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

                     For the fiscal year ended December 31, 1998

                                          OR

          [  ] Transition Report  Pursuant to  Section 13  or 15(d)  of the
               Securities Exchange Act of 1934

                    For the transition period from ______ to ______.

                             Commission File No. 0-19727

                            CUMBERLAND TECHNOLOGIES, INC.

                (Exact name of registrant as specified in its charter

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

          4311 West Waters Avenue, Suite 501      33614
          Tampa, Florida
          -------------------------------         -------------------------
          -
          (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             The NASDAQ Stock Market
          --------------------     ----------------------------------------

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

                                     Common Stock
                   ------------------------------------------------
                                   (Title of Class)<PAGE>





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

                                                       Yes [X]  No  [  ]

          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. [X]

                                      $2,845,112
          -----------------------------------------------------------------

          Aggregate  market value  of voting  stock (Common Stock)  held by
          nonaffiliates of the Registrant as of March 19, 1999

                   5,447,966 shares of Common Stock $.001 par value
          -----------------------------------------------------------------

          Number of shares of Common Stock outstanding as of March 27, 1998

                      Documents incorporated by reference: NONE<PAGE>





                                        PART I


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

               General
               -------

               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 ).   Cumberland Technologies, Inc.,( the
          Company ) is a holding  company engaged through its subsidiaries,
          Cumberland Casualty & Surety Company ( CCS ), Surety Specialists,
          Inc.  ( SSI ),   The  Surety  Group,   Inc.  ( SG ),   Associates
          Acquisition Corp. d/b/a Surety Associates, Inc. ( SA ) and Qualex
          Consulting Group,  Inc. ( Qualex ) in the  delivery of speciality
          surety  and  insurance   services.     Surety  services   include
          underwriting surety bonds on a  direct and assumed basis,  surety
          consulting  and the  development of  surety software.   Insurance
          services  include  the  underwriting   of  speciality  and  other
          liability insurance products.   In addition, the Company conducts
          its business through a number of independent agencies which focus
          on selling and delivering surety insurance products to consumers.
          Traditionally, this segment of  the surety industry has delivered
          its products through  an antiquated manual  process.  Because  of
          this  need to  advance technologically,  the Company  developed a
          software product called Bond-Pro .  This patented surety issuance
          system  increases  the speed  that  surety  agents deliver  their
          products   to  the   customer   and   financially  report   those
          transactions to the carrier, while reducing operating costs.  The
          Company s business strategy is to continue the underwriting focus
          of  each of  its  operating subsidiaries  and  to achieve  growth
          through the expanded licensing of Bond-Pro .

               CCS is a property  and casualty insurance company that   was
          incorporated  in  Texas  on  May 4,  1988  and  redomesticated in
          Florida, on September  2, 1994.   CCS is  licensed in  twenty-six
          states,  the  District  of  Columbia,  and  Guam.    It  holds  a
          certificate of authority from the United States Department of the
          Treasury, which qualifies CCS as an  acceptable surety on Federal
          bonds.  CCS is rated  B+  (Very Good) by A.M. Best.<PAGE>





               CCS  currently has  applications  for  admission pending  in
          various states.  Most of these states have a lengthy applications
          process  in  which the  admission  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
          if  may take  to approve  an application.   All  applications are
          updated as new  information becomes available and  CCS is waiting
          for inquiries or actions  by these pending states.   Those 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   the   applications   for  admission   will   be  submitted
          accordingly.   CCS is  currently attempting to  obtain additional
          state  licenses in order to spread its loss geographically and to
          increase  its  sales of  direct  surety  and insurance  products.
          Management believes  that CCS can function  profitability selling
          direct surety and insurance products in the states in which it is
          currently licensed.

               SSI,  a Florida corporation, formed  in August 1988,   SG, a
          Georgia  corporation,  and  SA,   a  South  Carolina  corporation
          purchased by Cumberland in  February and July 1995, respectively,
          are  specialized surety  agencies  which  operate as  independent
          agencies. Each secures  surety risks  for small to   medium  size
          contractors as an agent and for other agents as a broker.  SG and
          SA are also general lines insurance agencies.   When acting as an
          agent,  SSI,  SG and  SA receive  a  commission from  the various
          insurance companies it represents,  one of which is CCS.   Agency
          commissions are based upon  a percentage of premiums paid  by the
          consumer.   The commissions paid by  CCS to SSI, SG  and SA range
          from 15 to 40 percent.

               In addition,   SSI  generates additional revenues  through a
          joint partnering agreement with St.  Paul, Fire and Marine Group,
          f/k/a United States Fidelity and Guaranty Company ( St. Paul ) to
          pursue  small  to  medium  size contract  and  commercial  surety
          business on a country wide basis (the  St. Paul Agreement ).  The
          St.  Paul Agreement  allows  SSI to  solicit  surety business  in
          states  in  which  CCS  is not  licensed,  thereby  significantly
          increasing  the Company s  geographic  spread of  risk.   It also
          facilitates  St. Paul  agents access  to the  Company s Bond-Pro 
          issuance  system.   CCS participates  in the  St.  Paul Agreement
          underwriting risk through a retrocessional treaty.

               Qualex,  a  Florida corporation,  formed  in November  1994,
          provides claim and contracting  consulting services to the surety
          and   construction  industries.   CCS purchases  claim consulting
          services from Qualex on a contract basis.  

               The percentages of gross  revenue generated by the Company s
          subsidiaries for the year ended December 31, 1998 are as follows:<PAGE>





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

                              CCS                   74%

                              SSI                    9%
                            Qualex                   8%

                              SA                     5%

                              SG                     4%
                                            --------------------

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

               The  term   the   Company   unless  the  context   otherwise
          requires, refers  to  Cumberland  Technologies,  Inc.  and    its
          subsidiaries.  The principal executive offices of the Company are
          located  at 4311  West Waters  Avenue, Suite 501,  Tampa, Florida
          33614.   The Company s  telephone number  is (813)  885-2112, its
          facsimile  number  is  (813)   885-6734  and  its  web   site  is
          www.cumberlandtech.com.

               Surety Products
               ---------------

               CCS underwrites a wide variety of surety  bonds for small to
          medium size  surety accounts.  CCS also assumes underwriting risk
          from   other   surety   companies   under   various   reinsurance
          arrangements.    Contract   surety  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.   CCS s  typical bond  is less  than $500,000   with
          aggregate ongoing work of $1  million.  These bonds are  marketed
          through independent insurance agencies specializing  in this type
          of coverage to general contractors, sub-contractors and specialty
          contractors.

               Commercial surety  bonds,  which includes  all  non-contract
          surety bonds, numerous types of license and permit, miscellaneous
          and judicial bonds.   The scope of each bond  varies according to
          the law, locality, the nature  of the guarantee, and the  parties
          who  have a  right of action  under the  bond.   The typical bond
          penalty ranges from $5,000 to $25,000 and  are usually written on
          a volume basis.<PAGE>





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

               The  Company s other  liability insurance  products include,
          Registered Investment Advisors  professional liability  insurance
          and  Notary Public Errors and Omission liability insurance.  Both
          coverages are occurrence liability coverages, that insure against
          specific  liability  risks.    Under  the  Registered  Investment
          Advisors  professional liability coverage,  each endorsed account
          is  limited to  a maximum  liability coverage  of $500,000.   The
          Notary Public Errors and  Omissions liability coverage is written
          with liability limits of $5,000 to $30,000 per policy.

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

               Technology Product
               ------------------

               On October 1, 1996, CTI launched the development of a surety
          bond  issuance  system  Bond-Pro .     The  Company received  its
          federal copyright registration  #TX4-542-729 effective March  29,
          1997.   The Company sees  the implementation of  the system as an
          integral part of our  unique service affording us the  ability to
          capture a share of the marketplace.  This program encompasses the
          required functions an agency needs to run  a full scale bond desk
          when  implemented inside the  agency structure.   The software is
          designed  to  reduce  the  labor  required  to  provide  improved
          service.  The  efficiencies gained in using  the Bond-Pro  system
          enhances  CCS s  ability  to  increase  premium  and  to  develop
          relationships  which  may  not   otherwise  be  possible  due  to
          competition for this class of business.  While a small percentage
          of  the industry offers issue and reporting systems for bonds, no
          other   provider   offers  a   fully   integrated,  multi-carrier
          production and processing system including management reporting.

               Underwriting
               ------------

               For the  contract and  commercial surety lines  of business,
          the Company s underwriting philosophy  provides for an individual
          analysis of the risk associated with each application, except for
          specific categories  of  miscellaneous bonds.    In  underwriting
          contract bonds,  its approach focuses on  the financial strength,
          experience  and  operating  capacity   of  the  contractor.    In
          underwriting  commercial surety,  this  approach  focuses on  the
          credit history and financial resources of the applicant.<PAGE>





               The Company maintains control of the contract and commercial
          surety underwriting  process through the use  of authority limits
          for each underwriter and  committee underwriting of larger risks.
          The  Company  may  require   collateral  on  contract  bonds  and
          occasionally, on other types of bonds based upon an assessment of
          the  risk   characteristics.     The  risk  assessment   includes
          evaluation  of  the financial  strength  of  the contractor,  the
          credit history of the contractor, work in progress and successful
          work experience.   Collateral can consist  of irrevocable letters
          of  credit,  certificates  of deposit,  cash,  savings  accounts,
          publically traded  securities and  trustees or mortgages  on real
          property.   Both  corporate and  personal indemnification  may be
          required in order to  mitigate liability risk.  The  Company also
          targets various  products in  the commercial surety  market which
          are  characterized by relatively low risk exposure in small penal
          amounts.   The  underwriting  criteria, including  the extent  of
          bonding  authority  granted  to  independent  agents,  will  vary
          depending  on the class  of business and  the type of  bond.  For
          example,  relatively little underwriting information is typically
          required of certain low exposure risk such as notary bonds.

               Other  liability  insurance  applications  are  individually
          evaluated and the decision to write a particular risk is made  by
          the   Company s  underwriting   department.     The  underwriting
          department determines  whether to  write a particular  risk after
          evaluating  a number  of  factors based  upon detailed  objective
          underwriting standards relating to each class of business.

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

               The Company s insurance  subsidiary, in the  ordinary course
          of  business, cedes  insurance to  other insurance  companies, to
          limit its  exposure to  loss, provide greater  diversification of
          risk, and  minimize aggregate exposures.   Because the  ceding of
          insurance  does  not  discharge  the  primary  liability  of  the
          original insurer, CCS  places reinsurance with qualified carriers
          after  conducting   a  detailed  review  of  the  nature  of  the
          obligation and  a thorough  assessment of the  reinsurers  credit
          qualifications, claims settlement  performance and  capabilities.
          The reinsurance coverage terms are tailored to the  specific risk
          characteristics of the underlining products of the company.<PAGE>





               For  contract and  commercial surety  business, CCS  entered
          into an  excess of loss reinsurance  agreement with Transatlantic
          Reinsurance  Company (Transatlantic  Treaty), which  is rated  A+
          (Superior) by A.M. Best.  Excess of loss reinsurance is a form of
          reinsurance, which indemnifies the ceding insurer up to an agreed
          amount against all or a  portion of the amount of loss  in excess
          of a specified  retention.  Under  the Transatlantic Treaty,  CCS
          retains risk no  greater than  5% of $2,700,000  or $135,000  per
          principal.    Under  the  Transatlantic  Treaty,  the   reinsurer
          automatically assumes the risk of losses and all contract  surety
          bonds written  and classified as surety in CCS s statutory annual
          statement and all miscellaneous surety bonds with penal sums over
          $100,000  written and  classified  as surety  in CCS s  statutory
          annual statement.

               For  its liability  line  of registered  investment  advisor
          insurance,  the Company has reduced its exposure on any one risk,
          through the  purchase  of a  quota share  agreement with  Dorinco
          Reinsurance (Dorinco Treaty) which is rated A (Excellent) by A.M.
          Best.  Under the Dorinco Treaty,  CCS cedes 50% of its  liability
          on all registered investment advisor policies.

               On  a limited basis, CCS also  assumes and cedes reinsurance
          through facultative  and treaty  agreements from  other sureties.
          The loss of one of these customers or resources would  not have a
          material impact on the  operations of the company.   From October
          1991 through May 1, 1997, CCS participated in a pooling agreement
          with various  sureties,  which specialized  in  writing  contract
          surety.   Effective to  April 1,  1993,  CCS assumed  25% of  the
          business underwritten  by the pooling  agreement; 12.5% effective
          April 1, 1995  and 10% effective April 1, 1996.   Effective April
          1997, CCS elected not to participate in future business under the
          pooling agreement.

               Reserves
               --------

               Reserves  for  losses  and   loss  adjustment  expenses  are
          established  based upon  reported claims and  historical industry
          loss  development.   The  amount  of loss  reserves  for reported
          claims  is based  on a  case  by case  evaluation  of the  claim.
          Historical industry  data is reviewed and  consideration is given
          to the  anticipated  impact  of various  factors  such  as  legal
          developments,  economic conditions, and the effects of inflation.
          Amounts are adjusted periodically to reflect these factors.<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.

               During  1998, there were no  material changes in  the mix of
          business  or types  of risk  assumed.   However, the  Company was
          effective in spreading the geographic mix of the business.

               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.  CCS  does not
          discount its loss reserves for financial reporting purposes.

               Environmental Claims
               --------------------

               The  Company  bonds several  accounts  that have  incidental
          environmental  exposure,  with  respect  to   which  the  Company
          provides limited  contract bonding  programs.  In  the commercial
          surety market,  the Company  provides bonds to  corporations that
          are  in the  business  of mining  various minerals,  establishing
          mitigation banks, or operating environmental facilities, and that
          are obligated  to post  financial assurance bonds  that guarantee
          that property can be  managed according to regulatory guidelines.
          While  no  environmental responsibility  is  overtly  provided by
          commercial or contract bonds, some risk of environmental exposure
          may  exist if  the  surety  were  to  assume  certain  rights  of
          ownership  of  the  property  in the  completion  of  a defaulted
          project or through salvage recovery.

               To  date, the  Company  has not  received any  environmental
          claim  notices,   nor  is  management  aware   of  any  potential
          environmental claims.

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

               Insurance  company investment  practices  must  comply  with
          insurance laws  and regulations.   Generally, insurance  laws and
          regulations prescribe the  nature and quality of,  and set limits
          on, various types of investments, which may be made by CCS.<PAGE>





               CCS s   investment  portfolios,  generally  are  managed  to
          maximize  any  tax  advantages  to  the  extent  available  while
          minimizing  credit risk  with  investments  concentrated in  high
          quality, fixed income securities. CCS s portfolios are managed to
          provide diversification by limiting exposures to any one issue or
          issuer  and  to provide  liquidity  by  investing  in the  public
          securities markets.   Portfolios are structured  to support CCS s
          operations  and  in consideration  of  the  expected duration  of
          liabilities and short-term cash needs.

               An  Investment  Committee   of  CCS s  Board   of  Directors
          establishes investment policy and  oversees the management of the
          portfolio.

               Marketing
               ---------

               The Company principally  markets its products  in twenty-six
          states, the District of Columbia and Guam in which it is licensed
          and indirectly in all  other states through its joint  partnering
          agreement with  St. Paul.   Its  products are  marketed primarily
          through  SSI,  SG,  SA  and  independent  agents  and  producers,
          including multi-line agents and brokers that specialize as surety
          specialists, many of whom are members of the National Association
          of Surety Bond Producers.   On occasion, CCS will  write business
          directly  with the  customer,  but does  not  actively seek  such
          business.    The Company  uses  specialized  general agencies  to
          market its other liability insurance products.

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

               The  insurance  industry is  a highly  competitive industry.
          There are  numerous firms,  particularly in the  specialty surety
          markets,  which  compete  for   a  limited  volume  of  business.
          Competition is  based upon price, service,  products offered, and
          financial  strength of the insurance company.  There are a number
          of companies in the industry, which offer products similar to the
          Company s.

               The Company  competes in the  small to medium  size contract
          and commercial surety bond  markets.  Primary competitors include
          large multi-line  companies, as well as  small regional companies
          that  specialize in the surety market.  While the surety industry
          has experienced slow premium growth, competition has increased as
          a result of 10 years of profitable underwriting experience.  This
          competition  has  typically  manifested  itself  through  reduced
          premium   rates,  and   greater  tolerance   for   relaxation  of
          underwriting  standards.   Management  believes  such competition
          will continue.<PAGE>





               The Company,  while competitive  in pricing  and commission,
          believes  that the  availability  of  its  proprietary  Bond-Pro 
          surety  issuance  system,   specialty  underwriting,   managerial
          experience and service are its primary competitive factors in the
          industry.   To this end, the Company believes that its technology
          and  specialization  in  underwriting niche  surety  markets will
          enable  it   to  continue  to  compete   effectively,  even  when
          challenged by the larger standard market companies.

               Regulation
               ----------

               The Company s subsidiaries are subject to varying degrees of
          regulation  and supervision  in the  jurisdictions in  which they
          transact  business  under  statutes,  which  delegate regulatory,
          supervisory,  and  administrative   powers  to  State   insurance
          regulators.   In  general, an  insurer s state  of domicile,  has
          principal  responsibility  for such  regulation.  It is  designed
          generally  to protect  policy holders  rather than  investors and
          relates to matters such  as the standards of solvency  which must
          be  maintained;  the  licensing  of insurers  and  their  agents;
          examination  of the  affairs  of  insurance companies,  including
          periodic financial and market conduct examinations; the filing of
          annual and other reports,  prepared on a statutory basis,  on the
          financial  condition   of  insurers   or   for  other   purposes;
          establishment and maintenance  of reserves for unearned  premiums
          and losses;  and requirements  regarding numerous other  matters.
          Licensed  or  admitted  insurers  generally must  file  with  the
          insurance regulators of such states, or have filed on its behalf,
          the  premium rates  and bond  and policy  forms used  within each
          state.  In some states, approval of such rates and  forms must be
          received from the insurance regulators in advance of their use.

               CCS is domiciled in  Florida and licensed in 26  states, the
          District of  Columbia and Guam.   SSI, SG and SA  are licensed in
          Florida,  Georgia and South  Carolina respectfully.   CCS is also
          regulated by the United  States Department of the Treasury  as an
          acceptable surety for Federal bonds.

               Holding   company   laws   impose   standards   on   certain
          transactions  between registered  insurers and  their affiliates,
          which  include,  among  other  things,  that  the  terms  of  the
          transactions be fair  and reasonable and that the books, accounts
          and records  of each party  be maintained  so as  to clearly  and
          accurately  disclose  the  precise  nature  and  details  of  the
          transactions.   Holding company laws also  generally require that
          any  person or entity desiring  to acquire more  than a specified
          percentage  (commonly 10%)  of the  Company s  outstanding voting
          securities,  is   required  first  to  obtain   approval  of  the
          applicable state s insurance regulators.<PAGE>





               The National Association of Insurance Commissioners ( NAIC )
          has adopted a risk-based  capital ( RBC ) model law for  property
          and casualty companies.  The RBC model law is intended to provide
          standards   for   calculating  a   variable   regulatory  capital
          requirement  related to  a company s  current operations  and its
          risk exposures  (asset risk,  underwriting risk, credit  risk and
          off balance sheet risk).   These standards are intended  to serve
          as  a diagnostic  solvency tool  for regulators  that establishes
          uniform  capital   levels  and  specific   authority  levels  for
          regulatory  interventions when  an  insurer  falls below  minimum
          capital levels.   The model  laws specifies four  distinct action
          level at which a regulator  can intervene with increasing degrees
          of authority over a domestic insurer  as its financial conditions
          deteriorates.  These RBC levels are based on the percentage of an
          insurers surplus to  its calculated  RBC.  The  company s RBC  is
          required  to be disclosed in its statutory annual statement.  The
          RBC is not intended to be used as a rating or ranking tool nor is
          to be used in premium  rate making or approval.  The  Company has
          calculated its RBC requirements as of December 31, 1998 and found
          that it exceeded the highest level of capital requirements.

               Controlling Shareholders
               ------------------------

               Francis  Williams,  and  the   KC   (collectively   Majority
          Shareholder ) owns 78% of the  outstanding ordinary shares of the
          company and collectively control the policies and  affairs of the
          Company.  Circumstances may  incur in which the interests  of the
          Majority Shareholder of the Company could be in conflict with the
          interest of the  other holders of the common stock.  In addition,
          the  Majority  Shareholders  may  have an  interest  in  pursuing
          acquisitions, divestitures  or other  transaction  that in  their
          judgement,  could  enhance their  equity investment,  even though
          such  transactions might involve risk to the other holders of the
          common stock. 

               Employees
               ---------

               On December 31, 1998, the Company had 37 employees.  All are
          employed on a full-time  basis.  None of the  Company s employees
          are union members or subject to collective bargaining agreements.
          The Company believes that it enjoys a favorable relationship with
          its employees.<PAGE>





               Forward-looking Statements
               --------------------------

               All statements, other  than statements of  historical facts,
          included or  incorporated by reference  in this  Form 10-K  which
          address  activities,  events  or developments  which  the Company
          expects or anticipates will or may occur in the future, including
          statements regarding the  Company s competitive position, changes
          in business  strategy  or plans,  the availability  and price  of
          reinsurance, the  Company s ability  to pass on  price increases,
          plans to  install the Bond-Pro  program  in independent insurance
          agencies,  the  impact  of  insurance laws  and  regulation,  the
          availability of  financing, reliance on key management personnel,
          ability  to manage growth,  the Company s  expectations regarding
          the adequacy  of current  financing arrangements,  product demand
          and market  growth, and  other statements regarding  future plans
          and strategies, anticipated events  or trends similar expressions
          concerning  matters that  are  not historical  facts are  forward
          looking  statements.    These  statements are  based  on  certain
          assumptions  and analyzes  made by  the Company  in light  of its
          experience  and  its  perception  of  historical trends,  current
          conditions and expected future developments as well as factors it
          believes are appropriate in  the circumstances.  However, whether
          actual results  and developments will conform  with the Company s
          expectations  and predictions is subject to a number of risks and
          uncertainties  which  could   cause  actual  results  to   differ
          significantly  and  materially from  past  results  and from  the
          Company s  expectations, including the  risk factors discussed in
          this Form  10-K, Item  1 and  other  factors, many  of which  are
          beyond  the control  of  the Company,  consequently,  all of  the
          forward-looking statements  made in this Form  10-K are qualified
          by these cautionary statements and there can be no assurance that
          the  actual results  or developments  anticipated by  the Company
          will be  realized or,  even if  substantially realized that  they
          will  have the expected consequences to or effects on the Company
          or its business or operations.  The Company assumes no obligation
          to update  publicly any such  forward-looking statements, whether
          as a result of new information, future events or otherwise.

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

               The Company s  operating subsidiaries  rent or  lease office
          space in  the cities in which  they are located.   CCS and Qualex
          lease  office space  in Tampa,  Florida from  a company  owned by
          Francis Williams,  the Chairman of the Board of the Company, at a
          monthly rate of  $7,254, pursuant  to a lease  that was  executed
          March 1, 1997 and is effective through December 31, 2000.

               Management considers the rented and leased office facilities
          of  its subsidiaries  adequate  for the  current and  anticipated
          future level of operations.<PAGE>





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

               The  Company 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  the
          Company.<PAGE>





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

               None

               Executive Officers of the Registrant
               ------------------------------------

               All  of  the following  persons  are  regarded as  executive
          officers because of their  responsibilities and duties as elected
          officers of the  Company's subsidiaries.   Other than Francis  M.
          Williams  and  Joseph M.  Williams (See  Item  10), there  are no
          family relationships between any  of Company s executive officers
          and directors,  and there  are no arrangements  or understandings
          between  any of these officers  and any other  person pursuant to
          which the officer was selected as an officer.

                                Position Presently
           Name                   Held                Period of Service
           -------------------  -------------------   -------------------

           Edward J. Edenfield  President             CTI-05/1996 to date
             IV                 President             CCS-05/1996 to date
                                President             SSI-06/1997 to date
                                President             SG- 01/1998 to date
                                President             SA- 01/1998 to date

           Carol S. Black       Secretary             CTI-06/1995 to date
                                Secretary/Treasurer   CCS-06/1995 to date
                                Secretary             SSI-08/1995 to date
                                Secretary/Treasurer   Qualex-08/1995 to
                                                        date
                                Secretary             SG-08/1995 to date
                                Secretary             SA-08/1995 to date
           Edward A. Mackowiak  President             Qualex-11/1994 to
                                                        date

           Sam H. Newberry      Vice President        SG-01/1998 to date<PAGE>





                                       PART II


          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 SmallCap Market.   High and Low bid prices
          were set  forth in Quotation  Market Sheets published  by Nasdaq.
          The high and low bid prices for 1998 and 1997 were as follows:

                                          Bid Information
                                   -----------------------------

                                        1998            1997
                                   -------------- ---------------

                                     High    Low    High    Low
                                   ------- -------------- -------
               First Quarter        2 1/2   2 1/2  2 1/2  1 5/8 

               Second Quarter       2 3/4  2 5/16    4       2

               Third Quarter         3 1/8  3 1/8  3 5/8  2 19/32

               Fourth Quarter         2     1 5/8    3 1/2    2 1/4

                  As of March 12, 1998, there were  903 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.<PAGE>





               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
          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  CCS obtains prior approval  from
          the insurance  commissioner.  CCS does not  anticipate paying any
          dividends on CCS Common Stock in the near future.

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

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

                                                  1998     1997    1996     1995     1994
                                              -------- ---------------- -------- --------
                                                (In Thousands - except per share data)

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

            Operating data:                                            

              Net premium income             $  7,534 $  5,684 $ 3,808 $  5,068 $  4,957 
              Commission income . . . . . . .     710      860   1,386      774        - 

              Other income  . . . . . . . . .     827      616     653      425        - 

              Net investment income . . . . .     377      408     404      397      284 

              Net realized investment gain                             
                  (losses)  . . . . . . . . .    (437)     202     118      124     (124)
              Benefits and expenses . . . . .   9,332    7,599   6,952    7,016    6,604 

              Income (loss) before income                              
               taxes  . . . . . . . . . . . .    (321)     171    (583)    (228)  (1,209)

              Net income (loss) . . . . . . .    (321)     171    (583)    (228)  (1,073)

            Pro forma net income (loss) per                            
              share (1) . . . . . . . . . . .$   (.06)$    .03 $  (.14)$   (.06)$   (.27)
            </TABLE>

          (1)       Pro forma  net income (loss) per  share (unaudited) for
                    1995  and  1994  has  been  calculated  based  on   the
                    4,039,780 shares  of Cumberland Common Stock  that were
                    outstanding after the Distribution.  The 1998, 1997 and<PAGE>





                    1996  net income  (loss)  per share  amounts have  been
                    computed based on the actual weighted average number of
                    shares outstanding during the respective years.<PAGE>





          <TABLE>
          <CAPTION>

          Balance Sheet Data:

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

                                                  1998     1997    1996     1995     1994
                                              -------- ---------------- -------- --------
                                                            (In Thousands)

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

            Balance sheet data:                                        

              Investments . . . . . . . . . .$  3,987 $  6,469 $ 6,110 $  6,303 $  5,852 
              Cash and cash equivalents . . .   4,202    1,804     669    1,236    1,701 

              Accounts receivable . . . . . .   2,782    2,210     925      550    2,540 

              Reinsurance recoverables  . . .   2,306    2,017   1,590    1,697    1,749 

              Deferred policy acquisition                              
               costs  . . . . . . . . . . . .   1,246      813     635      435      581 
              Intangibles . . . . . . . . . .   1,456    1,681   1,957    2,163      134 

              Total assets  . . . . . . . . .  16,345   15,321  12,372   12,709   12,834 

                                                                       

              Policy liabilities and                                   
               accruals:                                       
               Unearned premiums  . . . . . .   3,750    2,629   1,862    1,182    1,631 

               Losses and LAE   . . . . . . .   3,220    2,550   1,992    2,352    3,138 

               Ceded reinsurance and accounts                          
                  payable . . . . . . . . . .   1,695    2,714   1,172       -         - 

              Term notes/surplus debentures,                                             
                  including accrued interest    1,000        0       0    4,798    4,343 
              Other long-term debt  . . . . .   1,331    1,419   1,533       -         - 

              Total liabilities . . . . . . .  10,996    9,312   6,559   11,419   11,518 

              Total stockholders' equity  . .   5,349    6,009   5,814    1,290    1,316 
            /TABLE
<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
                                    --------------------------------------------------

                                          1998      1997      1996      1998      1997
                                    --------------------------------------------------

            <S>                     <C>       <C>       <C>       <C>       <C>
            Net premium income  . . $   7,534 $   5,684 $   3,808     32.5%     49.3 %

            Net investment income         377       408       404     (7.6%)     1.0 %

            Net realized investment                               
              gains (losses)  . . .      (437)      202       118   (316.3%)    71.2 %

            Other revenues  . . . .     1,537     1,476     2,039      4.2%    (27.6)%
            Losses and loss                                       
              adjustment expenses       2,648     1,792     1,671      47.8%     7.2 %

            Amortization of deferred                              
              acquisition costs . .     2,252     1,779     1,532      15.4%    16.1% 

            General expenses and                                  
              taxes . . . . . . . .     4,432     4,028     3,749     10.0%      7.4% 

            Income (loss) before                                  
              income taxes  . . . .      (321)      171      (583)        -     70.8 %
            Net Income (loss) . . .      (321)      171      (583)        -     70.8 %

            </TABLE>

          Year Ended December 31, 1998 Compared to Year Ended December 31,
            1997
          -----------------------------------------------------------------
          --
               Written  direct  and  assumed  premiums   reached  a  record
          $10,930,000  during 1998.  Overall written premiums, net of ceded<PAGE>





          premium increased by $2,340,624 or 37.5%.  Earned premium  growth
          increased  by  32.5%  to  $7,534,000  for  1998  as  compared  to
          $5,684,000 for  1997.  The  increase in earned  premiums resulted
          from CCS s continued growth in the direct surety bond market.<PAGE>





               During 1998,  premiums written by CCS increased  as a result
          of  the marketing direction of the Company, which is to penetrate
          the  direct market  while  decreasing the  volume of  reinsurance
          premiums assumed through  Pooling Agreements.   CCS s reinsurance
          assumed premium is a result of quota share agreements whereby CCS
          assumes  a portion of the premiums written by agencies contracted
          to  produce  business   using  Cumberland s  Bond-Pro    issuance
          program.  The  increase in  ceded premiums is  correlated to  the
          direct premium  written  and the  association to  excess of  loss
          treaties  on these  premiums.  The following  table reflects  the
          written premium  activity, net of reinsurance ceded, for 1998 and
          1997.

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

                                         1998           1997       % Change
                              -------------- --------------  --------------

               Direct   . . . $    9,451,746 $    6,797,136          39.1% 
               Assumed  . . .      1,478,109      1,189,689          24.2% 

               Ceded  . . . .     (2,354,970)    (1,752,564)        (34.4%)
                              --------------  --------------

               Total  . . . . $    8,574,885 $     6,234,261         37.5% 
                              ==============  ==============

               During the year ended December 31, 1998 and 1997, investment
          income  was $377,218  and $408,050,  respectively.   Realized net
          losses and gains  for the years ended December 31,  1998 and 1997
          were ($437,565) and $201,863, respectively.  CCS wrote down their
          investment in certain equity securities during the 4th   quarter of
          1998 as management  determined the decline  in value to  be other
          than  temporary.   As a result,  CCS recorded a  loss of $580,360
          which is offset by net capital gains of $142,795.

               Other  revenue consists  primarily of commissions  earned by
          subsidiary agencies and fee revenue earned by a subsidiary claims
          consulting  group.   The increase in  other revenue  for the year
          ended December 31, 1998 of approximately $61,000 or 4% is related
          to revenues earned through  the Company s claim consulting group.
          For the  year  ended December  31,  1997, revenues  decreased  to
          $1,475,990 from  $2,039,331 or  28  percent.    The  decrease  of
          approximately $563,000 is attributable  to the transfer of direct
          writings by subsidiary  agencies  for  other carriers in  1996 to
          CCS in 1997.<PAGE>





               Losses and loss adjustment  expenses increased to $2,648,074
          from  $1,792,117 for the year  ended December 31,  1998 and 1997,
          respectively.  The increase  of $855,957 or 48% is  attributed to
          an  increase of  $327,956 or  31% in  direct claims  incurred and
          $528,001  or 71% in assumed  claims incurred.   Assumed claims on
          the  expired  pooling  agreements  were  negatively  impacted  by
          increased  severe losses.  Cumberland  share of the 1998 incurred
          losses under  the pooling agreements was  $1,007,502.  Management
          anticipates  a  decline  in  1999 for  claims  attributed  to the
          pooling  agreements.   The  following  tables  reflects the  1998
          activity as it pertains to earned premiums and incurred claims:

                                 Premiums        Claims
                                  Earned        Incurred         Ratio
                              -------------- -------------- --------------

               Direct net   . $    6,437,429 $    1,378,722          21.4% 

               Assumed, net        1,066,907        230,120          21.6% 
               Assumed                       
               (pooling), net        (29,348)    (1,039,232)            -  
                              --------------  --------------

               Total  . . . . $    7,533,684 $     2,648,074         35.1% 
                              ==============  ==============

               During the year ended December 31, 1998 the net amortization
          of deferred  policy  acquisitions costs  increased to  $2,252,195
          from  $1,778,808 for  the  year ended  December  31, 1997.    The
          increase is attributed to the increase in earned premiums.

               During the year ended December 31, 1998, operating  expenses
          and taxes,  licenses and fees (excluding  income taxes) increased
          to  $4,313,278  from   $3,903,476  in  1997.   The  increase   of
          approximately $410,000  or 10%  is a result  of increased  salary
          expense including bonuses, payroll taxes and employee benefits of
          $180,000 and increased taxes, licenses and fees of $207,000.  The
          increase in salary and related expenses is the cost of additional
          personnel consistent  with the Company growth  while the increase
          in taxes, licenses and  fees expenses is attributed to  increased
          premiums written.

               Interest expense  is interest paid  to the Surety  Group and
          Surety  Associates on notes due to agencies the Company purchased
          in 1995.

               Due  to tax loss  carryforwards, the  Company did  not incur
          income tax expense on  a consolidated basis for the  years ending
          December 31, 1998, 1997 and 1996, respectively.<PAGE>





          Year  Ended December 31, 1997 Compared to Year Ended December 31,
          1996
          -----------------------------------------------------------------
          --
               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
                                    --------------------------------------------------

                                          1997      1996      1995      1997      1996
                                    --------------------------------------------------

            <S>                     <C>       <C>       <C>       <C>       <C>
            Net premium income  . . $   5,684 $   3,808 $   5,068 $   49.3 %   (24.9)%

            Net investment income         408       404       397      1.0 %     1.8 %

            Net realized gains                                    
            (losses)  . . . . . . .       202       118       124     71.2 %    (4.8)%

            Other revenues  . . . .     1,476     2,039     1,198    (27.6)%    70.1 %
            Benefits and expenses       7,599     6,952     7,016      9.3 %     (.9)%

            Income (loss) before                                  
              income taxes  . . . .       171      (583)     (228)    70.8 %  (155.7)%

            Net Income (loss) . . .       171      (583)     (228)    70.8 %  (157.7)%
            </TABLE>

               During  the year ended December 31, 1997, net earned premium
          income  increased by  49 percent  to $5,684,000  from $3,808,000.
          Direct premiums  earned from  nonaffiliates  were $5,836,655  and
          $1,114,377  for  1997  and  1996, respectively,  representing  an
          increase of $4,722,278 or 424 percent.

               Net   reinsurance  premiums   earned  through   the  Pooling
          Agreements  were $1,166,025  and  $2,693,418 for  1997 and  1996,
          respectively,  representing  a  decrease  of  $1,527,393,  or  57
          percent.

               During 1997, direct premiums  written by CCS increased while
          assumed premiums decreased as a result of the marketing direction
          of the Company,  which is  to penetrate the  direct market  while
          decreasing  the volume  of  reinsurance premiums  assumed through
          Pooling  Agreements.   The following  table reflects  the written<PAGE>





          premium activity, net of reinsurance ceded, for 1997 and 1996.<PAGE>





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

                                         1997           1996       % Change
                               -------------- -------------- --------------

               Direct . . . . $     6,797,136$    2,025,796           236% 
               Assumed  . . .       1,189,689     2,890,050           (59%)

               Ceded  . . . .     (1,752,564)      (547,801)         (320%)
                               -------------- --------------

               Total  . . . . $     6,234,261$    4,368,046            43% 
                               ============== ==============

               During the year ended December 31, 1997 and 1996, investment
          income  before   capital  gains   was   $408,050  and   $403,919,
          respectively.   Realized gains, net  of realized losses,  for the
          year ended December 31, 1997 and 1996 were $201,863 and $117,824,
          respectively.  Investment income  remained consistent for 1997 as
          compared to 1996.

               Other  revenues  for  the   year  ended  December  31,  1997
          decreased  to $1,475,990  from  $2,039,331 or  28 percent.  Other
          revenues consist primarily  of commissions  earned by  subsidiary
          agencies.  The decrease of approximately $563,000 is attributable
          to the transfer  of direct writings  by subsidiary agencies   for
          other carriers in 1996 to CCS in 1997.

               During  the year  ended December  31, 1997, losses  and loss
          adjustment expenses increased  to $1,792,117 from  $1,670,640 for
          the  year ended  December 31, 1996.  The increase  in benefit and
          claims  expenses of  $121,477  is attributed  to  the effects  of
          reserve  increases on direct business of $928,009 which is offset
          by a decrease in claim reserves on assumed business  of $806,532.
          Loss ratios on direct and assumed premiums earned during 1997 are
          40% and 63.6%, respectively.

               During   the  year   ended  December   31,  1997,   the  net
          amortization of deferred policy  acquisitions costs increased  to
          $1,778,808 from $1,532,355 for the year  ended December 31, 1996.
          The increase is attributable to the increase in earned premiums.

               During the year ended  December 31, 1997, operating expenses
          increased to $3,903,476 from $3,255,805 in 1996.  The increase is
          due  to   expenses  incurred  in  the   continuing  research  and
          development of Cumberland's Bond Program and additional personnel
          employed to direct market its insurance products.<PAGE>





               Net  interest expense  decreased  to $124,928  in 1997  from
          $493,337 in 1996 due to the conversion on the term note to equity
          on October  1, 1996.  Interest expense on notes due to the former
          owner's  in  connection  with  agencies purchased  in  1995  were
          $124,928  and $121,271 for the years ending December 31, 1997 and
          1996, respectively.  The Company incurred interest expense during
          1996 of $372,006 on the term note prior to the 1996 conversion.

               Due  to tax loss  carryforwards, the  Company did  not incur
          income tax expense on  a consolidated basis for the  years ending
          December 31, 1997 and 1996, respectively.

          Liquidity and Capital Resources
          -------------------------------

               The capacity of a surety company to underwrite insurance and
          reinsurance  is  based  on   maintaining  liquidity  and  capital
          resources  sufficient to pay  claims and expenses  as they become
          due. Based  on standards established by  the National Association
          of Insurance Commissioners (NAIC)  and promulgated by the Florida
          Department of  Insurance, the Company  is permitted to  write net
          premiums  up  to an  amount equal  to  three times  its statutory
          surplus,  or  approximately  $14,500,000  at  December 31,  1998.
          Therefore,  based upon  statutory guidelines,  the Company  could
          increase earned  premiums by approximately $7,000,000  in 1999 in
          addition to the amount earned in 1998.

               The primary  sources of liquidity for the  Company are funds
          generated from  commissions, 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,  1998, the  Company s $16,545,051  of total
          assets   calculated  based   on  generally   accepted  accounting
          principles were  distributed primarily as follows:  50 percent in
          cash and  investments (including  accrued investment  income), 30
          percent in receivables  and reinsurance recoverables,  18 percent
          in  intangibles  and  deferred  policy acquisition  costs  and  2
          percent in other assets.

               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.<PAGE>





               Net  cash (used  in)  provided by  operating activities  was
          $(193,734),  $1,925,903   and  $(16,958)  for   the  years  ended
          December 31, 1998,  1997 and  1996, respectively.   In  1998, the
          decrease in  cash provided  by operating activities  is primarily
          attributed to an increase in receivables of $1,047,974 and income
          taxes recoverable of  $120,000.   In 1997, the  cash provided  by
          operating  activities was primarily  attributable to the increase
          in  ceded   reinsurance  payable  and  pooling   liabilities  and
          accruals.  In  1996, the  cash used in  operating activities  was
          primarily  attributable to  payments of  claims and  reinsurance,
          which was offset in part by a decrease in accounts receivable.

               Net  cash (used  in)  provided by  investing activities  was
          $1,718,716, $(120,560) and $253,876  for the years ended December
          31,  1998, 1997  and  1996, respectively.   Investing  activities
          consist of purchases and sales of investments and advances to and
          from KC.

               Net  cash (used  in)  provided by  financing activities  was
          $873,839, $(670,889) and $(803,772)  for the years ended December
          31,  1998, 1997  and  1996, respectively.   Financing  activities
          consist of purchases of  treasury stock, long-term and short-term
          borrowings  and repayment  on  borrowings during  1998, 1997  and
          1996.

          Year 2000 Issue
          ---------------

               The  Company  has employed  consultants  in  its efforts  to
          address its  Year 2000 issues  in conjunction with  the Company s
          own information technology  staff.  Excluding  the costs for  the
          Company s own information technology personnel, the total cost of
          compliance  is expected  to be  approximately $100,000  (of which
          $41,000   including  equipment   upgrades  will   be   a  capital
          expenditure)  with $14,000 having  been expended through December
          31,  1998.   All costs  (except capital)  have been  and  will be
          expensed as incurred and will be funded from the normal operating
          cash flows.

               The Company has developed an  in-house surety administrative
          system    BondPro  .     BondPro   is   an  agency   surety  bond
          administration system that issues bonds, tracks underwriting, and
          accounting  and  reporting from  its  database.   Bond-Pro   is a
          Windows based program and is year 2000 compliant.  The Company is
          aware of the  issues that many computer systems  will face as the
          millennium   (year  2000)  approaches.    The  Company,  however,
          believes that its own internal software and hardware is year 2000
          compliant.   The  Company believes  that any  year 2000  problems
          encountered by  procurement  agencies, and  other  customers  and
          vendors are  not likely to have a  material adverse effect on the
          Company s operations.  <PAGE>





               Excluding any possible catastrophic  events such as the loss
          of utilities  or banking, financial  or communications  services,
          the  potential  risks  known to  the  Company  at  this time  are
          primarily limited to delays, disruptions or losses resulting from
          information  bottlenecks  and  the  lack of  computer  processing
          power.   In  order to mitigate  the risk  to the  greatest extent
          possible, the Company will  be prepared to track mission-critical
          information manually.  Such information includes tracking premium
          income,  and receivables  and  recording payments  received  from
          agencies.   The  Company believes its  current workforce  and the
          employment pool  available in the area is sufficiently skilled to
          accommodate such a demand.  The Company will continue to evaluate
          its contingency planning activities  as more information  becomes
          available.   At this  time, the  total cost of  the risks  is not
          anticipated  to have a  material adverse effect  on the business,
          financial condition or results of operations of the Company.

          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 of 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  1998,  1997  and 1996  to  the  gross  amounts
          reported in Cumberland s balance sheets:<PAGE>





                                                    December 31

                                                1998        1997       1996
                                         ----------- ----------- ----------

          Liability for losses and LAE,             
          net of reinsurance                        
           recoverable on unpaid                    
           losses, at beginning         $ 1,392,931 $   594,922 $ 1,052,547
           of year  . . . . . . . . . .  ----------- ----------- ----------
          Provision for losses and LAE              
           for claims occurring in the              
           current year, net of                     
           reinsurance  . . . . . . . .   2,331,074   1,743,117   1,008,640

          Increase (decrease) in                    
           estimated losses and LAE for             
           claims occurring in prior                
           years, net of reinsurance        317,000      49,000     662,000
                                         ----------- ----------- ----------

          Incurred losses during the                
           current year, net of                     
           reinsurance  . . . . . . . .   2,648,074   1,792,117   1,670,640

          Losses and LAE payments for               
           claims, net of reinsurance,              
           occurring during:                        
               The current year . . . .     557,997     553,629     422,544
               Prior years  . . . . . .   1,802,428     440,479   1,705,721
                                         ----------- ----------- ----------
                                          2,360,425     994,108   2,128,265
                                         ----------- ----------- ----------

          Liability for losses and LAE,             
           net of reinsurance                       
           recoverable on unpaid                    
           losses, at end of year   . .   1,680,580   1,392,931    594,922 


          Reinsurance recoverables on               
           unpaid losses at end of                  
           year   . . . . . . . . . . .   1,539,877   1,157,369   1,396,874
                                         ----------- ----------- ----------

          Liability for losses and LAE,             
           gross of reinsurance                     
           recoverables on unpaid       $ 3,220,457 $ 2,550,300 $ 1,991,796
           losses, at end of year   . .  =========== =========== ==========<PAGE>





               Cumberland experienced deficiencies of $317,000, $49,000 and
          $662,000 for  losses and loss  adjustment expenses in  1998, 1997
          and  1996,  respectively.    The  deficiency  in  1998  and  1997
          principally   resulted  from   settling   case   basis   reserves
          established in  prior  years  for  amounts that  were  more  than
          expected.    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, 1998 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)  $    1,680,580 

               Reinsurance recoverables on unpaid losses and
                    LAE . . . . . . . . . . . . . . . . . .      1,539,877 
                                                             --------------

               Liability for losses and LAE, as reported in
                    the accompanying GAAP basis financial
                    statements  . . . . . . . . . . . . . . $    3,220,457 
                                                             ==============<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 1991
          through 1998 (in thousands).
          <TABLE>
          <CAPTION>
                                  1991         1992          1993         1994
                                    ------------- -------------------------- -------------

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

            Liability for losses                               
              and loss adjustment                              
              expenses, net of                                 
              reinsurance . . . . . $      1,663  $     2,426  $     1,709   $     1,625  
            Liability re-estimated                             
              as of:                                           
               One year later . . .        1,273        2,239        3,815         1,384  
               Two years later  . .        1,200        2,546        2,579         1,420  
               Three years later  .        1,316        2,263        2,750         1,631  
               Four years later . .        1,443        2,418        2,851         1,726  
               Five years later . .        1,234        2,408        3,176             -  
               Six years later  . .        1,199        2,970            -             -  
               Seven years later  .        1,199            -            -             -  
                                    ------------- -------------------------- -------------

            Cumulative (deficiency)                            
              redundancy  . . . . . $         464 $      (544) $    (1,467)  $      (101) 
                                    ============= ========================== =============
            </TABLE>

          <TABLE>
          <CAPTION>

                                  1995         1996          1997         1998
                                    ------------- -------------------------- -------------

            <S>                     <C>           <C>          <C>           <C>
            Liability for losses                               
              and loss adjustment                              
              expenses, net of                                 
              reinsurance . . . . . $      1,053  $        595 $      1,393  $      1,680 <PAGE>





            Liability re-estimated                             
              as of:                                           
               One year later . . .        1,716           644        1,710             - 
               Two years later  . .        1,815         1,013            -             - 
               Three years later  .        2,049             -            -             - 
               Four years later . .            -             -            -             - 
               Five years later . .            -             -            -             - 
               Six years later  . .            -             -            -             - 
               Seven years later  .            -             -            -             - 
                                    ------------- -------------------------- -------------

            Cumulative (deficiency)                            
              redundancy  . . . . . $       (966) $       (418)$       (317) $          - 
                                    ============= ========================== =============
            /TABLE
<PAGE>





          <TABLE>
          <CAPTION>
                                  1991         1992          1993         1994
                                    ------------- -------------------------- -------------

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

            Cumulative amount of                               
              liability, net of                                
              reinsurance                                      
              recoverables, paid                               
              through:                                         
               One year later . . . $        806  $      1,151 $        765  $      1,643 
                                    ============= ========================== =============
               Two years later  . . $        884  $      1,834 $      1,058  $      2,316 
                                    ============= ========================== =============
               Three years later  . $      1,095  $      2,088 $      2,868  $      2,164 
                                    ============= ========================== =============
               Four years later . . $      1,254  $      1,957 $      3,717  $      2,875 
                                    ============= ========================== =============
               Five years later . . $      1,260  $      3,533 $      4,442  $          - 
                                    ============= ========================== =============
               Six years later  . . $      1,199  $      3,840 $          -  $          - 
                                    ============= ========================== =============
               Seven years later  . $      1,199  $          - $          -  $          - 
                                    ============= ========================== =============
            </TABLE>

          <TABLE>
          <CAPTION>
                                  1995         1996          1997         1998
                                    ------------- -------------------------- -------------

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





            Cumulative amount of                               
              liability, net of                                
              reinsurance                                      
              recoverables, paid                               
              through:                                         
              One year later  . . . $      1,334           563        1,802             - 
                                    ============= ========================== =============
               Two years later  . .        2,186         1,631            -             - 
                                    ============= ========================== =============
               Three years later  .        2,997             -            -             - 
                                    ============= ========================== =============
               Four years later . .            -             -            -             - 
                                    ============= ========================== =============
               Five years later . .            -             -            -             - 
                                    ============= ========================== =============
               Six years later  . .            -             -            -             - 
                                    ============= ========================== =============
               Seven years later  .            -             -            -             - 
                                    ============= ========================== =============
            /TABLE
<PAGE>





          Effect of Inflation
          -------------------

               Inflation has not had  a material impact upon  the Company s
          operations for the last three years.

          Item 7A.  Quantitative and Qualitative Disclosures About Market
          --------  Risk
                    -------------------------------------------------------
          --

               Interest Rate Sensitivity
               -------------------------

               The following  table presents maturity principal  cash flows
          and relates weighted average  interest rates by expected maturity
          as of December 31, 1998:

          <TABLE>
          <CAPTION>

                                         Expected Maturity Date
                              -----------------------------------------------------------

                                                                                    Fair 
                                                                                    value
                                                                    There-          12/31
                                 1999    2000   2001    2002   2003  after   Total   /98
                              ------- -------------- -------------- -------------- -------

                                             (U.S. Equivalent in thousands)
            <S>               <C>     <C>    <C>     <C>    <C>     <C>    <C>     <C>

            Assets                                                         
            -------

            Securities                                                     
              available for                                                
              sale  . . . . .    752     600     26      -     126     546  2,050   2,082 

            Average interest                                               
              rate  . . . . .    6.1%    7.0%   5.6%     -     5.8%     -       -       - 
            Liabilities                                                    
            -----------

            Long-term, debt                                                
              including                                                    
              current portion     49     183  1,184     184     70     661  2,331   2,331 

            Average interest                                               
              rate  . . . . .    9.4%    9.2%   9.3%    8.9%   9.5%      -      -      -  
            /TABLE
<PAGE>





               The operations of the Company are subject to risk  resulting
          from interest rate  fluctuations to  the extent that  there is  a
          difference between  the amount of the  Company s interest-earning
          assets and  the amount  of interest-bearing liabilities  that are
          prepaid/withdrawn, mature  or reprice in specified  periods.  The
          principal  objective of the  Company s asset/liability management
          activities is to  provide maximum levels  of net interest  income
          while  maintaining   acceptable  levels  of  interest   rate  and
          liquidity risk and facilitating the funding needs of the Company.

               Due to  the limited nature and duration of claims, generally
          one  to two years, the Company maintains a portfolio that closely
          parallel s the money market interest rate scenario.

          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            57      Chairman of the Board
                                                    of Directors

             Joseph M. Williams             42      President and Treasurer
             George A. Chandler             69      Director

             Andrew J. Cohen                45      Director

             Edward J. Edenfield, IV        41      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.<PAGE>





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

                    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. 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  of   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.
               Prior to his involvement  with Cumberland, Mr. Edenfield had
               various management  and senior management  positions in  the
               insurance industry.   Mr. Edenfield began his career in 1980
               with Continental  Insurance Company  in their New  York home
               office.  Within  the last  five  years  prior to  Cumberland
               Casualty  &  Surety  Company,  Mr. Edenfield  has  held  the
               position of Assistant Vice President in charge of  surety at
               Meadowbrook Insurance  Group from  August 1995 to  May 1996;
               Vice President in charge of underwriting at Universal Surety
               of America from October 1994  to August 1995; Vice President
               in charge  of underwriting at American  Bonding Company from
               January 1992  to September 1994, and  Assistant Secretary in
               charge of treaty and facultative reinsurance from March 1992
               to December  1992.   Mr. Edenfield completed  his bachelor's
               degree  in  Business  Administration  with  an  emphasis  in
               Economics from Lycoming College.  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.

                    Andrew  J.   Cohen  was   elected  as  a   Director  to
               Cumberland s Board effective February  24, 1997.  Since June
               of  1972, Mr. Cohen has  been co-President of  ABC Fabric of
               Tampa, Inc. which is  now the fourth largest  private retail
               fabric  company in the United States.  Mr. Cohen brings both
               national  marketing and  corporate management  experience to
               Cumberland.<PAGE>





          Beneficial Ownership Reporting Compliance
          -----------------------------------------

               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, 1997 all  filing requirements applicable
          to  its   officers,  directors,  and  greater   than  10  percent
          beneficial owners were complied with.

          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 each
          of the three years ended December 31, 1998:

          <TABLE>
          <CAPTION>

                                  Annual Compensation       Long-Term Compensation
                                     ----------------------------  ---------------------

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

            <S>               <C>   <C>     <C>      <C>          <C>         <C>
            Joseph M.                                             
            Williams                                              
              President and                                       
              Treasurer . .   1998  $95,000 $30,000  $          - $        -  $         - 

                              1997  $95,000 $30,000  $          - $        -  $         - 

                              1996  $95,000 $37,000  $          - $        -  $         - 
            /TABLE
<PAGE>





          Aggregate Option  Exercises in 1998 and December  31, 1998 Option
          Values
          -----------------------------------------------------------------
          --

               The following  table  shows information  concerning  options
          held by the officers  shown in the Summary Compensation  Table at
          the end  of 1998.  No options were  exercised by such  persons in
          1998.

                                     Number of
                                     Securities
                                     Underlying      Value of Unexercised
                                Unexercised Options       in-the-Money
                                 at Fiscal Year End    Options at Fiscal
                                        (#)             Year End ($)(1)
                                    Exercisable/         Exercisable/
                   Name            Unexercisable         Unexercisable
          --------------------- ------------------- -----------------------

             Joseph M. Williams      124,000/0            $248,000/0

          (1)       Represents the dollar  value of the difference  between
                    the value at December 31, 1998 and  the option exercise
                    price of unexercised options at December 31, 1998.

          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.   Francis Williams
          serves as an executive officer  and director of Kimmins Corp.  of
          which Joseph Williams is also an executive officer.

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

               During the year  ended December 31,  1998, 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.<PAGE>





          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.  

          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,
          1998  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
          executive 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  . . . .        4,285,886(3)                   78.7%

             Joseph M. Williams          358,783(4)                    6.6%
             George A. Chandler            2,669(5)                       *

             Andrew J. Cohen  .           42,590(6)                     .8%

             Edward J.          
               Edenfield IV . .           12,000(7)                     .2%

             Kimmins Corp.  . .        1,723,290                      31.6%
             All directors and  
               executive        
               officers as a                                               
               group (five      
               persons) . . . .        4,701,928                      86.3%


              (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   2,338,517  shares   owned  by   Mr.  Francis
                    Williams;  1,059,306 shares  allocated to  Mr. Williams
                    based on  his 61.5% 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.   Mr.  Williams  owns 61.5%  of the  outstanding
                    common stock  of Kimmins Corp. and is  its Chairman and
                    Chief Executive Officer.<PAGE>





              (4)   Includes 8,800 shares owned  by Mr. Joseph M. Williams;
                    options to acquire 124,000 shares of Cumberland  Common
                    Stock; 219 shares held  by the KC 401(K) Plan  and ESOP
                    of which Mr. Williams  is fully vested.   Also includes
                    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; Mr. Williams disclaims
                    beneficial ownership of these shares.
          
              (5)   Includes 1,869  shares owned by Mr.  George A. Chandler
                    and options to acquire  800 shares of Cumberland Common
                    Stock.

              (6)   Includes  72,540  shares  owned  by  C&C  Properties  a
                    partnership  in which  Mr. Cohen  has a  50% ownership,
                    6,320  shares  held  in  trust for  Mr.  Cohen s  minor
                    children.

              (7)   Includes options to acquire 12,000 shares of Cumberland
                    Common stock.

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

               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.  In
          1992,  the debenture  due to  KC from  CCS was  assigned to  CTI.
          Interest and  principal payments are  subject to approval  by the
          Florida Department of Insurance.   On April 1, 1997,  CTI forgave
          $375,000 of its $3,000,000  surplus debenture due  to CCS.  As  a
          result,  CCS  increased  paid-in-capital  by  $375,000.    As  of
          December  31, 1998, no payments could be  made under the terms of
          the debenture.

               CTI  entered  into a  term note  agreement  with KC  for the
          outstanding amount of  the surplus 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, had a 10 percent interest  rate and was due on October 1,
          2002.

               Effective October  1, 1996,  CTI issued 1,723,290  shares at
          $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.

               Effective  November  10,  1998  Cumberland  entered  into  a
          $1,000,000 convertible  term note  agreement with  TransCor Waste
          Services, Inc., a subsidiary of KC.  The note is due November 10,
          2001  and  bears interest  at 10%.   The  lender may  convert the<PAGE>





          principal amount of  the note  or a portion  thereof into  common
          stock  at $3.00 per share  subsequent to a  six month anniversary
          and prior to the close of business on the maturity date.<PAGE>





               CCS writes surety bonds for KC and its affiliates.  Revenues
          attributable  to transactions  with  KC and  its affiliates  were
          $14,907, $1,738 and $2,873 for the years ended December 31, 1998,
          1997 and 1996, respectively.  Qualex performs consulting services
          for KC and affiliates.  Revenue attributable to  transaction with
          affiliates were  $282,193, 310,396  and $338,478 for  years ended
          December 31, 1998, 1997 and 1996, respectively.<PAGE>





          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, 1998
                         and 1997
                     -   Consolidated statements of  operations for each of
                         the three  years in the period  ended December 31,
                         1998
                     -   Consolidated  statements  of stockholders   equity
                         for  each of the  three years in  the period ended
                         December 31, 1998
                     -   Consolidated statements  of cash flows for each of
                         the three  years in the period  ended December 31,
                         1998
                     -   Notes to consolidated financial statements

               2.   Financial statement schedules

                    II    -   Condensed Financial Information of Registrant
                    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(i) -  Articles of Incorporation
                    3(ii)-  Bylaws
                    10   -  Lease  agreement  with  Cumberland   Properties,
                            Inc.
                    11   -  Statement Re: Computation of earnings per share
                    22   -  Subsidiary list
                    23   -  Consent   of   Independent   Certified    Public
                            Accountants
                    27   -  Financial Data Schedule<PAGE>





          *    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
                    None

               (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: March 31, 1999           CUMBERLAND TECHNOLOGIES, INC. 
                                          -----------------------------


           Date: March 31, 1999           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: March 31, 1999           By:  /s/ Joseph M. Williams
                                          -----------------------------
                                          Joseph M. Williams, President


           Date: March 31, 1999           By:  /s/ Francis M. Williams
                                          ----------------------------- 
                                          Francis M. Williams
                                          Chairman of the Board



           Date: March 31, 1999           By:  /s/ George A. Chandler
                                          -----------------------------
                                          George A. Chandler, Director



           Date: March 31, 1999           By:  /s/ Andrew J. Cohen
                                          -----------------------------
                                          Andrew J. Cohen, Director



           Date: March 31, 1999           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, 1998


                            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  . . . . .  31

          Consolidated Balance Sheets at December 31, 1998 and 1997 . .  32

          Consolidated Statements of Operations for Each of the
             Three Years in the Period Ended December 31, 1998  . . . .  34

          Consolidated Statements of Stockholders  Equity for
             Each of the Three Years in
             the Period Ended December 31, 1998 . . . . . . . . . . . .  35

          Consolidated Statements of Cash Flows for Each of
             the Three Years in the Period Ended December 31, 1998  . .  36

          Notes to Consolidated Financial Statements  . . . . . . . . .  38

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

          Schedule II  Condensed Financial Information of Registrant  .  55

          Schedule V   Valuation and Qualifying Accounts  . . . . . . .  59

          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.<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,  1998 and 1997,
          and   the   related   consolidated   statements   of  operations,
          stockholders'  equity, and cash flows for each of the three years
          in the period ended December 31, 1998.  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,  1998  and  1997,  and  the  consolidated  results  of  their
          operations and  their cash flows  for each of the  three years in
          the period ended  December 31, 1998, 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.




          March 19, 1999
          Tampa, Florida<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                             CONSOLIDATED BALANCE SHEETS

                                        ASSETS

                                                    December 31
                                           -----------------------------
                                                      1998          1997
                                            ----------------------------

           Investments - Notes 1 and 3:    
              Securities available-for-    
              sale at fair value:
                Fixed maturities (cost:    
                1998 - $2,049,787; 1997 -  
                $3,551,313)  . . . . . . . $    2,081,770 $   3,590,458 
                Equity securities          
                  (cost: 1998 - $799,487;  
                  1997 - $1,431,727) . . .        576,575     1,526,783 
              Fixed maturity securities    
                held-to-maturity, at       
                amortized cost: (fair      
                value, 1998 -$896,246; 1997
                - $1,002,280)  . . . . . .        860,508       982,528 
              Residential mortgage loan on 
                real estate, at unpaid     
                principal  . . . . . . . .         44,427        45,314 
              Short-term investments   . .        423,993       323,993 
                                            ----------------------------
                Total investments  . . . .      3,987,273     6,469,076 
                                           
              Cash and cash equivalents         4,202,351     1,803,530 
              Accrued investment income            55,348        82,821 
                                           
              Reinsurance recoverable  . .      2,306,372     2,016,756 
                                           
              Accounts receivable:         
                Trade less allowance for   
                  doubtful accounts of -0- 
                  and $113,120 at December 
                  31, 1998 and 1997,       
                  respectively . . . . . .      1,809,726     1,307,216 
                Affiliate  . . . . . . . .        927,910       903,181 
              Income tax recoverable   . .        120,000             - 
              Deferred policy acquisition       1,246,555       812,745 
                costs  . . . . . . . . . . 
              Intangibles, net   . . . . .      1,455,525     1,680,633 
              Other assets   . . . . . . .        233,991       245,425 
                                            ----------------------------
                                           $   16,345,051 $  15,321,383 
                                           ============== ==============
          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                             CONSOLIDATED BALANCE SHEETS

                         LIABILITIES AND STOCKHOLDERS' EQUITY

                                                    December 31
                                           -----------------------------
                                                      1998          1997
                                            ----------------------------
          Policy liabilities and accruals: 
             Loss and loss adjustment      $    3,220,457 $   2,550,300 
             expenses   . . . . . . . . .  
             Unearned premiums  . . . . .       3,749,945     2,629,282 
          Ceded reinsurance payable . . .       1,114,267     2,459,173 
          Accounts payable and other              580,564       254,839 
          liabilities . . . . . . . . . .  
          Long-term debt:                  
             Nonaffiliate   . . . . . . .       1,330,588     1,418,520 
             Affiliate  . . . . . . . . .       1,000,000             - 
                                            ----------------------------
             Total liabilities  . . . . .      10,995,821     9,312,114 
          Stockholders' equity:                                         
             Preferred stock, $.001 par    
             value; 10,000,000 shares      
             authorized, no shares issued               -             - 
             Common stock, $.001 par       
               value; 10,000,000           
               shares authorized;          
               5,763,070 shares issued at  
               December 31, 1998 and 1997,          5,763         5,763 
             Capital in excess of par                     
               value  . . . . . . . . . .       7,212,941     7,212,941 
             Accumulated other             
               comprehensive (loss) . . .        (190,929)      134,201 
             Accumulated deficit  . . . .      (1,414,826)   (1,093,417)
                                            ----------------------------
                                                5,612,949     6,259,488 
             Less treasury stock, at cost, 
               318,112 and 313,612 shares  
               at December 31, 1998 and    
               1997, respectively . . . .        (263,719)     (250,219)
                                            ----------------------------
             Total stockholders' equity         5,349,230     6,009,269 
                                            ----------------------------
                                           $   16,345,051 $  15,321,383 
                                            ============================

          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                              Year ended December 31
                                        ----------------------------------
                                                1998        1997       1996
                                         ----------- ----------- ----------
          REVENUE:                                  
             Direct premiums earned:                             
               Affiliates . . . . . . .      14,907       1,738      2,873 
               Nonaffiliates  . . . . .   8,526,254   5,836,655  1,149,377 
             Reinsurance premiums                   
               assumed  . . . . . . . .   1,268,032   1,381,264  3,083,787 
             Less reinsurance ceded   .  (2,275,509) (1,535,712)  (427,718)
                                         ----------- ----------- ----------
             Net premium income   . . .   7,533,684   5,683,945  3,808,319 
             Net investment income  . .     377,218     408,050    403,919 
             Net realized investment                
               gains (losses) . . . . .    (437,565)    201,863    117,824 
             Commission income  . . . .     710,058     859,862  1,385,964 
             Other income:                                       
               Affiliates . . . . . . .     289,207     310,396    338,478 
               Nonaffiliates  . . . . .     537,775     305,733    314,889 
                                         ----------- ----------- ----------
                                          9,010,377   7,769,849  6,369,393 
          Benefits and expenses:                    
             Losses and loss adjustment             
               expenses . . . . . . . .   2,648,074   1,792,117  1,670,640 
             Amortization of deferred               
               policy acquisition costs   2,252,195   1,778,808  1,532,355 
             Operating expenses   . . .   4,313,278   3,903,476  3,255,805 
             Interest expense:                      
               Affiliates . . . . . . .          -            -    372,066 
               Nonaffiliates  . . . . .     118,239     124,928    121,271 
                                         ----------- ----------- ----------
                                          9,331,786   7,599,329  6,952,137 
                                         ----------- ----------- ----------
          Net income (loss) . . . . . .    (321,409)$   170,520 $ (582,744)
                                         =========== =========== ==========
          Weighted average number of                
             shares   . . . . . . . . .   5,447,966   5,449,518  4,026,655 
                                         =========== =========== ==========
          Net income (loss) per share   $      (.06)$      0.03 $     (.14)
                                         =========== =========== ==========

          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

                                                    
                                                                 Capital in
                                             Common Shares       Excess of
                                           Stock         Amount  Par Value
                                        -----------------------------------
          Balance at January 1, 1996  .   4,039,780 $     4,040 $2,044,794 
             Purchase 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             
               depreciation of
               available-for-sale
               securities . . . . . . . 
             Net (loss) income  . . . .             
             Comprehensive loss . . . .             
                                        -----------------------------------
          Balance at December 31, 1996    5,763,070       5,763  7,212,941 
                                                    
             Purchase of 3,139 shares               
               of treasury stock  . . . 
             Net increase in unrealized             
               depreciation of
               available-for-sale
               securities . . . . . . . 
             Net (loss)income . . . . .             
             Comprehensive income . . .                                    
                                        -----------------------------------
          Balance at December 31, 1997    5,763,070       5,763  7,212,941 
                                                    
             Purchase of 4,500 shares               
               of treasury stock  . . . 
             Net decrease in unrealized             
               depreciation of
               available-for-sale
               securities . . . . . . . 
             Net (loss) income  . . . .             
             Comprehensive loss . . . .             
                                        -----------------------------------
          Balance at December 31, 1998    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, 1996, 1997 AND 1998 (continued)

          <TABLE>
          <CAPTION>
                            Accumulated   Retained        
                                     Other      Earnings    Treasury     Total
                                  Comprehensiv(accumulated   Stock    Stockholders
                                    e income    deficit)  ------------  ' Equity
                                  ------------------------------------------------
                                  ------------------------------------------------
                                  ------------------------            ------------

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

            Balance at January 1,      63,045 $  (681,193)   (140,915)  1,289,771 
            1996  . . . . . . . . 
              Purchase of 86,210                          
              shares of                                       (99,856)    (99,856)
                 treasury stock . 

              Conversion of term                          
              note for                                                  5,169,870 
                 1,723,290 shares
                 of common stock  

              Net increase in                             
              unrealized               36,631                              36,631 
                 depreciation
                 available-for-
                 sale securities  

              Net (loss) income                  (582,744)               (582,744)
                                                                      ------------
                                                                      ------------
                                                                      ------------
              Comprehensive loss                                         (546,113)
                                  ------------------------------------------------
                                  ------------------------------------------------
                                  ------------------------------------------------

            Balance at December        99,676  (1,263,937)   (240,771)  5,813,672 
            31, 1996  . . . . . . 

              Purchase of 3,139                           
              shares of                                        (9,448)     (9,448)
                 treasury stock . <PAGE>





              Net increase in                             
              unrealized                      
                 depreciation of       34,525                              34,525 
                 available-for-
                 sale securities  

              Net (loss) income                   170,520                 170,520 
                                                                      ------------
                                                                      ------------
                                                                      ------------

              Comprehensive                                               205,045 
              income  . . . . . . ------------------------------------------------
                                  ------------------------------------------------
                                  ------------------------------------------------
            Balance at December      134,201   (1,093,417)   (250,219)  6,009,269 
            31, 1997  . . . . . .                         

              Purchase of 4,500                           
              shares of                                       (13,500)    (13,500)
                 treasury stock . 

              Net increase in                             
              unrealized          
                 depreciation of    (325,130)                            (325,130)
                 available-for-
                 sale securities  

              Net (loss) income                  (321,409)               (321,409)
                                                                      ------------
                                                                      ------------
                                                                      ------------
              Comprehensive loss                                         (646,539)
                                  ------------------------------------------------
                                  ------------------------------------------------
                                  ------------------------------------------------

            Balance at December     (190,929)  (1,414,826)   (263,719)  5,349,230 
            31, 1998  . . . . . . ================================================
                                  =           =           =           =
            </TABLE>

          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              Year ended December 31
                                        ----------------------------------
                                               1998        1997        1996
                                        ----------- -----------  ----------
          Operating activities:                     
          Net (loss) income . . . . . . $ (321,409) $  170,520  $ (582,744)
          Adjustments to reconcile net               
            (loss) income to net cash
            (used in) provided by
            operating activities:
              Amortization/accretion of             
               investment premiums and              
               discounts  . . . . . . .        391      (2,788)     (6,052)
              Policy acquisition costs              
               amortized  . . . . . . .  2,252,194   1,778,808   1,532,355 
              Policy acquisition costs              
               deferred . . . . . . . . (2,686,004) (1,956,364) (1,732,272)
              Depreciation and                      
               amortization . . . . . .    225,108     370,553     378,447 
              Net realized loss(gain)               
               on sales of investments     437,566    (201,863)   (117,824)
              Provision for bad debts            -     113,120           - 
              Accrued interest on term              
               notes, net . . . . . . .          -           -     404,337 
              (Increase) decrease in:               
               Accrued investment                   
                    income  . . . . . .     27,473       6,831      (2,421)
               Reinsurance recoverable    (289,616)   (425,900)    709,464 
               Trade receivables  . . .   (502,510)   (852,285)   (139,675)
               Income tax recoverable     (120,000)          -           - 
               Other assets . . . . . .     11,434      57,079    (232,148)
              Increase (decrease) in:                          
               Policy liabilities and               
                  accruals  . . . . . .  1,790,820   1,325,672     319,801 
               Ceded reinsurance                    
                  payable . . . . . . . (1,344,906)  1,690,766     165,504 
               Accounts payable and                 
                  other liabilities . .    325,725    (148,246)   (713,730)
                                        ----------- -----------  ----------
          Net cash (used in) provided               
            by operating activities . .   (193,734)  1,925,903     (16,958)


          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)


                                              Year ended December 31
                                        ----------------------------------
                                               1998        1997        1996
                                        ----------- -----------  ----------
          Investing activities:                     
          Securities available-for-                            
           sale:
             Purchases - fixed                      
               maturities . . . . . . .   (968,313) (1,493,023)   (300,012)
             Sales - fixed maturities    2,479,916     954,039     620,000 
             Purchases - equities   . . (2,819,999) (4,536,969) (3,249,846)
             Sales - equities   . . . .  2,999,085   4,269,885   3,628,259 
          Securities held-to-maturity:              
             Purchases  . . . . . . . .   (100,000)   (299,492)   (680,116)
             Maturities   . . . . . . .    127,140     985,000     310,000 
          Proceeds from other                       
           investments  . . . . . . . .        887           -      25,529 
          Software development costs  .          -           -     (99,938)
                                        ----------- ----------- -----------
          Net cash provided by (used                
           in) investing activities   .  1,718,716    (120,560)    253,876 
          Financing activities:                     
          Purchases of treasury stock      (13,500)     (9,448)    (99,856)
          Payments on short-term                    
           borrowings and long-term                 
           debt   . . . . . . . . . . .    (87,932)   (114,745)   (469,483)
          Net change in advances to                 
           (from) affiliates  . . . . .    (24,729)   (546,696)   (234,433)
          Net proceeds from short-term              
           borrowings   . . . . . . . .  1,000,000           -           - 
                                        ----------- ----------- -----------
          Net cash provided by (used                
             in) financing activities      873,839    (670,889)   (803,772)
                                        ----------- ----------- -----------
          Increase (decrease) in cash               
             and cash equivalents   . .  2,398,821   1,134,454    (566,854)
          Cash and cash equivalents,                
             beginning of year  . . . .  1,803,530     669,076   1,235,930 
                                        ----------- ----------- -----------
          Cash and cash equivalents,                
             end of year  . . . . . . . $4,402,351  $1,803,530  $  669,076 
                                        =========== =========== ===========


          See notes to consolidated financial statements.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  DECEMBER 31, 1998

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

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

                Cumberland  Technologies,  Inc.  ( CTI )  f/k/a  Cumberland
          Holdings, Inc., a Florida corporation, was formed on November 18,
          1991,  to be a Holding  company and a  wholly-owned subsidiary of
          Kimmins Corp.  ( KC ). Effective October 1,  1992, KC contributed
          all of  the outstanding common stock of  two of its other wholly-
          owned  subsidiaries, Cumberland Casualty & Surety Company ( CCS )
          and Surety Specialists, Inc. ( SSI ) to CTI. KC then  distributed
          to its stockholders CHI s common stock  on the basis of one share
          of common  stock of CTI for  each five shares of  KC common stock
          and  Class B  common  stock owned  (the Distribution).  Effective
          January  30, 1997, Cumberland Holdings, Inc.  changed its name to
          Cumberland Technologies, Inc.   CTI conducts its business through
          five subsidiaries. CCS, a Florida corporation formed in May 1988,
          provides underwriting for  specialty surety  and performance  and
          payment  bonds for  contractors.  The  surety  services  provided
          include   direct  surety   and  to   a  lesser   extent,  assumed
          reinsurance.  SSI, a  Florida corporation formed in August  1988,
          is a general lines agency which operates as an independent agent.
          Surety  Group  ( SG ),  a  Georgia  corporation,  and  Associates
          Acquisition   Corp.  d/b/a  Surety  Associates  ( SA ),  a  South
          Carolina  corporation,  purchased  in  February  and  July  1995,
          respectively,  are   general  lines  agencies  which  operate  as
          independent agencies.  Official  Notary Service  of  Texas,  Inc.
          ( ONS ), a  Texas  corporation formed  in  February 1994,  is  an
          inactive corporation. Qualex Consulting Group, Inc. ( Qualex ), a
          Florida corporation  formed in November 1994,  provides claim and
          contracting consulting  services.   Florida  Credit &  Collection
          Services, Inc. a Florida corporation formed  in December 1996 was
          dissolved in June 1997.  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
                -----------

                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 other
          comprehensive  income.  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 on the  Statement of
          Operations.  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.

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

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





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

               To the  extent recoverable from future  policy revenues, 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 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.   Goodwill 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  and
          intangibles 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   loss  and  loss  adjustment   expenses
          including  incurred  but  not reported  losses  is  based on  the
          estimated ultimate  cost of settling the  claim using traditional
          paid  and incurred loss development methods.  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 loss  and
          loss adjustment  expenses is  accrued when the  related liability
          for unpaid  losses is  accrued. Loss adjustment  expenses include
          costs associated  directly with  specific claims  paid or  in the
          process  of settlement, such  as legal and  adjusters  fees. Loss
          adjustment  expenses  also include  other  costs  that cannot  be
          associated with specific claims but are related to losses 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  12).
          Amounts  recoverable  from  reinsurers  for  unpaid  losses   are
          estimated  in  a  manner  consistent  with  the  claim  liability
          associated with the reinsured policies.

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

               Direct insurance and assumed reinsurance premiums earned are
          recognized   on  a  pro-rata  basis  over  the  period  of  risk.
          Commission  income is  recognized at  the effective  date  of the
          bonds issued.   Other  income consisting primarily  of consulting
          fees are recognized when the negotiated services are provided. 

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

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

               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.  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.  See Note 7.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

               Earnings (loss) per  share is based on  the weighted average
          number of shares outstanding, adjusted for the dilutive effect of
          stock  options.  Since the effect of including the entire 168,486
          outstanding stock  options in the denominator  of the calculation
          for the year ended December 31, 1998 had no effect  on the result
          of the calculation, and the effect of stock options for the years
          ended December 31, 1997, and 1996 would be antidilutive, earnings
          per share is the same on both a basic and diluted basis for 1998,
          1997 and 1996.

               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.    Such
          estimates  and assumptions  could change  in  the future  as more
          information becomes known which would affect the amounts reported
          and disclosed herein.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               New Accounting Standards
               ------------------------

               As  of January  1, 1998,  the Company  adopted Statement  of
          Financial Accounting Standards  No. 130, Reporting  Comprehensive
          Income  ( SFAS 130 ).   SFAS  130 establishes  new rules  for the
          reporting and display of comprehensive income and its components;
          however,  the adoption  of this  Statement had  no impact  on the
          Company  net income  or shareholders  equity.   SFAS 130 requires
          unrealized gains and losses on  the Company s available for  sale
          securities,  which  prior adoption  were  reported  separately in
          shareholders   equity  to  be  included  in  other  comprehensive
          income.     All   adjustments   made  between   net  income   and
          comprehensive income for the Company are attributed to unrealized
          gains  and losses.    Prior year  financial statements  presented
          conform to the requirements of SFAS 130.  See Note 16.

               Effective January 1, 1998, the Company adopted the Financial
          Accounting  Standards Board s  Statement of  Financial Accounting
          Standards No.  131, Disclosures  about Segments of  an Enterprise
          and  Related   Information  (Statement   131).     Statement  131
          superseded  FASB  Statement  No.  14,  Financial  Reporting   for
          Segments  of a  Business Enterprise.   Statement  131 establishes
          standards  for the  way that  public business  enterprises report
          information   about  operating   segments  in   annual  financial
          statements and  requires that  those enterprises report  selected
          information  about   operating  segments  in   interim  financial
          reports.   The Company's  only material operating  segment is the
          underwriting of  surety insurance  products.  In  accordance with
          Statement 131 the Company  has not reported financial information
          on separate  segments.  Statement 131  also establishes standards
          for related disclosures  about products and services,  geographic
          areas,  and major customers.   The adoption of  Statement 131 did
          not affect results of operations or financial position.

               In  June  1998,  the  Financial  Accounting  Standards Board
          issued Statement  No. 133, Accounting for  Derivative Instruments
          and  Hedging Activities, which is required to be adopted in years
          beginning  after June 15, 1999.  Because of the Company s minimal
          use  of  derivatives, management  does  not  anticipate that  the
          adoption of the new  Statement will have a significant  effect on
          earnings or the financial position of the Company.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

               Certain amounts  in the 1997 financial  statements have been
          reclassified  to   conform  to   the  1998  financial   statement
          presentation.  These reclassifications had no effect on  net loss
          or stockholders  equity previously reported.

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

               CTI and its subsidiaries have entered into transactions with
          KC and companies affiliated through common ownership.  CCS writes
          surety bonds for KC and its  affiliates. Revenues attributable to
          surety  bonds with KC and its affiliates were $14,907, $1,738 and
          $2,873  for the  years ended  December 31,  1998, 1997  and 1996,
          respectively.   Qualex  performs consulting  services for  KC and
          affiliates.   Other income  from affiliates consist  primarily of
          consulting services provided to KC.

               Affiliate accounts receivable  represents funds advanced and
          joint expenses that  have not yet been reimbursed from KC and its
          affiliates.    These receivables  are  paid  periodically and  no
          interest is charged on the outstanding balances which are payable
          on demand.   Also  included in affiliate  accounts receivable  at
          December  31,  1997  is  a  $135,000  note  receivable  from  the
          Company s  Chairman of the Board  of Directors.   During 1998, KC
          reimbursed  SSI  for  certain  project  premiums  that  had  been
          guaranteed by the Chairman.  As a result, the note receivable was
          paid in full and  a commission of $83,952 was recognized by CCS.

               At  December 31, 1996, the Company was 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.  During
          1997, the Company was released by the bank as a  guarantor on the
          note.

               Cumberland leases  office space from a company  owned by the
          Chairman  of the Board of Directors at  a monthly rate of $7,254.
          The lease is effective through December 31,2000.<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>
                                                                                   Amortized     Gross      Gross     Estimated
                                                Cost    Unrealized  Unrealized Fair Value
                                            -----------    Gains      Losses   -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                                        ----------------------

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

            Available-for-sale securities at                       
            December 31, 1998:
              Fixed maturity securities:                           

                U.S. Government bonds . . . $1,553,407  $   19,426 $      563  $1,572,270 

                State and municipal bonds .    496,380      13,120          -     509,500 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------

            Total fixed maturity securities $2,049,787      32,546        563   2,081,770 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
              Equity securities . . . . . .    799,487          -     222,912     576,575 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------

            Total . . . . . . . . . . . . . $2,849,274  $   32,546 $  223,475  $ 2,658,345
                                            =========== ====================== ===========
                                            =           =          =           = 

            Held-to-maturity securities at                         
            December 31, 1998:

              Fixed maturity securities:                           
                U.S. Government bonds . . . $  860,508  $   35,738 $        -  $  896,246 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------

            Total . . . . . . . . . . . . . $  860,508  $   35,738 $        -  $  896,246 
                                            =========== ====================== ===========
                                            =           =          =           =<PAGE>





            Available-for-sale securities at                       
            December 31, 1997:

                 Fixed maturity securities:                        

                  U.S. Government and       $3,054,983  $   33,890 $    1,865  $3,087,008 
                  government agency bonds . 
                  State and municipal bonds    496,330       7,120          -     503,450 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------

            Total fixed maturity securities $3,551,313  $   41,010 $    1,865  $3,590,458 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------

                 Equity securities  . . . .  1,431,727     115,618     20,562   1,526,783 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------  ---------------------- -----------

            Total . . . . . . . . . . . . . $4,983,040  $  156,628 $   22,427  $5,117,241 
                                            =========== ====================== ===========
                                            =           =          =           =
            Held-to-maturity securities at                         
            December 31, 1997:

                 Fixed maturity securities:                        

                  U.S. Government bonds . . $  982,528  $   19,752 $        -  $1,002,280 
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------

            Total . . . . . . . . . . . . . $  982,528  $   19,752 $        -  $1,002,280 
                                            =========== ====================== ===========
                                            =           =          =           =
            /TABLE
<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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, 1998 are
          summarized, by stated maturity, as follows:

          <TABLE>
          <CAPTION>

                                                   

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

                                      Amortized                Amortized
                    Maturity            Cost      Fair Value     Cost      Fair Value
            ----------------------- ------------ ------------------------ ------------
            <S>                     <C>          <C>         <C>          <C>

            Due in one year or less $   751,160  $   757,080 $         -  $         - 

            Due after one year                               
              through five years        626,332      639,196     860,508      896,246 

            Due after five years                             
              through ten years   .     125,915      125,994           -            - 
            Due after ten years                              
              through fifteen years      50,000       50,000           -            - 

            Due after twenty years      496,380      509,500           -            - 
                                    ------------ ------------------------ ------------

                                    $ 2,049,787  $ 2,081,770 $   860,508  $   896,246 
                                    ============ ======================== ============
            </TABLE>

               The  Company  held  no  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.

               At  December 31, 1998 and 1997, the Company had $3.4 million
          and $5.3 million, respectively, in restricted  investments (fixed
          maturity  securities  and  short-term   investments).  Restricted
          investments  primarily  represent  funds  held  as  collateral in
          connection with  reinsurance trust  agreements and funds  held as<PAGE>





          required   under   statutory  regulations   by   state  insurance
          departments.<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
                                        ----------------------------------
                                                1998        1997       1996
                                         -----------  ---------- ----------
          Fixed maturity and equity                 
            securities  . . . . . . . . $   246,618 $   344,459 $  388,700 
          Mortgage loans on real estate       6,711       4,105      4,613 
          Short-term investments,                   
            including cash and cash                 
            equivalents . . . . . . . .     135,926      70,857     50,684 
                                         ----------- ----------- ----------
                                            389,255     419,421    443,997 
          Less investment expenses  . .     (12,037)    (1,1371)   (40,078)
                                         ----------- ----------- ----------
          Net investment income . . . . $   377,218 $   408,050 $  403,919 
                                                    

          Realized gain (loss) on                   
          available-for-sale
            securities:
            Fixed maturities - gains  .      15,589           -          - 
            Equity securities - gains       226,613     201,863    117,824 
            Equity securities - losses     (679,767)          -          - 
                                         ----------- ----------- ----------
          Net realized investment gains $  (437,565)$   201,863 $  117,824 
          (losses)  . . . . . . . . . . <PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               The  carrying  amounts  and  fair values  of  the  Company's
          financial instruments at December 31, 1998 are as follows:

                                                 December 31, 1998
                                            ----------------------------
                                                  Carrying
                                                    Amount    Fair Value
                                            ----------------------------
          Assets:                                                
            Cash and cash equivalents,     
            including short-term           
             investments  . . . . . . . .  $    4,626,344 $   4,626,344 
            Investments . . . . . . . . .       3,563,280     3,554,591 
            Accounts receivable . . . . .       2,737,636     2,737,636 
            Reinsurance receivable  . . .       2,306,372     2,306,372 
                                           
            Liabilities:                                   
             Long-term debt   . . . . . .  $    2,330,588 $   2,330,588 
             Policy loss reserves   . . .       3,220,457     3,220,457 
             Ceded reinsurance payable          1,114,267     1,114,267 

               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 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.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Intangibles at December 31 are comprised of the following:


                                                     1998           1997
                                           -------------- --------------
            Purchased customer accounts    $   1,084,041  $   1,084,041 
            Noncompete agreements . . . .              -        234,000 
            Goodwill  . . . . . . . . . .        926,661        926,661 
                                               2,010,702      2,244,702 
                                           -------------- --------------
            Less accumulated amortization        555,177       (564,069)
                                           -------------- --------------
                                           $   1,455,525  $   1,680,633 
                                           ============== ==============

               Amortization expense amounted to  $225,108 in 1998, $275,169
          in 1997 and $306,175 in 1996.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                           
          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, 1998,  1997 and
          1996, to the gross amounts reported in the Company s consolidated
          balance sheets:
                                                    December 31
                                        ----------------------------------
                                                1998       1997        1996
                                         ----------------------   ---------
          Liability for losses and LAE,             
            net of reinsurance                      
            recoverable on unpaid                   
            losses, at beginning of                 
            year  . . . . . . . . . . . $ 1,392,931 $  594,922  $1,052,547 
          Provision for losses and LAE              
            for claims occurring in the             
            current year, net of                    
            reinsurance . . . . . . . .   2,331,074  1,743,117   1,008,640 
          Increase in estimated losses              
            and LAE for claims                      
            occurring in prior years,               
            net of reinsurance  . . . .     317,000     49,000     662,000 
                                         ----------------------  ----------
          Incurred losses during the                
            current year, net of                    
            reinsurance . . . . . . . .   2,648,074  1,792,117   1,670,640 
          Losses and LAE payments for               
          claims, net of reinsurance,               
          occurring during:                 557,997    553,629     422,544 
              The current year  . . . .   1,802,428    440,479   1,705,721 
              Prior years . . . . . . .  ----------------------  ----------
                                          2,360,425    994,108   2,128,265 
                                         ----------------------  ----------
          Liability for losses and LAE,             
            net of reinsurance                      
            recoverables on unpaid                  
            losses, at end of year  . .   1,680,580  1,392,931  $  594,922 
          Reinsurance recoverables on               
            unpaid losses at end of                 
            year  . . . . . . . . . . .   1,539,877  1,157,369   1,396,874 
                                         ----------------------  ----------
          Liability for losses and LAE,             
            gross of reinsurance                    
            recoverables on unpaid                  
            losses, at end of year  . . $ 3,220,457 $2,550,300  $1,991,796 
                                         ----------------------  ----------<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                           

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

               Cumberland experienced deficiencies of $317,000, $49,000 and
          $662,000 for losses  and loss adjustment  expenses in 1998,  1997
          and  1996,  respectively.    The  deficiency  in  1998  and  1997
          principally   resulted   from   settling   case   basis  reserves
          established  in  prior  years for  amounts  that  were more  than
          expected.    The deficiency  in 1996  is  a result  of additional
          claims expense on a 1993/94 pooling agreements.

               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)


          7.   Income Taxes
               ------------

               There  was no income  tax expense  or benefit  recognized in
          1998, 1997 or 1996.

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

                                                1998        1997       1996
                                         ----------- ----------- ----------
              Federal statutory tax                 
               rate . . . . . . . . . .      (34.0)%       34.0%    (34.0)%
              State income taxes, net               
               of federal income tax                
               benefit  . . . . . . . .        (3.0)        3.9      (3.7)%
              Income exempt from                    
               taxation and dividend                
               exclusions . . . . . . .        (9.7)       (7.2)    (10.1) 
              Differences between                   
               income statement and tax                          
               return . . . . . . . . .        (7.0)       69.3         -  
              Utilization of NOL                    
               carryforwards  . . . . .        38.2      (110.1)     44.4  
              Nondeductible expenses  .        15.5        10.1       3.4  
                                        -----------  ----------- ----------
              Effective tax rate  . . .           -         -          -   
                                         =========== =========== ==========<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          7.   Income Taxes (continued)
               ------------------------

               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:

                                                    December 31
                                           -----------------------------
                                                1998           1997
                                           -------------- --------------
          Deferred tax liabilities:                              
            Deferred policy acquisition    
              costs . . . . . . . . . . .  $      544,339 $     305,836 
            Unrealized gains  . . . . . .               -        50,500 
                                            ----------------------------
          Total deferred tax liabilities          544,339       356,336 
                                            ----------------------------
          Deferred tax assets:                            
            Unrealized loss . . . . . . .         290,236             - 
            Outside basis difference in    
              investments . . . . . . . .          91,646        40,620 
            Amortization of intangibles            96,160        69,028 
            Unearned premiums . . . . . .         245,321       166,961 
            Losses and loss adjustment     
              expenses  . . . . . . . . .          54,885        19,050 
            Net operating loss             
              carryforward  . . . . . . .          85,789       232,012 
            Alternative minimum credit     
              carryforward  . . . . . . .          27,648        15,555 
            Surplus note  . . . . . . . .         102,314       102,314 
            Other, net  . . . . . . . . .          17,139         8,931 
                                            ----------------------------
                                                1,011,138       654,471 
            Less valuation allowance  . .        (466,799)     (298,135)
                                            ----------------------------
          Total deferred tax assets . . .         544,339       356,336 
                                            ----------------------------
          Net deferred taxes  . . . . . .  $            - $           - 
                                            ============================<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          7.   Income Taxes (continued)
               ------------------------

               The  Company  has net  operating  loss  carryforwards as  of
          December 31,  1998  of  approximately  $227,980  which  generally
          expire in 2010 and 2011.

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

               Long-term debt consists of the following:

                                               December 31   December 31
                                                      1998          1997
                                            ----------------------------
          Affiliate:                       
            Note payable due November 10,  
              2001  . . . . . . . . . . .  $    1,000,000 $           - 
          Nonaffiliate:                    
            Note payable due March 1, 2002        374,087       377,077 
            Note payable due June 30, 2010        956,501     1,041,443 
                                            ----------------------------
                                           $    2,330,588 $   1,418,520 
                                            ============================

               Notes Payable to Affiliate
               --------------------------

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





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

               In  connection  with  the  acquisition of  certain  agencies
          during  1995, the Company entered into two notes payable with the
          agencies   previous owners.  One  note is  due March 1,  2002 and
          bears  interest   at  8%   through  February 28,  2001   and  10%
          thereafter.  Principal  payments  of  $125,000  are  due annually
          beginning March 1, 2000. The other is due June 30, 2010 and bears
          interest 9%.  Principal payments of $40,000 were due annually for
          three  years  beginning January 5,  1996.    Payments of  $11,104
          including principal  and interest  are payable monthly  beginning
          April 1, 1997.

               Interest  paid in  1998, 1997  and 1996  for term  notes due
          nonaffiliates was $118,239, 124,298 and $121,271, respectively.

               Maturities of  notes payable  to nonaffiliates for  the five
          years succeeding December 31, 1998 and thereafter are as follows:

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

                             1999          $              49,158

                             2000                        183,471
                             2001                        184,254

                             2002                        181,002

                             2003                         72,637

                          Thereafter                     660,066

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

               In 1992, CTI entered into a term  note agreement with KC for
          the  outstanding  amount  of   a  debenture,  including  interest
          arrearage  of $4,291,049. 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<PAGE>





          taxes.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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  term  note  payable  in  the  amount  of
          $5,169,870 (including accrued interest).

          9.   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  compensation, not  to  exceed six  percent of  the
          participant's annual compensation.   The Company's  contributions
          to the plan totaled $11,701, $9,367 and $7,288 in 1998, 1997  and
          1996, respectively.

          10.  Stock Option Plan 
               -----------------

               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. Options  to purchase 52,586  shares of  the Company s
          common stock, at no cost to the holders, were granted during 1992
          and remain outstanding at  December 31, 1998.  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, 1998, 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, 1998,  12,000 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, 1998,  1,500  of the  options were
          exercisable.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          10.  Stock Option Plan (continued)
               -----------------------------

               Effective, March  18, 1998,  the Company granted  options to
          purchase 12,000 shares to  certain individuals at CCS at  a price
          of  $2.25 per  share.   As  of December  31, 1998,  2,400 of  the
          options were exercisable.

               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  since no  material
          amount of options have  been awarded since the effective  date of
          Statement 123,  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 materially different
          from amounts reported based on APB 25.

          11.  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, 1998.

          12.  Reinsurance
               -----------

               CCS  assumes  reinsurance  through  a  program  whereby  its
          subsidiary,  SSI,  has  contracted  through  a  joint  partnering
          agreement  with  St. Paul  Fire  and Marine  Group,  f/k/a United
          States Fidelity and Guaranty Company ( St. Paul ) to pursue small
          to medium size contract and commercial surety  business in states
          in  which CCS is not licensed.   CCS participates in the St. Paul
          agreement underwriting risk through a  retrocessional treaty with
          St. Paul s reinsurer, Transatlantic Reinsurance Company.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          12.  Reinsurance (continued)
               -----------------------

               Effective  October 1, 1996,  CCS entered into  a quota share
          agreement  with  First  Indemnity of  America  Insurance  Company
          whereby all of the premiums written through a shared underwriting
          office are subject to this treaty.  Cumberland assumes 50% of the
          premiums written  by FIA and cedes 50% of the premiums written by
          CCS.

               CCS assumed  reinsurance primarily from  a pooling agreement
          which expired in April, 1997 for which CCS assumed 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  assumed 25 percent and  20 percent of the  risk with a
          maximum  exposure  to CCS  of  $125,000  and $600,000  per  bond,
          respectively.

               The Company cedes to Transatlantic Reinsurance Company on an
          excess of  loss treaty  95% of  the risk  insured with a  maximum
          exposure to the Company of $235,000 per principal.  Transatlantic
          Reinsurance Company is rated A+ by A.M. Best.   For its liability
          line of registered investment  advisor insurance, the Company has
          reduced its exposure on any one  risk, with a purchase of a quota
          share agreement  with Dorinco Reinsurance  (Dorinco Treaty) which
          is rated A  (Excellent) by A.M. Best.  Under  the Dorinco Treaty,
          CCS  cedes 50%  of  its liability  on  all registered  investment
          advisor  policies, which have an aggregate net liability limit of
          $500,000 per endorsement. 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.   Reinsurance does not relieve an insurer of its liability
          to  policyholders, however,  the  reinsurer is  obligated to  the
          insurer for the portion assumed by such reinsurer.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          12.  Reinsurance (continued)
               -----------------------

          <TABLE>
          <CAPTION>

                             1998                           1997                          1996
                                     ---------------------------    ---------------------------    ---------------------------
                                           -----------------             -----------------              -----------------

                                        Written         Earned        Written         Earned         Written         Earned
                                     ------------    ------------   ------------   ------------    ------------   ------------
                                       --------        --------       --------       --------        --------       --------

                  <S>                <C>            <C>             <C>            <C>            <C>             <C>
                  Direct premiums    $  9,451,746   $  8,541,161    $ 6,797,136      5,838,393       2,025,796      1,152,250 

                  Assumed               1,478,109      1,268,032      1,189,689      1,381,264       2,890,050      3,083,787 
                  premiums

                  Ceded premiums       (2,354,970)    (2,275,509)    (1,752,564)    (1,535,712)       (547,800)      (427,718)
                                      ------------   ------------   ------------   ------------    ------------   ------------
                                     --------       --------        --------       --------       --------        --------

                  Net premiums  .    $  8,574,885   $  7,533,684    $ 6,234,261    $ 5,683,945    $  4,368,046    $ 3,808,319 
                                           =======        =======        =======        =======         =======        =======
                 </TABLE>

               Loss and loss  adjustment expenses in  1998, 1997, and  1996
          are summarized as follows:

                                                1998        1997       1996
                                         ----------- ----------- ----------
               Direct . . . . . . . . . $ 1,743,448 $ 1,048,450 $  127,232 
               Assumed  . . . . . . . .   1,343,334     741,351  1,587,890 
               Ceded  . . . . . . . . .    (438,708)       2316    (44,482)
                                         ----------- ----------- ----------
               Net losses and loss                  
                 adjustment expenses  . $ 2,648,074 $ 1,792,117 $ 1,670,640
                                         =========== =========== ==========

               The Company reported reinsurance recoverables on paid losses
          of $408,708 and $448,553 at 1998 and 1997, respectively.


          13.  Statutory Accounting Practices and Regulatory Requirements
               --------------------------------------------------------
          <PAGE>





               Statutory surplus 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:<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          13.  Statutory Accounting Practices  and Regulatory  Requirements
               (continued)
               ------------------------------------------------------------
          --

                                              Year Ended December 31
                                                1998        1997       1996
                                         ----------- ----------- ----------
          Statutory capital and surplus $ 4,843,478 $ 5,044,527 $5,034,662 
          Net income (loss) . . . . . .      74,157 $   959,304 $ (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  was
          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.

               Under applicable state insurance  statues, CCS must maintain
          minimum  capital and  surplus of  $2,500,000 (as  of December 31,
          1998). 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, 1998,  no dividends
          from CCS are  available for  payment to the  Company without  the
          prior approval of the Department of Insurance.<PAGE>





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               The Company  adopted  the provisions  of the  SFAS No.  130,
           Reporting Comprehensive Income,  in  1998.  Comprehensive income
          is  defined as any change  in equity from  transactions and other
          events  originating  from  nonowner  sources.   For  the  Company
          comprehensive  income  is composed  of   reported net  income and
          changes  in the  unrealized  appreciation of  available for  sale
          investment portfolio.    SFAS No.  130  requires the  Company  to
          report  all components  of comprehensive  income.   The following
          summaries  present the  components of  our comprehensive  income,
          other than net income, for the last two years.

                                            Consolidated Statements of
                                               Comprehensive Income
                                         Twelve Months Ended December 31
                                                     1998             1997
                                              -----------      -----------
          Net income (loss) . . . . . . $       (321,409)$        170,520 
          Other comprehensive income,   
             net of tax:
                                                                          
             Unrealized (depreciation)  
             appreciation of available  
             for sale securities        
             arising during period  . .         (830,088)         161,425 
                                              -----------      -----------
             Less:  reclassification    
               adjustment for (losses)  
               gains included in net    $      (504,958) $        126,000 
               income                    ---------------- ----------------

             Comprehensive income   . . $       (649,539)$        205,045 
                                         ================ ================

          15.  Subsequent Events
               -----------------

               On  February  1,  1999  the  Company  filed  a  registration
          statement  on  Form  S-8  to  register  400,000  shares  of stock
          available to participants of the 1991 Stock Option Plan.<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                    OF REGISTRANT

                            CUMBERLAND TECHNOLOGIES, INC.

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

             Condensed Balance                           1998          1997
                  Sheets                        ------------- -------------
          ----------------------

          Assets:                              
             Trade receivables                 $           - $      21,835 

           Accounts receivable                 
             from affiliates                               -             - 

           Investment in wholly-               
             owned subsidiaries                    1,701,379     2,385,867 

           Other assets   . . .                       68,363        54,408 
           Surplus debenture                   
             receivable from                   
             subsidiary   . . .                    5,026,354     4,763,854 
                                                ------------- -------------

                                               $   6,796,096 $   7,225,964 
                                                ============= =============

          Liabilities:                         

           Accounts payable to                 
             affiliates   . . .                    1,442,165     1,213,207 
           Accounts payable   .                        4,701         3,488 
                                                ------------- -------------

                                                   1,446,866     1,216,695 

          Stockholders' equity:                

           Common stock   . . .                        5,763         5,763 
           Other stockholders'                     5,343,467     6,003,506 
             equity   . . . . .                 ------------- -------------

                                                   5,349,230     6,009,269 
                                                ------------- -------------

                                               $   6,796,096 $   7,225,964 
                                                ============= =============<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.

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

          Condensed Statements                        
           of Operations              1998          1997          1996
          ---------------------- ------------- ------------- -------------

          Management fees from                 
           wholly- owned                       
           subsidiaries   . . .  $     217,892 $      88,378 $      62,557 
          Interest income from                 
           subsidiary   . . . .        262,500       271,875       300,000 
                                  ------------- ------------- -------------

                                       480,392       360,253       362,557 

          Costs and expenses:                  

           Selling and                         
             administrative                    
             expenses   . . . .        415,242       294,901       133,834 
           Interest expense to                 
             affiliates   . . .              -             -       372,066 
                                  ------------- ------------- -------------

                                       415,242       294,901       505,900 
                                  ------------- ------------- -------------

          Income (loss) before                 
           income taxes and                    
           equity in net income                
           (loss) of                           
           subsidiaries   . . .         65,150        65,352      (143,343)

          Federal and state                    
           income tax                          
           benefits   . . . . .              -             -             - 
          Equity in net income                 
           (loss) of                           
           subsidiaries   . . .       (386,559)      105,168      (439,401)
                                  ------------- ------------- -------------

          Net income (loss) . .  $    (321,409)$     170,520 $    (582,744)
                                  ============= ============= =============<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.


          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.

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

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

               Organization  -  Cumberland  Technologies,  Inc.  ( CTI   or
           Cumberland ), 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.  ( SG ),  Surety Associates  ( SA ),  and Qualex  Consulting
          Group,  Inc. ( Qualex )  (collectively together  with Cumberland,
          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  direct surety
          and, to a lesser extent, reinsurance.  SSI, a Florida corporation
          formed in August 1988,  is a general lines agency  which operates
          as  an  independent  agent.    SG,  a  Georgia  corporation,  and
          Associates  Acquisition Corp.  d/b/a Surety  Associates,  a South
          Carolina corporation,  purchased  by Cumberland  in February  and
          July  1995, respectively,  are general  lines insurance  agencies
          which  operate  as  independent  agencies.    Qualex,  a  Florida
          corporation  formed   in  November   1995,  provides   claim  and
          contracting consulting services.
          
               For the years ended December 31,  1998 and 1997, CTI charged
          its subsidiaries excluding CCS, a management fee.<PAGE>





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.
          

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

          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
          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.

               Investment in  subsidiaries  at  December 31, 1998  and 1997
          include  the   net  unrealized  (depreciation)   appreciation  in
          available-for-sale securities  held  by CCS,  of  $(190,929)  and
          $134,201 as  of December 31,  1998 and 1997,  respectively. These
          amounts  have  been  included  in the  CTI   other  stockholders 
          equity  amounts.

          3.   Surplus Debenture Receivable from Subsidiary
               --------------------------------------------

               In  1988, CCS issued a  surplus debenture to  KC in exchange
          for $3,000,000 which  bears interest at 10 percent per annum.  In
          1992,  the debenture  due to  KC from  CCS was  assigned to  CTI.
          Interest and  principal payments are  subject to approval  by the
          Florida Department of Insurance.   On April 1, 1997,  CTI forgave
          $375,000 of its $3,000,000  surplus debenture due  to CCS.  As  a
          result,  CCS  increased  paid-in-capital  by  $375,000.    As  of
          December  31, 1998, no payments could be  made under the terms of
          the debenture.<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, 1996:

              Deducted from asset                                   
               accounts:

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

               Deferred income tax                                  
                  valuation                                         
                  allowance . . . . $374,149    321,120   $     -0- $      -0- $  695,269 
                                    ========== ========== ========== ========== ==========
            For the year ended                                      
              December 31, 1997:

              Deducted from asset                                   
               accounts:

               Allowance for                                        
                  doubtful                                          
                  accounts  . . . . $     -0-  $113,120   $     -0- $      -0- $  113,120 
                                    ========== ========== ========== ========== ==========

               Deferred income tax                                  
                  valuation                                         
                  allowance . . . . $695,269   $     -0-  $     -0- $  397,134 $  298,135 
                                    ========== ========== ========== ========== ==========
            For the year ended                                      
              December 31, 1998:

              Deducted from asset                                   
               accounts:

               Allowance for                                        
                  doubtful accounts $ 113,120        -0-  $     -0- $  113,120 $      -0- 
                                    ========== ========== ========== ========== ==========<PAGE>





               Deferred income tax                                  
                  valuation                                         
                  allowance . . . . $298,135   $     -0-  $168,664  $      -0- $  466,799 
                                    ========== ========== ========== ========== ==========
            /TABLE
<PAGE>





            EXHIBIT 11 - STATEMENT RE:  COMPUTATION OF EARNINGS PER SHARE

                            CUMBERLAND TECHNOLOGIES, INC.


                                              Year Ended December 31

                                                1998        1997       1996
                                         -----------  ----------  ---------

          Average shares outstanding  .   5,447,966   5,449,518  4,026,655 
          Net effect of dilutive stock              
           options  . . . . . . . . . .           -           -          - 
                                         ----------- ----------- ----------

          Totals  . . . . . . . . . . .   5,447,996   5,449,518  4,026,655 
                                         =========== =========== ==========

          Net income (loss) . . . . . .    (321,409)$   170,520 $ (582,744)
                                         =========== =========== ==========

          Earnings (loss) per share                 
           amount   . . . . . . . . . . $      (.06)$       .03 $     (.14)
                                         =========== =========== ==========<PAGE>





                     EXHIBIT 22 - SUBSIDIARIES OF THE REGISTRANT

                            CUMBERLAND TECHNOLOGIES, INC.


          As  of   December  31,  1998,  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.

             - The Surety Group, Inc.

             - Associates Acquisition Corp. d/b/a Surety Associates, Inc.
          <PAGE>





           EXHIBIT 23 - CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                            CUMBERLAND TECHNOLOGIES, INC.

          We consent to the incorporation by reference in  the Registration
          Statement (Form S-8  No. 333-71537) pertaining to the  1991 Stock
          Option Plan of  Cumberland Technologies, Inc. of our report dated
          March  19,  1999,  with  respect to  the  consolidated  financial
          statements   and  schedules  of   Cumberland  Technologies,  Inc.
          included  in the  annual report  (Form 10-K)  for the  year ended
          December 31, 1998.



          /s/:      ERNST & YOUNG LLP

          March 31, 1999
          Tampa, Florida<PAGE>