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, 1997

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

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

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

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

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

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

                                     Common Stock
                                  ------------------
                                   (Title of Class)

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

                                      $5,143,604

            Aggregate market value of voting stock (Common Stock) held by
          nonaffiliates of the Registrant as of March 27, 1998

                   5,449,458 shares of Common Stock $.001 par value

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

                      Documents incorporated by reference: NONE





                              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  Cumberland
          Technologies,   Inc.   and   subsidiaries   (the    Company    or
           Cumberland ) 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  Cumberland s  Bond  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 analyses 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.





                                        PART I

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

               Cumberland  Technologies,  Inc.  ("CTI"   or  "Cumberland"),
          (f/k/a Cumberland  Holdings,  Inc.) a  Florida  corporation,  was
          formed  on November  18, 1991,  to  be a  holding  company and  a
          wholly-owned  subsidiary  of  Kimmins  Corp.  ("KC").   Effective
          October  1, 1992,  KC contributed all  of the  outstanding common
          stock   of  two  of  its  wholly-owned  subsidiaries,  Cumberland
          Casualty &  Surety Company  ("CCS") and Surety  Specialists, Inc.
          ("SSI")  to CTI.  KC  then distributed to  its stockholders CTI's
          common stock on the basis of one share of common stock of CTI for
          each five  shares of  KC common  stock and  Class B  common stock
          owned (the  "Distribution").   CTI conducts its  business through
          its  subsidiaries, CCS,  SSI, Surety  Group, Inc.  ( SG ), Surety
          Associates ( SA ), Official Notary Service of Texas, Inc. ("ONS")
          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.

               Cumberland  conducts   its  business  through  five  of  its
          subsidiaries and a number of  independent agencies which focus on
          selling and  delivering surety  insurance products  to consumers.
          Traditionally, the  surety segment of the  insurance industry has
          delivered its products through an antiquated manual process.  The
          need  to  advance  technologically  created  an  opportunity  for
          Cumberland  to  develop  a   software  product  to  organize  its
          business.  During 1996, the Company introduced its  bond software
          program "BondPro".  A management team of  software architects and
          developers  and  insurance  executives  at  Cumberland  committed
          itself to developing and distributing software that increases the
          speed with which the agents deliver their  products through their
          agents and  carriers to the consumer.  It is Cumberland's goal to
          reduce operating costs of insurance agents through the use of the
          software  Cumberland developed.   Cumberland's  business strategy
          focuses   on   niche    industry   consolidation   through    the
          implementation of the Company s proprietary information system.





               CCS is a  property and casualty  insurance company that  was
          incorporated  in Texas  on May 4,  1988.  In  September 1994, CCS
          redomesticated from Texas to  Florida.  CCS is licensed  to write
          insurance  in  twenty-four states  (Arkansas,  Delaware, Florida,
          Georgia,   Idaho,   Indiana,   Kentucky,   Louisiana,   Maryland,
          Massachusetts, Missouri, Montana, Nebraska, Nevada, North Dakota,
          Oregon,  Pennsylvania, South  Carolina, South  Dakota, Tennessee,
          Texas, Washington,  West Virginia  and Wyoming), the  District of
          Columbia and  Guam and  currently has applications  for admission
          pending  in  the  following  six  states:      Alabama,   Kansas,
          Mississippi, New  York, Oklahoma, and  Wisconsin.  Most  of these
          states have a lengthy application  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 it may  take to approve an  application.  All
          applications are  updated as  new information  becomes available,
          and Cumberland  is  waiting for  inquiries  or actions  by  these
          pending states.

               The  states in which CCS  has not yet  applied for licensing
          generally  require  additional  years  of  operating  history  or
          additional  capital  and  surplus.    Once  CCS  has   met  these
          requirements,  it is  anticipated that  CCS  will apply  in these
          states.   CCS is currently  attempting to obtain additional state
          licenses to spread its risk geographically and increase its sales
          of direct line insurance.  Management believes, however, that CCS
          can  function  profitably  selling  direct  line   insurance  and
          reinsurance in the states in which it is currently licensed.  CCS
          has in  the past,  and intends in  the future, to  primarily sell
          surety  bonds to  contractors and  miscellaneous surety  bonds to
          federal and local government agencies.

               Insurance Ratings
               -----------------

               Insurers compete with other insurance companies on the basis
          of  a number of factors,  including the ratings  assigned by A.M.
          Best.

               A.M. Best reviews an  insurer s profitability, leverage  and
          liquidity, as  well  as  the  insurer s  book  of  business,  the
          adequacy  and  soundness  of  its reinsurance,  the  quality  and
          estimated  market  value  of  its assets,  the  adequacy  of  its
          reserves  and the  experience and  competence of  its management.
          A.M.  Best ratings are based upon factors relevant to the insured
          customer and are not directed to the protection of investors.





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

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

               The percentages of gross  revenue generated by the Company's
          subsidiaries for  the  year  ended  December  31,  1997  were  as
          follows:

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

                     CCS                     63  %

                     SSI                     14
                     SG                       6

                     SA                       7

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

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

               Cumberland s  investment  portfolio  consists  primarily  of
          investment grade debt and equity securities.  The market value of
          these securities vary depending upon general economic and  market
          conditions and the interest rate environment.  From time to time,
          Cumberland may  be required for business or regulatory reasons to
          sell certain of its investments at a time when their market value
          is less than the cost of such of investments.





               Regulation
               ----------

               The  insurance subsidiary  is subject  to varying  degree of
          supervision  and regulation  in the  jurisdictions in  which they
          conduct  business  under  statutes  which   delegate  regulatory,
          supervisory   and  administrative   powers  to   state  insurance
          regulators.     The   nature  of   the  regulation   varies  from
          jurisdiction   to  jurisdiction  but   typically  involves  prior
          approval of the  acquisition of control  of an insurance  company
          controlling   an  insurance   company,   regulation  of   certain
          transactions entered into by an insurance company with any of its
          affiliates,  limitations on  dividends,  approval  or  filing  of
          premium  rates and  policy  forms for  many  lines of  insurance,
          solvency standards,  minimum amounts of capital  and surplus that
          must be maintained, limitations on amounts or types and amount of
          investments,  limitations  on the  size  of  risks which  may  be
          insured  by a single  company, licensing of  insurers and agents,
          deposits of securities for  the benefit of policy or  surety bond
          holders, reporting  of financial condition and other matters.  In
          addition,  state insurance regulators  perform periodic financial
          and market conduct examinations of insurance companies.  All such
          regulation is intended generally to protect the policy  or surety
          bond  holders, rather than equity  holders.  No  assurance can be
          given  that future  legislative  or regulatory  changes will  not
          adversely affect CCS s business.

               Adverse Legislation
               -------------------

               A  significant  portion of  the CCS s  business is  and will
          continue  to be  derived  from the  writing of  commercial surety
          bonds mandated by various states statutes and local ordinances to
          cover acts of  public officials and  private businesses, such  as
          Realtors,  automobile dealers and  others who  generally interact
          with   members  of  the  public  .    In  recent  years,  several
          jurisdictions have repealed legislation mandating use of  various
          types  of  these bonds,  often  replacing  them with  alternative
          protection mechanisms, who  assert claims against  such officials
          or businesses.  In  addition, contract surety bonds  are required
          generally  by federal,  state  and local  governments for  public
          works projects.    If numerous  governments  were to  repeal  the
          requirements  for obtaining  bonds of  the type  written  by CCS,
          their  results of  operations  and financial  condition would  be
          materially   and  adversely  affected   and,  consequently  their
          financial condition could be materially and adversely affected.





               Controlling shareholders
               ------------------------

               Francis Williams and  Kimmins Corp. (collectively   Majority
          Shareholder ) owns  78.3% of  the outstanding ordinary  shares of
          the  Company and collectively control the affairs and policies of
          the  Company.   Circumstances  may  occur in  which  the interest
          Majority Shareholders 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  transactions that,
          in their  judgement, could enhance their  equity investment, even
          though such transactions might involve risks to the other holders
          of the common stock.

               The Company s Board  of Directors has the authority to issue
          up to one million shares of Preferred Stock and to  determine the
          price, rights, preferences and privileges of those shares without
          any further vote  or action by the  stockholders.  The  rights of
          the  holders of  Common  Stock will  be subject  to,  and may  be
          adversely affected by, the rights of the holders of any shares of
          Preferred  Stock that may be issued  in the future.  The issuance
          of  Preferred Stock  could  have the  effect  of making  it  more
          difficult  for a  third  party  to  acquire  a  majority  of  the
          outstanding  voting  stock  of  the  Company,  thereby  delaying,
          deferring or preventing a change of control of the Company.

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

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

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

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





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

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

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

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

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

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

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





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

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

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

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

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

               Software
               --------

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





               Miscellaneous Bonds
               -------------------

                    These bonds are primarily sold through agents issued in
               small dollar  amounts and written to  governmental bodies as
               part of a  licensing requirement.  There are  numerous types
               of miscellaneous bonds sold in the United States.  Licensing
               laws often require firms to provide surety in support of the
               promise to lawfully conduct business.  The scope of the bond
               varies according to the law, the locality, the nature of the
               guarantee,  and the parties who have a right of action under
               the bond.

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

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

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

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





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

                    Starting  in 1995,  Cumberland's management  elected to
               initially focus on this neglected area.  Since the launching
               of the  development of  this product the  Company's software
               team has  written, applied  for copyright, field  tested and
               began distributing the "Cumberland Bond Issuance Program" to
               selected agents around the United States on October 1, 1996.
               The  Company  received  its federal  copyright  registration
               #TX4-542-729,  effective  March  29,  1997.    This  program
               encompasses all  the required  functions an agency  needs to
               run  a full  scale  bond desk  when  implemented inside  the
               agency structure.   The  software developed, is  designed to
               reduce  the  labor  required  to provide  the  service.  The
               program is structured to allow CTI to sell components of the
               program  to a broad  section of the surety  industry.  As of
               December  31,  1997,  CTI  has  twenty  agencies  using  its
               software   and   intends   to  complete   installations   of
               approximately four agencies per month during 1998.

               General
               -------

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

                    Cumberland  utilizes  the  independent   agency  system
               through  its  bond  program   to  market  its  contract  and
               miscellaneous bonds, outsourcing to market its notary bonds,
               and  a general  agency to  market its  registered investment
               advisor's insurance.





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

                    During  1996,  Cumberland  Casualty  &  Surety  Company
               changed  the focus of how  it acquires surety  premium.  The
               Company committed  to enter  the miscellaneous, license  and
               permit, probate,  court  and performance  and  payment  bond
               markets on a  direct basis.   The Company's  emphasis is  to
               market  directly  to  agents   for  all  classes  of  surety
               business, thus  providing the  Company with  greater control
               over  marketing  and   underwriting  functions,   management
               believes that their emphasis will  create a high quality and
               profitable book of business.

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

                    Cumberland  primarily writes direct surety bonds for KC
               and its affiliates.   Revenues attributable to direct surety
               transactions with KC and  its affiliates were $1,738, $2,873
               and $4,535 for the  years ended December 31, 1997,  1996 and
               1995, respectively.





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

                    Effective  July 1,  1996, Cumberland Casualty  & Surety
               Company  entered into  a surety  excess of  loss reinsurance
               agreement  with  Transatlantic  Reinsurance   Company  which
               provides the Company  with the ability to write single bonds
               up  to  $1,500,000  with  a  principal  aggregate  level  of
               $3,000,000.         Transatlantic     Reinsurance    Company
               (Transatlantic  Re)   is  a  carrier  that   specializes  in
               reinsurance  treaties   related  to  the   surety  business.
               Established  in  1952, Transatlantic  Re  is  Best Rated  A+
               (Superior),   with  statutory  surplus  of  $952,707,000  at
               December  31, 1996.    The reinsurance  treaty provides  the
               Company  with the ability to actively pursue small to medium
               sized  contractors with revenues up  to $5,000,000.  It also
               allows the  Company to  market and  underwrite miscellaneous
               surety bonds up to $1,500,000.  The agreement is a principal
               excess of loss agreement and Cumberland retains five percent
               (5%) of $900,000 net loss, each principal excess of $100,000
               net loss.  The Company retains ten percent (10%) of the next
               $1,000,000  layer.    This  reinsurance  treaty  effectively
               allows Cumberland  Casualty &  Surety Company to  market its
               products  in  all twenty-six  (26)  states  in  which it  is
               presently licensed,  which management  believes  leads to  a
               better geographic spread of risk and premium dollars.

                    For   the  period  October   1991  to  September  1993,
               Cumberland  entered into  a pooling  agreement with  Indiana
               Lumbermens Mutual Insurance  Company ( ILMIC ),  Connecticut
               Indemnity   Company  ("CIC")  and  American  Surety  Company
               ("American Surety").  CIC  is a member of the  Orion Capital
               Companies  which  are  specialty  writers  of  property  and
               casualty    coverages   with   an   emphasis   on   workers'
               compensation,  professional  liability  for  architects  and
               engineers, nonstandard automobile and  surety business.  CIC
               was formed in 1917 and had statutory surplus of  $99,939,000
               at  December 31,  1996.   CIC is  Best Rated  A (Excellent),
               based on  the consolidated performance of  the Orion Capital
               Companies by A.M.  Best, an  insurance rating  agency.   The
               Orion   Capital   Companies   had   statutory   surplus   of
               $672,168,000  at  December  31,   1996  and,  based  on  its
               consolidated  performance,  is  Best  Rated  A  (Excellent).
               American Surety is  a small nondomestic surety  which is not
               rated.





                    The Company entered into a pooling agreement (beginning
               October 1993).  Under  the provisions of the new  agreement,
               CIC  and  ILMIC  were  replaced by  Gulf  Insurance  Company
               ("Gulf").    Under this  agreement,  Cumberland assumes  10%
               (effective April  1, 1996); 12.5% (effective  April 1, 1995)
               and  25% (prior to April 1, 1995) of certain surety policies
               underwritten  by Gulf.    Gulf  is  a  member  of  the  Gulf
               Insurance  Group which  was formed  in 1940  and is  jointly
               owned  by Primerica  Corporation and  Travelers Corporation.
               Gulf is  rated A+ (Superior) and  had policyholders' surplus
               of  $287,534,000  at December  31, 1996.    Gulf is  a niche
               market  underwriter  which  targets  small  to  medium  size
               accounts  and offers  directors  and  officers,  errors  and
               omissions,   fidelity  and   surety,  and   other  specialty
               liability products.

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

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

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

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

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





               coverage.





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

                    During 1997, there was no material change in the mix of
               business,  including the  location  of business,  geographic
               mix, and types of risks assumed.

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

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

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

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

               Regulation
               ----------

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





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

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

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

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

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

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

                    Cumberland has aligned itself with other small sureties
               as  a reinsurer.   Therefore,  Cumberland is  able  to write
               larger  bonds than  some competitors  of the  same financial
               size because  of the availability of  reinsurance from these





               sureties.





                    The  surety market  is highly  competitive.   Companies
               generally compete for surety business on the basis of price,
               service,   financial   strength,  ratings,   reputation  and
               capabilities of  the  independent  agents  and  brokers  who
               solicit  the  business,  and  reputation  of  the  insurance
               company.   The small contract and commercial bond markets in
               which CCS competes have  seen additional competition as both
               large  and  small  insurance  companies  are  competing  and
               expanding in  this area.  CCS  does not have a  direct sales
               force  but  instead  relies   on  a  nationwide  network  of
               independent   insurance  agencies.    In  order  to  compete
               effectively  in the  market, CCS  will need  to continue  to
               maintain  productive  relationships  with   the  independent
               insurance  agencies  that  offer  its  products.     Certain
               existing and  potential competitors  of CCS are  larger, and
               have   greater  financial   resources  and   more  extensive
               insurance  product lines.    The business  of  CCS could  be
               adversely affected by such competition.

                    Cumberland  believes  that  the  principal  competitive
               factors  in   the   industry  are   reputation,   managerial
               experience, price, and breadth of services offered.

               Employees
               ---------

                    As of  December 31, 1997, Cumberland employs thirty-one
               employees,  of  which  two  are  employed  in  an  executive
               capacity, eight are employed in professional capacities, and
               twenty-nine are employed in  a variety of administrative and
               clerical  positions.    Cumberland   believes  that  it  can
               continue to  operate effectively with the  current number of
               employees.

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

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

               Cumberland  leases office space from  a company owned by the
          Chairman of the Board, Mr. Francis M. Williams, at a monthly rate
          of $7,254 pursuant to a lease that was executed March 1, 1997 and
          is effective through December 31, 2001.

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

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





          financial   position,  future   operations  or   cash  flows   of
          Cumberland.





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

          None





                                       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  the
          National  Quotation  Bureau and  Nasdaq.   The  high and  low bid
          prices for 1997 and 1996 were as follows:

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

                                        1997            1996
                                   -------------- ---------------

                                     High    Low    High    Low
                                   ------- -------------- -------
               First Quarter        2 1/2   1 5/8    9/16    1/2

               Second Quarter           4       2       1    7/8

               Third Quarter        3 5/8 2 19/32   3 1/4      3

               Fourth Quarter       3 1/2   2 1/4   3 1/4      3


               As of March 2, 1998,  there were 971 stockholders of  record
          of the  Common Stock.  A  number of such holders  are brokers and
          other institutions holding shares in  "street name" for more than
          one beneficial owner.

               Dividends
               ---------

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





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

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

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

                                                  1997     1996    1995     1994     1993
                                              -------- ---------------- -------- --------
                                                (In Thousands - except per share data)

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

            Operating data:

              Net premium income  . . . . . .$  5,684 $  3,808 $ 5,068 $  4,957 $  4,412
              Commission income . . . . . . .     860    1,386     774        -        -

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

              Net investment income . . . . .     408      404     397      284      337

              Net realized gain (losses)  . .     202      118     124     (124)      22
              Benefits and expenses . . . . .   7,599    6,952   7,016    6,604    4,825

              Income (loss) before income
               taxes  . . . . . . . . . . . .     171     (583)   (228)  (1,209)     238

              Net income (loss) . . . . . . .     171     (583)   (228)  (1,073)     231

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

          (1)       Pro forma  net income (loss) per  share (unaudited) for
                    1994  and  1993  has  been  calculated  based  on   the
                    4,039,780 shares  of Cumberland Common Stock  that were
                    outstanding after the Distribution.  The 1997, 1996 and





                    1995  net income  (loss)  per share  amounts have  been
                    computed based on the actual weighted average number of
                    shares outstanding during the respective years.





          <TABLE>
          <CAPTION>
          Balance Sheet Data:

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

                                                  1997     1996    1995     1994     1993
                                              -------- ---------------- -------- --------
                                                (In Thousands - except per share data)

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

            Balance sheet data:

              Investments . . . . . . . . . .$  6,469 $  6,110 $ 6,303 $  5,852 $  5,046
              Cash and cash equivalents . . .   1,804      669   1,236    1,701    3,117

              Accounts receivable . . . . . .   2,210      925     550    2,540      948

              Reinsurance recoverables  . . .   2,017    1,590   1,697    1,749    1,876

              Deferred policy acquisition
               costs  . . . . . . . . . . . .     813      635     435      581      340
              Intangibles . . . . . . . . . .   1,681    1,957   2,163      134        -

              Total assets  . . . . . . . . .  15,321   12,372  12,709   12,834   11,956



              Policy liabilities and
               accruals:
               Unearned premiums  . . . . . .   2,629    1,862   1,182    1,631    1,037

               Losses and LAE   . . . . . . .   2,550    1,992   2,352    3,138    3,355

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

              Term notes/surplus debentures,
               including accrued interest           0        0   4,798    4,343    4,403
              Other long-term debt  . . . . .   1,419    1,533      -         -        -

              Total liabilities . . . . . . .   9,312    6,559  11,419   11,518    9,351

              Total stockholders' equity  . .   6,009    5,814   1,290    1,316    2,605
            </TABLE>





          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
                                    --------------------------------------------------

                                          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  . . . .       170      (583)     (228)    70.8 %  (155.7)%

            Net Income (loss) . . .       170      (583)     (228)    70.8 %  (157.7)%
            </TABLE>

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

                    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  $1,149,377  for  1997  and  1996,  respectively,
          representing an increase of $4,687,278 or 408 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  premium activity, net of reinsurance ceded, for 1997 and
          1996.

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

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

               Direct (net)   $     5,202,001$    1,854,270          181%
               Assumed (net)        1,032,260     2,513,775          (59% )
                               -------------- --------------

               Total  . . . . $     6,234,261$    4,368,045           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, benefits and
          claims 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.
          Management believes  that future  programming updates to  BondPro
          and  other  related expenses  will  remain  consistent with  1997
          operating expenses.

                    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  agencies
          purchased  in 1995 were $124,928 and $121,271 for the years ended
          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.

                    The  Company s  effective tax  (benefit)  rate was  -0-
          percent for 1997 and 1996. The net operating loss carryforward at
          December 31,  1997 is  $841,568.   The  deviation from  statutory
          rates  for  1997 and  1996  primarily  relates to  the  Company s
          establishment  of a valuation allowance  on a portion  of the net
          operating loss, the future realization of which is uncertain.





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

                    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
                                    --------------------------------------------------

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

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

            Net investment income         404       397       284       1.8       39.8

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

            Other revenues  . . . .     2,039     1,198       278      70.1      331.3
            Benefits and expenses       6,952     7,016     6,604       (.9)       6.2

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

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

                    During  the year  ended December  31, 1996,  net earned
          premium  income  decreased  by  25  percent  to  $3,808,000  from
          $5,068,000 or  $1,260,000.  The decrease  is primarily attributed
          to the premiums assumed through reinsurance pooling agreements.

                    Net  reinsurance premiums  earned  through the  Pooling
          Agreements  were $2,693,418  and  $4,440,632 for  1996 and  1995,
          respectively,  representing  a  decrease  of  $1,747,214,  or  an
          overall  39 percent  decrease  in assumed  premiums.   Net direct
          premiums earned were  $1,114,901 and $627,683 for 1996  and 1995,
          respectively, representing an increase of $487,218 or 78 percent.

                    During  1996, direct premiums  written by CCS increased
          while  assumed premiums  decreased as a  result of  the marketing
          direction  of the Company.   CCS's direction is  to penetrate the
          direct market while decreasing the volume of reinsurance premiums





          assumed through Pooling Agreements.  The following table reflects
          the  written premium  net of  reinsurance, activity for  1996 and
          1995.





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

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

               Direct, net  . $    1,854,270 $      881,683           110%
               Assumed, net        2,513,775      3,899,884           (36%)
                               -------------- --------------

               Total  . . . . $    4,368,045 $    4,781,567             9%
                               ============== ==============

                    During  the  year ended  December  31,  1996 and  1995,
          investment income before realized capital gains was $403,919  and
          $397,680, respectively.  Realized gains, net of realized  losses,
          for the year  ended December 31, 1996  and 1995 was $117,824  and
          $124,004,  respectively.    Overall  investment  income  remained
          consistent for 1996 as compared to 1995.

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

                    During the  year ended December 31,  1996, benefits and
          claims expenses  increased to $1,670,640 from  $1,245,546 for the
          year ended December 31, 1995.  The increase in benefit and claims
          expenses  of  $425,094 is  attributed  to  claims on  reinsurance
          assumed pooling agreements.  During 1996, an increase of $300,000
          was  charged  to  the  1993/94  pooling  agreement.    Management
          believes  the increase in claims arising from business written in
          the Pooling Agreement has leveled off and anticipates that losses
          associated with  the reinsurance contracts  will decrease  during
          1997.     Losses  associated   with  direct   premiums  represent
          approximately 11% of premiums earned or $127,232.

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

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





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

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

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

                    The   capacity  of  a   surety  company  to  underwrite
          insurance and  reinsurance is based on  maintaining liquidity and
          capital  resources sufficient to pay  claims and expenses as they
          become  due.  Based  on  standards established  by  the  National
          Association  of Insurance Commissioners (NAIC) and promulgated by
          the Florida Department of Insurance, the Company is permitted  to
          write premiums up to an amount equal to three times its statutory
          surplus,   or  approximately   $15,134,000  and   $15,104,000  at
          December 31, 1997  and 1996, respectively. Therefore,  based upon
          statutory guidelines, the Company could increase earned  premiums
          by approximately  $9,500,000 in  1998 in addition  to the  amount
          earned in 1997.

                    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,  1997, the  Company s  $15,321,383 of
          total  assets calculated based  on generally  accepted accounting
          principles were  distributed primarily as follows:  55 percent in
          cash and  investments (including accrued  investment income),  27
          percent in  receivables and reinsurance recoverables,  16 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.

                    Net cash (used in) provided by operating activities was
          $1,925,903,  $(169,587)   and  $(375,690)  for  the  years  ended
          December 31, 1997, 1996  and 1995,  respectively.   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
          $(120,560), $253,876, and $(659,944) for the years ended December
          31,  1997, 1996  and  1995, 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
          $(670,889) $(803,772)  and $570,263 for the  years ended December
          31,  1997, 1996  and  1995, respectively.   Financing  activities
          consist of purchases of treasury stock, short-term borrowings and
          repayment during 1997, 1996 and 1995 on notes payable  that are a
          result of the 1995 purchase of two agencies.

          Year 2000 Issue (unaudited)
          ---------------------------

                    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.
          BondPro is a  window 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.  The Company anticipates no other  year
          2000 problems  which are  reasonably likely  to  have a  material
          adverse  effect on  the Company s  operations.   There can  be no
          assurance, however, that such problems will not arise.

          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  1997,  1996  and 1995  to  the  gross  amounts
          reported in Cumberland s balance sheets:





                                                    December 31

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

          Liability for losses and LAE,
          net of reinsurance
           recoverable on unpaid
           losses, at beginning         $   594,922 $ 1,052,547 $1,625,703
           of year  . . . . . . . . . .  ----------- ----------- ----------
          Provision for losses and LAE
           for claims occurring in the
           current year, net of
           reinsurance  . . . . . . . .   1,743,117   1,008,640  1,486,546

          Increase (decrease) in
           estimated losses and LAE for
           claims occurring in prior
           years, net of reinsurance         49,000     662,000   (241,000)
                                         ----------- ----------- ----------

          Incurred losses during the
           current year, net of
           reinsurance  . . . . . . . .   1,792,117   1,670,640  1,245,546

          Losses and LAE payments for
          claims, net of
           reinsurance, occurring
           during:
               The current year . . . .     553,629     422,544    161,279
               Prior years  . . . . . .     440,479   1,705,721  1,657,423
                                         ----------- ----------- ----------
                                            994,108   2,128,265  1,818,702
                                         ----------- ----------- ----------

          Liability for losses and LAE,
           net of reinsurance
           recoverable on unpaid
           losses, at end of year   . .   1,392,931     594,922  1,052,547

          Reinsurance recoverables on
           unpaid losses at end of year   1,157,369   1,396,874  1,299,257
                                         ----------- ----------- ----------

          Liability for losses and LAE,
           gross of reinsurance
           recoverables on unpaid
           losses, at end of year   . . $ 2,550,300 $ 1,991,796 $2,351,804
                                         =========== =========== ==========





                    Cumberland  experienced  a   $49,000  and  $662,000   a
          deficiency for  losses and loss  adjustment expenses in  1997 and
          1996, respectively,  and experienced a redundancy  of $241,000 in
          1995,  for losses incurred in prior years. The deficiency in 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 redundancy in
          1995  principally  resulted  from  settling  case  basis reserves
          established in prior years for amount less than expected.

                    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, 1997 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)  $    1,392,931

               Reinsurance recoverables on unpaid losses and
                    LAE . . . . . . . . . . . . . . . . . .      1,157,369
                                                             --------------

               Liability for losses and LAE, as reported in
                    the accompanying GAAP basis financial
                    statements  . . . . . . . . . . . . . . $    2,550,300
                                                             ==============





          Analysis of Loss and Loss Adjustment Expense Development
          --------------------------------------------------------
                    The following  table represents the development  of the
          liability for  unpaid liabilities,  net of reinsurance,  for 1990
          through 1997 (in thousands).

          <TABLE>
          <CAPTION>
                                  1990         1991          1992         1993
                                    ------------- -------------------------- -------------

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

            Liability for losses
              and loss adjustment
              expenses, net of
              reinsurance . . . . . $      2,171  $      1,663 $      2,426  $     1,709
            Liability re-estimated
              as of:
               One year later . . .        3,003         1,273        1,239        3,815
               Two years later  . .        2,549         1,200        2,546        2,579
               Three years later  .        2,349         1,316        2,263        2,750
               Four years later . .        2,471         1,443        2,418        2,851
               Five years later . .        2,368         1,234        2,408            -
               Six years later  . .        2,466         1,199            -            -
               Seven years later  .        2,370             -            -            -
                                    ------------- -------------------------- -------------

            Cumulative (deficiency)
              redundancy  . . . . . $       (199) $        464 $         18  $    (1,142)
                                    ============= ========================== =============
            </TABLE>

          <TABLE>
          <CAPTION>

                                  1994         1995          1996         1997
                                    ------------- -------------------------- -------------

            <S>                     <C>           <C>          <C>           <C>
            Liability for losses
              and loss adjustment
              expenses, net of
              reinsurance . . . . . $      1,625  $      1,053 $        595  $      1,393





            Liability re-estimated
              as of:
               One year later . . .        1,384         1,716          644             -
               Two years later  . .        1,420         1,815            -             -
               Three years later  .        1,631             -            -             -
               Four years later . .            -             -            -             -
               Five years later . .            -             -            -             -
               Six years later  . .            -             -            -             -
               Seven years later  .            -             -            -             -
                                    ------------- -------------------------- -------------

            Cumulative (deficiency)
              redundancy  . . . . . $         (6) $       (762)$        (49) $          -
                                    ============= ========================== =============
            </TABLE>





          <TABLE>
          <CAPTION>
                                  1990         1991          1992         1993
                                    ------------- -------------------------- -------------

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

            Cumulative amount of
              liability, net of
              reinsurance
              recoverables, paid
              through:
               One year later . . . $      1,931  $        806 $      1,151  $        765
                                    ============= ========================== =============
               Two years later  . . $      2,188  $        884 $      1,834  $      1,058
                                    ============= ========================== =============
               Three years later  . $      2,267  $      1,095 $      2,088  $      2,868
                                    ============= ========================== =============
               Four years later . . $      2,295  $      1,254 $      1,957  $      3,717
                                    ============= ========================== =============
               Five years later . . $      2,295  $      1,260 $      3,533  $          -
                                    ============= ========================== =============
               Six years later  . . $      2,331  $      1,199 $          -  $          -
                                    ============= ========================== =============
               Seven years later  . $      2,364  $          - $          -  $          -
                                    ============= ========================== =============
            </TABLE>

          <TABLE>
          <CAPTION>
                                  1994         1995          1996         1997
                                    ------------- -------------------------- -------------

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





            Cumulative amount of
              liability, net of
              reinsurance
              recoverables, paid
              through:
              One year later  . . . $      1,643         1,334          563             -
                                    ============= ========================== =============
               Two years later  . .        2,316         2,186            -             -
                                    ============= ========================== =============
               Three years later  .        2,164             -            -             -
                                    ============= ========================== =============
               Four years later . .            -             -            -             -
                                    ============= ========================== =============
               Five years later . .            -             -            -             -
                                    ============= ========================== =============
               Six years later  . .            -             -            -             -
                                    ============= ========================== =============
               Seven years later  .            -             -            -             -
                                    ============= ========================== =============
            </TABLE>





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

               Inflation  has not  had,  and is  not  expected to  have,  a
          material impact upon the Company s operations for the  last three
          years.

          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            56      Chairman of the Board
                                                    of Directors

             Joseph M. Williams             41      President and Treasurer
             George A. Chandler             68      Director

             Andrew J. Cohen                44      Director

             Edward J. Edenfield, IV        40      President, CCS

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

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





                    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.





                    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.






          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, 1997:

          <TABLE>
          <CAPTION>


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

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

            <S>               <C>     <C>      <C>     <C>          <C>      <C>
            Joseph M. Williams
              President and
               Treasurer  . .   1997  $ 95,000 $30,000 $         -  $     -  $         -

                                1996  $ 95,000 $37,000 $         -  $     -  $         -

                                1995  $ 95,000 $30,000 $         -  $     -  $         -
            </TABLE>





          Aggregate Option  Exercises in 1997 and December  31, 1997 Option
          Values
          -----------------------------------------------------------------
          -

               The following  table  shows information  concerning  options
          held by the officers  shown in the Summary Compensation  Table at
          the end  of 1997.  No options were  exercised by such  persons in
          1997.


                                     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            $363,375/$0

          (1)       Represents the dollar value  of the difference  between
                    the value at December 31, 1997 and the option  exercise
                    price of unexercised options at December 31, 1997.

          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, 1997, the  Company paid
          nonofficer  Directors  an annual  fee  of  $5,000. Directors  are
          reimbursed for all  out-of-pocket expenses incurred  in attending
          Board of Directors and committee meetings.





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

               There is no  formal compensation committee  of the Board  of
          Directors or  other committee of the  Board performing equivalent
          functions.  As  noted  above,   compensation  is  determined   by
          Francis M.  Williams, Chairman of the  Board of the Company under
          the  direction  of the  Board of  Directors.  There is  no formal
          compensation  policy  for  the  Chief Executive  Officer  of  the
          Company.  Compensation  of  the Chief  Executive  Officer,  which
          primarily consists  of salary, is based  generally on performance
          and the Company s resources. Compensation for Mr. Joseph Williams
          has been fixed annually each  year by the Chairman of  the Board.
          Mr.  Joseph   Williams   compensation  is  not   subject  to  any
          employment contract.

          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 March 27, 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:

                                 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.           3,602,002     (3)          66.1%
             Williams . . . . .

             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 . . .       8,000     (7)           *

             All directors and
             executive officers
             as a group (five
             persons) . . . . .      4,014,044               73.7%





              (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   2,318,617  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.

              (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 8,000 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, 1997, 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.

              CCS writes surety  bonds for KC and its  affiliates. Revenues
          attributable  to transactions  with  KC and  its affiliates  were
          $1,738, $2,873 and $4,535 for the  years ended December 31, 1997,
          1996 and 1995, respectively.  Qualex performs consulting services
          for  KC and affiliates.  Revenue attributable to transaction with
          affiliates  were $310,396,  338,478 and  $43,183 for  years ended
          December 31, 1997, 1996 and 1995, respectively.

              In 1992, the Company assigned  a debenture due to KC from CCS
          to CTI.  CTI entered into a  term note agreement with  KC for the
          outstanding amount of the debenture, including interest arrearage
          ($4,291,049)  at  September  30, 1992  as  part  of the  spin-off
          transaction. The term note was pari passi with the other debts of
          the  Company, 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  Service,  Corp.)  in exchange  for
          surrender of the  Company's term  note payable in  the amount  of
          $5,169,870.

          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,  1997
                         and 1996
                     -   Consolidated statements of operations for  each of
                         the three  years in the period  ended December 31,
                         1997
                     -   Consolidated  statements  of stockholders   equity
                         for each of  the three years  in the period  ended
                         December 31, 1997
                     -   Consolidated statements of cash flows  for each of
                         the three  years in the period  ended December 31,
                         1997
                     -   Notes to consolidated financial statements

               2.   Financial statement schedules

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

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

               3.  The following  documents are  filed as exhibits  to this
                   Annual Report on Form 10-K:
                    3(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
                    27   -  Financial Data Schedule

          *    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.





                                      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, 1998       CUMBERLAND TECHNOLOGIES, INC.
                                          -----------------------------


           Date:     March 31, 1998       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, 1998       By:  /s/ Joseph M. Williams
                                          -----------------------------
                                          Joseph M. Williams, President


           Date:     March 31, 1998       By:  /s/ Francis M. Williams
                                          -----------------------------
                                          Francis M. Williams,
                                          Chairman of the Board



           Date:     March 31, 1998       By:  /s/ George A. Chandler
                                          -----------------------------
                                          George A. Chandler, Director



           Date:     March 31, 1998       By:  /s/ Andrew J. Cohen
                                          -----------------------------
                                          Andrew J. Cohen, Director


           Date:     March 31, 1998       By:  /s/ Carol S. Black
                                          -----------------------------
                                          Carol S. Black, Secretary
                                          (principal financial and
                                          accounting officer)





                              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, 1997


                            Cumberland Technologies, Inc.

                                    Tampa, Florida





                            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  . . . . .  32

          Consolidated Balance Sheets at December 31, 1997 and 1996 . .  33

          Consolidated Statements of Operations for Each of the
             Three Years in the Period Ended December 31, 1997  . . . .  35

          Consolidated Statements of Stockholders  Equity for
             Each of the Three Years in
             the Period Ended December 31, 1997 . . . . . . . . . . . .  36

          Consolidated Statements of Cash Flows for Each of
             the Three Years in the Period Ended December 31, 1997  . .  37

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

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

          Schedule I     Summary of Investments Other than
                         Investments in Related Parties . . . . . . . .  56
          Schedule II    Condensed Financial Information
                         of Registrant  . . . . . . . . . . . . . . . .  57
          Schedule V     Valuation and Qualifying Accounts  . . . . . .  61

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





                  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,  1997 and 1996,
          and   the   related   consolidated   statements   of  operations,
          stockholders'  equity, and cash flows for each of the three years
          in the period ended December 31, 1997.  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,  1997  and  1996,  and  the  consolidated  results  of  their
          operations and  their cash flows  for each of the  three years in
          the period ended  December 31, 1997, 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 24, 1998
          Tampa, Florida





                            CUMBERLAND TECHNOLOGIES, INC.

                             CONSOLIDATED BALANCE SHEETS

                                        ASSETS

                                                    December 31
                                           -----------------------------
                                                1997           1996
                                           -------------- --------------
           Investments - Notes 1 and 3:
              Securities available-for-
              sale at fair value:
                Fixed maturities (cost:
                1997 - $3,551,313; 1996 -
                $3,013,312)  . . . . . . . $    3,590,458 $   3,055,753
                Equity securities (cost:
                1997 - $1,431,727;
                  1996 - $962,780) . . . .      1,526,783     1,020,016
              Fixed maturity securities
                held-to-maturity, at
                amortized cost: (fair
                value, 1997 -$1,002,280;
                1996 - $1,699,435) . . . .        982,528     1,664,264
              Residential mortgage loan on
                real estate, at unpaid
                principal  . . . . . . . .         45,314        45,838
              Short-term investments   . .        323,993       323,993
                                            ----------------------------
                Total investments  . . . .      6,469,076     6,109,864

              Cash and cash equivalents         1,803,530       669,076
              Accrued investment income            82,821        89,652

              Reinsurance recoverable  . .      2,016,756     1,590,856

              Accounts receivable:
                Trade less allowance for
                  doubtful accounts of
                  $113,120 and -0- at
                  December 31, 1997 and
                  1996, respectively . . .      1,307,216       568,051
                Affiliate  . . . . . . . .        903,181       356,485
              Deferred policy acquisition
                costs  . . . . . . . . . .        812,745       635,189
              Intangibles, net   . . . . .      1,680,633     1,956,724
              Other assets   . . . . . . .        245,425       396,442
                                            ----------------------------
                                           $   15,321,383 $  12,372,339
                                            ============================

          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                             CONSOLIDATED BALANCE SHEETS

                         LIABILITIES AND STOCKHOLDERS' EQUITY

                                                    December 31
                                           -----------------------------
                                                      1997          1996
                                            ----------------------------
          Policy liabilities and accruals:
             Loss and loss adjustments     $    2,550,300 $   1,991,796
             expenses   . . . . . . . . .
             Unearned premiums  . . . . .       2,629,282     1,862,114
          Ceded reinsurance payable . . .       2,459,173       768,407
          Accounts payable and other              254,839       403,085
          liabilities . . . . . . . . . .
          Long-term debt:
             Nonaffiliate   . . . . . . .       1,418,520     1,533,265
                                            ----------------------------
               Total liabilities  . . . .       9,312,114     6,558,667
          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, 1997 and 1996,   . . .           5,763         5,763
             Capital in excess of par
               value  . . . . . . . . . .       7,212,941     7,212,941
             Net unrealized appreciation
               of available-for-sale
               securities . . . . . . . .         134,201        99,676
             Accumulated deficit  . . . .      (1,093,417)   (1,263,937)
                                            ----------------------------
                                                6,259,488     6,054,443
             Less treasury stock, at cost,
               313,612 and 310,473 shares
               at December 31, 1997 and
               December 31, 1996,
               respectively . . . . . . .        (250,219)     (240,771)
                                            ----------------------------
             Total stockholders' equity         6,009,269     5,813,672
                                            ----------------------------
                                           $   15,321,383 $  12,372,339
                                            ============================



          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                              Year ended December 31
                                        ----------------------------------
                                                1997        1996       1995
                                         ----------- ----------- ----------
          REVENUES:
             Direct premiums earned:
               Affiliates . . . . . . .       1,738       2,873      4,535
               Nonaffiliates  . . . . .   5,836,655   1,149,377    623,148
             Reinsurance premiums
               assumed  . . . . . . . .   1,381,264   3,083,787  4,944,125
             Less reinsurance ceded   .  (1,535,712)   (427,718)  (503,493)
                                         ----------- ----------- ----------
             Net premium income   . . .   5,683,945   3,808,319  5,068,315
             Net investment income  . .     408,050     403,919    397,380
             Net realized gains   . . .     201,863     117,824    124,004
             Commission income  . . . .     859,862   1,385,964    773,611
             Other income:
               Affiliates . . . . . . .     310,396     338,478     43,183
               Nonaffiliates  . . . . .     305,733     314,889    381,455
                                         ----------- ----------- ----------
                                          7,769,849   6,369,393  6,787,948
          Benefits and expenses:
             Losses and loss adjustment
               expenses . . . . . . . .   1,792,117   1,670,640  1,245,546
             Amortization of deferred
               policy acquisition costs   1,778,808   1,532,355  2,380,140
             Operating expenses   . . .   3,903,476   3,255,805  2,882,255
             Interest expense:
               Affiliates (net of
               interest income from
                affiliates of $-0-; -0-
                and 22,660 for 1997,
                1996 and 1995,
                respectively)   . . . .           -     372,066    432,112
               Nonaffiliates  . . . . .     124,928     121,271     76,105
                                         ----------- ----------- ----------
                                          7,599,329   6,952,137  7,016,158
                                         ----------- ----------- ----------
          Income (loss) before income
             taxes  . . . . . . . . . .     170,520    (582,744)  (228,210)
          Income taxes (benefit)  . . .           -           -          -
                                         ----------- ----------- ----------
          Net income (loss) . . . . . . $   170,520 $  (582,744)$ (228,210)
                                         =========== =========== ==========
          Weighted average number of
             shares   . . . . . . . . .   5,449,518   4,026,655  3,824,494
                                         =========== =========== ==========
          Net income (loss) per share   $      0.03 $      (.14)$     (.06)
                                         =========== =========== ==========
          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

                                                                 Capital in
                                                                 Excess of
                                           Shares      Amount    Par Value
                                        -----------------------------------
          Balance at January 1, 1995  .   4,039,780 $     4,040 $2,044,794
             Purchases of 48,546 shares
               of treasury stock  . . .
             Net increase in unrealized
               depreciation of
               available-for-sale
               securities . . . . . . .
             Net loss . . . . . . . . . -----------------------------------
          Balance at December 31, 1995    4,039,780       4,040  2,044,794

             Purchases of 86,210 shares
               of treasury stock  . . .
             Conversion of term note for
               1,723,290 shares of
               common stock . . . . . .   1,723,290       1,723  5,168,147
             Net increase in unrealized
               appreciation of
               available-for-sale
               securities . . . . . . .
             Net loss . . . . . . . . . -----------------------------------
          Balance at December 31, 1996    5,763,070       5,763  7,212,941

             Purchases of 3,139 shares
               of treasury stock  . . .
             Net increase in unrealized
               depreciation of
               available-for-sale
               securities . . . . . . .
             Net income . . . . . . . . -----------------------------------
          Balance at December 31, 1997    5,763,070       5,763  7,212,941
                                        ===================================

          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

               YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (continued)

          <TABLE>
          <CAPTION>
                              Unrealized
                                                  Appreciation
                                                 (Depreciation)      Retained
                                                  of Available-      Earnings                            Total
                                                    for-Sale       (Accumulated    Treasury Stock    Stockholders'
                                                   Securities        Deficit)     ----------------      Equity
                                                ---------------- ----------------    -----------   ----------------
                                                   ----------       ----------                        -----------

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

                 Balance at January 1, 1995  .          (166,457)$       (452,983)        (113,249)       1,316,145
                    Purchases of 48,546 shares
                    of                                                                     (27,666)         (27,666)
                       treasury stock  . . . .

                    Net increase in unrealized
                       depreciation available-
                       for-sale securities   .          (229,502)                                          (229,502)

                    Net loss   . . . . . . . .                           (228,210)                         (228,210)
                                                 ---------------- ---------------- ---------------- ----------------
                                                -----------      -----------      -----------      -----------

                 Balance at December 31, 1995             63,045         (681,193)        (140,915)       1,289,771
                    Purchases of 86,210 shares
                    of                                                                     (99,856)         (99,856)
                       treasury stock  . . . .

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

                    Net increase in unrealized
                       appreciation of
                       available-for-sale                 36,631                                             36,631
                       securities  . . . . . .

                    Net loss   . . . . . . . .                           (582,744)                         (582,744)
                                                 ---------------- ---------------- ---------------- ----------------
                                                -----------      -----------      -----------      -----------
                 Balance at December 31, 1996             99,676       (1,263,937)        (240,771)       5,813,672






                    Purchases of 3,139 shares
                    of                                                                      (9,448)          (9,448)
                       treasury stock  . . . .

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

                    Net income   . . . . . . .                           (170,520)                         (170,520)
                                                 ---------------- ---------------- ---------------- ----------------
                                                -----------      -----------      -----------      -----------
                 Balance at December 31, 1997            134,201       (1,093,417)        (250,219)       6,009,269
                                                       ==========       ==========       ==========       ==========

                 </TABLE>

          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              Year ended December 31
                                        ----------------------------------
                                              1997        1996        1995
                                       ----------- -----------  ----------
          Operating activities:
          Net income loss . . . . . .  $  170,520  $ (582,744) $ (228,210)
          Adjustments to reconcile net
            loss to net cash (used in)
            provided by operating
            activities:
              Amortization/accretion
              of investment premiums
              and discounts . . . . .      (2,788)     (6,052)    (10,137)
              Policy acquisition costs
               amortized  . . . . . .   1,778,808   1,532,355   2,380,140
              Policy acquisition costs
               deferred . . . . . . .  (1,956,364) (1,732,272) (2,234,669)
              Depreciation and
               amortization . . . . .     370,553     378,447     278,008
              Net realized (gain) on
               sales of investments      (201,863)   (117,824)   (124,004)
              Provision for bad debts     113,120           -      67,209
              Accrued interest on term
               notes, net . . . . . .           -     404,337     454,772
              (Increase) decrease in:
               Accrued investment
                  income  . . . . . .       6,831      (2,421)    (40,629)
               Reinsurance recoverable   (425,900)    709,464      51,126
               Trade receivables  . .    (852,285)   (139,675)  1,644,946
               Other assets . . . . .      57,079    (232,148)    (89,891)
              Increase (decrease) in:
               Policy liabilities and
                  accruals  . . . . .   1,325,672     319,801  (1,235,291)
               Ceded reinsurance
                  payable . . . . . .   1,690,766     165,504  (1,930,993)
               Accounts payable and
                  other liabilities      (148,246)   (713,730)    641,933
                                       ----------- -----------  ----------
          Net cash (used in) provided
            by operating activities     1,925,903     (16,958)   (375,690)


          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)


                                              Year ended December 31
                                        ----------------------------------
                                              1997        1996        1995
                                       ----------- -----------  ----------
          Investing activities:
          Securities available-for-
          sale :
             Purchases - fixed
               maturities              (1,493,023)   (300,012) (2,561,848)
             Sales - fixed maturities     954,039     620,000   1,436,223
             Purchases - equities   .  (4,536,969) (3,249,846) (1,224,251)
             Sales - equities   . . .   4,269,885   3,628,259   1,445,237
          Securities held-to-maturity:
           Purchases  . . . . . . . .    (299,492)   (680,116)          -
           Maturities   . . . . . . .     985,000     310,000     701,655
          Proceeds from sales and
           maturities of investments            -      25,529     116,117
          Purchases of businesses, net
           of cash acquired                     -           -    (572,677)
          Software development costs            -     (99,938)          -
                                       ----------- ----------- -----------
          Net cash (used in) provided
           by investing activities       (120,560)    253,876    (659,944)
          Financing activities:
          Purchases of treasury stock      (9,448)    (99,856)    (27,666)
          Payments on short-term
           borrowings and long-term
           debt   . . . . . . . . . .    (114,745)   (469,483)    (86,130)
          Net advances to (from)
           affiliates   . . . . . . .    (546,696)   (234,433)    277,452
          Net proceeds from short-term
           borrowings   . . . . . . .           -           -     406,607
                                       ----------- ----------- -----------
          Net cash (used in) provided
             by financing activities     (670,889)   (803,772)    570,263
                                       ----------- ----------- -----------
          Increase (decrease) in cash
          and cash equivalents  . . .   1,134,454    (566,854)   (464,971)
                                       ----------- ----------- -----------
          Cash and cash equivalents,
             beginning of year  . . .     669,076   1,235,930   1,700,901
                                       ----------- ----------- -----------
          Cash and cash equivalents,
             end of year  . . . . . .  $1,803,530  $  669,076  $1,235,930
                                       =========== =========== ===========

          See notes to consolidated financial statements.





                            CUMBERLAND TECHNOLOGIES, INC.

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  DECEMBER 31, 1997

          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 CHI. KC then  distributed
          to its stockholders CHI s common stock  on the basis of one share
          of common  stock of CHI for  each five shares of  KC common stock
          and  Class B  common  stock owned  (the Distribution).  Effective
          January  30, 1997, Cumberland Holdings, Inc.  changed its name to
          Cumberland Technologies, Inc. ("CTI").  CTI conducts its business
          through 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,
          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.





                            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
          stockholders  equity.  The amortized  cost of debt  securities in
          this  category  is  adjusted  for amortization  of  premiums  and
          accretion  of  discounts  to  maturity.  Such  amortization   and
          accretion is  included in  investment income. Realized  gains and
          losses and declines in value judged to be other-than-temporary on
          available-for-sale  securities are included in investment income.
          The  cost   of  securities  sold   is  based   on  the   specific
          identification  method.  Interest  and  dividends  on  securities
          available-for-sale are included in investment income.

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

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

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





          equivalents.





                            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, noncompete  agreements,
          purchased  contract agreements, and the excess  of costs over the
          fair  value of  identifiable  net  assets acquired  ( Goodwill ).
          Purchased customer accounts, noncompete agreements, and purchased
          contract agreements are being  amortized on a straight-line basis
          over  the related  estimated  lives and  contract periods,  which
          range  from 3  to 15  years.   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 will  be
          reduced by the estimated shortfall of cash flows.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

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

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

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

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

               Unearned premiums are calculated  using the monthly pro rata
          basis.

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

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





          Amounts  recoverable  from  reinsurers   for  unpaid  losses  are
          estimated  in  a  manner  consistent  with  the  claim  liability
          associated with the reinsured policies.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

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

               Direct insurance and assumed reinsurance premiums earned are
          recognized  on  a  pro-rated  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
               ------------

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

               The Company  files a  consolidated tax return  that includes
          all of its subsidiaries.  See Note 9.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

               Earnings (loss)  per share is calculated  in accordance with
          the provisions of Statement of Financial Accounting Standards No.
          128  Earnings per  Share  and  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 189,086
          outstanding stock  options in the denominator  of the calculation
          for the  year ended December 31, 1997 had no effect on the result
          of the calculation, and the effect of stock options for the years
          ended December 31, 1996, and 1995 would be antidilutive, earnings
          per share is the same on both a basic and diluted basis for 1997,
          1996 and 1995.  The weighted average number of outstanding shares
          were  5,449,518, 4,026,655  and 3,824,494  at December  31, 1997,
          1996 and 1995, respectively.

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

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

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

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





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

               In  June  1997,  the  financial Accounting  Standards  Board
          issued Statement  130, Reporting Comprehensive Income.  Statement
          130 establishes  new  rules  for  the reporting  and  display  of
          comprehensive  income and  its components;  however, adoption  in
          1998  will  have  no  impact  on  the  Company s  net  income  or
          shareholders  equity.  Statement 130 requires unrealized gains or
          losses  on  the  Company s  available-for-sale  securities, which
          currently are reported in shareholders  equity to be included  in
          other   comprehensive  income   and  the   disclosure   of  total
          comprehensive income.

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

               Certain amounts  in the 1996 financial  statements have been
          reclassified  to   conform  to   the  1997  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 $1,738,  $2,873 and
          $4,535 for  the years  ended December 31,  1997,  1996 and  1995,
          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 and 1996 is a $135,000 note receivable from the
          Company s Chairman of  the Board  of Directors.   No interest  is
          charged on the note which is payable on demand.

               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 TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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.





                            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>
                                        Cost       Gross      Gross     Estimated
                                            ----------- Unrealized  Unrealized Fair Value
                                            -----------    Gains      Losses   -----------
                                            ----------- ---------------------- -----------
                                                        ---------------------- -----------
                                                        ----------------------

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

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

                  U.S. Government and
                  government agency bonds . $3,054,983  $   33,890 $    1,864  $3,087,009

                  State and municipal bonds    496,330       7,120          -     503,450
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            --          ---        ---         ---

            Total fixed maturity securities $3,551,313  $   41,010 $    1,864  $3,590,459
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ---         ---        ---         ---
                 Equity securities  . . . .  1,431,727     115,618     20,562   1,526,783
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ---         ---        ---         ---

            Total . . . . . . . . . . . . . $4,983,040  $  156,628 $   22,426  $5,117,242
                                            =========== ====================== ===========
                                            =           =          =           =

            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
                                            =========== ====================== ===========
                                            =           =          =           =

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

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

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

            Total . . . . . . . . . . . . . $3,976,092  $  116,137 $   16,460  $4,075,769
                                            =========== ====================== ===========
                                            =           =          =           =

            Held-to-maturity securities at
              December 31, 1996:
              Fixed maturity securities:

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

            State and municipal bonds          225,449      20,827          -     246,276
                                            ----------- ---------------------- -----------
                                            ----------- ---------------------- -----------
                                            ---         ---        --          ---

            Total . . . . . . . . . . . . . $1,664,264  $   35,893 $      722  $1,699,435
                                            =========== ====================== ===========
                                            =           =          =           =
            </TABLE>





                            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, 1997 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 $ 1,113,158  $ 1,119,245 $         -  $         -

            Due after one year
              through five years
                                      1,816,637    1,842,568     982,528    1,002,280

            Due after five years
              through ten years   .     125,188      125,195           -            -
            Due after twenty years      496,330      503,450           -            -
                                    ------------ ------------------------ ------------

                                    $ 3,551,313  $ 3,590,458 $   982,528  $ 1,002,280
                                    ============ ======================== ============
            </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,  1997 and 1996, the Company had $5.3 million
          and $5.0 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
          required   under  statutory   regulations   by  state   insurance
          departments.





                            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
                                        ----------------------------------
                                                1997        1996       1995
                                         ----------- ----------- ----------
          Fixed maturity and equity
            securities  . . . . . . . . $   344,459 $   388,700 $  387,859
          Mortgage loans on real estate       4,105       4,613      4,658
          Short-term investments,
            including cash and cash
            equivalents . . . . . . . .      70,857      50,684     74,601
                                         ----------- ----------- ----------
                                            419,421     443,997    467,118
          Less investment expenses  . .     (11,371)    (40,078)   (69,738)
                                         ----------- ----------- ----------
          Net investment income . . . . $   408,050 $   403,919 $  397,380
                                         =========== =========== ==========


          Realized gain (loss) on
          available-for-sale
            securities:
            Fixed maturities  . . . . .           -           -    (10,984)
            Equity securities . . . . .     201,863     117,824    134,988
                                         ----------- ----------- ----------
          Net realized investment gains
          (losses)  . . . . . . . . . . $   201,863 $   117,824 $  124,004
                                         =========== =========== ==========





                            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, 1997 are as follows:

                                                 December 31, 1997
                                           -----------------------------
                                              Carrying
                                               Amount       Fair Value
                                           -------------- --------------
          Assets:
            Cash and cash equivalents,
            including short-term           $    2,127,523 $   2,127,523
             investments  . . . . . . . .
            Investments . . . . . . . . .       6,145,083     6,164,835
            Accounts receivable . . . . .       2,210,397     2,210,397

            Liabilities:
             Long-term debt   . . . . . .  $    1,418,520 $   1,418,520

               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.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

             Intangibles at December 31 are comprised of the following:

                                                     1997           1996
                                           --------------  -------------
            Purchased customer accounts    $   1,084,041   $  1,084,041
            Noncompete agreements . . . .        234,000        234,000
            Goodwill  . . . . . . . . . .        926,661        926,661
            Deferred state admission
             costs and other  . . . . . .        489,365        489,365
                                           -------------- --------------
                                               2,734,067      2,734,067
            Less accumulated amortization     (1,053,434)      (777,343)
                                           -------------- --------------
                                           $   1,680,633  $   1,956,724
                                           ============== ==============

            Amortization expense amounted to  $275,169 in 1997, $306,175 in
            1996 and $227,185 in 1995.





                            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, 1997,  1996 and
          1995, to the gross amounts reported in the Company s consolidated
          balance sheets:

                                                    December 31
                                        ----------------------------------
                                                1997       1996        1995
                                         ----------------------  ----------
          Liability for losses and LAE,
          net of reinsurance
            recoverable on unpaid
            losses, at beginning of     $   594,922 $1,052,547  $1,625,703
            year  . . . . . . . . . . .
          Provision for losses and LAE
            for claims occurring in the
            current year, net of
            reinsurance . . . . . . . .   1,743,117  1,008,640   1,486,546
          Increase (decrease) in
            estimated losses and LAE
            for claims occurring in
            prior years, net of
            reinsurance . . . . . . . .      49,000    662,000    (241,000)
                                         ----------------------  ----------
          Incurred losses during the
            current year, net of
            reinsurance . . . . . . . .   1,792,117  1,670,640   1,245,546
          Losses and LAE payments for
            claims, net of reinsurance,
            occurring during:
              The current year  . . . .     553,629    422,544     161,279
              Prior years . . . . . . .     440,479  1,705,721   1,657,423
                                         ----------------------  ----------
                                            994,108  2,128,265   1,818,702
                                         ----------------------  ----------
          Liability for losses and LAE,
            net of reinsurance
            recoverables on unpaid
            losses, at end of year  . .   1,392,931 $  594,922  $1,052,547
          Reinsurance recoverables on
            unpaid losses at end of
            year  . . . . . . . . . . .   1,157,369  1,396,874   1,299,257
                                         ----------------------  ----------





          Liability for losses and LAE,
            gross of reinsurance
            recoverables on unpaid
            losses, at end of year  . . $ 2,550,300 $1,991,796  $2,351,804
                                         ======================  ==========





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Cumberland experienced a $49,000 and $662,000 deficiency for
          losses and loss  adjustment in 1997  and 1996, respectively,  and
          experienced a redundancy of $241,000 in 1995, for losses incurred
          in prior years. The deficiency  in 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  redundancy  in 1995  principally resulted  from
          settling  case  basis reserves  established  in  prior years  for
          amounts less than expected.

               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.

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

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

               The  1996 weighted  average  interest  rate  for  short-term
          borrowings was 8.5%.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Long-term debt consists of the following:

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

                                                      1997          1996
                                            ----------------------------
          Note payable due March 1, 2002         $377,077 $     423,265
          Note payable due June 30, 2010        1,041,443     1,110,000
                                            ----------------------------
                                               $1,418,520 $   1,533,265
                                            ============================

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

               In connection  with  the  acquisition  of  certain  agencies
          during 1995 (see  Note 16),  the Company entered  into two  notes
          payable with  the  agencies  previous  owners.  One note  is  due
          March 1, 2002 and bears interest at 8% through February 28,  2001
          and  10%  thereafter.  Principal  payments of  $150,000  are  due
          annually beginning March 1, 2000. The  other is due June 30, 2010
          and   bears  interest  at  8%  through  March  31,  1999  and  9%
          thereafter. Principal  payments of  $40,000 are due  annually for
          three  years beginning  January 5, 1996.   Principal  payments of
          $11,104 are payable monthly beginning April 1, 1997.

               Maturities of  notes payable  to nonaffiliates for  the five
          years succeeding December 31, 1997 are as follows:

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

                        1998                         $ 173,248

                        1999                           133,248
                        2000                           283,248

                        2001                           283,248

                        2002                           255,063





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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
          taxes.

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

               There was  no income  tax expense  or benefit  recognized in
          1997, 1996 or 1995.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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:

                                                1997        1996       1995
                                         ----------- ----------- ----------
             Federal statutory tax rate        34.0%     (34.0)%    (34.0)%
             State income taxes, net of
               federal income tax
               benefit  . . . . . . . .         3.9       (3.7)%     (4.4)
             Income exempt from
               taxation and dividend
               exclusions . . . . . . .        (7.2)     (10.1)      (8.5)
             Differences between income
               statement and tax return        69.3          -       10.7
             Utilization of NOL
               carryforwards  . . . . .      (110.1)      44.4       34.6
             Nondeductible expenses   .        10.1        3.4        1.6
                                         ----------- ----------- ----------
             Effective tax rate   . . .          -           -          -
                                         =========== =========== ==========

               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:





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

                                                    December 31

                                                      1997          1996
                                            ----------------------------
          Deferred tax liabilities:
            Deferred policy acquisition
             costs  . . . . . . . . . . .  $      305,836 $     239,022
            Losses and loss adjustment
             expenses   . . . . . . . . .               -        31,269
                                           -------------- --------------
          Total deferred tax liabilities          305,836       270,291
                                            ============================
          Deferred tax assets:
            Outside basis difference in
             investments  . . . . . . . .          40,620             -
            Amortization of intangibles            90,857        63,341
            Unearned premiums . . . . . .         321,557       140,143
            Losses and loss adjustment
             expenses   . . . . . . . . .          19,050             -
            Net operating loss
             carryforward   . . . . . . .         316,682       746,174
            Alternative minimum credit
             carryforward   . . . . . . .          15,555        15,555
            Other, net  . . . . . . . . .           8,931           347
                                            ----------------------------
                                                  813,252       965,560
            Less valuation allowance  . .        (507,416)     (695,269)
                                            ----------------------------
          Net deferred tax assets . . . .  $      305,836 $     270,291
                                            ============================

               The  Company  has net  operating  loss  carryforwards as  of
          December 31,  1997  of  approximately  $841,568  which  generally
          expire in 2010 and 2011.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

          10.  Statutory Accounting Practices and Regulatory Requirements
               ----------------------------------------------------------

               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:

                                              Year Ended December 31
                                            1997        1996       1995
                                        ----------- ----------- ----------

          Statutory capital and surplus $ 5,044,527 $ 5,034,662 $ 5,134,923
          Net income (loss) . . . . . . $   959,304 $  (293,204)$   897,955

               CCS is domiciled in Florida and prepares its statutory-basis
          financial  statements  in  accordance  with  accounting practices
          prescribed  or permitted  by  the  Florida Insurance  Department.
           Prescribed  statutory  accounting practices include  state laws,
          regulations,  and  general administrative  rules,  as  well as  a
          variety of publications of  the National Association of Insurance
          Commissioners   ( NAIC ).     Permitted    statutory   accounting
          practices  encompass   all  accounting  practices  that  are  not
          prescribed; such practices  may differ from  state to state,  may
          differ  from company to company within a state, and may change in
          the future. The  NAIC currently  is in the  process of  codifying
          statutory accounting  practices, the result of  which is expected
          to   constitute  the   only  source  of    prescribed   statutory
          accounting   practices.  Accordingly,  that   project,  which  is
          expected to be  completed in  1998, will likely  change, to  some
          extent, prescribed statutory accounting practices, and may result
          in changes to the accounting practices that insurance enterprises
          use to prepare their statutory financial statements.

               Under  applicable state insurance statues, CCS must maintain
          minimum  capital and  surplus of  $2,100,000 (as  of December 31,
          1997). 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, 1997,  no dividends
          from CCS are  available for  payment to the  Company without  the
          prior approval of the Department of Insurance.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

               CCS  also cedes  reinsurance to  other insurance  companies.
          Reinsurance does not relieve  an insurer of its liability  to the
          policyholder  for the  full amount  of the  policy, however,  the
          reinsurer  is obligated to the insurer for the portion assumed by
          such reinsurer. The Company cedes on an excess of loss treaty 95%
          of the  risk insured with  a maximum  exposure to the  Company of
          $195,000 per principal.   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.

          <TABLE>
          <CAPTION>

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

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

                  <S>                       <C>           <C>           <C>           <C>            <C>           <C>
                  Direct premiums . . .     $6,797,136     5,838,393      2,025,796     1,152,250       881,683       627,683

                  Assumed premiums  . .      1,189,689     1,381,264      2,890,050     3,083,787     4,341,649     4,944,125

                  Ceded premiums  . . .     (1,752,564)   (1,535,712)      (547,800)     (427,718)     (441,765)     (503,493)
                                            -----------   -----------    -----------   -----------   -----------   -----------
                                            -------       -------       -------       -------        -------       -------

                  Net premiums  . . . .     $6,234,261    $5,683,945    $ 4,368,046   $ 3,808,319    $4,781,567    $5,068,315
                                                 ======        ======         ======        ======        ======        ======
                 </TABLE>
               During April  1994,  CCS  amended  one  of  its  reinsurance
          agreements to  be retroactive  for policies  effective October 1,
          1993. The agreement was previously effective beginning January 1,
          1994.  Under this agreement, CCS assumes  10% (effective April 1,
          1996), 12.5% (effective  April 1, 1995); 25% prior  to that date)





          of certain surety policies underwritten by the insurance company.
          For  the years  ended  December 31, 1996  and  1995, CCS  assumed
          earned  premiums  of  approximately  $2,600,000  and  $4,372,000,
          respectively,  under the  terms of  the agreement.  The agreement
          expired April 1, 1997.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               Loss  and loss adjustment  expenses in 1997,  1996, and 1995
          are summarized as follows:

                                                1997        1996       1995
                                         ----------- ----------- ----------
               Direct . . . . . . . . . $ 1,048,450 $   127,232 $   63,343
               Assumed  . . . . . . . .     741,351   1,587,890  1,184,953
               Ceded  . . . . . . . . .       2,316     (44,482)    (2,750)
                                         ----------- ----------- ----------
               Net losses and loss
                    adjustment expenses $ 1,792,117 $ 1,670,640 $1,245,546
                                         =========== =========== ==========

               The Company reported reinsurance recoverables on paid losses
          of $448,553 and $312,911 at 1997 and 1996, respectively.

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

          12.  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.  At December 31,  1997,  options  to purchase  66,586
          shares of the Company s  common stock, at no cost to the holders,
          have  been granted,  all  are  currently  exercisable.  Effective
          October 1, 1992, the Company granted  options to purchase 100,000
          shares to  its President  at a  price of $.125  per share.  As of
          December 31, 1997, all of the options were exercisable.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

               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, 1997, 8,000  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,  1997,  1,000 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.

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

               On April 1,  1996, CTI adopted a defined contribution 401(k)
          plan covering substantially  all employees.  Under  the plan, the
          Company  makes   contributions  equal  to  one   percent  of  the
          participant's  compensation, not  to  exceed six  percent of  the
          participant's annual  compensation.  The  Company's contributions
          to  the  plan  totaled  $9,367  and  $7,288  in  1997  and  1996,
          respectively.

          14.  Supplemental Disclosure of Cash Flow Information
               ------------------------------------------------

               Interest  paid  in  1997,   1996  and  1995  for  short-term
          borrowings was  $0, $27,389 and $28,612,  respectively.  Interest
          paid in 1997, 1996  and 1995 for term notes due nonaffiliates was
          $124,928, $121,271  and $76,105,  respectively.  No  income taxes
          were paid for the years ended December 31, 1997, 1996 and 1995.

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

               CTI  is authorized  to issue  1,000,000 shares  of preferred





          stock,  $.001 par  value,  with  such  rights and  privileges  as
          determined by the Board  of Directors. The preferred stock  shall
          be  issued at such times and for such consideration as determined
          by  the Board  of Directors.  No shares  have been  issued as  of
          December 31, 1997.





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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

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

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

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

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

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

               Revenues . . . . . . . . .  $     6,960,343
               Net loss . . . . . . . . .  $      (341,347)
               Net loss per share . . . .  $          (.09)





                            CUMBERLAND TECHNOLOGIES, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


          17.  Year 2000 Issue (unaudited)
               ---------------------------

               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.  BondPro is a window
          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.  The Company anticipates no other year 2000
          problems which are  reasonably likely to have  a material adverse
          effect on the Company s  operations.  There can be  no assurance,
          however, that such problems will not arise.





                        SCHEDULE I - SUMMARY OF INVESTMENTS -
                      OTHER THAN INVESTMENTS IN RELATED PARTIES
                            CUMBERLAND TECHNOLOGIES, INC.
                                  DECEMBER 31, 1997
                     Column A             Column B    Column C   Column D
          ----------------------------- ----------- ----------- ----------

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

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

               United States Government
               and government agencies  $ 3,054,983 $ 3,087,009 $3,087,009
               State and municipalities     496,330     503,450    503,450
                                         ----------- ----------- ----------

          Total . . . . . . . . . . . .   3,551,313   3,590,459  3,590,459

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

               Banks, trusts and
                insurance companies   .      30,000      28,000     28,000

               Industrial and
                miscellaneous   . . . .   1,401,727   1,498,783  1,498,783
                                         ----------- ----------- ----------

          Total . . . . . . . . . . . .   1,431,727   1,526,783  1,526,783
          Fixed maturity securities,
          held to maturity:

             Bonds:

               United States Government     982,528   1,002,280    982,528
                                         ----------- ----------- ----------

          Total . . . . . . . . . . . .     982,528   1,002,280    982,528
          Residential mortgage loan on
            real estate . . . . . . . .      45,314      45,314     45,314

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





          Total investments . . . . . . $ 6,334,875 $ 6,488,829 $6,469,077
                                        ===========  =========== ==========





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                    OF REGISTRANT

                            CUMBERLAND TECHNOLOGIES, INC.

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

             Condensed Balance                           1997          1996
                  Sheets                        ------------- -------------
          ----------------------

          Assets:
            Trade receivables                  $      21,835 $           -

           Accounts receivable
             from affiliates                               -        57,545

           Investment in wholly-
             owned subsidiaries                    2,385,867     1,698,281

           Other assets   . . .                       54,408        85,560
           Surplus debenture
             receivable from
             subsidiary   . . .                    4,763,854     4,866,979
                                                ------------- -------------

                                               $   7,225,964 $   6,708,365
                                                 ============ =============

          Liabilities:

           Accounts payable to
             affiliates   . . .                    1,213,207       863,430
           Accounts payable   .                        3,488        31,263
                                                ------------- -------------

                                                   1,216,695       894,693

          Stockholders' equity:

           Common stock   . . .                        5,763         5,763
           Other stockholders'
             equity   . . . . .                    6,003,506     5,807,909
                                                ------------- -------------

                                                   6,009,269     5,813,672
                                                ------------- -------------

                                               $   7,225,964 $   6,708,365
                                                ============= =============





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.
                                           Year Ended December 31
                                  -----------------------------------------

           Condensed Statements
               of Operations               1997          1996          1995
          ----------------------  ------------- ------------- -------------

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

                                       360,253       362,557       300,000

          Costs and expenses:

           Selling and
             administrative
             expenses   . . . .        294,901       133,834       151,189
           Interest expense to
             affiliates   . . .              -       372,066       454,772
                                  ------------- ------------- -------------

                                       294,901       505,900       605,961
                                  ------------- ------------- -------------

          Income (loss) before
           income taxes and
           equity in net income
           (loss) of
           subsidiaries   . . .         65,352      (143,343)     (305,961)

          Federal and state
           income tax benefits               -             -             -
          Equity in net income
           (loss) of
           subsidiaries   . . .        105,168       439,401        77,751
                                  ------------- ------------- -------------

          Net income (loss) . .  $     170,520 $    (582,744)$    (228,210)
                                  ============= ============= =============





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.



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

           Condensed Statements
               of Cash Flows          1997          1996          1995
          ---------------------- ------------- ------------- -------------

          Net cash provided by
           operating activities              -             -             -
                                  ------------- ------------- -------------
          Cash and cash
           equivalents,
           beginning of year                 -             -             -
                                  ------------- ------------- -------------

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

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

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





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.


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

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

                Organization  -  Cumberland  Technologies,  Inc. ("CTI"  or
          "Cumberland"),   (f/k/a  Cumberland  Holdings,  Inc.)  a  Florida
          corporation, was formed  on November  18, 1991, to  be a  holding
          company and  a wholly-owned  subsidiary of Kimmins  Corp. ("KC").
          Effective October 1, 1992, KC contributed all of the  outstanding
          common stock of two  of its wholly-owned subsidiaries, Cumberland
          Casualty &  Surety Company  ("CCS") and Surety  Specialists, Inc.
          ("SSI")  to CTI.  KC  then distributed to  its stockholders CTI's
          common stock on the basis of one share of common stock of CTI for
          each five  shares of  KC common  stock and Class  B common  stock
          owned (the  "Distribution").   CTI conducts its  business through
          its  subsidiaries, CCS,  SSI, Surety  Group, Inc.  ( SG ), Surety
          Associates ( SA ), Official Notary Service of Texas, Inc. ("ONS")
          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,  1997  and  1996,  CTI
          charged its subsidiaries excluding CCS,  a management fee. No fee
          was charged for the year ended December 31, 1995.

          2.    Basis  of   Presentation  -   In  the   parent-company-only
          financial statements, the Company s investment in subsidiaries is
          stated  at   cost  plus  equity  in   undistributed  earnings  of
          subsidiaries since  the date of acquisition.  The Company s share
          of net income  of its unconsolidated subsidiaries is  included in
          consolidated  income using the equity method. Parent-company-only
          financial  statements  should be  read  in  conjunction with  the
          Company s consolidated financial statements.





                    SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                              OF REGISTRANT (CONTINUED)

                            CUMBERLAND TECHNOLOGIES, INC.


                Investment in subsidiaries   at December 31, 1997  and 1996
          include  the net  unrealized  appreciation in  available-for-sale
          securities   held  by  CCS,   of  $134,201  and   $99,676  as  of
          December 31, 1997 and 1996, 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, 1997,  no payments could be made  under the terms of
          the debenture.





                    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, 1995:

              Deducted from asset
               accounts:

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

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

              Deducted from asset
               accounts:

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

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

              Deducted from asset
               accounts:

               Allowance for
                  doubtful accounts         0    113,120                          113,120
                                    ========== ========== ========== ========== ==========






               Deferred income tax
                  valuation
                  allowance . . . . $ 695,269  $          $         $  187,853 $  507,416
                                    ========== ========== ========== ========== ==========
            </TABLE>





            EXHIBIT 11 - STATEMENT RE:  COMPUTATION OF EARNINGS PER SHARE

                            CUMBERLAND TECHNOLOGIES, INC.


                                              Year Ended December 31

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

          Average shares outstanding  .   5,449,518   4,026,655  3,824,494
          Net effect of dilutive stock
           options  . . . . . . . . . .           -           -          -
                                         ----------- ----------- ----------

          Totals  . . . . . . . . . . .   5,449,518   4,026,655  3,824,494
                                         =========== =========== ==========

          Net gain (loss) . . . . . . . $   170,520 $  (582,744)$ (228,210)
                                         =========== =========== ==========

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





                     EXHIBIT 22 - SUBSIDIARIES OF THE REGISTRANT

                            CUMBERLAND TECHNOLOGIES, INC.


          As  of   December  31,  1997,  the   subsidiaries  of  Cumberland
          Technologies, Inc. were as follows:

             - Surety Specialists, Inc.

             - Cumberland Casualty & Surety Company

             - Official Notary Service of Texas, Inc.

             - Qualex Consulting Group, Inc.

             - Surety Group, Inc.

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