILMIC.   Because of this agreement, management
               does  not  believe  that   the  loss  of  the   quota  share
               reinsurance treaty with ILMIC  had a material adverse effect
               on the operation of Cumberland.<PAGE>





                    The  Company  entered  into  a  new  pooling  agreement
               (beginning October 1993).   Under the provisions of the  new
               agreement,  CIC and  ILMIC were  replaced by  Gulf Insurance
               Company  ("Gulf").  Under this agreement, Cumberland assumes
               10%  (effective April  1, 1996);  12.5% (effective  April 1,
               1995; 25%  prior to  that date) of  certain surety  policies
               underwritten  by Gulf.    Gulf  is  a  member  of  the  Gulf
               Insurance  Group which  was formed  in 1940  and is  jointly
               owned  by Primerica  Corporation and  Travelers Corporation.
               Gulf is  rated A+ (Superior) and  had policyholders' surplus
               of  $269,179,379  at December  31, 1995.    Gulf is  a niche
               market  underwriter  which  targets  small  to  medium  size
               accounts and offers D&O, E&O, fidelity  and surety and other
               specialty liability products.

                    Cumberland  assumes  reinsurance on  a  facultative and
               treaty basis from several  small sureties.  The loss  of one
               of these customers would  not have a material impact  on the
               operations of Cumberland.

               Investments
               -----------

                    Investments  activities are conducted  by an investment
               committee   which  manages  assets  pursuant  to  investment
               objectives and  guidelines established by  senior management
               of Cumberland.  These  objectives require that the portfolio
               consist  of debt  and  equity  securities  of the  type  and
               quality  mix   which  will  enable  Cumberland   to  compete
               effectively in  the property and  casualty insurance market,
               provide appropriate interest margins and assure Cumberland's
               continued   solvency  and   profitability.     In  addition,
               investments in  tax-free obligations are made  to the extent
               of any tax advantages available.  Investment in any security
               not  stated  in  the  investment  committee's philosophy  is
               limited to five percent of statutory surplus.

               Reserves for Losses and Loss Adjustment Expenses
               ------------------------------------------------

                    Reserves for  losses and  loss adjustment expenses  are
               established  based  upon  reported  claims  and Cumberland's
               historical  record  of loss  percentages  and  trends.   The
               amount  of loss reserves for  reported claims is  based on a
               case  by  case  evaluation  of  the  claim.    Additionally,
               historical data  is reviewed  and consideration is  given to
               the  anticipated impact  of  various factors  such as  legal
               developments and economic conditions, including  the effects
               of inflation.  Amounts  are adjusted periodically to reflect
               these factors.  In addition, Cumberland may incur additional
               liability if  its reinsurers do not  meet their obligations.
               Reinsurance does not discharge an insurance carrier from its
               primary  liability to a policy holder for the face amount of
               the coverage.<PAGE>





                    Reserve  for losses  and loss  adjustment expenses  are
               actuarial  estimates   of  losses,  including   the  related
               settlement costs.  Management believes that the reserves for
               losses and  loss adjustment  expenses are adequate  to cover
               the losses and loss  adjustment expenses, including the cost
               of incurred  but not  reported losses.   In accordance  with
               statutory   requirements,   CCS's  reserves   are  certified
               annually at year end by an independent actuary.

                    There  has  been  no  material  change  in  the  mix of
               business,  including the  location  of business,  geographic
               mix, and types of risks  assumed.  Incurred losses increased
               in  1994  due  to a  single  principal  on business  written
               through  the  1991/92  pooling  agreement.   This  loss  was
               atypical in  nature, and  the Company does  not expect  this
               trend  to  continue.   An  additional  reserve increase  was
               recognized  during 1996 due to  the increase in  claims on a
               1993/1994 Pooling Agreement.

                    Current  fluctuations  in  inflation  have  not  had  a
               material effect on the financial statements and there are no
               explicit  provisions in  the  financial  statements for  the
               effects of inflation that may cause future changes  in claim
               severity.

                    Other  than  certain classification  differences, there
               are no material differences  between statutory reserves  and
               Generally Accepted Accounting  Principle ("GAAP")  reserves.
               The  Company  does  not   discount  its  loss  reserves  for
               financial reporting purposes.

               Claims Adjustment
               -----------------

                    In  addition to  management's  active participation  in
               claims  administration,  Cumberland has  historically relied
               upon outside claims adjusters and attorneys to help minimize
               the  cost of  claims  administration.   Due to  management's
               active  participation  and  the  increased  direct  premium,
               Cumberland  believes  it has  the  expertise  to manage  its
               claims administration.

               Regulation
               ----------

                    Cumberland   is  subject   to  regulation   by  various
               supervising  agencies  which  exercise broad  administrative
               powers  with respect  to  licensing  to  transact  business,
               overseeing  trade  practices,  licensing  agents,  approving
               policy  and bond  forms, establishing  reserve requirements,
               prescribing    dividend   limitations,    approving   rates,
               prescribing  the  form  and content  of  required  financial
               statements, regulating the  types and amount  of investments
               permitted   and  other   matters,  all   as  set   forth  in<PAGE>





               regulations.<PAGE>





                    State laws regulating insurance holding companies, such
               as Cumberland, may significantly limit the ability of CCS to
               pay   dividends   to    Cumberland,   therefore    affecting
               Cumberland's  ability  to pay  or  KC's  ability to  require
               Cumberland  to  pay  loans  or  advances  from  KC.    Under
               insurance  guaranty fund  laws, insurers  doing  business in
               states having  such laws  can be  assessed up to  prescribed
               limits  for   policyholder  losses  incurred   by  insolvent
               companies.    The  amount   of  any  future  assessments  on
               Cumberland under  these laws cannot be  reasonably estimated
               at this time.

                    All  of  the states  in  which  Cumberland is  licensed
               regulate  insurers  and  their  affiliates  under  insurance
               holding company legislation.   Under such laws, transactions
               with  related  parties may  be  subject to  prior  notice or
               approval  depending  on  the  size  of  the  transaction  in
               relation to the Company's financial position.   There can be
               no assurance that such transactions will be approved in  the
               future.

                    Although  the federal  government  generally  does  not
               directly   regulate   the   insurance    industry,   federal
               initiatives  often  have an  impact  on  the  industry in  a
               variety  of ways.    Current and  proposed federal  measures
               which  may  significantly   affect  the  insurance  industry
               include employee benefit  regulation, securities  regulation
               concerning insurance products, tax law changes affecting the
               taxation  of   insurance  companies,  changes  in   the  tax
               treatment of insurance products, and proposed legislation to
               more fully  subject insurance  companies to  antitrust laws.
               Changes in federal, state, and  local regulations could have
               a  materially   adverse   effect  on   Cumberland's   future
               operations.

                    Cumberland  believes it is  substantially in compliance
               with  all  material  statutory  regulations  concerning  its
               primary business operations.

               Competition
               -----------

                    The insurance industry is highly competitive due to the
               number and  size of insurers and agencies.  However, because
               Cumberland markets  its products  in the  specialty contract
               surety and  landfill market,  Cumberland  believes that  its
               competition is  limited to  a few regional  surety companies
               which have also  targeted this market.   The larger sureties
               and insurance  companies  have chosen  historically  not  to
               enter this market.

                    Cumberland has aligned itself with other small sureties
               as  a reinsurer.   Therefore,  Cumberland is  able to  write
               larger  bonds than  some competitors  of the  same financial<PAGE>





               size because  of the availability of  reinsurance from these
               sureties.<PAGE>





                    Cumberland operates in a  highly competitive market for
               miscellaneous bonds,  and competes with  its competition  on
               price and service.

                    Cumberland  believes  that  the  principal  competitive
               factors  in   the   industry  are   reputation,   managerial
               experience,   price,  and   breadth  of   services  offered.
               Cumberland   believes   that   the  experience   of   senior
               management, together  with their  reputation and the  use of
               their bond program as  a marketing tool, provides it  with a
               competitive advantage in the  industry in which its products
               are marketed.

               Employees
               ---------

                    Cumberland employs  thirty-one employees, of  which two
               are employed in an executive capacity, eight are employed in
               professional capacities, and  twenty-nine are employed in  a
               variety   of   administrative   and    clerical   positions.
               Cumberland   believes  that  it   can  continue  to  operate
               effectively with the current number of employees.

                    None of  the Company's employees are  union members and
               none are  subject to collective bargaining  agreements.  The
               Company believes that its relationship with its employees is
               satisfactory.

               Surplus Debentures/Term Note
               ----------------------------

                    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  due
               quarterly only if and when  CCS's surplus, as defined below,
               exceeds  $4,000,000 and are  limited to  an amount  equal to
               one-half of  the statutory  net income before  dividends and
               federal and  foreign and  income taxes  of  CCS during  that
               year.  As  of December 31,  1996, no payments could  be made
               under the terms of the debenture.

                    In  1992, the debenture due to KC from CCS was assigned
               to CTI.  CTI entered into a term note agreement  with KC for
               the outstanding amount of the debenture, including  interest
               arrearage ($4,291,049) at September 30, 1992 as  part of the
               Distribution.   The term note  is pari passi  with the other
               debts of CCS,  bears interest  at 10 percent  and is due  on
               October 1, 2002.   Interest and principal  are due quarterly
               with  minimum  payments equal  to one  half of  net earnings
               before interest and federal income taxes.  The term note was
               subordinate  in right  of payments  to all  policyholders of
               CCS.  Surplus funds  are defined as funds CCS  has remaining
               after deduction of capital, insurance reserves and all other
               liabilities,   in   accordance  with   accounting  practices<PAGE>





               prescribed or permitted by the Florida Insurance Department.<PAGE>





                    Effective October 1, 1996,  CTI issued 1,723,290 shares
               at the fair value of $3.00  per share of its common stock to
               Kimmins Corp.  (f/k/a Kimmins Environmental Services, Corp.)
               in exchange for surrender of the Company's term note payable
               in the amount of $5,169,870.

          Item 2.        Properties
          -------        ----------

               Cumberland leases  office space from a company  owned by the
          chairman of the Board, Mr. Francis M. Williams, at a monthly rate
          of $4,347.  The lease expired on  February 28, 1997.  A new lease
          was executed March 1, 1997.

          Item 3.        Legal Proceedings
          -------        -----------------

               Cumberland  and  its subsidiaries  are  involved in  various
          lawsuits  arising   in  the  ordinary  course   of  its  business
          operations as an insurer.   Management does not believe  that any
          of these lawsuits will have a material effect on the consolidated
          financial   position,  future   operations  or   cash  flows   of
          Cumberland.

          Item 4.        Submission  of  Matters  to  a  Vote  of  Security
          Holders
          -------        --------------------------------------------------

          None

          Item 5.        Market for the Company's Common Equity and Related
          -------        Stockholders Matters
                         --------------------------------------------------
          --

               The Company's  Common Stock (symbol "CUMB")  has been traded
          in the over-the-counter market since October 1, 1992.   Effective
          December 16,  1996, Cumberland was  approved and included  in the
          trading on the  Nasdaq Small Cap  Market.  Bid  and Asked  prices
          were  set  forth  in Quotation  Market  Sheets  published by  the
          National Quotation Bureau and  Nasdaq.  The bid and  asked prices
          for 1995 and 1996 were as follows:

                                         1995           1996
                                   ------------------------------

                                     Bid     Ask    Bid     Ask
                                   ------- --------------------- 

               First Quarter         $3/8   $1/2    $1/2   $9/16
               Second Quarter        1/4     1/2    7/8    1.00

               Third Quarter         1/4     1/2    3.00   3-1/4<PAGE>





               Fourth Quarter        1/4     1/2    3.00   3-1/4<PAGE>





               As of December  31, 1996, there  were 1,062 stockholders  of
          record of the Common Stock.  A number of such Holders are brokers
          and other institutions  holding shares in "street  name" for more
          than one beneficial owner.

               Dividends
               ---------

                    The payment by the Company of dividends, if any, in the
               future is within  the discretion of  its Board of  Directors
               and   will  depend  upon  the  Company's  earnings,  capital
               requirements  (including working  capital needs),  and other
               financial needs.  Cumberland  does not anticipate paying any
               dividends on Cumberland Common Stock in the near future.

                    The  future payment  of dividends,  if any,  by  CCS is
               within the  discretion of  its Board  of Directors  and will
               depend  upon CCS's earnings,  statutory limitations, capital
               requirements (including working capital needs) and financial
               condition, as  well as  other relevant factors.   Applicable
               state laws and regulations restrict the payment of dividends
               by CCS to the  extend of surplus profits less  any dividends
               that  have been paid in  the preceding twelve  months or net
               investment income  for the  year, whichever is  less, unless
               CCS  obtains prior approval from the insurance commissioner.
               CCS does not  anticipate paying any dividends  on CCS Common
               Stock in the near future.<PAGE>





          Item 6.        Selected Financial Data
          -------        -----------------------
          <TABLE>
          <CAPTION>
          Income Statement Data:

                                                        Year Ended December 31
                                             -------------------------------------------

                                               1992     1993     1994     1995    1996
                                             -------- -------- -------- ----------------
                                                (In Thousands - except per share data)

            <S>                              <C>      <C>      <C>     <C>      <C>

            Operating data:                                            

              Net premium income  . . . . . .$  5,042 $  4,412 $ 4,957 $  5,068 $  3,808 
              Net investment income . . . . .     331      337     284      397      404 

              Net realized gain (losses)  . .       -       22    (124)     124      118 

              Benefits and expenses . . . . .   5,418    4,825   6,604    7,016    6,952 

              Income (loss) before income                              
               taxes  . . . . . . . . . . . .     248      238  (1,209)    (228)    (583)
              Net income (loss) . . . . . . .     183      231  (1,073)    (228)    (583)

            Pro forma net income (loss) per                            
              share (1) . . . . . . . . . . .$    .05 $    .06 $  (.27)$   (.06)$   (.14)
            </TABLE>

          (1)  Pro  forma net income (loss) per  share (unaudited) for 1992
               and 1993 has  been calculated based on the  4,039,780 shares
               of Cumberland  Common Stock that were  outstanding after the
               Distribution.  The 1994, 1995 and 1996 net income (loss) per
               share  amounts  have  been  computed  based  on  the  actual
               weighted  average number  of shares  outstanding  during the
               respective years, adjusted for the dilutive effect of  stock
               options.<PAGE>





          <TABLE>
          <CAPTION>
          Balance Sheet Data:

                                                        Year Ended December 31
                                             -------------------------------------------

                                               1992     1993     1994     1995    1996
                                             -------- -------- -------- ----------------
                                                (In Thousands - except per share data)

            <S>                              <C>      <C>      <C>     <C>      <C>

            Balance sheet data:                                        

              Investments . . . . . . . . . .$  7,637 $  5,046 $ 5,852 $  6,303 $  6,110 
              Cash and cash equivalents . . .   1,161    3,117   1,701    1,236      669 

              Accounts receivable . . . . . .   1,361      948   2,540      550      925 

              Reinsurance recoverables (1)      1,363    1,876   1,749    1,697      988 

              Deferred policy acquisition                              
                costs . . . . . . . . . . . .     697      340     581      435      635 
              Intangibles . . . . . . . . . .      --       --     134    2,163    1,957 

              Total assets  . . . . . . . . .  12,608   11,956  12,834   12,709   11,769 

                                                                       

              Policy liabilities and                                   
                accruals:                                      
                Unearned premiums . . . . . .   1,895    1,037   1,631    1,182    1,862 

                Losses and LAE (1)  . . . . .   3,497    3,355   3,138    2,352    1,992 

              Term notes/surplus debentures,                           
                including accrued interest      4,291    4,403   4,343    4,798        0 

              Other long-term debt  . . . . .      --       --      --       --    1,533 
              Total liabilities . . . . . . .  10,169    9,351  11,518   11,419    5,956 

              Total stockholders' equity  . .   2,439    2,605   1,316    1,290    5,813 
            </TABLE>

          (1)  The  1992, 1993,  1994,  1995  and  1996 amounts  have  been
               adjusted to  reflect the  Company's  adoption of  SFAS  113.
               "Accounting and Reporting for Reinsurance  of Short-Duration
               and Long- Duration  Contracts."  See Note 1 of  the Notes to
               Consolidated Financial Statements.<PAGE>





          Item 7.        Management's Discussion and Analysis of Financial
          -------        Condition and Results of Operations
                         -------------------------------------------------

          Results of Operations
          ---------------------

               The following  table sets forth, for  the periods indicated,
          (i)  summary   financial  data  (in  thousands),   and  (ii)  the
          percentage change in the dollar amount for such items from period
          to period.

          <TABLE>
          <CAPTION>
                                                        Percentage Increase
                                                             (Decrease)
                                          Year Ended December      Year Ended December
                                                   31                      31
                                    --------------------------------------------------

                                       1994      1995      1996      1995      1996
                                    --------------------------------------------------

            <S>                     <C>       <C>       <C>       <C>       <C>
            Net premium income  . . $   4,957 $   5,068 $   3,808 $     2.2%$   (24.9)

            Net investment income         284       397       404      39.8       1.8 

            Net realized gains                                    
              (losses)  . . . . . .      (124)      124       118     200.0      (4.8)

            Other revenues  . . . .       278     1,199     2,039     331.3      70.1 
            Benefits and expenses       6,604     7,016     6,952       6.2       (.9)

            Loss before income taxes   (1,209)     (228)     (583)     81.1    (155.7)

            Net loss  . . . . . . .    (1,073)     (228)     (583)     78.8    (157.7)
            </TABLE>


          Year  Ended December 31, 1996 Compared to Year Ended December 31,
          1995
          -----------------------------------------------------------------
          -

               During the year ended December 31, 1996, net  premium income
          decreased by  25 percent  to $3,808,000 from  $5,068,000 for  the
          year ended December 31, 1995.

               Net   reinsurance  premiums   earned  through   the  Pooling
          Agreements  were $2,693,418  and  $4,440,632 for  1996 and  1995,
          respectively representing a decrease of $1,747,214, or an overall
          39 percent decrease in assumed premiums.<PAGE>





               Direct premiums earned were $1,114,901 and $627,683 for 1996
          and 1995,  respectively, representing an increase  of $487,218 or
          78 percent.<PAGE>





               During 1996, direct premiums  written by CCS increased while
          assumed  premiums   decreased  as  a  result   of  the  marketing
          activities of the Company.   CCS's direction is to  penetrate the
          direct market while decreasing the volume of reinsurance premiums
          assumed through Pooling Agreements.  The following table reflects
          the written premium activity for 1996 and 1995.

                                            Written Premiums
                              --------------------------------------------

                                   1995           1996         % Change
                              -------------- -------------- --------------

             Direct . . . . . $      881,683 $    2,025,796 $         130% 
             Assumed  . . . .      3,899,884      2,890,050           (26%)
                               -------------- -------------- --------------

             Total  . . . . . $    4,781,567 $    4,915,846 $            3%
                               ============== ============== ==============

               During the year ended December 31, 1996 and 1995, investment
          income   before  capital   gains  was   $403,919  and   $397,681,
          respectively.   Realized gains, net of losses, for the year ended
          December   31,  1996   and  1995   was  $117,824   and  $124,004,
          respectively.   The net  result  was investment  income  remained
          consistent for 1996 as compared to 1995.

               Other  revenues  for  the  year  ended  December  31,   1996
          increased to  $2,039,331  from  $1,198,249  for  the  year  ended
          December  31, 1995,  an increase  of  70.1%.   The increase  is a
          direct  result of  an increase  of $612,350 in  commission income
          earned by subsidiary surety agencies, and an increase of $228,729
          in consulting revenues  derived from Qualex  which was formed  in
          November 1994.

               During the year ended December 31, 1996, benefits and claims
          expenses  increased to  $1,670,640 from  $1,245,546 for  the year
          ended  December 31,  1995.   The increase  in benefit  and claims
          expenses  of  $425,095 is  attributed  to  claims on  reinsurance
          assumed pooling agreements.  During 1996, an increase of $300,000
          was  charged  to  the  1993/94  pooling  agreement.    Management
          believes the increase in claims arising  from business written in
          the Pooling Agreement has leveled off and anticipates that losses
          associated with  the reinsurance contracts  will decrease  during
          1997.     Losses  associated   with  direct   premiums  represent
          approximately 11% of premiums earned or $127,232.

               During the year ended December 31, 1996, the amortization of
          deferred  policy acquisitions costs  decreased to $1,532,355 from
          $2,380,140 for the year ended December 31, 1995.  The decrease is
          attributable to the decrease in earned premiums.<PAGE>





               During the year ended  December 31, 1996, operating expenses
          increased to $3,255,805 from $2,882,255 in 1995.  The increase is
          due to  additional expenses associated  with the purchase  of two
          agencies   during  1995,   expenses  incurred  in   research  and
          development   of  Cumberland's   Bond  Program,   and  additional
          personnel employed to direct market its insurance products.

               Net  interest expense  decreased  to $493,337  in 1996  from
          $508,217 in 1995 due to the conversion on the term note to equity
          on October 1, 1996.

               The Company s effective tax (benefit) rate for 1996 and 1995
          was -0- percent for  1996 and 1995. The deviation  from statutory
          rates for  1996  and  1995  primarily relates  to  the  Company s
          establishment  of a valuation allowance  on a portion  of the net
          operating loss, the future realization of which is uncertain.

          Year  Ended December 31, 1995 Compared to Year Ended December 31,
          1994
          -----------------------------------------------------------------

               During the year ended December 31,  1995, net premium income
          increased by 2  percent to  $5,068,000  from  $4,957,000 for  the
          year  ended December  31, 1994.   Premium  income for  1995, when
          compared  to 1994,  remained  relatively flat.   Net  reinsurance
          premiums earned through  the pooling  agreements were  $4,441,000
          and $4,453,000 for 1995 and 1994, respectively.   Direct premiums
          earned were $628,000 for  1995 as compared to $503,000  for 1994,
          an increase of $125,000 or 25%.

               During  the year  ended  December 31,  1995, net  investment
          income increased  to $521,000 from  $160,000 for  the year  ended
          December  31,   1994.  The  increase  in   investment  income  is
          attributed to net realized  gains of $124,000 and an  increase in
          the interest  rate earnings  on the  bond portfolio  during 1995.
          The Company realized net losses on sales of investments in common
          stocks in 1994 of $123,000.

               Other revenue for the year ended December 31, 1995 increased
          to $1,199,000 from $278,000 for the year ended December 31, 1994,
          an increase  of 331%.   The majority  of the increase  relates to
          $489,000 of commission income  derived from SG and SA  which were
          acquired  in 1995,  and $425,000  of consulting  revenues derived
          from Qualex which was formed in November 1994.

               During the year ended December 31, 1995, benefits and claims
          expenses  decreased to  $1,246,000 from  $2,646,000 for  the year
          ended  December  31,  1994.  The ratio  of  benefits  and  claims
          expenses to net premium income for 1995 (25%) decreased from 1994
          (53%)  primarily due to a decrease in incurred losses relating to
          a  single  principal  on  business written  through  the  1991/92
          pooling agreement. This  loss was atypical in nature and expensed
          during 1994.<PAGE>





               During the year ended December 31, 1995, the amortization of
          deferred policy  acquisition costs increased  to $2,380,000  from
          $2,038,000 for the  year ended  December 31, 1994.  The ratio  of
          amortization of deferred policy  acquisition costs to net premium
          income for 1995 (47%) approximated that for 1994 (41%). 

               During the year ended  December 31, 1995, operating expenses
          increased to  $2,882,000 from  $1,515,000 in 1994.  This increase
          was  due primarily to  purchasing the two  agencies and expanding
          the Company's book of business.

               Net  interest expense  increased  to $508,200  in 1995  from
          $406,000  in 1994  primarily due  to interest  expense associated
          with the purchase of SG and SA.

               The Company s effective  tax (benefit) rate for 1995 was -0-
          percent as  compared to  (11.2) percent  for 1994.  The deviation
          from statutory rates for  1994 and 1995 primarily relates  to the
          Company s establishment of a valuation allowance on a portion  of
          the  net  operating  loss, the  future  realization  of  which is
          uncertain.

          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
          premiums  up  to an  amount equal  to  three times  its statutory
          surplus,   or  approximately   $15,104,000  and   $15,405,000  at
          December 31, 1996 and 1995,  respectively. Therefore, based  upon
          statutory guidelines, the Company could increase  earned premiums
          by  approximately $11,296,000 in  1997 in addition  to the amount
          earned  in 1996. The primary sources of liquidity for the Company
          are funds generated from  surety premiums, investment income, and
          proceeds from sales and  maturities of portfolio investments. The
          principal expenditures are payment  of losses and loss adjustment
          expenses, insurance operating expenses, and commissions.

               At  December 31,  1996, the  Company s $11,629,224  of total
          assets   calculated  based   on  generally   accepted  accounting
          principles were  distributed primarily as follows:  59 percent in
          cash  and investments  (including accrued investment  income), 17
          percent in receivables  and reinsurance recoverables, 22  percent
          in  intangibles  and  deferred  policy acquisition  costs  and  2
          percent in other assets.<PAGE>





               The  Company  maintains  a  liquid  operating  position  and
          follows  investment guidelines  that are  intended to  provide an
          acceptable  return  on  investment  while  maintaining sufficient
          liquidity to meet its obligations.

               Net cash used in operating activities was $315,000, $375,000
          and  $355,000 for  the years  ended December 31,  1994,  1995 and
          1996,  respectively.    In  1994,  the  cash  used  in  operating
          activities  of $315,000 was due primarily to an increase in trade
          accounts receivable and  the net loss for  the year offset by  an
          increase  in ceded reinsurance payable. In 1995 and 1996 the cash
          used  in  operating  activities  was  primarily  attributable  to
          payments of claims  and reinsurance,  which offset in  part by  a
          decrease in accounts receivable.

               Net  cash   (used  in)  provided  by   (used  in)  investing
          activities  was $(1,024,000),  $(383,000), and  $358,000 for  the
          years  ended  December 31,  1994,  1995  and 1996,  respectively.
          Investing   activities   consist  of   purchases  and   sales  of
          investments and advances to and from KC.

               KC  and  Cumberland  entered  into  a  term  note  agreement
          evidencing  the balance of the surplus debenture which was due KC
          from CCS. The surplus debenture, as well as all accrued interest,
          has been assigned to Cumberland. Refer to Note 8 of  the Notes to
          Consolidated Financial Statements.

          Losses and Loss Adjustment Expenses
          -----------------------------------

               The  consolidated financial statements include the estimated
          liability for unpaid losses and loss adjustment expenses (LAE) of
          CCS.  The liabilities  for losses  and  LAE are  determined using
          case-basis  evaluations and statistical projections and represent
          estimates of the ultimate net  cost of all unpaid losses  and LAE
          incurred through the end the period. These  estimates are subject
          to the effect of  trends in future claim severity  and frequency.
          These  estimates  are  continually reviewed  and,  as  experience
          develops  and new  information  becomes known,  the liability  is
          adjusted as necessary; such adjustments, if  any, are included in
          current operations.

          Reconciliation  of  Liability  for  Losses  and  Loss  Adjustment
          Expenses
          -----------------------------------------------------------------

               The  following  table  provides  a   reconciliation  of  the
          beginning  and ending  liability  balances,  net  of  reinsurance
          recoverable,  for  1994,  1995  and  1996 to  the  gross  amounts
          reported in Cumberland s balance sheets:<PAGE>





                                                    December 31

                                            1994        1995        1996
                                        -----------------------------------

          Liability for losses and LAE,             
           net of reinsurance                       
           recoverable on unpaid                    
           losses, at beginning                     
           of year  . . . . . . . . . . $1,708,761  $ 1,625,703 $1,052,547 
                                        -----------------------------------
          Provision for losses and LAE              
           for claims occurring in the              
           current year, net of                     
           reinsurance  . . . . . . . .  2,425,455    1,486,546  1,370,640 

          Increase (decrease) in                    
           estimated losses and LAE for             
           claims occurring in prior                
           years, net of reinsurance        220,600    (241,000)   300,000 
                                        -----------------------------------

          Incurred losses during the                
          current year, net of                      
           reinsurance  . . . . . . . .   2,646,055   1,245,546  1,670,640 

          Losses and LAE payments for               
          claims, net of                            
           reinsurance, occurring                   
           during:                                  
             The current year . . . . .     810,903     161,279    422,544 
             Prior years  . . . . . . .   1,918,210   1,657,423  1,705,721 
                                        -----------------------------------
                                          2,729,113   1,818,702  2,128,265 
                                        -----------------------------------

          Liability for losses and LAE,             
           net of reinsurance                       
           recoverable on unpaid                    
           losses, at end of year   . .   1,625,703   1,052,547    594,922 

          Reinsurance recoverables on               
           unpaid losses at end of year             
           (1)  . . . . . . . . . . . .   1,512,219   1,299,257  1,396,874 
                                        -----------------------------------

          Liability for losses and LAE,             
           gross of reinsurance                     
           recoverables on unpaid                   
           losses, at end of year   . . $ 3,137,922 $ 2,351,804 $1,991,796 
                                        ===================================

          (1)  Exclusive of ceded unearned premiums accounts.<PAGE>





               Cumberland  experienced a  $241,000 excess  in reserves  for
          losses and loss adjustment  expenses in  1995, and  experienced a
          deficiency   of  $220,600   and  $300,000   in  1994   and  1996,
          respectively for losses  incurred in prior  years. The excess  in
          1995  principally  resulted  from  settling case  basis  reserves
          established  in  prior years  for  amounts  that  were less  than
          expected.  The deficiency  in  1994 principally  resulted from  a
          single principal on business  written through the 1991/92 pooling
          agreement.  This loss was atypical in nature and the Company does
          not  expect  this situation  to be  indicative of  a trend.   The
          deficiency in 1996 is a result of additional claims  expense on a
          1993/94 pooling agreement.

               The anticipated effect of inflation is implicitly considered
          when estimating liabilities for losses and LAE. While anticipated
          price increases due to inflation are considered in estimating the
          ultimate  claim  costs, the  increase  in  average severities  of
          claims  is  caused  by  a  number  of   factors.  Future  average
          severities are projected based  on historical trends adjusted for
          anticipated changes in underwriting standards, policy provisions,
          and  general  economic  trends.  These  anticipated   trends  are
          monitored  based  on  actual  development  and  are  modified  if
          necessary.

               The differences between the  December 31, 1996 liability for
          losses  and  LAE   reported  in  the  accompanying   consolidated
          financial  statements  in  accordance  with   generally  accepted
          accounting principles  ("GAAP") and  that reported in  the annual
          statement  filed   with  the   state  insurance   departments  in
          accordance  with statutory  accounting  practices ("SAP")  are as
          follows:

             Liability for losses and LAE on a SAP basis
               (which is net of reinsurance recoverables on
               unpaid losses and LAE  . . . . . . . . . . . $      907,833 

             Reinsurance recoverables on unpaid losses and
               LAE  . . . . . . . . . . . . . . . . . . . .      1,396,874 

             Salvage and subrogation  . . . . . . . . . . .       (312,911)
                                                            ---------------
             Liability for losses and LAE, as reported in
               the accompanying GAAP basis financial
               statements . . . . . . . . . . . . . . . . . $    1,991,796 
                                                            ===============<PAGE>





          Analysis of Loss and Loss Adjustment Expense Development
          --------------------------------------------------------
               The  following  table  represents  the  development  of  the
          liability for  unpaid liabilities,  net of reinsurance,  for 1989
          through 1996 (in thousands).
          <TABLE>
          <CAPTION>
                                  1989         1990          1991         1992
                                    ------------- -------------------------- -------------

            <S>                     <C>           <C>          <C>           <C>

            Liability for losses                               
              and loss adjustment                              
              expenses, net of                                 
              reinsurance . . . . . $      1,003  $      2,171 $      1,663  $      2,426 
            Liability re-estimated                             
              as of:                                           
               One year later . . .        2,113         3,003        1,273         2,239 
               Two years later  . .        1,908         2,549        1,200         2,546 
               Three years later  .        1,806         2,349        1,316         2,263 
               Four years later . .        1,636         2,471        1,443         2,418 
               Five years later . .        1,678         2,368        1,234             - 
               Six years later  . .        1,639         2,466            -             - 
               Seven years later  .        1,635                          -             - 
                                    ------------- -------------------------- -------------

            Cumulative (deficiency)                            
              redundancy  . . . . . $       (632) $       (295)$        429  $          8 
                                    ============= ========================== =============
            </TABLE>

          <TABLE>
          <CAPTION>

                                  1993         1994          1995         1996
                                    ------------- -------------------------- -------------

            <S>                     <C>           <C>          <C>           <C>
            Liability for losses                               
              and loss adjustment                              
              expenses, net of                                 
              reinsurance . . . . . $      1,709  $      1,625 $      1,053  $        595 <PAGE>





            Liability re-estimated                             
              as of:                                           
               One year later . . .        2,033         2,228        2,186             - 
               Two years later  . .        1,481         2,601            -             - 
               Three years later  .        2,947             -            -             - 
               Four years later . .            -             -            -             - 
               Five years later . .            -             -            -             - 
               Six years later  . .            -             -            -             - 
               Seven years later  .            -             -            -             - 
                                    ------------- -------------------------- -------------

            Cumulative (deficiency)                            
              redundancy  . . . . . $     (1,238) $       (976)$     (1,133) $          - 
                                    ============= ========================== =============
            /TABLE
<PAGE>





          <TABLE>
          <CAPTION>
                                  1989         1990          1991         1992
                                    ------------- -------------------------- -------------

            <S>                     <C>           <C>          <C>           <C>

            Cumulative amount of                               
              liability, net of                                
              reinsurance                                      
              recoverables, paid                               
              through:                                         
               One year later . . . $      1,351  $      1,931 $        806  $      1,151 
                                    ============= ========================== =============
               Two years later  . . $      1,524  $      2,188 $        884  $      1,834 
                                    ============= ========================== =============
               Three years later  . $      1,614  $      2,267 $      1,095  $      2,088 
                                    ============= ========================== =============
               Four years later . . $      1,614  $      2,295 $      1,254  $      1,957 
                                    ============= ========================== =============
               Five years later . . $      1,623  $      2,295 $      1,260  $          - 
                                    ============= ========================== =============
               Six years later  . . $      1,623  $      2,331 $          -  $          - 
                                    ============= ========================== =============
               Seven years later  . $      1,630  $          - $          -  $          - 
                                    ============= ========================== =============
            </TABLE>

          <TABLE>
          <CAPTION>
                                  1993         1994          1995         1996
                                    ------------- -------------------------- -------------

            S>                     <C>           <C>          <C>           <C
<PAGE>





            Cumulative amount of                               
              liability, net of                                
              reinsurance                                      
              recoverables, paid                               
              through:                                         
              One year later  . . . $        765         1,643        1,334             - 
                                    ============= ========================== =============
               Two years later  . .        1,058         2,316            -             - 
                                    ============= ========================== =============
               Three years later  .        2,868             -            -             - 
                                    ============= ========================== =============
               Four years later . .            -             -            -             - 
                                    ============= ========================== =============
               Five years later . .            -             -            -             - 
                                    ============= ========================== =============
               Six years later  . .            -             -            -             - 
                                    ============= ========================== =============
               Seven years later  .            -             -            -             - 
                                    ============= ========================== =============
            </TABLE>

          Effect of Inflation
          -------------------
               Inflation  has  not had,  and  is not  expected  to  have, a
          material impact upon the Company s operations for  the last three
          years.<PAGE>





          Item 8.   Financial Statements and Supplementary Data
          -------   -------------------------------------------

               The  financial statements  of the  Company required  by this
          Item are listed  in Item 14(a)(1) and (2) and  are submitted as a
          separate section of this report.

          Item 9.        Changes in and Disagreements with Accountants on
          -------        Accounting and Financial Disclosure
                         ------------------------------------------------

          None

          Item 10.       Directors and Executive Officers of the Registrant
          --------       --------------------------------------------------

               The current  directors and executive officers  of Cumberland
          are as follows:
                      Name                 Age              Position
          -----------------------------------------------------------------

             Francis M. Williams            55      Chairman of the Board
                                                    of Directors

             Joseph M. Williams             40      President, Treasurer
                                                    and Director
             George A. Chandler             67      Director

             Edward J. Edenfield, IV        38      President, CCS

               All  Directors  of Cumberland  hold  office  until the  next
          annual meeting of stockholders and the election and qualification
          of their successors. Officers of Cumberland are elected  annually
          by  the Board of  Directors and hold office  at the discretion of
          the Board.

               Set forth  below is information regarding  the directors and
          executive officers of Cumberland:<PAGE>





                    Francis M.  Williams has been Chairman of  the Board of
               Cumberland  since its  inception and,  until June  1992, was
               President of Cumberland. In  addition, Mr. Williams has been
               Chairman  of  the Board  and Director  of  CCS and  SSI from
               inception  and President  and  Chairman of  the Board  of KC
               since its  inception in  1979. Prior to  November 1988,  Mr.
               Williams  was the Chairman of  the Board and Chief Executive
               Officer  of Kimmins  Corp.  (a predecessor  of  KC) and  its
               predecessors and sole owner of K Management  Corp. From June
               1981 until January  1988, Mr. Williams  was the Chairman  of
               the Board  of Directors of  College Venture Equity  Corp., a
               small business  investment company; and since  June 1981, he
               has  been   Chairman  of  the  Board,   Director,  and  sole
               stockholder  of Kimmins  Coffee  Service, Inc.  , an  office
               coffee  service  company.  Mr.  Williams  has  also  been  a
               director  the National Association of Demolition Contractors
               and a member  of the  executive committee of  the Tampa  Bay
               International Trade Council.
          
                    Joseph M.  Williams has  been the Secretary,  Treasurer
               and a Director  of Cumberland since its  inception and since
               June 1992 has been President of Cumberland. In addition, Mr.
               Williams  has been  the Secretary  and Treasurer  of Kimmins
               Corp. since October 1988, the Vice President, Secretary, and
               Treasurer  of  CCS since  April  1989,  and Vice  President,
               Secretary, and  Treasurer of SSI  since August, 1989.   From
               June  1985  through  October  1988,  Mr.  Williams  was  the
               secretary of Kimmins Corp. a predecessor of KC. Mr. Williams
               has  been  employed  by the  Company  and  Kimmins  Corp. in
               various capacities since January  1984. From January 1982 to
               December 1983, he was  the managing partner of  Williams and
               Grana,  a firm  engaged in  public accounting.  From January
               1978 to December 1981, Mr. Williams was employed as a senior
               tax  accountant  with  Price  Waterhouse  &  Co.  Joseph  M.
               Williams is the nephew of Francis M. Williams.<PAGE>





                    Edward  J. Edenfield,  IV  is the  President and  Chief
               Operating Officer  of Cumberland Casualty  & Surety Company.
               Mr. Edenfield joined Cumberland Casualty & Surety Company in
               May  of 1996 as Chief Operating Officer, and was promoted to
               President in September of 1996.  He brings over sixteen (16)
               years of  management experience  in the insurance  industry,
               specializing  in  contract and  miscellaneous  surety bonds.
               Mr. Edenfield  completed his  bachelor's degree  in Business
               Administration with  an emphasis in  Economics from Lycoming
               College.   Prior  to  his involvement  with Cumberland,  Mr.
               Edenfield  had  various  management  and  senior  management
               positions in the  insurance industry.  Most  recently he was
               Assistant Vice President - Surety with Meadowbrook Insurance
               Group  in Southfield,  Michigan.   Mr.  Edenfield began  his
               career in  1980 with Continental Insurance  Company in their
               New  York home office.   Mr. Edenfield is  presently a Board
               Member of  The American Surety Association,  and is involved
               in the National Association of Independent Sureties, as well
               as being a member of the National Association of Surety Bond
               Producers.   Mr. Edenfield is responsible for administration
               and finance of the insurance operations at Cumberland.
          
                    George A.  Chandler has  been a Director  of Cumberland
               since  its inception. In  addition, Mr. Chandler  has been a
               Director of KC  since January 1990. Since November 1989, Mr.
               Chandler has been  an independent  business consultant.  Mr.
               Chandler  was  Chairman  of  the  Board  from July  1986  to
               November 1989,  and  President and  Chief Executive  officer
               from  October 1985  to November,  1989 of Aqu-Chem,  Inc., a
               manufacturer   of  packaged  boilers   and  water  treatment
               equipment. From May 1983 to October  1985, he was President,
               Chief Executive  Officer,  and  Director  of  American  Ship
               Building  Co.,  which   is  engaged  in  the   construction,
               conversion and repair of cargo vessels. Mr. Chandler is also
               a Director  of The  Allen Group,  Inc. and  DeVlieg Bullard,
               Inc.

          Compliance with Section 16(a) of the Securities Exchange Act
          ------------------------------------------------------------

               Section  16(a)  of  the  Securities  Exchange  Act  of  1934
          requires the  Company s officers  and directors, and  persons who
          own more than 10  percent of a registered class of  the Company s
          equity securities,  to file reports  of ownership and  changes in
          ownership with  the Securities  and Exchange  Commission ("SEC").
          Officers, directors, and greater than 10 percent stockholders are
          required  by SEC regulation to furnish the Company with copies of
          all Section 16(a) forms they file.  Based solely on the Company s
          review  of the copies  of such forms  received by  it, or written
          representations from certain reporting persons that no Form 5 was
          required for those persons, the Company believes that, during the
          year ended  December 31, 1996 all  filing requirements applicable
          to  its   officers,  directors,  and  greater   than  10  percent
          beneficial owners were complied with.<PAGE>





          Item 11.       Executive Compensation and Other Information
          --------       --------------------------------------------

          Summary Compensation Table

               The following  table  provides certain  summary  information
          concerning compensation paid  or accrued by  the Company and  its
          subsidiaries  to and on behalf of the Company s President for the
          year ended December 31, 1996:

          <TABLE>
          <CAPTION>
                                                             Long-Term
                                           Annual Compensation          Compensation
                                       ---------------------------- -------------------

            Name of Individual                             Other                 All
            and Principal                                 Annual     Stock      other
            Position            Year    Salary   Bonus Compensation Options  Compensation

            <S>               <C>     <C>      <C>     <C>          <C>      <C>
            Joseph M. Williams                                      
              President and                                         
               Treasurer  . .   1996  $ 95,000 $37,000 $         -  $     -  $         - 

                                1995  $ 95,000 $30,000 $         -  $     -  $         - 

                                1994  $ 95,000 $30,000 $         -  $     -  $         - 
            </TABLE>

          Aggregate Option Exercises  in 1996 and December  31, 1996 Option
          Values
          -----------------------------------------------------------------

               The  following  table shows  information  concerning options
          held by  the officers shown in the  Summary Compensation Table at
          the end  of 1996. No  options were  exercised by such  persons in
          1996.


                                     Number of
                                     Securities      Value of Unexercised
                                     Underlying           in-the-Money
                                Unexercised Options    Options at Fiscal
                                 at Fiscal Year End     Year End ($)(1)
                   Name         (#) Exercisable (E)     Exercisable(E)
          --------------------- ------------------- -----------------------
          Joseph M. Williams          124,000       $           359,500 (E)


          (1)  Represents the  dollar value  of the difference  between the
               value at December 31, 1996  and the option exercise price of
               unexercised options at December 31, 1996.<PAGE>





          Compensation Committee Interlocks and Insider Participation
          -----------------------------------------------------------

               There is no compensation committee of the Company s Board of
          Directors or  other committee of the  Board performing equivalent
          functions.  The person  who performs  the equivalent  function is
          Francis M. Williams, Chairman of the Board.

          Compensation of Directors
          -------------------------

               During the  year ended December  31, 1996, the  Company paid
          nonofficer  Directors  an annual  fee  of  $5,000. Directors  are
          reimbursed  for all out-of-pocket  expenses incurred in attending
          Board of Directors and committee meetings.

          Board Compensation Committee Report on Executive Compensation
          -------------------------------------------------------------

               There is  no formal compensation  committee of the  Board of
          Directors or  other committee of the  Board performing equivalent
          functions.  As   noted  above,  compensation  is   determined  by
          Francis M.  Williams, Chairman of the Board  of the Company under
          the  direction  of the  Board of  Directors.  There is  no formal
          compensation  policy  for  the  Chief Executive  Officer  of  the
          Company.  Compensation  of  the  Chief Executive  Officer,  which
          primarily consists  of salary, is based  generally on performance
          and the Company s resources. Compensation for Mr. Joseph Williams
          has been fixed annually  each year by the Chairman  of the Board.
          Mr.  Joseph   Williams   compensation  is  not   subject  to  any
          employment contract.  In  1994, Mr. Joseph Williams  compensation
          was $125,000. In 1994, the Company recorded net premium income of
          $4,957,000  and a  net loss  of $1,073,362.  In 1995,  Mr. Joseph
          Williams   compensation   was  $125,000.  In  1995,  the  Company
          recorded  net  premium income  of $5,068,315  and  a net  loss of
          $228,210.    In  1996,  Mr.  Joseph  Williams'  compensation  was
          $132,000.   In 1996, the  Company recorded net  premium income of
          $3,808,319 and a net loss of $582,744.

          Item 12.       Security  Ownership  of Certain  Beneficial Owners
          and
          --------       Management
                         --------------------------------------------------

          Commons  Stock   Ownership  of  Certain  Beneficial   Owners  and
          Management
          -----------------------------------------------------------------

               The  following  table sets  forth  the number  of  shares of
          Cumberland s Common  Stock beneficially owned as  of December 31,
          1996  by (i)  persons  known by  Cumberland  to own  more  than 5
          percent  of  Cumberland s  outstanding Common  Stock,  (ii)  each
          director and officer  of Cumberland, and (iii)  all directors and
          officers of Cumberland as a group:<PAGE>





                                 Amount and Nature
             Name and Address      of Beneficial     Percent of Issued and
           of Beneficial Owner  Ownership of Common   Outstanding Common
                 (1) (2)               Stock                 Stock
          --------------------- ------------------- -----------------------

             Francis M.         
             Williams . . . . .   3,542,592     (3)         65.1 %

             Joseph M. Williams     349,783     (4)          6.4 %
             George A. Chandler       2,669     (5)           *  

             All directors and  
              officers as a     
              group (three      
              persons)  . . . .      3,895,044              71.5 %


             (1)    The address of all officers and Directors of Cumberland
                    listed above  are  in care  of  Cumberland at  4311  W.
                    Waters Ave., Suite 501, Tampa, FL 33614.

             (2)    Cumberland believes that the persons named in the table
                    have sole  voting and investment power  with respect to
                    all shares of common stock beneficially owned by  them,
                    unless otherwise noted.
          
             (3)    Includes   2,259,207  shares   owned  by   Mr.  Francis
                    Williams;  1,059,306 shares  allocated to  Mr. Williams
                    based on his ownership in Kimmins Corp., 29,345  shares
                    owned by  Mr. Williams  wife; 22,748 shares held by Mr.
                    Williams as  trustee for his wife  and children; 18,296
                    shares held by Mr. Williams as  custodian under the New
                    York Uniform Gifts to Minors Act for his  Children; and
                    153,690 held  by  various Real  Estate Partnerships  of
                    which Mr. Williams is 100 percent Owner.

             (4)    Includes 8,800 shares owned by Mr. Joseph M.  Williams;
                    options  to acquire 115,000 shares of Cumberland Common
                    Stock; 219 shares held  by the KC 401(K) Plan  and ESOP
                    of which  Mr. Williams is fully  vested; 205,764 shares
                    held by KC s 401(K) Plan, Profit Participation Plan and
                    ESOP, options  to acquire  20,000 shares  of Cumberland
                    Common Stock held by the ESOP, of which Mr. Williams is
                    a  trustee,   but  of  which  Mr.   Williams  disclaims
                    beneficial ownership.
          
             (5)    Includes 1,869  shares owned by Mr.  George A. Chandler
                    and options to acquire 800 shares of Cumberland  Common
                    Stock.

              *     Less than one percent.<PAGE>





          Item 13.       Certain Relationships and Related Transactions
          --------       ----------------------------------------------

              CCS writes surety  bonds for KC and  its affiliates. Revenues
          attributable  to transactions  with  KC and  its affiliates  were
          $13,546, $4,535 and $2,873 for the years ended December 31, 1994,
          1995 and 1996, respectively.

              In  May 1988, CCS  issued KC a surplus  debenture in exchange
          for  $3,000,000,  bearing  interest  at  10  percent  per  annum.
          Interest  and principal  payments are  due quarterly only  if and
          when CCS s surplus, as defined  below, exceeds $4,000,000 and are
          limited  to  an amount  equal to  one-half  of the  statutory net
          income  before dividends and federal and  foreign income taxes of
          CCS  during that  year.  In December  1988, CCS  issued  to KC  a
          surplus debenture  for $5,000,000 bearing interest  at 12 percent
          per  annum.  CCS obtained  permission  from  the Commissioner  of
          Insurance  and repaid  this  debenture in  1991. This  $5,000,000
          payment was  applied to  the outstanding principal  and therefore
          did not reduce the outstanding interest.

              In  1992, the Company  assigned the debenture due  to KC from
          CCS to  CTI. CTI entered into  a term note agreement  with KC for
          the  outstanding  amount  of the  debenture,  including  interest
          arrearage ($4,291,049) at September 30, 1992 as part of the spin-
          off transaction. The term note is pari passi with the other debts
          of the  Company,  bears interest  at  10 percent  and is  due  on
          October 1, 2002. For the first five years interest and  principal
          are  due quarterly with minimum payments equal to one-half of net
          earnings  before  interest  and   federal  income  taxes.    This
          debenture   was  subordinate   in   right  of   payment  to   all
          policyholders of CCS. Surplus  funds are defined as funds  of CCS
          remaining after deduction of  capital, insurance reserves and all
          other   liabilities,  in  accordance  with  accounting  practices
          prescribed or permitted by the Florida Insurance Department.

              Effective October 1, 1996, CTI issued 1,723,290 shares at the
          fair  value of $3.00  per share  of its  common stock  to Kimmins
          Corp.  (f/k/a Kimmins  Environmental Service, Corp.)  in exchange
          for surrender of the Company's term note payable in the amount of
          $5,169,870.

              SSI acts as an agent for surety bonds written  for KC and its
          affiliates. Commission revenues attributable to transactions with
          KC and its affiliates  were $59,759, $43,183 and $16,803  for the
          years ended December 31, 1994, 1995 and 1996, respectively.<PAGE>





              CCS and SSI filed a consolidated tax return with KC  for 1988
          through September 30, 1992.  CTI filed a separate return  for the
          three  months  ending  December  31, 1992.  Under  a  tax-sharing
          agreement with KC,  CCS and SSI were charged that  portion of the
          consolidated liability which is in direct proportion to the ratio
          of  CCS s and  SSI s  pre-tax financial  income  or loss  to  the
          consolidated  totals,  without  consideration  of  the effect  of
          permanent  and temporary  differences  which  were allocated,  in
          total, to KC. CCS  and SSI, accordingly, did not  record deferred
          taxes on their balance sheets and the annual charge  representing
          CCS s and SSI s tax liability was settled through an intercompany
          charge.

          Item 14.       Exhibits, Financial Statements, Schedules, and
          --------       Reports on Form 8-K 
                         ----------------------------------------------

          (a)  The  following documents are  filed as  part of  this Annual
               Report on Form 10-K 

               1.   Financial Statements

                     -   Report of Independent Certified Public Accountants
                     -   Consolidated  balance sheets at  December 31, 1995
                         and 1996
                     -   Consolidated statements of  operations for each of
                         the three  years in the period  ended December 31,
                         1996
                     -   Consolidated  statements  of stockholders   equity
                         for each  of the three  years in the  period ended
                         December 31, 1996
                     -   Consolidated  statements of cash flows for each of
                         the three  years in the period  ended December 31,
                         1996
                     -   Notes to consolidated financial statements

               2.   Financial statement schedules

                    I     -   Summary   of   Investments   -   Other   than
                              Investments in Related Parties
                    II    -   Condensed Financial Information of Registrant
                    III   -   Supplementary Insurance Information
                    IV    -   Reinsurance
                    V     -   Valuation and Qualifying Accounts

               All   other  Schedules   are  omitted  since   the  required
          information  is   not  present  or  is  not  present  in  amounts
          sufficient to require submission of the Schedules, or because the
          information required is included  in the financial statements and
          notes thereto.

               3.   The following  documents are filed as  exhibits to this
                    Annual Report on Form 10-K:
                    3(a)*-  Articles of Incorporation and Bylaws<PAGE>





                    10*  -  Material contracts
                    11   -  Statement Re: Computation of earnings per share
                    22   -  Subsidiary list

          *    Previously  filed  as   part  of  Registrant s  Registration
               Statement  on  Form 8,  File  No.  0-19727 and  incorporated
               herein by reference thereto.

               (b)  Reports on Form 8-K

                    Form  8-K  was  filed  during the  three  months  ended
                    December 31,  1996 due  to the  term note  converted to
                    equity.  The filing included Condensed Consolidated Pro
                    Forma Balance Sheet dated September 30, 1996.

               (c)  Exhibits

                    The response to this portion of Item 14 is submitted as
                    a separate section of this report.

               (d)  Financial Statement Schedules

                    The response to this portion of Item 14 is submitted as
                    a separate section of this report.<PAGE>





                                      SIGNATURES


               Pursuant to the requirements  of Section 13 or 15(d)  of the
          Securities  Exchange Act of 1934, the  registrant has duly caused
          this  report to  be  signed on  its  behalf by  the  undersigned,
          thereunder duly authorized.

           Date:     April 15, 1997       CUMBERLAND TECHNOLOGIES, INC.
                                          -----------------------------

           Date:     April 15, 1997       By:  /s/ Joseph M. Williams
                                          -----------------------------
                                          Joseph M. Williams, President
          
               Pursuant to the requirements  of the Securities Exchange Act
          of 1934,  this  report has  been signed  below  by the  following
          persons on behalf of the Registrant and in the  capacities and on
          the dates indicated.



           Date:     April 15, 1997       By:  /s/ Joseph M. Williams
                                          -----------------------------
                                          Joseph M. Williams, President


           Date:     April 15, 1997       By:  /s/ Francis M. Williams
                                          -----------------------------
                                          Francis M. Williams,
                                          Chairman of the Board



           Date:     April 15, 1997       By:  /s/ George A. Chandler
                                          -----------------------------
                                          George A. Chandler, Director



           Date:     April 15, 1997       By:  /s/ Carol S. Black
                                          -----------------------------
                                          Carol S. Black, Secretary
                                          (principal financial and
                                          accounting officer)<PAGE>





                              Annual Report on Form 10-K

                               Item 14(a), (c) and (d)

                  List of Financial Statements, Financial Statement
                                Schedules and Exhibits

                             Year Ended December 31, 1996


                            Cumberland Technologies, Inc. 

                                    Tampa, Florida<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC. 

                     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS,
                      FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

               The following consolidated financial statements of
          Cumberland Technologies, Inc. are included herein:

                                                                       Page

          Report of Independent Certified Public Accountants  . . . . .  30

          Consolidated Balance Sheets at December 31, 1995 and 1996 . .  31

          Consolidated Statements of Operations for Each of the
             Three Years in the Period Ended December 31, 1996  . . . .  33

          Consolidated Statements of Stockholders  Equity for 
             Each of the Three Years in the Period Ended
             December 31, 1996  . . . . . . . . . . . . . . . . . . . .  34

          Consolidated Statements of Cash Flows for Each of
             the Three Years in the Period Ended December 31, 1996  . .  35

          Notes to Consolidated Financial Statements  . . . . . . . . .  36

          The following consolidated financial statement schedules are
          filed as part of this report:

          Schedule I     Summary of Investments Other than
                         Investments in Related Parties . . . . . . . .  54
          Schedule II    Condensed Financial Information of Registrant   55
          Schedule III   Supplementary Insurance Information  . . . . .  59
          Schedule IV    Reinsurance  . . . . . . . . . . . . . . . . .  60
          Schedule V     Valuation and Qualifying Accounts  . . . . . .  61

          All other schedules for which provision is made in the applicable
          accounting regulation  of the Securities and  Exchange Commission
          are  not   required  under   the  related  instructions   or  are
          inapplicable and, therefore, have been omitted.

          The following exhibits are filed as part of this report:

               Exhibit 11 -   Statement  Re:   Computation of  Earnings Per
                              Share
               Exhibit 22 -   Subsidiary List
               Exhibit 27 -   Financial Data Schedule<PAGE>





                  Report of Independent Certified Public Accountants

          Board of Directors
          Cumberland Technologies, Inc.

          We have  audited the accompanying consolidated  balance sheets of
          Cumberland  Technologies, Inc. as of  December 31, 1995 and 1996,
          and   the   related   consolidated  statements   of   operations,
          stockholders'  equity, and cash flows for each of the three years
          in the period ended December 31, 1996.   Our audits also included
          the  financial statement  schedules listed  in the Index  at Item
          14(a).    These  financial   statements  and  schedules  are  the
          responsibility of the Company's  management.  Our  responsibility
          is to  express  an  opinion  on these  financial  statements  and
          schedules based on our audits.

          We  conducted our  audits in  accordance with  generally accepted
          auditing  standards.  Those  standards require  that we  plan and
          perform the  audit to  obtain reasonable assurance  about whether
          the financial statements are  free of material misstatement.   An
          audit includes  examining, on  a test basis,  evidence supporting
          the  amounts  and disclosures  in the  financial statements.   An
          audit also includes assessing  the accounting principles used and
          significant estimates  made by management, as  well as evaluating
          the overall  financial statement  presentation.  We  believe that
          our audits provide a reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to
          above present fairly, in  all material respects, the consolidated
          financial position  of Cumberland Technologies,  Inc. at December
          31,  1995  and  1996,  and  the  consolidated  results  of  their
          operations and their  cash flows for each  of the three years  in
          the  period ended December 31, 1996, in conformity with generally
          accepted  accounting  principles.    Also, in  our  opinion,  the
          related  financial   statement  schedules,  when   considered  in
          relation to  the  basic financial  statements taken  as a  whole,
          present  fairly, in  all material  respects, the  information set
          forth therein.



                                                          ERNST & YOUNG LLP



          April 10, 1997
          Tampa, Florida<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                             CONSOLIDATED BALANCE SHEETS

                                        ASSETS

                                                    December 31
                                           -----------------------------
                                                1995           1996
                                           -------------- --------------
           Investments - Notes 1 and 3:    
              Securities available-for-    
              sale at fair value:
                Fixed maturities . . . . . $    3,452,553 $   3,055,753 
                Equity securities  . . . .      1,160,500     1,020,016 
              Fixed maturity securities    
                held-to-maturity, at       
                amortized cost . . . . . .      1,294,758     1,664,264 
              Residential mortgage loan on 
                real estate, at unpaid     
                principal  . . . . . . . .         46,367        45,838 
              Short-term investments   . .        348,993       323,993 
                                            ----------------------------
                Total investments  . . . .      6,303,171     6,109,864 
                                           
              Cash and cash equivalents         1,235,930       669,076 
              Accrued investment income            87,231        89,652 
                                           
              Reinsurance recoverable  . .      1,697,417       987,953 
                                           
              Accounts receivable:         
                Trade, less allowance for  
                  doubtful accounts of     
                  $67,209 at December 31,  
                  1995 and $-0- December   
                  31, 1996 . . . . . . . .        428,376       906,530 
                Affiliate  . . . . . . . .        122,052        18,006 
              Deferred policy acquisition  
                costs  . . . . . . . . . .        435,272       635,189 
              Intangibles, net   . . . . .      2,162,961     1,956,724 
              Other assets   . . . . . . .        236,566       396,442 
                                            ----------------------------
                                           $   12,708,976 $  11,769,436 
                                            ============================

          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                             CONSOLIDATED BALANCE SHEETS

                         LIABILITIES AND STOCKHOLDERS' EQUITY

                                                    December 31
                                           -----------------------------
                                                1995           1996
                                           -------------- --------------
          Policy liabilities and accruals: 
             Loss and loss adjustments     
             expenses   . . . . . . . . .  $    2,351,804 $   1,991,796 
             Unearned premiums  . . . . .       1,182,305     1,862,114 
          Ceded reinsurance payable . . .                       165,504 
          Accounts payable and other       
             liabilities  . . . . . . . .       1,116,815       403,085 
          Short-term borrowings . . . . .         406,607             - 
          Long-term debt:                  
             Affiliate, including accrued  
             interest   . . . . . . . . .       4,797,804             - 
             Nonaffiliate   . . . . . . .       1,563,870     1,533,265 
                                            ----------------------------
               Total liabilities  . . . .      11,419,205     5,955,764 
          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, 4,039,780 and   
               5,763,070 shares issued at  
               December 31, 1995 and 1996, 
               respectively . . . . . . .           4,040         5,763 
             Capital in excess of par      
               value  . . . . . . . . . .       2,044,794     7,212,941 
             Net unrealized appreciation   
               of available-for-sale       
               securities . . . . . . . .          63,045        99,676 
             Accumulated deficit  . . . .        (681,193)   (1,263,937)
                                            ----------------------------
                                                1,430,686     6,054,443 
             Less treasury stock, at cost, 
               224,263 and 310,473 shares  
               at December 31, 1995 and    
               December 31, 1996,          
               respectively . . . . . . .        (140,915)     (240,771)
                                            ----------------------------
             Total stockholders' equity         1,289,771     5,813,672 
                                            ----------------------------
                                           $   12,708,976 $  11,769,436 
                                            ============================
          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                              Year ended December 31
                                        ----------------------------------
                                            1994        1995       1996
                                        ----------- ----------- ----------
          REVENUES:                                 
             Reinsurance premiums                   
               assumed  . . . . . . . . $ 5,019,734 $ 4,944,125 $3,083,787 
             Direct premiums earned:                             
               Affiliates . . . . . . .      13,546       4,535      2,873 
               Nonaffiliates  . . . . .     489,698     623,148  1,149,377 
             Less reinsurance ceded   .    (566,264)   (503,493)  (427,718)
                                         ----------- ----------- ----------
             Net premium income   . . .   4,956,714   5,068,315  3,808,319 
             Net investment income  . .     283,638     397,380    403,919 
             Net realized investment                
               (losses) gains   . . . .    (123,395)    124,004    117,824 
             Commission income  . . . .     141,852     773,611  1,385,964 
             Other income:                                       
               Affiliates . . . . . . .      59,759      43,183    338,478 
               Nonaffiliates  . . . . .      76,551     381,455    314,889 
                                         ----------- ----------- ----------
                                          5,395,119   6,787,948  6,369,393 
          Benefits and expenses:                    
             Benefits and claims  . . .   2,646,055   1,245,546  1,670,640 
             Amortization of deferred               
               policy acquisition costs   2,037,539   2,380,140  1,532,355 
             Operating expenses   . . .   1,514,575   2,882,255  3,255,805 
             Interest expense:                      
               Affiliates (net of                   
                interest income from                
                affiliates of $54,609,              
                $22,660 and -0- for                 
                1994, 1995 and 1996,                
                respectively)   . . . .     405,502     432,112    372,066 
               Nonaffiliates  . . . . .           -      76,105    121,271 
                                         ----------- ----------- ----------
                                          6,603,671   7,016,158  6,952,137 
                                         ----------- ----------- ----------
          Loss before income                        
             taxes  . . . . . . . . . .  (1,208,552)   (228,210)  (582,744)
          Income taxes (benefit)  . . .    (135,190)          -          - 
                                         ----------- ----------- ----------
          Net loss  . . . . . . . . . . $(1,073,362)$  (228,210)$ (582,744)
                                         =========== =========== ==========
          Weighted average number of                
             shares   . . . . . . . . .   3,908,759   3,824,494  4,026,655 
                                         =========== =========== ==========
          Net loss per share  . . . . . $      (.27)$      (.06)$     (.14)
                                         =========== =========== ==========
          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996


                                                    
                                                                 Capital in
                                                                 Excess of
                                           Shares      Amount    Par Value
                                        -----------------------------------
          Balance at January 1, 1994  .   4,039,780 $     4,040 $2,044,794 
             Purchases of 104,030 shares            
               of treasury stock  . . . 
             Change in accounting                   
               principle  . . . . . . . 
             Net increase in unrealized             
               depreciation of
               available-for-sale
               securities . . . . . . . 
             Net loss . . . . . . . . . -----------------------------------
          Balance at December 31, 1994    4,039,780       4,040  2,044,794 
                                                    
             Purchases of 48,546 shares             
               of treasury stock  . . . 
             Net increase in unrealized             
               appreciation of
               available-for-sale
               securities . . . . . . . 
             Net loss . . . . . . . . . -----------------------------------
          Balance at December 31, 1995    4,039,780       4,040  2,044,794 
                                                    
             Purchases of 86,210 shares             
               of treasury stock  . . . 
             Conversion of term note for            
               1,723,290 shares of                  
               common stock . . . . . .   1,723,290       1,723  5,168,147 
             Net increase in unrealized             
               appreciation of
               available-for-sale
               securities . . . . . . . 
             Net loss . . . . . . . . . -----------------------------------
          Balance at December 31, 1996    5,763,070       5,763  7,212,941 
                                        ===================================

          See notes to consolidated financial statements.<PAGE>





                            Cumberland Technologies, Inc.
                   Consolidated Statements of Stockholders' Equity
                     Years Ended December 31, 1994, 1995 and 1996
                        Consolidated Statements of Operations
                                     (continued)
          <TABLE>
          <CAPTION>
                              Unrealized                             
                                                  Appreciation                            
                                                 (Depreciation)                           
                                                   of Actively       Retained             
                                                   Managed and       Earnings                            Total
                                                 Available-for-    (Accumulated    Treasury Stock    Stockholders'
                                                 Sale Securities     Deficit)     ----------------      Equity
                                                ---------------- ----------------    -----------   ----------------
                                                   ----------       ----------                        -----------

                 <S>                            <C>              <C>              <C>              <C>

                 Balance at January 1, 1994  .           (28,191)         620,379          (36,244)       2,604,778 
                    Purchases of 104,030 of                                       
                    treasury                                                               (77,005)         (77,005)
                       stock   . . . . . . . .  

                    Change in accounting                  46,755                                             46,755 
                    principle  . . . . . . . .  

                    Net increase in unrealized                                    
                       depreciation available-  
                       for-sale securities   .          (185,021)                                          (185,021)

                    Net loss   . . . . . . . .                         (1,073,362)                       (1,073,362)
                                                 ---------------- ---------------- ---------------- ----------------
                                                -----------      -----------      -----------      -----------
                 Balance at December 31, 1994           (166,457)        (452,983)        (113,249)       1,316,145 

                    Purchases of 48,546 shares                                    
                    of                                                                     (27,666)         (27,666)
                       treasury stock  . . . .  

                    Net increase in unrealized                                    
                       appreciation of          
                       available-for-sale                229,502                                            229,502 
                       securities  . . . . . .  

                    Net loss   . . . . . . . .                           (228,210)                         (228,210)
                                                 ---------------- ---------------- ---------------- ----------------
                                                -----------      -----------      -----------      -----------
                 Balance at December 31, 1995             63,045         (681,193)        (140,915)       1,289,771 
                                                       ==========       ==========       ==========       ==========<PAGE>





                    Purchases of 86,210 shares                                    
                    of                                                                     (99,856)         (99,856)
                       treasury stock  . . . .  

                    Conversion of term note for                                   
                       1,723,290 shares of
                       common stock  . . . . .                                                            5,169,170 

                    Net increase in unrealized                                    
                       appreciation of          
                       available-for-sale                 36,631                                             36,631 
                       securities  . . . . . .  
                    Net loss   . . . . . . . .                           (582,744)                         (582,744)
                                                 ---------------- ---------------- ---------------- ----------------
                                                -----------      -----------      -----------      -----------

                 Balance at December 31, 1996             99,676       (1,263,937)        (240,771)       5,813,672 
                                                       ==========       ==========       ==========       ==========
                 </TABLE>
          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              Year ended December 31
                                       ----------------------------------- 
                                           1994        1995       1996
                                       ----------- ----------- -----------
          Operating activities:                    
          Net income loss              $(1,073,362) $ (228,210) $ (582,744)
          Adjustments to reconcile net             
            loss to net cash used in
            operating activities:
              Amortization/accretion               
               of investment premiums              
               and discounts  . . . .      (2,850)    (10,137)     (6,052)
              Policy acquisition costs             
               amortized  . . . . . .   2,037,539   2,380,140   1,532,355 
              Policy acquisition costs             
               deferred . . . . . . .  (2,278,348) (2,234,669) (1,732,272)
            Depreciation and                       
              amortization  . . . . .      90,283     278,008     378,447 
              Net realized (gain) loss             
               on sales of investments    123,395    (124,004)   (117,824)
              Provision for bad debts      21,926      67,209           - 
              Accrued interests on                 
               term notes, net  . . .     (59,515)    454,772     404,337 
              Deferred income taxes .     (31,855)          -           - 
              (Increase) decrease in:              
               Accrued investment                  
                 income . . . . . . .      11,939     (40,629)     (2,421)
               Reinsurance recoverable    127,752      51,126     709,464 
               Trade receivables  . .  (1,461,300)  1,644,946    (478,154)
               Other assets . . . . .     (78,573)    (89,366)   (232,148)
              Increase (decrease) in:                                     
              Policy liabilities and               
               accruals . . . . . . .     377,589  (1,235,291)    319,801 
              Ceded reinsurance                    
               payable  . . . . . . .   1,624,262  (1,930,993)    165,504 
              Accounts payable and                 
               other liabilities  . .     256,458     641,933    (713,730)
                                       ----------- ----------- -----------
          Total adjustments . . . . .     758,702    (146,955)    227,307 
                                       ----------- ----------- -----------
          Net cash used in operating               
             activities . . . . . . .    (314,660)   (375,165)   (355,437)

          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                         CONSOLIDATED STATEMENTS OF CASH FLOW
                                     (continued)

                                              Year ended December 31
                                       ---------------------------------- 
                                           1994        1995       1996
                                       ----------- ----------- -----------
          Investing activities:                    
          Securities available-for-                                       
            sale:                      
              Purchases - fixed                    
              maturities  . . . . . .  (2,539,297) (2,561,848)   (300,012)
              Sales - fixed maturities  3,145,241   1,436,223     620,000 
              Purchases - equities  .  (3,315,841) (1,224,251) (3,249,846)
              Sales - equities  . . .   1,961,669   1,445,237   3,628,259 
          Securities held-to-maturity:             
            Purchases . . . . . . . .  (1,188,860)          -    (680,116)
            Maturities  . . . . . . .     499,918     701,655     310,000 
          Proceeds from sales and                  
            maturities of investments     836,783     116,117      25,529 
          Purchases of investments  .    (464,061)       (525)          - 
          Purchases of businesses, net             
            of cash acquired  . . . .           -    (572,677)          - 
          Software development costs            -           -     (99,938)
          Net advances from KC  . . .      40,475     277,452     104,046 
                                       ----------- ----------- -----------
          Net cash (used in) provided              
            by investing activities    (1,023,973)   (382,617)    357,922 
          Financing activities:                    
          Purchases of treasury stock     (77,005)    (27,666)    (99,856)
          Payments on short-term                   
            borrowings and long-term               
            debt  . . . . . . . . . .           -     (86,130)   (469,483)
          Net proceeds from short-term             
            borrowings  . . . . . . .           -     406,607           - 
                                       ----------- ----------- -----------
          Net cash (used in) provided              
            by financing activities       (77,005)    292,811    (569,339)
                                       ----------- ----------- -----------
          Increase (decrease) in cash              
            and cash equivalents  . .   1,415,638    (464,971)   (566,854)
          Cash and cash equivalents,               
            beginning of year . . . .   3,116,539   1,700,901   1,235,930 
                                       ----------- ----------- -----------
          Cash and cash equivalents,               
            end of year . . . . . . .  $1,700,901  $1,235,930  $  669,076 
                                       =========== =========== ===========
          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  DECEMBER 31, 1996

          1.    Summary of Significant Accounting Policies
                ------------------------------------------

                Organization
                ------------

                Cumberland Holdings, Inc. ("CHI"),  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 CHI.  KC then distributed  to its  stockholders CHI s
          common stock on the basis of one share of common stock of CHI 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").   CTI conducts its business  through seven subsidiaries.
          CCS,  a   Florida  corporation  formed  in   May  1988,  provides
          reinsurance for specialty  sureties and  performance and  payment
          bonds  for contractors.  The  surety  services  provided  include
          reinsurance  and, to  a  lesser  extent,  direct surety.  SSI,  a
          Florida  corporation formed  in August  1988, is a  general lines
          agency which operates as an independent agent. 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,  provides  registration and  sundry  services  to
          notaries.  Qualex  Consulting  Group,  Inc.  (Qualex),  a Florida
          corporation  formed   in  November   1994,  provides   claim  and
          contracting consulting  services.   Florida  Credit &  Collection
          Services,  Inc. a  Florida  corporation formed  in December  1996
          provides  credit   and  collections   services.    CTI   and  its
          subsidiaries are referred to herein as the "Company."

                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 CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

                The  accompanying  consolidated  financial statements  have
          been prepared  in accordance  with generally accepted  accounting
          principles which, as to  the subsidiary insurance company, differ
          from statutory  accounting practices  prescribed or  permitted by
          regulatory  authorities.  The  significant   accounting  policies
          followed  by  CTI and  subsidiaries  that  materially affect  the
          financial statements are summarized in this note.

                Investments
                -----------

                Effective January 1,  1994, the  Company adopted  Statement
          of Financial  Accounting Standards ("SFAS") No.  115, "Accounting
          for  Certain Investments  in Debt  and Equity  Securities." Under
          this new  accounting standard,  debt securities that  the Company
          has both the positive intent and ability to  hold to maturity are
          classified  as "held-to-maturity" securities  and are reported at
          amortized  cost,  adjusted  for   amortization  of  premiums  and
          accretion of discounts to maturity. Such amortization, as well as
          interest earnings on these  securities, is included in investment
          income.

                Marketable  equity   securities  and  debt  securities  not
          classified  as "held-to-maturity"  are classified  as "available-
          for-sale."   Available-for-sale   securities   are  reported   at
          estimated fair  value, with the unrealized gains  and losses, net
          of  any related  taxes,  reported  as  a  separate  component  of
          stockholders  equity.  The amortized  cost of debt  securities in
          this  category  is  adjusted  for amortization  of  premiums  and
          accretion  of   discounts  to  maturity.  Such  amortization  and
          accretion is  included in  investment income. Realized  gains and
          losses and declines in value judged to be other-than-temporary on
          available-for-sale securities are  included in investment income.
          The   cost  of  securities   sold  is   based  on   the  specific
          identification  method.  Interest  and  dividends  on  securities
          available-for-sale are included in investment income.

                Short-term  investments  primarily include  certificates of
          deposit  having  maturities  of   more  than  three  months  when
          purchased,  which are  reported at  cost which  approximates fair
          value.

               The  adoption of  SFAS No.  115 resulted  in an  increase of
          $46,755 in stockholders  equity as of January 1, 1994.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Cash Equivalents
               ----------------

               The Company considers all highly liquid investments having a
          maturity  of three  months  or less  when  purchased to  be  cash
          equivalents.

               Deferred Policy Acquisition Costs
               ---------------------------------

               The  costs  of acquiring  new  surety  business, principally
          commissions, are deferred and amortized in a manner which charges
          each  year s  operations  in  direct proportion  to  the  premium
          revenue recognized.

               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).
          Purchased customer accounts, noncompete agreements, and purchased
          contract agreements are being  amortized on a straight-line basis
          over  the related  estimated  lives and  contract periods,  which
          range from 3 to 15 years. The excess of costs over the fair value
          of  identifiable net  assets  acquired is  being  amortized on  a
          straight-line basis  over 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
          will  be  reviewed if  circumstances  suggest  that  they may  be
          impaired.  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 will  be
          reduced by the estimated shortfall of cash flows.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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 (claim adjustment expense) is accrued
          when the  related liability for  unpaid claims is  accrued. Claim
          adjustment  expenses  include  costs  associated   directly  with
          specific claims paid  or in  the process of  settlement, such  as
          legal and adjusters  fees. Claim 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.

               Unearned Premiums
               -----------------

               Unearned premiums are calculated  using the monthly pro rata
          basis.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Reinsurance
               -----------

               The Company assumes  and cedes reinsurance and  participates
          in various pools. The  accompanying financial statements  reflect
          premiums,  benefits and settlement  expenses, and deferred policy
          acquisition  costs,  net  of  reinsurance ceded  (see  Note  11).
          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 are  presented  as an
          asset in the accompanying consolidated financial statements.

               Revenue Recognition
               -------------------

               Direct  insurance  and reinsurance  premiums earned  and the
          liability  for unearned  premiums are  recognized on  a pro-rated
          basis over the period of risk. Surety and other bonds agency fees
          are  recognized when  the negotiated  services are  provided. The
          Company s  insurance  products  policies  are   primarily  short-
          duration contracts.

               Commissions   related  to  agency   activity  are  generally
          recognized at the later  of the effective  date of the policy  or
          the date billed.

               Income Taxes
               ------------

               The Company s  provision for income taxes  is computed under
          the provisions of Statement of Financial Accounting Standards No.
          109,  "Accounting for Income Taxes." Under the method required by
          Statement  No.  109,  deferred  tax assets  and  liabilities  are
          recognized  for  the  future  tax  consequences  attributable  to
          differences between  the financial statement carrying  amounts of
          existing assets  and liabilities and their  respective tax bases.
          Deferred tax  assets and  liabilities are measured  using enacted
          tax rates  expected to apply  to taxable  income in the  years in
          which those temporary differences are expected to be recovered or
          settled.  Under Statement  No.  109, the  effect on  deferred tax
          assets  and liabilities of a change in tax rates is recognized in
          income in the period that includes the enactment date.

               The Company  files a  consolidated tax return  that includes
          all of its subsidiaries.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Earnings Per Share
               ------------------

               Net loss per share  is based on the weighted  average number
          of shares outstanding, adjusted for the  dilutive effect of stock
          options, and  is the  same on  both a  primary and fully  diluted
          basis.

               Business Concentration
               ----------------------

               The majority of the Company s business relates to surety and
          performance bonds for contractors. Accordingly, the occurrence of
          adverse  economic conditions  in the  contracting business  could
          have a material adverse effect on the Company s business although
          no such conditions have been encountered in the past. The Company
          only  requires  collateral  from  surety bond  customers  if  the
          customer  meets between 80 percent to 99 percent of the Company s
          underwriting  criteria. Customers that  fail to meet  at least 80
          percent of the requirements are denied surety bonding.

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

               The preparation of  financial statements in conformity  with
          generally accepted accounting  principles requires management  to
          make estimates  and assumptions that affect  the amounts reported
          in  the  financial statements  and  accompanying  notes.   Actual
          results could differ from those estimates.

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

               Certain  amounts  in  1994  financial  statements have  been
          reclassified to conform  to the 1995 and 1996 financial statement
          presentations.

          2.   Related Party Transactions
               --------------------------

               CTI and its subsidiaries have entered into transactions with
          KC  and companies affiliated through common  ownership by KC. CCS
          writes surety bonds for KC and its affiliates.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          2.   Related Party Transactions (continued)
               --------------------------------------

               Affiliate  accounts receivable represents  funds advanced to
          or from KC and its affiliates on a periodic basis with repayments
          made on  a periodic basis.  Through March 31, 1995,  the advances
          bore interest at ten  percent and were due on  demand. Subsequent
          to March 31, 1995, no interest was charged on the advances, which
          remain payable on demand.

               At December 31, 1996,  the Company is a guarantor  for $2.25
          million  of borrowings made under  the terms of  a loan agreement
          entered into on December 8, 1995 between KC and a bank.

               Cumberland leases office space  from a company owned by  the
          Chairman of the Board at a monthly rate of $4,347.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          3.   Investments

               The Company s investments  in available-for-sale  securities
          and held-to-maturity securities are summarized as follows:

          <TABLE>
          <CAPTION>
                                                 Gross      Gross
                                                       Unrealized  Unrealized  Estimated
                                                Cost       Gains      Losses   Fair Value
                                            ----------- ---------------------- -----------

            <S>                             <C>         <C>        <C>         <C>

            Available-for-sale securities                          
              at December 31, 1996:
                 Fixed maturity securities:                        

                  U.S. Government bonds . . $3,013,312  $   48,201 $    5,760  $3,055,753 

                 Equity securities  . . . .    962,780      67,936     10,700   1,020,016 
                                            ----------- ---------------------- -----------

            Total . . . . . . . . . . . . . $3,976,092  $  116,137 $   16,460  $4,075,769 
                                            =========== ====================== ===========
            Held-to-maturity securities at                         
              December 31, 1996:

                 Fixed maturity securities:                        

                  U.S. Government bonds . . $1,438,815  $   15,066 $      722  $1,453,159 

                  State and municipal bonds    225,449      20,827          -     246,276 
                                            ----------- ---------------------- -----------
            Total . . . . . . . . . . . . . $1,664,264  $   35,893 $      722  $1,699,435 
                                            =========== ====================== ===========

            Available-for-sale securities                          
              at December 31, 1995:

              Fixed maturity securities:                           

                  U.S. Government bonds . . $3,326,638  $  125,915 $        -  $3,452,553 
              Equity securities   . . . . .  1,223,370      11,800     74,670   1,160,500 
                                            ----------- ---------------------- -----------

            Total . . . . . . . . . . . . . $4,550,008  $  137,715 $   74,670  $4,613,053 
                                            =========== ====================== ===========
            /TABLE
<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          3.   Investments (continued)
               -----------------------

          <TABLE>
          <CAPTION>
                                                 Gross      Gross
                                                       Unrealized  Unrealized  Estimated
                                                Cost       Gains      Losses   Fair Value
                                            ----------- ---------------------- -----------

            <S>                             <C>         <C>        <C>         <C>

            Held-to-maturity securities at                         
              December 31, 1995:
              Fixed maturity securities:                           

                  U.S. Government bonds . . $1,064,221  $    6,306 $    2,907  $1,067,620 

            State and municipal bonds . . .    230,537           -          -     230,537 
                                            ----------- ---------------------- -----------

            Total . . . . . . . . . . . . . $1,294,758  $    6,306 $    2,907  $1,298,157 
                                            =========== ====================== ===========
            </TABLE>

               The  amortized   cost  and  fair  value   of  the  Company s
          investments   in  fixed   maturity   securities,  segregated   by
          available-for-sale and held-to-maturity, at December 31, 1996 are
          summarized, by stated maturity, as follows:

          <TABLE>
          <CAPTION>
                                                   

                                                                        Available-for-Sale         Held to Maturity
                                    ------------------------  ------------------------

                                      Amortized                    
                    Maturity            Cost      Fair Value     Cost      Fair Value
            ----------------------- ------------ ------------------------ ------------

            <S>                     <C>          <C>         <C>          <C>
            Due in one year or less $   729,642  $   734,809 $   983,193  $ 1,005,454 

            Due after one year                               
              through five years      2,283,670    2,320,944     681,071      693,980 
                                    ------------ ------------------------ ------------

                                    $ 3,013,312  $ 3,055,753 $ 1,664,264  $ 1,699,435 
                                    ============ ======================== ==========
          /TABLE
<PAGE>
<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          3.   Investments (continued)
               -----------------------

               Investments  in  any  person  or  its  affiliates (excluding
          obligations  of  the  U.S.  Government  or  its  agencies)  which
          exceeded 10 percent  of stockholders   equity at the  end of  the
          respective year were as follows:

                                                    December 31

                                               1995             1996
                                        ----------------- -----------------

            Spartanburg County, SC      
               Municipal Bond . . . . . $        230,536  $              - 
            Bank of Boston preferred    
               stock  . . . . . . . . .          263,750                 - 

            First Chicago Corp.         
               preferred stock  . . . .          190,000                 - 

               At  December 31, 1995 and 1996, the Company had $5.2 million
          and $5.0  million,  respectively, in  restricted investments  and
          cash  and  cash  equivalents.  Restricted  investments  primarily
          represent funds held as collateral in connection with reinsurance
          trust agreements. <PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          3.   Investments (continued)
               -----------------------

               Net  investment income for  the Company is  comprised of the
          following:

                                              Year ended December 31
                                        ----------------------------------
                                            1994        1995       1996
                                        ----------- ----------- ----------
          Fixed maturity and equity                 
            securities  . . . . . . . . $   251,973 $   387,859 $  388,700 
          Mortgage loans on real estate      18,262       4,658      4,613 
          Short-term investments,                   
            including cash and cash                 
            equivalents . . . . . . . .      52,433      74,601     50,684 
                                         ----------- ----------- ----------
                                            322,668     467,118    443,997 
          Less investment expenses  . .     (39,030)    (69,738)   (40,078)
                                         ----------- ----------- ----------
          Net investment income . . . .     283,638     397,380    403,919 
                                         =========== =========== ==========
                                                    

          Realized gain (loss) on                   
            available-for-sale
            securities:
            Fixed maturities  . . . . .     (34,752)    (10,984)         - 
            Equity securities . . . . .     (88,643)    134,988    117,824 
                                         ----------- ----------- ----------
          Net realized investment gains             
            (losses)  . . . . . . . . . $  (123,395)$   124,004 $  117,824 
                                         =========== =========== ==========

          4.   Fair Value of Financial Instruments
               -----------------------------------

               The  carrying  amounts  and  fair values  of  the  Company's
          financial instruments at December 31, 1996 are as follows:<PAGE>






                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

          4.        Fair Value of Financial Instruments (continued)
                    -----------------------------------------------

                                                 December 31, 1996
                                           -----------------------------
                                              Carrying
                                               Amount       Fair Value
                                           -------------- --------------
          Assets:                                                
            Cash and cash equivalents,     
               including short-term        
               investments  . . . . . . .  $      993,069 $     993,069 
            Investments . . . . . . . . .       5,785,871     5,821,042 
            Accounts receivable . . . . .         924,536       924,536 
            Reinsurance recoverables  . .         987,953       987,953 
                                           
            Liabilities:                                   
             Long-term debt   . . . . . .  $    1,533,265 $   1,533,265 

               The  following  methods and  assumptions  were  used by  the
          Company in  estimating its  fair value disclosures  for financial
          instruments:

                    Cash  and  cash  equivalents,  short-term  investments,
               accounts receivable, reinsurance recoverables  and long-term
               debt:  The carrying  amount  reported in  the balance  sheet
               approximates its fair value.

                    Investments:  Fair values for fixed maturity securities
               are based on quoted market  prices, where available, and are
               recognized  in  the  balance  sheet  for  available-for-sale
               securities. The fair values  for equity securities are based
               on quoted  market prices and  are recognized in  the balance
               sheet.

          5.   Intangibles
               -----------

               Intangibles at December 31 are comprised of the following:

                                                1995           1996
                                           -------------- --------------
            Purchased customer accounts    $   1,084,041  $   1,084,041 
            Noncompete agreements . . . .        234,000        234,000 
            Goodwill  . . . . . . . . . .        926,661        926,661 
            Deferred state admission costs 
             and other  . . . . . . . . .        389,427        489,365 
                                           -------------- --------------
                                               2,634,129      2,734,067 
            Less accumulated amortization       (471,168)      (777,343)
                                           -------------- --------------<PAGE>





                                           $   2,162,961  $   1,956,724 
                                           ============== ==============<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          5.   Intangibles (continued)
               -----------------------

               Amortization expense  amounted to $61,370  in 1994, $227,185
          in 1995 and $306,175 in 1996.

          6.   Reserve for Losses and Loss Adjustment Expenses
               -----------------------------------------------

               The  following  table  provides   a  reconciliation  of  the
          beginning  and  ending  liability  balances,  net  of reinsurance
          recoverables,  for the  years ended  December 31, 1994,  1995 and
          1996, to the gross amounts reported in the Company s consolidated
          balance sheets:

                                                    December 31
                                        ----------------------------------
                                            1994        1995       1996
                                        ----------- ----------- ----------
          Liability for losses and LAE,             
            net of reinsurance                      
            recoverable on unpaid                   
            losses, at beginning of                 
            year  . . . . . . . . . . . $ 1,708,761 $1,625,703  $1,052,547 
          Provision for losses and LAE              
            for claims occurring in the             
            current year, net of                    
            reinsurance . . . . . . . .   2,425,455  1,486,546   1,370,640 
          Increase (decrease) in                    
            estimated losses and LAE                
            for claims occurring in                 
            prior years, net of                     
            reinsurance . . . . . . . .     220,600   (241,000)    300,000 
                                         ----------------------  ----------
          Incurred losses during the                
            current year, net of                    
            reinsurance . . . . . . . .   2,646,055  1,245,546   1,670,640 
          Losses and LAE payments for               
            claims, net of reinsurance,             
            occurring during:                       
              The current year  . . . .     810,903    161,279     422,544 
              Prior years . . . . . . .   1,918,210  1,657,423   1,705,721 
                                         ----------------------  ----------
                                          2,729,113  1,818,702   2,128,265 
                                         ----------------------  ----------<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          6.   Reserve for Losses and Loss Adjustment Expenses (continued)
               -----------------------------------------------------------

                                                    December 31
                                        ----------------------------------
                                            1994        1995       1996
                                        ----------- ----------- ----------
          Liability for losses and LAE,             
            net of reinsurance                      
            recoverables on unpaid                  
            losses, at end of year  . . $ 1,625,703 $1,052,547     594,922 
          Reinsurance recoverables on               
            unpaid losses at end of                 
            year  . . . . . . . . . . .   1,512,219  1,299,257   1,396,874 
                                         ----------------------  ----------
          Liability for losses and LAE,             
            gross of reinsurance                    
            recoverables on unpaid                  
            losses, at end of year  . . $ 3,137,922 $2,351,804  $1,991,796 
                                         ======================  ==========

               The Company experienced a redundancy of $241,000 in reserves
          for losses and loss adjustment expenses in 1995 and experienced a
          deficiency   of  $220,600   and   $300,000  in   1994  and   1996
          respectively. The  redundancy in 1995  principally resulted  from
          settling  case  basis reserves  established  in  prior years  for
          amounts  that were  less  than expected.  The deficiency  in 1994
          principally resulted from a  single principal on business written
          through  a 1991/92  pooling agreement.   The  deficiency  in 1996
          principally resulted from a 1993/94 Pooling Agreement.

               The anticipated effect of inflation is implicitly considered
          when estimating liabilities for losses and LAE. While anticipated
          price increases due to inflation are considered in estimating the
          ultimate  claim  costs, the  increase  in  average severities  of
          claims  is  caused  by  a  number  of  factors.   Future  average
          severities are projected based  on historical trends adjusted for
          anticipated changes in underwriting standards, policy provisions,
          and  general  economic  trends.  These  anticipated  trends   are
          monitored  based  on  actual  development  and  are  modified  if
          necessary.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          6.   Reserve for Losses and Loss Adjustment Expenses (continued)
               -----------------------------------------------------------

               The  Company  has  entered  into a  managing  general  agent
          agreement with an unaffiliated  insurance agency. Under the terms
          of the agreement, the Company and agency share in the profits and
          losses  resulting from  business placed  by the  managing general
          agent. As of December 31,  1995 and 1996, the Company  reported a
          profit split recoverable of $542,856 and  $527,471, respectively.
          The profit split amounts have been included as a component of the
          reserve for losses and  loss adjustment expenses for 1995  in the
          accompanying  consolidated  balance  sheets.   During  1996,  the
          profit split recoverable was  utilized to offset accounts payable
          due under the  agreement.  The  managing general agent  agreement
          was not renewed effective January 1, 1997.

          7.   Short-Term Borrowings
               ---------------------

               During  1995,  the  Company   entered  into  a  margin  loan
          agreement with  an investment firm  which enables the  Company to
          borrow funds up to  a percentage of the Company s  invested funds
          ($518,000  at December 31,  1995). As  of December 31,  1995, the
          Company had  $406,607 outstanding  under the  agreement.   As  of
          December 31,  1995, the Company  had preferred and  common stocks
          with  an estimated fair value  of $1,160,500 on  account with the
          investment firm.  The loan bears interest  at .75% to 2.50% above
          the investment  firm's base  rate (8.75% at  December 31,  1995).
          For  the year  ended  December 31,  1995  and 1996,  the  Company
          incurred  interest expense of  $28,612 and  $27,389 respectively,
          under the terms of  the agreement.  During 1996, the Company paid
          off this margin loan.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


               The  1995 weighted  average  interest  rate  for  short-term
          borrowings was 8.5%.

          8.   Long-Term Debt
               --------------

               Long-term debt consists of the following:

                                                    December 31
                                                1995           1996
                                           -------------- --------------
          Term note due affiliate          
            (including accrued interest of 
            $1,797,804 at                  
            December 31, 1995)  . . . . .  $    4,797,804 $           - 
          Note payable due March 1, 2002   
            at 8% through February 28,     
            2001 and 10% thereafter . . .         413,870       423,265 
          Note payable due June 30, 2010   
            at 8% through July 31, 1999    
            and 9% thereafter . . . . . .       1,150,000     1,110,000 
                                            ----------------------------
                                           $    6,361,674    $1,533,265 
                                            ============================

               Term Note Due Affiliate
               -----------------------

               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 due  quarterly only  if and
          when CCS s surplus, as defined below, exceeds $4,000,000 and  are
          limited  to  an amount  equal to  one-half  of the  statutory net
          income before dividends  and federal and foreign  income taxes of
          CCS during that year.   In 1992, the debenture due to KC from CCS
          was assigned to CTI.  As  of December 31, 1996, no amounts  could
          be paid by CCS to CTI under the terms of the debenture.

                In  addition,  in  1992,  CTI  entered  into  a  term  note
          agreement  with KC for  the outstanding amount  of the debenture,
          including interest arrearage  ($4,291,049) at September  30, 1992
          as part of the  Distribution. The term note  was pari passi  with
          the other  debts of CCS,  bearing interest  at 10 percent  of the
          unpaid principal and  interest and  was due on  October 1,  2002.
          Interest and  principal were due quarterly  with minimum payments
          equal to one  half of  net earnings before  interest and  federal
          income  taxes.   Effective  October 1,  1996,  the term  note was
          converted to equity at a rate of $3.00 per share.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

          8.   Long-Term Debt (continued)
               --------------------------

               The term note  was subordinate  in right of  payment to  all
          policyholders  of CCS. Surplus funds are defined as funds CCS has
          remaining after deduction of  capital, insurance reserves and all
          other  liabilities,  in   accordance  with  accounting  practices
          prescribed or permitted by the Florida Insurance Department. 

               Effective October  1, 1996,  CTI issued 1,723,290  shares at
          the fair  value of $3.00 per share of its common stock to Kimmins
          Corp. (f/k/a  Kimmins Environmental Service,  Corp.) in  exchange
          for surrender of the Company's term note payable in the amount of
          $5,169,870.

               Notes Payable to Nonaffiliates
               ------------------------------

               In  connection  with  the  acquisition  of  certain agencies
          during 1995 (see  Note 16),  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  8%  through  March  31,  1999  and  9%
          thereafter. Principal  payments of  $40,000 are due  annually for
          three years  beginning January 5,  1996.  Principal  and interest
          payments  at 9%  of $11,104  are due  monthly beginning  April 1,
          1997.

               Maturities of  notes payable  to nonaffiliates for  the five
          years succeeding December 31, 1996 are as follows:

               Year Ending December 31
          --------------------------------

                        1997                         $ 139,936

                        1998                           173,248
                        1999                           133,248

                        2000                           283,248

                        2001                           283,248<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          9.   Income Taxes
               ------------

               Significant components of the provision (benefit) for income
          taxes for the years  ended December 31, 1994, 1995 and  1996, are
          as follows:

                                            1994        1995       1996
                                        ----------- ----------- ----------
               Current  . . . . . . . . $  (103,335)$         -          - 
               Deferred . . . . . . . .     (31,855)          -          - 
                                         ----------- ----------- ----------
                                        $  (135,190)$         -          - 
                                         =========== =========== ==========

               A reconciliation  of the  federal statutory income  tax rate
          applied to pre-tax loss and the effective income tax benefit rate
          is as follows:

                                            1994        1995       1996
                                        ----------- ----------- ----------
             Federal statutory tax rate      (34.0)%    (34.0) %    (34.0)%
             State income taxes, net of             
               federal income tax                                          
               benefit  . . . . . . . .      (3.7)       (4.4)       (3.7)%
             Income exempt from                     
               taxation and dividend                             
               exclusions . . . . . . .      (6.6)       (8.5)      (10.1) 
             Differences between                    
               earnings statement and                
               tax return . . . . . . .         -        10.7           -  
             Valuation allowance  . . .      24.3        34.6        44.4  
             Other, net   . . . . . . .       8.8         1.6         3.4  
                                         ----------- ----------- ----------
             Effective tax rate   . . .     (11.2) %        -           -  
                                         =========== =========== ==========

               Deferred  income  taxes  reflect  the  net  tax  effects  of
          temporary differences  between the carrying amount  of assets and
          liabilities   for   financial   reporting   purposes    and   the
          corresponding amounts  used for  income  tax reporting  purposes.
          Significant components of the Company s  deferred tax liabilities
          and assets are as follows:<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          9.   Income Taxes (continued)
               ------------------------

                                                    December 31
                                                1995           1996
                                           -------------- --------------
          Deferred tax liabilities:                              
            Deferred policy acquisition    
             costs  . . . . . . . . . . .  $      163,793 $    239,022  
            State licensing costs . . . .          21,486            -  
            Losses and loss adjustment     
             expenses   . . . . . . . . .               -       31,269  
                                            ----------------------------
          Total deferred tax liabilities          185,279       270,291 
          Deferred tax assets:             
            Amortization of intangibles            23,734        63,341 
            Unearned premiums . . . . . .          88,980       140,143 
            Losses and loss adjustment     
             expenses   . . . . . . . . .          43,186             - 
            Net operating loss             
             carryforward   . . . . . . .         400,135       746,174 
            Alternative minimum credit     
             carryforward   . . . . . . .               -        15,555 
            Other, net  . . . . . . . . .           3,393           347 
                                            ----------------------------
                                                  559,428       965,560 
            Less valuation allowance  . .        (374,149)     (695,269)
                                            ----------------------------
          Net deferred tax assets . . . .         185,279       270,291 
          Net deferred tax liabilities  .  $            0             0 
                                            ============================

               The  Company  has net  operating  loss  carryforwards as  of
          December 31, 1996  of  approximately $1,982,924  which  generally
          expire in 2010 and 2011.

          10.  Regulatory Requirements
               -----------------------

               Generally  accepted accounting  principles (GAAP)  differ in
          certain  respects  from the  accounting  practices prescribed  or
          permitted by insurance statutory authorities.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          10.  Regulatory Requirements (continued)
               -----------------------------------

               Under applicable state insurance statues, CCS must  maintain
          minimum  capital and  surplus of  $1,950,000 (as  of December 31,
          1996). In addition, under  applicable state laws and regulations,
          CCS  is restricted from paying dividends to the extent of surplus
          profits less any dividends  that have been paid in  the preceding
          twelve months or net investment income for the year, whichever is
          less,  unless the Company obtains prior approval from the Florida
          Department of  Insurance. As of  December 31, 1996, substantially
          all CCS retained earnings is restricted from paying dividends.

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

               CCS assumes  reinsurance primarily from a  pooling agreement
          for  which CCS  assumes 10  percent  of the  risk with  a maximum
          exposure  to CCS  of $125,000  per bond.  CCS is  still receiving
          residual revenues from  a pooling agreement for which CCS assumes
          25 percent and 20 percent of  the risk with a maximum exposure to
          CCS of $125,000 and $600,000 per bond, respectively.

               CCS  also cedes  reinsurance to  other insurance  companies.
          Reinsurance does not relieve  an insurer of its liability  to the
          policyholder  for  the full  amount of  the policy,  however, the
          reinsurer  is obligated to the insurer for the portion assumed by
          such  reinsurer. The Company  continues to have  exposure to risk
          for reinsurance ceded in  the event that the reinsurer  is unable
          to meet its obligation under the reinsurance agreement in force.

               During  April  1994,  CCS  amended one  of  its  reinsurance
          agreements to  be retroactive  for policies  effective October 1,
          1993. The agreement was previously effective beginning January 1,
          1994.   Under this agreement, CCS assumes 10% (effective April 1,
          1996),  12.5% (effective April 1, 1995); 25%  prior to that date)
          of certain surety policies underwritten by the insurance company.
          For  the  years ended  December 31,  1996 and  1995,  CCS assumed
          earned  premiums  of  approximately  $2,600,000  and  $4,372,000,
          respectively,  under the  terms of  the agreement.  The agreement
          expires April 1, 1997, but is expected to be renewed.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          11.  Reinsurance (continued)
               -----------------------

               Benefits and claims in 1994,  1995, and 1996 are  summarized
          as follows:

                                            1994        1995       1996
                                        ----------- ----------- ----------
               Direct . . . . . . . . . $  (116,928)$    63,343 $  127,232 
               Assumed  . . . . . . . .   2,790,489   1,184,953  1,587,890 
               Ceded  . . . . . . . . .     (27,506)     (2,750)   (44,482)
                                         ----------- ----------- ----------
               Net benefits and claims              
                expenses  . . . . . . . $ 2,646,055 $ 1,245,546 $ 1,670,640
                                         =========== =========== ==========

               One  of  the  Company's  subsidiaries  is a  claimant  in  a
          proceeding  against  the  United  States Navy  before  the  Armed
          Services Board of Appeals  seeking reimbursement of approximately
          $1  million  related  to  the subsidiary's  performance  under  a
          performance and  payment bond  related to  the construction  of a
          building for the United States Navy.   Management believes, based
          on advice from  its counsel, that  it will be successful  in this
          claim and,  accordingly, has recorded a  reinsurance recoverable.
          The Company is currently awaiting a decision in this case.

               The   Company s  reinsurance   recoverable  amounts   as  of
          December 31,  1995  and   1996  reported   in  the   accompanying
          consolidated balance sheets  also included estimated  subrogation
          recoverables  from the U.S.  Government of approximately $600,000
          and $640,000, respectively.

          12.  Stock Option Plan 
               -----------------
          
                The  Company has  elected to  follow  Accounting Principles
          Board of Opinion No 25 "Accounting for Stock Issued to Employees"
          (APB  25)  and  related  interpretations in  accounting  for  its
          employee  stock  options  because  the  alternative  fair   value
          accounting provided  for under Statement of  Financial Accounting
          Standards  No.  123, "Accounting  for  Stock-Based Compensation,"
          required  use of option valuation  models that were not developed
          for  use  in  valuing employee  stock  options.    The effect  of
          applying Statement No. 123's  fair value method to  the Company's
          stock based awards results  in net income and earnings  per share
          that  are not  material from  amounts reported  based on  APB 25.
          Under  APB  25, because  the  exercise  price  of  the  Company's
          employee stock options equals the  market price of the underlying
          stock  on  the  date  of   grant,  no  compensation  expense   is
          recognized.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          12.  Stock Option Plan (continued)
               -----------------------------
          
               CTI has  400,000  shares of  its common  stock reserved  for
          issuance  for the exercise of  options to be  granted under CTI s
          1991 stock  option plan (the  "Plan"). Options granted  under the
          Plan, in general, expire no later than ten years from the date of
          grant.

               As a  result of  the Distribution, options  were granted  to
          certain  individuals, which vest over five years from the date of
          the  grant.  At December 31,  1996,  options  to purchase  68,386
          shares of the Company s  common stock, at no cost  to the holder,
          have  been  granted,  all  are currently  exercisable.  Effective
          October 1,  1992, the Company granted options to purchase 100,000
          shares to  its President at  a price  of $.125 per  share. As  of
          December 31, 1996, all of the options were exercisable.

               Effective  May  22, 1996,  the  Company  granted options  to
          purchase 20,000 shares to  the President of "CCS"  at a price  of
          $.75 per  share.  As of  December 31, 1996, 4,000  of the options
          were exercisable.  The  Company granted options on July  26, 1996
          to  purchase 2,500 shares to an employee  at a price of $1.00 per
          share.    As  of December  31,  1996,  500  of the  options  were
          exercisable.

               As  a  result of  the retirement  of  a fully  vested option
          holder, the Company purchased  16,700 options on July 1,  1996 at
          $1.50 per share which represented the fair value of the Company's
          stock at  date of purchase.   No options were  exercised in 1994,
          1995 or 1996.

          13.  Employee Benefit Plan
               ---------------------

               On April 1, 1996, CTI adopted a defined  contribution 401(k)
          plan covering substantially  all employees.  Under the  plan, the
          Company  makes   contributions  equal  to  one   percent  of  the
          participant's  contributions, not  to exceed  six percent  of the
          participant's  annual compensation.   The Company's contributions
          to the plan totaled $7,288 in 1996.
          
          14.  Supplemental Disclosure of Cash Flow Information
               ------------------------------------------------

               For  the year ending December 31, 1994, interest payable for
          term  note  due affiliate  of  $460,111 was  settled  through the
          intercompany account with KC.  Interest paid in 1995 and 1996 for
          short-term  borrowings  was  $28,612  and  $27,389, respectively.
          Interest paid in 1995  and 1996 for term notes  due nonaffiliates
          was $45,600 and $89,000, respectively.  No income taxes were paid
          for the  years ended  December 31,  1994 and 1996.   The  Company<PAGE>





          received  an income  tax refund  of $108,231  for the  year ended
          December 31, 1995.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          15.  Preferred Stock
               ---------------

               CTI  is authorized  to issue  1,000,000 shares  of preferred
          stock,  $.001 par  value,  with  such  rights and  privileges  as
          determined by the Board  of Directors. The preferred stock  shall
          be  issued at such times and for such consideration as determined
          by  the Board  of Directors.  No shares  have  been issued  as of
          December 31, 1996.

          16.  Acquisitions
               ------------

               Effective   February 28,   1995,   the    Company   acquired
          substantially  all of the assets  of The Surety  Group, a Georgia
          insurance  agency  specializing  in  the  sales  of  surety  bond
          policies. The purchase price of $850,000 is comprised of $325,000
          paid  at closing,  the  assumption of  $25,000  of capital  lease
          obligations  and  a $500,000  note  payable  to  the seller.  The
          purchase  agreement  provides  that  the purchase  price  may  be
          reduced,  but  not increased,  based  on  the agency s  operating
          results during the three-year period ending February 28, 1998.

               Effective July  1, 1995,  the Company  acquired  all of  the
          assets  of Surety  Associates, Inc.,  a South  Carolina insurance
          agency specializing in the sales of surety bond and certain types
          of property  and casualty insurance policies.  The purchase price
          of $1,330,241 is  comprised of  $180,241 paid at  closing, and  a
          $1,150,000 note payable to the seller.

               Both acquisitions have been accounted for using the purchase
          method. The  results of operations of the  acquired entities have
          been  included in  the  accompanying  consolidated statements  of
          operations since their respective purchase date.

               The  effects of the acquired assets  have been excluded from
          the accompanying consolidated statements of cash flows.

               The  following  unaudited  pro  forma  summary  presents the
          consolidated  results of  operations as  if the  acquisitions had
          occurred  at the beginning of  the periods presented,  and do not
          purport  to be indicative of the results that actually would have
          occurred if  the acquisitions  had been  consummated as  of those
          dates or of results which may occur in the future.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          16.  Acquisitions (continued)
               ------------------------

                                               Year Ended December 31
                                                1994           1995
                                           -------------- --------------
                                                    (Unaudited)

               Revenues . . . . . . . . .  $    6,576,646 $   6,960,343 
               Net loss . . . . . . . . .      (1,322,490)$    (341,347)
               Net loss per share . . . .  $         (.34)$        (.09)

          17.  Statutory Accounting Practices
               ------------------------------

               Shareholders  equity  and net income (loss),  as reported to
          the domiciliary state insurance department in accordance with its
          prescribed or permitted statutory accounting practices for CCS is
          summarized as follows:

                                                          December 31
                                                        1995       1996
                                                    ----------- ----------
          Stockholders' equity                      
            (capital and surplus) . . .             $ 5,134,923 $5,034,662 
                                                     =========== ==========
          
                                              Year Ended December 31
                                            1994        1995       1996
                                        ----------- ----------- ----------
          Net income (loss) . . . . . . $  (783,977)$   897,955 $ (293,204)
                                         =========== =========== ==========

               CCS is domiciled in Florida and prepares its statutory-basis
          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. The  NAIC currently  is in the  process of  codifying
          statutory accounting  practices, the result of  which is expected
          to  constitute   the  only  source   of  "prescribed"   statutory
          accounting  practices.  Accordingly,   that  project,  which   is
          expected to be  completed in  1998, will likely  change, to  some
          extent, prescribed statutory accounting practices, and may result
          in changes to the accounting practices that insurance enterprises
          use to prepare their statutory financial statements.<PAGE>





                        SCHEDULE I - SUMMARY OF INVESTMENTS -
                      OTHER THAN INVESTMENTS IN RELATED PARTIES

                            CUMBERLAND TECHNOLOGIES, INC.

                                  DECEMBER 31, 1996

                     Column A             Column B    Column C   Column D
          ----------------------------- ----------- ----------- ----------

                                                                 Amount at
                                                                   Which
                                                                 Shown in
                                                                    the
                                                                  Balance
                Type of Investment          Cost       Value       Sheet
          ----------------------------- ----------- ----------- ----------

          Fixed maturity securities,                
            available-for-sale:
             Bonds:                                 

               United States Government             
                and government agencies $ 3,013,312 $ 3,055,753 $3,055,753 
                                         ----------- ----------- ----------

          Total . . . . . . . . . . . .   3,013,312 $ 3,055,753  3,055,753 
                                                     ===========

          Equity securities, available-             
            for-sale:
             Common stocks:                         

               Banks, trusts and                    
               insurance companies  . .       5,625 $     5,625      5,625 

               Industrial and                       
                miscellaneous   . . . .     610,905     671,266    671,266 

             Public utilities   . . . .     138,125     135,000    135,000 
             Investment in limited                  
               partnerships . . . . . .     208,125     209,375    208,125 
                                         ----------- ----------- ----------

          Total . . . . . . . . . . . .     962,780 $ 1,021,266  1,020,016 
                                                     ===========<PAGE>





                        SCHEDULE I - SUMMARY OF INVESTMENTS -
                      OTHER THAN INVESTMENTS IN RELATED PARTIES
                                     (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.

                                  DECEMBER 31, 1996


                     Column A             Column B    Column C   Column D
          ----------------------------- ----------- ----------- ----------

                                                                 Amount at
                                                                   Which
                                                                 Shown in
                                                                    the
                                                                  Balance
                Type of Investment          Cost       Value       Sheet
          ----------------------------- ----------- ----------- ----------

          Fixed maturity securities,                
            held to maturity:
             Bonds:                                 

               United States Government   1,438,815 $ 1,453,159  1,438,815 

               State and municipalities     225,449     246,276    225,449 
                                         ----------- ----------- ----------

          Total . . . . . . . . . . . .   1,664,264 $ 1,699,435  1,664,264 
                                                     ===========
          Residential mortgage loan on              
            real estate . . . . . . . .      45,838                 45,838 

          Short-term investments  . . .     323,993                323,993 
                                         ===========             ==========

          Total investments . . . . . . $ 6,010,187             $6,109,864 
                                         ===========             ==========<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                    OF REGISTRANT

                            CUMBERLAND TECHNOLOGIES, INC.

                                                       December 31
                                               ---------------------------

             Condensed Balance                        
                  Sheets                            1995          1996
          ----------------------               ------------- -------------

          Assets:                              
           Accounts receivable                 
             from affiliates                   $      77,220 $      57,545 

           Investment in wholly-               
             owned subsidiaries                
             (equity)   . . . .                    2,101,051     1,698,281 

           Other assets   . . .                      126,240        85,560 

           Surplus debenture                   
             receivable from                   
             subsidiary   . . .                    4,566,979     4,866,979 
                                                ------------- -------------
                                               $   6,871,490 $   6,708,365 
                                                ============= =============

          Liabilities:                         

           Accountants payable                       749,915       863,430 

           Other liabilities                           34,000       31,263 
           Term note payable to                
             affiliate  . . . .                    4,797,804             0 

                                                   5,581,719       894,693 

          Stockholders' equity:                

           Common stock   . . .                        4,040         5,763 
           Other stockholders'                 
             equity   . . . . .                    1,285,731     5,807,909 
                                                ------------- -------------

                                                   1,289,771     5,813,672 
                                                ------------- -------------

                                               $   6,871,490 $   6,708,365 
                                                ============= =============<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.

                                                  Year Ended December 31
                                               ---------------------------

           Condensed Statements                       
               of Operations          1994          1995          1996
          ---------------------- ------------- ------------- -------------

          Management fees from                 
           wholly-owned                        
           subsidiaries   . . .  $     155,417 $           - $      62,557 
          Interest income from                 
           subsidiary   . . . .        310,500       300,000       300,000 
                                  ------------- ------------- -------------

                                       465,917       300,000       362,557 

          Costs and expenses:                                

           Selling and                         
             administrative                    
             expenses   . . . .        305,211       151,189       133,834 
           Interest expense to                 
             affiliates   . . .        481,736       454,772       372,066 
                                  ------------- ------------- -------------

                                       786,947       605,961       505,900 
                                  ============= ============= =============

          Loss before income                   
           taxes and equity in                 
           net income (loss) of                
           subsidiaries   . . .       (321,030)     (305,961)     (143,343)

          Federal and state                    
           income tax benefits           8,710             -            -  
          Equity in net income                 
           (loss) of                           
           subsidiaries   . . .       (761,042)       77,751      (439,401)
                                  ------------- ------------- -------------

          Net income (loss) . .  $  (1,073,362)$    (228,210)$    (582,744)
                                  ============= ============= =============<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.


                                                  Year Ended December 31
                                               ---------------------------

                                                  Year Ended December 31
                                               ---------------------------

           Condensed Statements                       
               of Cash Flows          1994          1995          1996
          ---------------------- ------------- ------------- -------------
          Net cash provided by                 
           operating activities              -             -             - 
                                  ------------- ------------- -------------

          Cash and cash                        
           equivalents,                        
           beginning of year                 -             -             - 
                                  ------------- ------------- -------------

          Cash and cash                        
           equivalents, end of                 
           year   . . . . . . .              - $           - $           - 
                                  ============= ============= =============

          Supplemental   Schedule  of   Noncash  Investing   and  Financing
          Activities
          -----------------------------------------------------------------

                The Company operates through its wholly-owned  subsidiaries
          and   all  operating   activities   have  been   funded  by   its
          subsidiaries.

                The Company  was capitalized  through  the contribution  of
          the outstanding common stock of CCS and SSI to the Company by KC.

                During 1992,  the Company  acquired the  liabilities to  KC
          from CCS  in the  form of  amounts due KC  under the  CCS surplus
          debenture in exchange  for the term  note.  Effective  October 1,
          1996, the term note was converted to equity.<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.


          Notes to Condensed Financial Statements
          ---------------------------------------

          1.    Organization   and   summary   of  significant   accounting
          policies
                ----------------------------------------------------------
          -

                Organization  -   Cumberland  Holdings,   Inc.  ("CHI"),  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 CHI. KC  then distributed to
          its stockholders CHI s common stock on the basis of  one share of
          common stock of  CHI for each five shares of  KC common stock and
          Class B common stock owned. CHI conducts its business through its
          subsidiaries. Effective January 31, 1997, CHI changed its name to
          Cumberland Technologies, Inc.  ("CTI") to more efficiently  state
          the nature  and  direction of  its surety  bond software  program
          written  and developed  to  assist its  insurance operations  and
          subsidiaries in marketing its direct surety bond.  CCS, a Florida
          corporation  formed   in  May  1988,   provides  reinsurance  for
          specialty  sureties and  performance and  payment bonds  for con-
          tractors. The surety  services provided include  reinsurance and,
          to a  lesser extent,  direct surety. SSI,  a Florida  corporation
          formed in August 1988,  is a general lines agency  which operates
          as  an  independent  agent.  Surety  Group  (SG)  and  Associates
          Acquisition Corp. d/b/a Surety Associates (SA), are general lines
          agencies  purchased  in  February  and  July  1995, respectively.
          During  1994, CTI  formed two  additional subsidiaries,  Official
          Notary  Service of  Texas, Inc.,  a Texas  corporation formed  in
          February  1994,  provides  registration  and sundry  services  to
          notaries,   and  Qualex   Consulting  Group,   Inc.,   a  Florida
          corporation   formed  in  November   1994,  provides   claim  and
          contracting consulting services.
          
                For  the  years  ended  December 31,  1994  and  1996,  CTI
          charged its subsidiaries a management fee. No fee was charged for
          the year ended December 31, 1995.
          
          2.        Basis  of Presentation  -  In  the  parent-company-only
          financial statements, the Company s investment in subsidiaries is
          stated  at   cost  plus  equity  in   undistributed  earnings  of
          subsidiaries since  the date of acquisition.  The Company s share
          of net income  of its unconsolidated subsidiaries  is included in
          consolidated income using the equity  method. Parent-company-only
          financial  statements  should be  read  in  conjunction with  the
          Company s consolidated financial statements.<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.


          Notes to Condensed Financial Statements (continued)
          ---------------------------------------------------

                The investment in subsidiaries  amounts as  of December 31,
          1995    and    1996   are    net    of    the   net    unrealized
          depreciation/appreciation  in available-for-sale  securities held
          by CCS. Such amounts total $63,045 and $99,676 as of December 31,
          1995  and  1996,  respectively.  These  amounts  have  also  been
          included in the CTI "other stockholders  equity" amounts.<PAGE>





                  SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION

                            CUMBERLAND TECHNOLOGIES, INC.

          <TABLE>
          <CAPTION>

                                      Future Policy                    
                                                                Benefits,                      
                                                      Deferred      Losses,                 Other Policy
                                                       Policy     Claims and     Unearned    Claims and     Premium
                                                    Acquisition  Loss Expenses   Premiums     Benefits      Revenue
                                                       Costs     --------------------------    Payable   -------------
                                                   -------------   --------      --------   -------------   --------
                                                      --------                                --------

                 <S>                               <C>           <C>          <C>           <C>          <C>

                 Year ended                                                                 
                   December 31, 1994                                                        
                   Property and Casualty Insurance                                          
                   Company   . . . . . . . . . . . $    580,743  $  3,137,922 $  1,631,478  $          0 $  4,956,714 
                                                         =======       =======      =======       =======      =======
                 Year ended                                                                 
                   December 31, 1995                                                        
                   Property and Casualty Insurance                                          
                   Company   . . . . . . . . . . . $    435,272  $  2,351,804 $  1,182,305  $          0 $  5,068,315 
                                                         =======       ==============             =======      =======

                 Year ended                                                                 
                   December 31, 1996                                                        
                   Property and Casualty Insurance                                          
                   Company   . . . . . . . . . . . $    635,189  $  1,991,796 $  1,862,114  $          0 $  3,808,319 
                                                         =======       =======      =======       =======      =======
                 
                 </TABLE>

          (1)     Includes reinsurance premiums assumed.<PAGE>





                     Schedule III - SUPPLEMENTARY INSURANCE INFORMATION

                              CUMBERLAND HOLDINGS, INC.
                                     (CONTINUED)


          <TABLE>
            <CAPTION>

                                               Benefits,   Amortization       
                                                                 Claims,    of Deferred                  Premiums
                                                        Net       Losses and      Policy        Other       Written
                                                     Investment   Settlement   Acquisition    Operating       (1)
                                                       Income      Expenses       Costs       Expenses   -------------
                                                   ------------- -------------------------- -------------   --------
                                                      --------     --------      --------     --------

                 <S>                               <C>           <C>          <C>           <C>          <C>

                 Year ended                                                                 
                   December 31, 1994                                                        
                   Property and Casualty Insurance                                          
                   Company   . . . . . . . . . . . $    160,243  $  2,646,055 $  2,037,539  $  1,514,575 $  5,580,978 
                                                         =======       =======      =======       =======      =======
                 Year ended                                                                 
                   December 31, 1995                                                        
                   Property and Casualty Insurance                                          
                   Company   . . . . . . . . . . . $    521,384  $  1,245,546 $  2,380,140  $  2,882,255 $  4,781,567 
                                                         =======       =======      =======       =======      =======

                 Year ended                                                                 
                   December 31, 1996                                                        
                   Property and Casualty Insurance                                          
                   Company   . . . . . . . . . . . $    521,743  $  1,670,640 $  1,532,355  $  3,255,805 $  4,368,046 
                                                         =======       =======      =======       =======      =======

                 </TABLE>
          (1)   Includes reinsurance premiums assumed.<PAGE>





                              SCHEDULE IV - REINSURANCE

                            CUMBERLAND TECHNOLOGIES, INC.

          <TABLE>
          <CAPTION>
                                                  Assumed             Percentage
                                             Ceded to     from                of Amount
                                     Gross      Other      Other       Net    Assumed to
                                    Amount    Companies  Companies    Amount      Net
                                  -------------------------------------------------------

            <S>                   <C>        <C>        <C>        <C>        <C>

            Year ended                                             
              December 31, 1994                                    
              Property and                                         
              Casualty Insurance                                   
              Premiums  . . . . . $  503,244 $  566,264 $5,019,734 $4,956,714 $   101.27%
                                  =======================================================
            Year ended                                             
              December 31, 1995                                    
              Property and                                         
              Casualty Insurance                                   
              Premiums  . . . . . $  627,683 $  503,493 $4,944,125 $5,068,315 $    97.55%
                                  =======================================================

            Year ended                                             
              December 31, 1996                                    
              Property and                                         
              Casualty Insurance                                   
              Premiums  . . . . . $ 1,152,250$  427,718 $3,083,787 $3,808,319 $    80.98%
                                  =======================================================
            /TABLE
<PAGE>





                    SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
                            CUMBERLAND TECHNOLOGIES, INC.

          <TABLE>
          <CAPTION>
                                            Additions            
                                              ---------------------

                                    Balance at Charged to Charged to           Balance at
                                     Beginning  Costs and   Other                End of
                  Description        of Period  Expenses   Accounts  Deductions  Period
            ----------------------- ---------- ---------- ---------- --------------------

            <S>                     <C>        <C>        <C>       <C>        <C>
            For the year ended                                      
              December 31, 1994:

              Deducted from asset                                   
               accounts:

               Allowance for                                        
                 doubtful accounts  $       0  $       0            $        0 $        0 
                                    ========== ========== ========== ========== ==========

               Deferred income tax                                  
                 valuation allowance$       0  $ 294,197  $62,638(1)$        0 $  356,835 
                                    ========== ========== ========== ========== ==========
            For the year ended                                      
              December 31, 1995:

              Deducted from asset                                   
               accounts:

               Allowance for                                        
                 doubtful accounts  $       0  $  67,209  $       0 $        0 $   67,209 
                                    ========== ========== ========== ========== ==========

               Deferred income tax                                  
                 valuation allowance$ 356,835  $  79,952  $       0 $ 62,638(2)$  374,149 
                                    ========== ========== ========== ========== ==========
            For the year ended                                      
              December 31, 1996:

              Deducted from asset                                   
               accounts:

               Allowance for                                        
                 doubtful accounts  $  67,209  $       0  $       0 $   67,209 $        0 
                                    ========== ========== ========== ========== ==========

               Deferred income tax                                  
                 valuation allowance$ 374,149  $ 321,111  $       0 $        0 $  695,260 
                                    ========== ========== ========== ========== ==========
            </TABLE>

          (1)  Establishment of valuation allowance against deferred assets<PAGE>





               associated  with  unrealized  losses  on  available-for-sale
               securities.

          (2)  Represents   the  elimination  of  the  valuation  allowance
               associated  with  unrealized  losses  on  available-for-sale
               securities.<PAGE>





            EXHIBIT 11 - STATEMENT RE:  COMPUTATION OF EARNINGS PER SHARE

                            CUMBERLAND TECHNOLOGIES, INC.


                                              Year Ended December 31

                                            1994        1995       1996
                                        ----------- ----------- ----------

          Average shares outstanding  .   3,908,759   3,824,494  4,026,655 
          Net effect of dilutive stock              
           options  . . . . . . . . . .           -           -          - 

          Totals  . . . . . . . . . . . $  3,908,759$ 3,824,494 $4,026,655 
                                         =========== =========== ==========

          Net income (loss) . . . . . . $(1,073,362)$  (228,210)$ (582,744)
                                         =========== =========== ==========

          Earnings (loss) per share     $      (.27)$      (.06)$     (.14)
           amount   . . . . . . . . . .  =========== =========== ==========<PAGE>





                     EXHIBIT 22 - SUBSIDIARIES OF THE REGISTRANT

                            CUMBERLAND TECHNOLOGIES, INC.


          As  of   December  31,  1996,  the   subsidiaries  of  Cumberland
          Technologies, Inc. were as follows:

             - Surety Specialists, Inc.

             - Cumberland Casualty & Surety Company

             - Official Notary Service of Texas, Inc.

             - Qualex Consulting Group, Inc.

             - Surety Group, Inc.

             - Associates Acquisition Corp. d/b/a Surety Associates, Inc.
          
             - Florida Credit & Collection Services, Inc.<PAGE>