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, 1999
                                       or
[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

         For the transition period from _____________ to _____________.

                           Commission File No. 0-19727

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

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

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

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

           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]

                                   $2,556,232
                                   ----------
 Aggregate            market  value  of  voting  stock  (Common  Stock)  held by
                      nonaffiliates of the Registrant as of March 15, 2000

                5,497,244 shares of Common Stock $.001 par value
                ------------------------------------------------
        Number of shares of Common Stock outstanding as of March 27, 2000

                    Documents incorporated by reference: NONE



<PAGE>




                                     PART I


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

         General

         Cumberland   Technologies,   Inc.  ("CTI"  or   "Cumberland"),   (f/k/a
Cumberland  Holdings,  Inc.) a Florida  corporation,  was formed on November 18,
1991,  to be a holding  company and a  wholly-owned  subsidiary of Kimmins Corp.
("KC").  Effective October 1, 1992, KC contributed all of the outstanding common
stock of two of its  wholly-owned  subsidiaries,  Cumberland  Casualty  & Surety
Company ("CCS") and Surety Specialists, Inc. ("SSI") to CTI. KC then distributed
to its stockholders CTI's common stock on the basis of one share of common stock
of CTI for each five  shares of KC common  stock and Class B common  stock owned
(the  "Distribution").  Cumberland  Technologies,  Inc.,  ("the  Company")  is a
holding company engaged through its subsidiaries,  Cumberland  Casualty & Surety
Company  ("CCS"),  Surety  Specialists,  Inc.  ("SSI"),  The Surety Group,  Inc.
("SG"),  Associates  Acquisition Corp. d/b/a Surety Associates ("SA") and Qualex
Consulting  Group,  Inc.  ("Qualex")  in the  delivery of  specialty  surety and
insurance  services.  Surety  services  include  underwriting  surety bonds on a
direct and  assumed  basis,  surety  consulting  and the  development  of surety
software.  Insurance  services  include the underwriting of speciality and other
liability  insurance  products.  In addition,  the Company conducts its business
through a number of  independent  agencies which focus on selling and delivering
surety  insurance  products to  consumers.  Traditionally,  this  segment of the
surety industry has delivered its products through an antiquated manual process.
Because  of this  need to  advance  technologically,  the  Company  developed  a
software  product  called  Bond-Pro(R).  This patented  surety  issuance  system
increases  the speed that surety agents  deliver their  products to the customer
and  financially  report  those  transactions  to the  carrier,  while  reducing
operating costs. The Company's business strategy is to continue the underwriting
focus of each of its operating  subsidiaries  and to achieve  growth through the
expanded licensing of Bond-Pro(R).

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

         CCS currently has applications for admission pending in various states.
Most of these states have a lengthy  applications process in which the admission
filing must be updated with certain financial and nonfinancial information until
the  insurance  department  decides  to approve an  application.  The  insurance
department is not  restricted as to the amount of time if may take to approve an
application.  All applications are updated as new information  becomes available
and CCS is waiting  for  inquiries  or actions by these  pending  states.  Those
states  in  which  CCS has not  yet  applied  for  licensing  generally  require
additional years of operating  history or additional  capital and surplus.  Once
CCS has met these  requirements,  it is anticipated  that the  applications  for
admission will be submitted  accordingly.  CCS is currently attempting to obtain
additional state licenses in order to spread its risk of loss geographically and
to  increase  its sales of direct  surety  and  insurance  products.  Management
believes that CCS can function profitability selling direct surety and insurance
products in the states in which it is currently licensed.



<PAGE>


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

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

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

         The   percentages   of  gross   revenue   generated  by  the  Company's
subsidiaries for the year ended December 31, 1999 are as follows:

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

                           CCS                     83%
                           SSI                      5
                           Qualex                   5
                           SA                       3
                           SG                       4
                                                  ----
                                                  100%
                                                  ====

         The term "the Company" unless the context otherwise requires, refers to
Cumberland  Technologies,  Inc. and its  subsidiaries.  The principal  executive
offices of the Company are located at 4311 West Waters Avenue, Suite 401, Tampa,
Florida 33614. The Company's  telephone number is (813) 885-2112,  its facsimile
number is (813) 885-6734 and its web site is www.cumberlandtech.com.

         Surety Products

         CCS underwrites a wide variety of surety bonds for small to medium size
surety accounts.  CCS also assumes underwriting risk from other surety companies
under various reinsurance  arrangements.  Contract surety bonds center primarily
on performance and payment bonds issued for the construction industry. The bonds
guarantee  that a contractor  will fulfill  their  obligations,  with respect to
performing  the scope of work  defined  in the  contract  and  fulfilling  their
financial  obligations.  CCS's typical bond is less than $500,000 with aggregate
ongoing  work of $1  million.  These  bonds  are  marketed  through  independent
insurance agencies specializing in this type of coverage to general contractors,
sub-contractors and specialty contractors.


<PAGE>


         Commercial surety bonds, which includes all non-contract  surety bonds,
numerous  types of license and permit,  miscellaneous  and judicial  bonds.  The
scope of each bond  varies  according  to the law,  locality,  the nature of the
guarantee,  and the  parties  who have a right of action  under  the  bond.  The
typical bond penalty ranges from $5,000 to $50,000 and are usually  written on a
volume basis.

         Insurance Products

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

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

         Technology Product

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

         Underwriting

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

<PAGE>

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

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

         Reinsurance

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

         For contract and commercial surety business, CCS entered into an excess
of  loss   reinsurance   agreement  with   Transatlantic   Reinsurance   Company
(Transatlantic  Treaty),  which is rated A+ (Superior) by A.M.  Best.  Excess of
loss reinsurance is a form of reinsurance,  which indemnifies the ceding insurer
up to an agreed amount  against all or a portion of the amount of loss in excess
of a specified  retention.  Under the Transatlantic  Treaty, CCS retains risk no
greater than 5% of $2,700,000 or $145,000 per principal. Under the Transatlantic
Treaty, the reinsurer  automatically assumes the risk of losses and all contract
surety  bonds  written  and  classified  as  surety  in CCS's  statutory  annual
statement  and all  miscellaneous  surety  bonds with  penal sums over  $100,000
written and classified as surety in CCS's statutory annual statement.

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

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

<PAGE>

         Reserves

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

         Reserve for losses and loss adjustment expenses are actuarial estimates
of losses,  including the related settlement costs. Management believes that the
reserves  for losses and loss  adjustment  expenses  are  adequate  to cover the
losses and loss  adjustment  expenses,  including  the cost of incurred  but not
reported losses.

         During 1999,  there were no material  changes in the mix of business or
types of risk  assumed.  However,  the Company was  effective in  spreading  the
geographic mix of the business.

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

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

         Environmental Claims

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

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

         Investments

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

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

<PAGE>

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

         Marketing

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

         Competition

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

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

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

         Regulation

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

<PAGE>

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

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

         The  National  Association  of  Insurance  Commissioners  ("NAIC")  has
adopted a  risk-based  capital  ("RBC")  model  law for  property  and  casualty
companies.  The RBC model law is intended to provide standards for calculating a
variable   regulatory  capital   requirement  related  to  a  company's  current
operations and its risk exposures (asset risk,  underwriting  risk,  credit risk
and off  balance  sheet  risk).  These  standards  are  intended  to  serve as a
diagnostic  solvency tool for regulators that establishes uniform capital levels
and specific authority levels for regulatory interventions when an insurer falls
below minimum  capital  levels.  The model laws specifies  four distinct  action
level at which a regulator can intervene  with  increasing  degrees of authority
over a domestic  insurer as its  financial  conditions  deteriorates.  These RBC
levels are based on the percentage of an insurers surplus to its calculated RBC.
The company's RBC is required to be disclosed in its statutory annual statement.
The RBC is not intended to be used as a rating or ranking tool nor is to be used
in premium rate making or approval.  The Company calculated its RBC requirements
as of December 31, 1999 and met the standards under the NAIC guidelines.

         Controlling Shareholders

         Francis Williams, and "KC" (collectively  "Majority  Shareholder") owns
79.7% of the outstanding ordinary shares of the Company and collectively control
the policies and affairs of the  Company.  Circumstances  may arise in which the
interest of the Majority  Shareholder  of the Company  could be in conflict with
the interest of the other holders of the common stock. In addition, the Majority
Shareholder may have an interest in pursuing acquisitions, divestitures or other
transaction that in their judgement, could enhance their equity investment, even
though such  transactions  might involve risk to the other holders of the common
stock.

         Employees

         On December 31, 1999, the Company had 39 employees. All are employed on
a full-time basis. None of the Company's  employees are union members or subject
to  collective  bargaining  agreements.  The Company  believes  that it enjoys a
favorable relationship with its employees

<PAGE>

         Forward-looking Statements

         All statements,  other than statements of historical facts, included or
incorporated by reference in this Form 10-K which address activities,  events or
developments  which the Company expects or anticipates  will or may occur in the
future,  including  statements  regarding  the Company's  competitive  position,
changes  in  business   strategy  or  plans,   the  availability  and  price  of
reinsurance,  the Company's ability to pass on price increases, plans to install
the  Bond-Pro(R)  program  in  independent  insurance  agencies,  the  impact of
insurance laws and regulation,  the  availability of financing,  reliance on key
management  personnel,  ability to manage  growth,  the  Company's  expectations
regarding the adequacy of current  financing  arrangements,  product  demand and
market  growth,  and other  statements  regarding  future plans and  strategies,
anticipated events,  trends or 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.

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

     The  Company's  operating  subsidiaries  rent or lease  office space in the
cities in which they are  located.  CCS and Qualex  lease office space in Tampa,
Florida from a company owned by Francis  Williams,  the Chairman of the Board of
the Company, at a monthly rate of $7,278,  pursuant to a lease that was executed
March 1, 1997 and is effective  through  December 31, 2000.  Effective  March 1,
2000, the monthly rate will be $9,878 as a result of increased  operating  costs
and improvements.

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

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

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

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

         None

<PAGE>


         Executive Officers of the Registrant

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

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

Joseph M. Williams:      President                  CTI:    06/1992 to date

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

Carol S. Black:          Secretary                  CTI:    06/1995 to date
                         Secretary/Treasurer        CCS:    06/1995 to date
                         Secretary                  SSI:    08/1995 to date
                         Secretary/Treasurer        Qualex: 08/1995 to date
                         Secretary                  SG:     08/1995 to date
                         Secretary                  SA:     08/1995 to date

Edward A. Mackowiak:     President                  Qualex: 11/1994 to date

Sam H. Newberry:         Vice President             SG:     01/1998 to date




<PAGE>


                                     PART II


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

         The  Company's  Common  Stock  (symbol  "CUMB")  has been traded in the
over-the-counter  market  since  October 1, 1992.  Effective  December 16, 1996,
Cumberland  was  approved  and  included in the  trading on the Nasdaq  SmallCap
Market.  High and Low bid  prices  were set  forth in  Quotation  Market  Sheets
published  by  Nasdaq.  The high and low bid  prices  for 1999 and 1998  were as
follows:


                                         Bid Information
                        -------------------------------------------------------
                               1999                       1998
                        -------------------------------------------------------
                             High          Low          High           Low
                        -------------------------------------------------------
  First Quarter         $    2 5/8  $   1 3/4 $       2 1/2 $       2 1/2
  Second Quarter             2 3/8      1 7/8         2 3/4         2 3/8
  Third Quarter              2 1/8      1 7/8         3 1/8         3 1/8
  Fourth Quarter             2 3/8      1 1/2         2             1 5/8

         As of March 10,  2000,  there  were 856  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 extent of
surplus  profits less any dividends that have been paid in the preceding  twelve
months or net  investment  income for the year,  whichever  is less,  unless CCS
obtains prior approval from the insurance commissioner.  CCS does not anticipate
paying any dividends on CCS Common Stock in the near future.

Item 6.        Selected Financial Data
-------        -----------------------

         The  following  selected  financial  data are taken from the  Company's
consolidated  financial statements.  The data should be read in conjunction with
the  accompanying  consolidated  financial  statements  and the  related  notes,
Management's Discussion and Analysis and other financial information included in
this Form 10-K.


<PAGE>

<TABLE>
<CAPTION>
Statement of Operations Data:
                                                                      Year Ended December 31,
                                                 ------------------------------------------------------------------
                                                        1999         1998        1997        1996          1995
                                                 ------------------------------------------------------------------
                                                              (In Thousands - except per share data)
<S>                                                    <C>           <C>        <C>           <C>          <C>

Operating data:
    Net premium income ......................... $     9,618  $     7,534 $     5,684  $    3,808   $     5,068
    Commission income ..........................         474          710         860       1,386           774
    Other income ..............................          901          827         616         653           425
    Net investment income .....................          333          377         408         404           397
    Net realized investment gain (losses) .....          129         (437)        202         118           124
    Benefits and expense ......................       10,270        9,332       7,599       6,952         7,016
    Income (loss) before income taxes .........        1,185         (321)        171        (583)         (228)
    Net income (loss) .........................        1,148         (321)        171        (583)         (228)
Net income (loss) per share (1) ...............  $       .21  $      (.06)$       .03   $    (.14)  $      (.06)
</TABLE>

(1) The net loss per share for 1995 has been  calculated  based on the 4,039,780
shares of Cumberland  Common Stock that were outstanding after the Distribution.
The 1999,  1998,  1997 and 1996 net income  (loss) per share  amounts  have been
computed  based on the  actual  weighted  average  number of shares  outstanding
during the respective years.

<TABLE>
<CAPTION>
Balance Sheet Data:
                                                                            December 31,
                                                 -------------------------------------------------------------------
                                                        1999         1998         1997        1996          1995
                                                 -------------------------------------------------------------------
                                                                           (In Thousands)
<S>                                                    <C>           <C>          <C>         <C>           <C>
Balance sheet data:
    Investments ...............................  $     8,394  $    3,987   $     6,469  $    6,110   $     6,303
    Cash and cash equivalents .................        2,000       4,202         1,804         669         1,236
    Accrued investment income .................           66          55             -           -             -
    Accounts receivable .......................        3,301       3,105         1,966         925           550
    Reinsurance recoverables ..................        2,898       2,306         2,017       1,590         1,697
    Deferred policy acquisition costs .........        1,601       1,247           813         635           435
    Intangibles ...............................        1,267       1,456         1,681       1,957         2,163
    Other investments .........................          559         553           244           -             -
    Deferred tax asset ........................          305           -             -           -             -
    Other assets ..............................          315         354           327         486           325
    Total assets ..............................       20,706      17,265        15,321      12,372        12,709

Policy liabilities and accruals:
    Unearned premiums .........................        4,844       3,750         2,629       1,862         1,182
    Losses and LAE ............................        4,577       3,220         2,550       1,992         2,352
    Ceded reinsurance and accounts
       payable ...............................         2,277       2,615         2,714       1,172         1,523
    Income tax payable .......................            35           -             -           -             -
Term notes/surplus debentures, including
accrued interest .............................         1,000       1,000             0           0         4,798
Other long-term debt .........................         1,281       1,331         1,419       1,533         1,564
Total liabilities ............................        14,014      11,916         9,312       6,559        11,419
Total stockholders' equity ...................         6,692       5,349         6,009       5,813         1,290
</TABLE>

<PAGE>

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

Results of Operations

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

                                                                                    Percentage Increase (Decrease)
                                                                                       Year Ended December 31,
                                                 Year Ended December 31,
                                       -----------------------------------------------------------------------------
                                              1999            1998           1997          1999           1998
                                       -----------------------------------------------------------------------------
<S>                                          <C>              <C>            <C>           <C>            <C>

Net premium income ................... $     9,618    $      7,534  $       5,684         27.7%            32.5%
Net investment income ................         333             377            408        (11.7)%          (7.6)%
Net realized investment gains
   (losses) ..........................         129            (437)           202         129.5%        (316.3)%
Other revenues .......................       1,375           1,537          1,476        (10.5)%            4.2%
Losses and loss adjustment
   expenses ..........................       2,395           2,648          1,792         (9.6)%           47.8%
Amortization of deferred
   acquisition costs .................       2,895           2,252          1,779          28.6%           26.6%
General expenses and taxes ...........       4,980           4,432          4,028          12.4%           10.0%
Income (loss) before income
   taxes .............................       1,185            (321)           171         469.2%        (287.7)%
Income tax expenses ..................          37               -              -           -             -
Net income (loss) ....................       1,148            (321)           171         457.6%        (287.7)%
</TABLE>

         Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

         Written direct and assumed premiums reached a record $13,237,460 during
1999. Overall written premiums,  net of ceded premium increased by $1,922,427 or
22%. Earned premium growth increased by $2,084,108 or 28% to $9,617,792 for 1999
compared to $7,533,684 for 1998. The increase in earned  premiums  resulted from
CCS's continued growth in the direct surety bond market.

         During  1999,  premiums  written  by CCS  increased  as a result of the
continued marketing  direction of the Company,  which is to penetrate the direct
market while  decreasing  the volume of  reinsurance  premiums  assumed  through
Pooling Agreements. CCS's reinsurance assumed premium is a result of quota share
agreements  whereby  CCS assumes a portion of the  premiums  written by agencies
contracted to produce business using Cumberland's  Bond-Pro(R) issuance program.
The increase in ceded premiums is correlated to the direct  premium  written and
the  association  to excess of loss  treaties on these  premiums.  The following
table reflects the written premium activity,  net of reinsurance ceded, for 1999
and 1998.

                                          Written Premiums
            --------------------------------------------------------------------
                         1999                    1998              % Change
            ---------------------- ---------------------- ----------------------
  Direct ..$       10,816,114     $        9,451,746                 14.4%
  Assumed .         2,421,346              1,478,109                 63.8%
  Ceded ...        (2,740,148)            (2,354,970)             (16.4)%
           ---------------------- ----------------------- ----------------------
  Total ...$       10,497,312     $        8,574,885                 22.4%
           ====================== ======================= ======================
<PAGE>

         During the year ended December 31, 1999 and 1998, net investment income
earned was $333,462 and  $377,218,  respectively.  Realized net losses and gains
for the years ended  December 31, 1999 and 1998 were  $129,101  and  $(437,565),
respectively.  CCS wrote down its investment in certain equity securities during
the 4th  quarter of 1998 as  management  determined  the  decline in value to be
other than  temporary.  As a result,  CCS  recorded a loss of  $580,360 in 1998,
which was offset by net capital gains of $142,795.

         Other revenue  consists  primarily of commissions  earned by subsidiary
agencies and fee revenue earned by a subsidiary claims consulting group. For the
year ended December 31, 1999,  other revenues  decreased by $162,145 (11%) which
is attributable  to the transfer of direct  writings by subsidiary  agencies for
other carriers in 1998 to CCS in 1999.

         Losses  and loss  adjustment  expenses  decreased  to  $2,394,532  from
$2,648,074  for the year ended  December  31, 1999 and 1998,  respectively.  The
decrease of $253,542 or 9.6% is attributed  to a decrease on claims  incurred on
assumed pooling  business.  Direct incurred losses increased  $423,081  (183.9%)
while losses under the assumed pooling  agreements  decreased  $981,978 (94.5%).
Assumed claims on the expired  pooling  agreements  were impacted during 1998 by
losses incurred of $1,039,232.  The following  tables reflects the 1999 activity
as it pertains to earned premiums and incurred claims:

            Premiums Earned         Claims Incurred                Ratio
            ---------------------- ---------------------- ----------------------
Direct, net $        7,538,112     $         1,684,078                22.3%
Assumed, net         2,079,680                 653,201                31.4%
Assumed
(pooling net)                -                  57,253                   -
            ---------------------- ---------------------- ----------------------
Total       $        9,617,792     $         2,394,532                24.9%
            ====================== ====================== ======================

         During  the  year  ended  December  31,  1999 the net  amortization  of
deferred policy  acquisitions  costs increased to $2,895,834 from $2,252,195 for
the year ended  December 31, 1998. The increase is attributed to the increase in
earned premiums.

         During the year ended December 31, 1999,  operating expenses and taxes,
licenses  and  fees  (excluding  income  taxes)  increased  to  $4,766,101  from
$4,313,278  in 1998.  The  increase of $452,823 or 10% is a result of  increased
salary  expense  including  bonuses,  payroll  taxes and  employee  benefits  of
$112,550;  travel expenses of $102,665;  increased  taxes,  licenses and fees of
$141,370 and general office expenses of $96,238. The increase in salary,  travel
and related  expenses is the cost of additional  personnel  consistent  with the
Company  growth  while the  increase  in taxes,  licenses  and fees  expenses is
attributed to increased premiums written.

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

         The Company incurred income tax expenses during 1999 of $36,686. Due to
tax loss  carryforwards,  the  Company  did not incur  income  tax  expense on a
consolidated   basis  for  the  years   ending   December  31,  1998  and  1997,
respectively.

<PAGE>

         Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

         Written direct and assumed premiums  reached a then record  $10,929,855
during  1998.  Overall  written  premiums,  net of ceded  premium  increased  by
$2,340,624 or 37.5%.  Earned premium growth increased by 32.5% to $7,533,684 for
1998 as  compared  to  $5,683,945  for 1997.  The  increase  in earned  premiums
resulted from CCS's continued growth in the direct surety bond market.

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

                                          Written Premiums
             -------------------------------------------------------------------
                    1998                    1997              % Change
             ---------------------- ---------------------- ---------------------
Direct ..... $        9,451,746     $         6,797,136                39.1%
Assumed ....          1,478,109               1,189,689                24.2%
Ceded ......         (2,354,970)             (1,752,564)              (34.4%)
             ---------------------- ---------------------- ---------------------
Total ...... $        8,574,885     $         6,234,261                37.5%
             ====================== ====================== =====================

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

         Other revenue  consists  primarily of commissions  earned by subsidiary
agencies and fee revenue earned by a subsidiary  claims  consulting  group.  The
increase in other  revenue for the year ended  December 31, 1998 of $61,049 (4%)
is related to revenues earned through the Company's claim consulting group.

         Losses  and loss  adjustment  expenses  increased  to  $2,648,074  from
$1,792,117  for the year ended  December  31, 1998 and 1997,  respectively.  The
increase of $855,957  (48%) is  attributed  to an increase of $327,956  (31%) in
direct claims  incurred and $528,001 (71%) in assumed claims  incurred.  Assumed
claims on the expired pooling  agreements were negatively  impacted by increased
severe losses.  Cumberland  share of the 1998 incurred  losses under the pooling
agreements was $1,039,232.  Management  anticipates a decline in 1999 for claims
attributed to the pooling  agreements.  The following  tables  reflects the 1998
activity as it pertains to earned premiums and incurred claims:

               Premiums Earned        Claims Incurred            Ratio
             ---------------------- ---------------------- ---------------------
Direct, net $          6,437,429    $       1,378,722                 21.4%
Assumed, net           1,066,907              230,120                 21.6%
Assumed
 (pooling net)            29,348            1,039,232                    -
             ---------------------- ---------------------- ---------------------
Total ...... $         7,533,684    $       2,648,074                 35.1%
             ====================== ====================== =====================
<PAGE>

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

         During the year ended December 31, 1998,  operating expenses and taxes,
licenses  and  fees  (excluding  income  taxes)  increased  to  $4,313,278  from
$3,903,476  in 1997.  The  increase of $409,802 or 10% is a result of  increased
salary  expense  including  bonuses,  payroll  taxes and  employee  benefits  of
$180,161,  general office expenses of $22,797 and increased taxes,  licenses and
fees of  $206,844.  The  increase in salary and related  expenses is the cost of
additional  personnel  consistent  with the Company growth while the increase in
taxes, licenses and fees expenses is attributed to increased premiums written.

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

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

Liquidity and Capital Resources

         The  capacity  of  a  surety   company  to  underwrite   insurance  and
reinsurance is based on maintaining  liquidity and capital resources  sufficient
to pay claims and expenses as they become due. Based on standards established by
the National  Association of Insurance  Commissioners  (NAIC) and promulgated by
the Florida  Department  of  Insurance,  the Company is  permitted  to write net
premiums  up to an  amount  equal to  three  times  its  statutory  surplus,  or
approximately  $15,320,000 at December 31, 1999.  Statutory guidelines impose an
additional  limitation on increasing net written premiums to no more than 33% of
prior year's net written  premiums.  Under these  guidelines,  the Company could
increase net written premiums by approximately $3,500,000.

         At  December  31,  1999,  the  Company's  $20,706,550  of total  assets
calculated based on generally  accepted  accounting  principles were distributed
primarily as follows:  50.5 percent in cash and investments  (including  accrued
investment  income),  29.9 percent in receivables and reinsurance  recoverables,
13.9 percent in intangibles and deferred policy  acquisition  costs, 1.5 percent
in deferred income tax asset and 4.2 percent in other assets.

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

         Net cash provided by (used in)  operating  activities  was  $1,965,077,
$(193,734) and $1,925,903 for the years ended December 31, 1999,  1998 and 1997,
respectively.  In 1999, the cash provided by operating  activities was primarily
attributable to increases in net income and accrued policy liabilities on claims
and reinsurance.  In 1998, the decrease in cash provided by operating activities
is primarily  attributed to an increase in  receivables of $1,422,588 and income
taxes  recoverable  of  $120,000.  In  1997,  the  cash  provided  by  operating
activities  was  primarily  attributable  to the  increase in ceded  reinsurance
payable and pooling liabilities and accruals.

         Net cash (used in) provided by investing  activities was  $(4,133,973),
$1,410,318 and $(364,768) for the years ended December 31, 1999,  1998 and 1997,
respectively.   Investing   activities   consist  of  purchases   and  sales  of
investments.
<PAGE>

         Net cash (used in)  provided by  financing  activities  was  $(33,308),
$1,182,237 and $(426,681) for the years ended December 31, 1999,  1998 and 1997,
respectively.  Financing  activities  consist of  purchases  of treasury  stock,
long-term and  short-term  borrowings  and repayment on borrowings  during 1999,
1998 and 1997.

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.


<PAGE>


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 1999, 1998 and
1997 to the gross amounts reported in Cumberland's balance sheets:

<TABLE>
<CAPTION>

                                                                              December 31,
                                                     ---------------------------------------------------------------
                                                                   1999                  1998                1997
                                                     ---------------------------------------------------------------
<S>                                                                <C>                   <C>                 <C>

Liability for losses and LAE, net of reinsurance
   recoverable on unpaid losses, at beginning
   of year ......................................    $        1,680,580   $         1,392,931  $         594,922
                                                     ---------------------------------------------------------------
Provision for losses and LAE for claims occurring
   in the current year, net of reinsurance ......             2,810,532             2,331,074          1,743,117
Increase (decrease) in estimated losses and LAE for
   claims occurring in prior years, net of
   reinsurance ..................................              (416,000)              317,000             49,000
                                                     ---------------------------------------------------------------
Incurred losses during the current year, net of
   reinsurance ..................................             2,394,532             2,648,074          1,792,117
Losses and LAE payments for claims, net of
   reinsurance, occurring during:
   Current year .................................               135,635               557,997            553,629
   Prior years ..................................             1,130,750             1,802,428            440,479
                                                     ---------------------------------------------------------------
                                                              1,266,385             2,360,425            994,108
Liability for losses and LAE, net of reinsurance
   recoverable on unpaid losses, at end of year .             2,808,727             1,680,580          1,392,931
Reinsurance recoverables on unpaid losses at end of
   year .........................................             1,767,812             1,539,877          1,157,369
                                                     ---------------------------------------------------------------
Liability for losses and LAE, gross of reinsurance
   recoverables on unpaid losses, at end of year ..  $        4,576,539   $         3,220,457  $       2,550,300
                                                     ===============================================================
</TABLE>

         Cumberland  experienced  a  $416,000  redundancy  and  deficiencies  of
$317,000 and $49,000 for losses and loss  adjustment  expenses in 1999, 1998 and
1997,  respectively.   The  redundancy  principally  resulted  from  subrogation
received on pooling  agreement case base reserves and claims in prior years. The
deficiency  in 1998 and 1997  principally  resulted  from  settling  case  basis
reserves established in prior years for amounts that were more than expected.

         The  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, 1999 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:

<PAGE>


Liability for losses and LAE on a SAP basis (which is net of
reinsurance recoverables on unpaid losses and LAE) .....    $          2,808,727
Reinsurance recoverables on unpaid losses and LAE ......               1,767,812
                                                            --------------------
Liability for losses and LAE, as reported in the
 accompanying GAAP basis consolidated
 financial statements .................................     $          4,576,539
                                                            ====================

Analysis of Loss and Loss Adjustment Expense Development

         The following  table  represents  the  development of the liability for
unpaid losses and LAE, net of reinsurance, for 1992 through 1999 (in thousands).

<TABLE>
<CAPTION>
                                     1992      1993       1994       1995       1996       1997        1998      1999
                                ----------------------------------------------------------------------------------------
<S>                                  <C>       <C>        <C>        <C>        <C>        <C>         <C>       <C>

Liability for losses and loss
  adjustment expenses, net
  of reinsurance ............   $   2,426  $  1,709   $  1,625   $  1,053   $    595   $ 1,393    $   1,680  $  2,809
Liability re-estimated as of:
  One year later ............       2,239     3,815      1,384      1,716        644      1,710       1,264         -
  Two years later ...........       2,546     2,579      1,420      1,815      1,013      1,711           -         -
  Three years later .........       2,263     2,750      1,631      2,049      1,121          -           -         -
  Four years later ..........       2,418     2,851      1,726      2,036          -          -           -         -
  Five years later ..........       2,408     3,176      1,625          -          -          -           -         -
  Six years later ...........       2,970     3,139          -          -          -          -           -         -
  Seven years later .........       2,310         -          -          -          -          -           -         -
                                ----------------------------------------------------------------------------------------
Cumulative (deficiency)
  redundancy ................   $     116  $ (1,430)  $      -   $   (983)  $   (526)  $   (318)  $     416  $  2,809
                                =========  =========  ========   =========  =========  =========  =========  ========

                                     1992      1993       1994       1995       1996       1997        1998      1999
                                ----------------------------------------------------------------------------------------
Cumulative amount of
  liability, net of
  reinsurance recoverables,
  paid through:
    One year later ..........   $   1,151  $   765    $  1,643   $  1,334   $    563    $ 1,802    $  2,155  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
    Two years later .........   $  1,834   $ 1,058    $  2,316   $  2,186   $  1,631    $ 2,856   $       -  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
    Three years later .......   $  2,088   $ 2,868    $  2,164    $ 2,997    $ 2,466    $     -   $       -  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
    Four years later ........   $  1,957   $ 3,717    $  2,875    $ 3,506   $      -   $      -   $       -  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
    Five years later ........   $  3,533   $ 4,442    $  3,230   $      -   $      -   $      -   $       -  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
    Six years later .........   $  3,840   $ 4,804   $       -   $      -   $      -   $      -   $       -  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
    Seven years later .......   $  2,278  $      -   $       -   $      -   $      -   $      -   $       -  $       -
                                =========  ========   ========   ========   ========   ========   =========  =========
</TABLE>
<PAGE>


Effect of Inflation

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

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

         Interest Rate Sensitivity

         The following tables present principal  maturity cash flows and relates
weighted average interest rates by expected maturity as of December 31, 1999 and
1998:
<TABLE>
<CAPTION>

                                                              1999 Expected Maturity Date
                                     -------------------------------------------------------------------------------
                                                                                                              Fair
                                                                                          There-              Value
                                     2000           2001     2002      2003     2004       after    Total     12/31/99
                                     -------------------------------------------------------------------------------
                                                             (U.S. Equivalent in thousands)
<S>                                  <C>            <C>      <C>      <C>       <C>       <C>       <C>       <C>

Assets
Debt securities available for sale   $  3,099        -        -       121         -        478   $   3,698 $   3,698
   Average interest rate ........         5.8%       -        -       5.8%        -        6.1%          -         -

Debt securities held to maturity     $  1,500      865        -       255        95          -   $   2,715 $   2,715
   Average interest rate ........         5.9%     6.3%       -       5.5%      5.5%         -           -         -

Mortgage loans ..................         896        1        1         2         2         38         940       940
   Average interest rate ........         8.9%     7.5%      7.5%     7.5%      7.5%       7.5%          -         -

Short-term investments ..........         430        -        -         -         -          -         430       430
   Average interest rate ........         4.7%       -        -         -         -          -           -         -

Liabilities
Long-term, debt including current
   portion ......................    $    183    1,184       183       70         84       577   $   2,281 $   2,281
   Average interest rate ........        9.42%    9.35%     9.74%    9.04%      8.02%        -           -         -

</TABLE>

<TABLE>
<CAPTION>

                                                              1998 Expected Maturity Date
                                     -------------------------------------------------------------------------------
                                                                                                            Fair
                                                                                      There-                Value
                                     1999     2000      2001       2002     2003      after      Total     12/31/98
                                     -------------------------------------------------------------------------------
                                                             (U.S. Equivalent in thousands)
<S>                                  <C>      <C>       <C>        <C>      <C>       <C>        <C>        <C>

Assets
Debt securities available for sale   $ 750    600         25        -       125       582        $  2,082    $   2,082
   Average interest rate ..........    6.1%   7.0%       5.6%       -       5.8%        -               -            -

Liabilities
Long-term, debt including current
   portion ........................  $  49    183      1,184      184        70       661        $  2,331    $   2,331
   Average interest rate ..........    9.4%   9.2%       9.3%     8.9%      9.5%        -               -            -

</TABLE>

<PAGE>

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

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

         Additionally,  the risk that the Company's  results of  operations  may
suffer from rapid  changes in interest  rates is  substantially  mitigated  as a
result of all of the  Company's  interest-earning  assets  and  interest-bearing
liabilities being written at fixed rates.

Item 8. Consolidated financial statements and Supplementary Data
------  --------------------------------------------------------

         The consolidated  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
          --------------------

         On January 3, 2000, the Company filed a Form 8-K to register its change
in certifying accountant.

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      58         Chairman of the Board of Directors
          Joseph M. Williams       43         President and Treasurer
          Andrew J. Cohen          46         Director
          R. Donald Finn           56         Director
          Edward J. Edenfield IV   42         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.


<PAGE>

         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 was a Director of Cumberland since its inception through
September  9, 1999.  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. Mr. Chandler
resigned from the Board effective September 9, 1999.

     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 experiences to Cumberland.

         R.  Donald  Finn  was  elected  as a  Director  to  Cumberland's  Board
effective  September  9, 1999.  For more than the last five years,  Mr. Finn has
been a partner in the law firm of Gibson, McAskill & Crosby, located in Buffalo,
New York, where Mr. Finn has practiced law for more than the last 25 years.

<PAGE>

Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's officers and directors,  and persons who own more than 10 percent of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the  Securities and Exchange  Commission
("SEC").  Officers,  directors,  and greater  than 10 percent  stockholders  are
required by SEC  regulation  to furnish  the Company  with copies of all Section
16(a) forms they file.  Based  solely on the  Company's  review of the copies of
such forms  received by it, or written  representations  from certain  reporting
persons  that no Form 5 was  required for those  persons,  the Company  believes
that, during the year ended December 31, 1999 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
--------  --------------------------------------------
<TABLE>
Summary Compensation Table
<CAPTION>

         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  and CCS's  President  for each of the three
years in the period ended December 31, 1999:

                                                                                        Long-Term Compensation
                               ------------------------------------------------------------------------------------
                                                                           Stock               All Other
                                         Annual Compensation              Options            Compensation
                               ------------------------------------------------------------------------------------
Name of Individual and
   Principal Position                 1999          1998          1997      1999            1998         1997
-------------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>          <C>          <C>          <C>           <C>
Joseph M. Williams
President and Treasurer, CTI
    Salary .................   $    95,000   $    95,000   $    95,000 $       -     $        -    $        -
    Bonus ..................   $    60,000   $    30,000   $    30,000 $       -     $        -    $        -

Edward J. Edenfield IV
President and CEO, CCS
   Salary ..................   $   115,000   $   116,731   $   105,000 $       -     $        -    $        -
   Bonus ...................   $    35,000   $    25,000   $    14,500 $       -     $        -    $        -

</TABLE>

Aggregate Option Exercises in 1999 and December 31, 1999 Option Values

     The  following  table  shows  information  concerning  options  held by the
officers shown in the Summary  Compensation Table at the end of 1999. Mr. Joseph
M. Williams exercised 24,000 options in 1999.

                                                           Value of Unexercised
                  Number of Securities Underlying                In-the-Money
                   Unexercised Options at Fiscal             Options at Fiscal
                             Year End                          Year End ($)(1)
Name               (#) Exercisable/Unexercisable       Exercisable/Unexercisable
--------------------------------------------------------------------------------
Joseph M. Williams            100,000/0                               $175,000/0
Edward J. Edenfield IV         16,000/0                                $28,000/0

(1)  Represents the dollar value of the difference between the value at December
     31, 1999 and the option  exercise price of unexercised  options at December
     31, 1999.


<PAGE>

Compensation Committee Interlocks and Insider Participation

         There is no compensation  committee of the Company's Board of Directors
or other committee of the Board performing equivalent functions.  The person who
performs the equivalent function is Francis M. Williams,  Chairman of the Board.
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, 1999,  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  December  31,  1999 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 of Beneficial    Percent of Issued
Name and Address                Ownership of                   and Outstanding
of Beneficial Owner (1) (2)      Common Stock                    Common Stock
--------------------------------------------------------------------------------

Francis M. Williams                 3,721,515 (3)                       67.7%
Joseph M. Williams                    358,783 (4)                        6.5%
R. Donald Finn                          2,131 (5)                          *
Andrew J. Cohen                        42,590 (6)                         .8%
Edward J. Edenfield IV                 16,000 (7)                         .2%
Kimmins Corp.                       1,723,290                           31.3%
All directors and executive
Officers as a group (five persons)  4,802,762                           85.8%

(1)  The address of all officers and Directors of Cumberland listed above are in
     care of Cumberland at 4311 W. Waters Ave., Suite 401, Tampa, Florida 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  2,436,529 shares owned by Mr. Francis Williams;  1,061,547 shares
     allocated to Mr.  Williams  based on his 61.1%  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 153,050 held by various Real Estate Partnerships of which
     Mr.  Williams  is  100  percent  Owner.  Mr.  Williams  owns  63.9%  of the
     outstanding  common  stock of Kimmins  Corp.  and is its Chairman and Chief
     Executive Officer.

(4)  Includes 32,800 shares owned by Mr. Joseph M. Williams;  options to acquire
     100,000 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 2,131 shares owned by Mr. R. Donald Finn.

(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 16,000 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, 1999, no
payments could be made under the terms of the  debenture.  On June 30, 1999, CTI
forgave  $576,266 of its $2,625,000  surplus  debenture due to CCS. As a result,
CCS increased paid-in-capital to $1,000,000 from $423,734.

         CTI  entered  into a term note  agreement  with KC for the  outstanding
amount of the surplus  debenture,  including interest in arrears of ($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.

<PAGE>


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

         CCS  writes   surety  bonds  for  KC  and  its   affiliates.   Revenues
attributable  to transactions  with KC and its affiliates were $10,342,  $14,907
and $1,738 for the years ended December 31, 1999,  1998 and 1997,  respectively.
Qualex performs consulting services for KC and affiliates.  Revenue attributable
to transaction  with affiliates  were $117,075,  $282,193 and $310,396 for years
ended December 31, 1999, 1998 and 1997, respectively.

Item  14. Exhibits,  Consolidated  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.   Consolidated Financial Statements

               -  Report  of  Independent   Auditors  -  Report  of  Independent
               Certified  Public  Accountants -  Consolidated  balance sheets at
               December  31,  1999  and  1998  -   Consolidated   statements  of
               operations for each of the three
                 years in the period ended December 31, 1999.
               - Consolidated  statements  of stockholders' equity for each of
                 the three years in the period ended December 31, 1999.
               - Consolidated statements of cash flows for each of the three
                 years in the period ended December 31, 1999.
               - Notes to consolidated financial statements

         2.    Financial Statement Schedule

               Schedule II - Condensed Financial Information of Registrant

         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.

          3. The following documents are filed as exhibits to this Annual Report
             on Form 10-K:

                  3(i)     -   Articles of Incorporation
                  3(ii)    -   Bylaws
                  10       -   Lease agreement with Cumberland Properties, Inc.
                  11       -   Statement Re: Computation of Earnings Per Share
                  22       -   Subsidiary list
                  23.1     -   Consent of Deloitte & Touche LLP
                  23.2     -   Consent of Ernst & Young LLP
                  27       -   Financial Data Schedule

<PAGE>

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

(b)      Reports on Form 8-K

         On November 12, 1999, the Company filed a Form 8-K to register  changes
         in Registrant's Certifying Accountant.

(c)      Exhibits

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

(d)      Financial Statement Schedules

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


                                   SIGNATURES


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

Date:    April 14, 2000             CUMBERLAND TECHNOLOGIES, INC.


Date:    April 14, 2000             By: /s/ Joseph M. Williams
                                    --------------------------------------------
                                    Joseph M. Williams, President

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


Date:    April 14, 2000             By: /s/ Joseph M. Williams
                                    --------------------------------------------
                                    Joseph M. Williams, President


Date:    April 14, 2000             By: /s/ Francis M. Williams
                                    --------------------------------------------
                                    Francis M. Williams, Chairman of the Board


Date:    April 14, 2000             By: /s/ R. Donald Finn
                                    --------------------------------------------
                                    R. Donald Finn, Director


Date:    April 14, 2000             By: /s/ Andrew J. Cohen
                                    --------------------------------------------
                                    Andrew J. Cohen, Director


Date:    April 14, 2000             By: /s/ Carol S. Black
                                    --------------------------------------------
                                    Carol S. Black, Secretary
                                    (Principal Financial and Accounting Officer)

<PAGE>

                           Annual Report on Form 10-K

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

                    List of Consolidated Financial Statements

             Consolidated Financial Statement Schedules and Exhibits

                          Year Ended December 31, 1999


                          Cumberland Technologies, Inc.

                                 Tampa, Florida


<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS,
                   FINANCIAL STATEMENT SCHEDULES AND EXHIBITS

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

                                                                            Page
                                                                            ----

Independent Auditors' Report .................................................30

Report of Independent Certified Public Accountants ...........................31

Consolidated Balance Sheets at December 31, 1999 and 1998 .................32-33

Consolidated Statements of Operations for Each of the
 Three Years in the Period ended December 31, 1999 ...........................34

Consolidated Statements of Stockholders' Equity for
 Each of the three years in the Period ended December 31, 1999 ...............35

Consolidated Statements of Cash Flows for Each of the
 three years in the Period ended December 31, 1999 ...........................36

Notes to Consolidated Financial Statements ...................................37

The following financial statement schedule is filed as part of this report:

Schedule II - Condensed Financial Information of Registrant ..................55

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


<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Cumberland Technologies, Inc.

     We have audited the accompanying  consolidated  balance sheet of Cumberland
Technologies, Inc. and subsidiaries (the "Company") as of December 31, 1999, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash  flows for the year then  ended.  Our audit  also  included  the  financial
statement schedule listed in the Index. These consolidated  financial statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements and financial statement schedule based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects,  the financial position of the Company
at December  31, 1999 and the results of its  operations  and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
Also, in our opinion the related financial statement  schedule,  when considered
in relation to the basic  consolidated  financial  statements  taken as a whole,
presents fairly, in all material respects, the information set forth therein.



/s/ DELOITTE & TOUCHE LLP
Tampa, Florida

April 7, 2000



<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Cumberland Technologies, Inc.

     We have audited the accompanying  consolidated  balance sheet of Cumberland
Technologies,  Inc.  as of  December  31,  1998  and  the  related  consolidated
statements of operations,  stockholders'  equity, and cash flows for each of the
two years in the period ended  December 31, 1998.  Our audits also  included the
financial  statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Cumberland Technologies,  Inc. at December 31, 1998 and the consolidated results
of their operations and their cash flows for each of the two years in the period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation  to the basic  financial  statements  taken as a whole,
present fairly, in all material respects, the information set forth therein.




/s/  ERNST & YOUNG LLP
Tampa, Florida

March 19, 2000

<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                               December 31,
                                                   -----------------------------
                                                             1999           1998
                                                   -----------------------------
Investments:
    Securities available-for-sale at fair value:
       Debt securities ...........................    $ 3,698,506    $ 2,081,770
       Equity securities .........................        602,194        576,575
    Debt securities held-to-maturity at amortized
       cost (fair value, 1999 - $2,714,801;
       1998 - $896,246) ..........................      2,722,489        860,508
    Mortgage loans on real estate, at unpaid
       principal .................................        940,304         44,427
    Short-term investments .......................        430,239        423,993
                                                      ------------   -----------
       Total investments .........................      8,393,732      3,987,273

Cash and cash equivalents ........................      2,000,147      4,202,351
Accrued investment income ........................         66,088         55,348

Reinsurance recoverable ..........................      2,898,422      2,306,372

Accounts receivable:
    Less allowance for doubtful accounts of
       $27,000 and  $ - 0 - respectively .........      2,896,358      2,729,774
    Affiliate ....................................        404,481        375,304
Income tax recoverable ...........................           --          120,000
Deferred income tax asset ........................        304,983           --
Deferred policy acquisition costs ................      1,601,427      1,246,555
Intangibles, net .................................      1,266,635      1,455,525
Other investment .................................        559,418        552,606
Other assets .....................................        314,859        233,991
                                                      -----------    -----------
                                                      $20,706,550    $17,265,099
                                                      ===========    ===========


                       See notes to consolidated financial
                                   statements.

<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                          December 31,
                                               ---------------------------------
                                               1999                       1998
                                               ---------------------------------
Policy liabilities and accruals:
   Loss and loss adjustment expenses .............. $  4,576,539  $  3,220,457
   Unearned premiums ..............................    4,843,606     3,749,945
Ceded reinsurance payable .........................      367,906     1,114,267
Accounts payable and other liabilities ............    1,909,578     1,500,612
Income tax payable ................................       35,132          --
Long-term debt:
   Nonaffiliate ...................................    1,281,429     1,330,588
   Affiliate ......................................    1,000,000     1,000,000
                                                    ------------  ------------
   Total liabilities ..............................   14,014,190    11,915,869
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; 5,497,244 and 5,444,958
       shares issued and outstanding, respectively         5,816         5,763
   Capital in excess of par value .................    7,257,916     7,212,941
   Accumulated other comprehensive loss ...........      (40,897)     (190,929)
   Accumulated deficit ............................     (266,756)   (1,414,826)
                                                    ------------  ------------
                                                       6,956,079     5,612,949
   Less treasury stock, at cost, 318,112  shares at
       December 31, 1999 and 1998 .................     (263,719)     (263,719)
                                                    ------------  ------------
   Total stockholders' equity .....................    6,692,360     5,349,230
                                                    ------------  ------------
                                                    $ 20,706,550  $ 17,265,099
                                                    ============  ============



                       See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>

                          CUMBERLAND TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                        Years ended December 31,
                                                      --------------------------------------------------------------
                                                                  1999                  1998                1997
                                                      --------------------------------------------------------------
<S>                                                          <C>                  <C>                 <C>
REVENUE:
Direct premiums earned:
    Affiliates ......................................        $     10,342         $    14,907         $     1,738
    Nonaffiliates ...................................          10,053,779           8,526,254           5,836,655
Reinsurance premiums assumed ........................           2,079,680           1,268,032           1,381,264
Less reinsurance ceded ..............................          (2,526,009)         (2,275,509)         (1,535,712)
                                                             ------------         -----------          ----------
Net premium income ..................................           9,617,792           7,533,684           5,683,945
Net investment income ...............................             333,462             377,218             408,050
Net realized investment gains (losses) ..............             129,101            (437,565)            201,863
Commission income ...................................             473,912             710,058             859,862
Other income:
    Affiliates ......................................             117,075             289,207             310,396
    Nonaffiliates ...................................             783,908             537,775             305,733
                                                             ------------         -----------          ----------
Total revenue .......................................          11,455,250           9,010,377           7,769,849

BENEFITS AND EXPENSES:
Losses and loss adjustment expenses .................           2,394,532           2,648,074           1,792,117
Amortization of deferred policy acquisition
    costs ...........................................           2,895,834           2,252,195           1,778,808
Operating expenses ..................................           4,766,101           4,313,278           3,903,476
Interest expense:
    Affiliate .......................................             100,000                --                  --
    Nonaffiliate ....................................             114,027             118,239             124,928
                                                            -------------          ----------           ---------
Total expenses ......................................          10,270,494           9,331,786           7,599,329
                                                            -------------          ----------         -----------

Income (loss) before income tax expense .............           1,184,756            (321,409) $          170,520
Income tax expense ..................................              36,686                --                  --
                                                            -------------          ----------         -----------
Net income (loss) ...................................        $  1,148,070       $    (321,409) $          170,520
                                                            =============          ==========         ===========

Weighted average number of shares ...................           5,475,613           5,447,966           5,449,518
                                                            =============          ==========         ===========
Net income (loss) per share .........................        $       0.21       $        (.06) $             0.03
                                                            =============          ==========         ===========




                       See notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                          CUMBERLAND TECHNOLOGIES, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

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

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

Balance at January 1, 1997 .........    5,763,070    $     5,763    $7,212,941  $  99,676     $(1,263,937)    $(240,771)($5,813,672)

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

   Net unrealized appreciation
     of available-for-sale
     securities, net of tax .......                                                34,525                                    34,525

   Net income ......................                                                              170,520                   170,520
                                                                                                                          ----------

   Comprehensive income ............                                                                                        205,045

                                        ---------         ------     ---------     -------     ----------     --------    ----------
Balance at December 31, 1997 .......    5,763,070          5,763     7,212,941     134,201     (1,093,417)    (250,219)   6,009,269

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


   Net unrealized depreciation
     of available-for-sale
     securities, net of tax .......                                               (325,130)                                (325,130)

   Net loss ........................                                                             (321,409)                 (321,409)
                                                                                                                          ----------

   Comprehensive loss ..............                                                                                       (646,539)
                                        ---------         ------     ---------    --------     ----------     --------     ---------
Balance at December 31, 1998 .......    5,763,070          5,763     7,212,941    (190,929)    (1,414,826)    (263,719)   5,349,230

   Exercise of 52,286 shares
     under 1991 stock option
     plan ..........................       52,286             53        44,975                                               45,028

   Net unrealized appreciation
     of available-for-sale
     securities, net of tax .......                                               150,032                                   150,032

   Net income ......................                                                           1,148,070                  1,148,070
                                                                                                                          ----------

   Comprehensive income ............                                                                                      1,298,102
                                        ---------    -----------    ----------   ---------    -----------    ---------   ----------
Balance at December 31, 1999 .......    5,815,356    $     5,816    $7,257,916   $ (40,897)   $  (266,756)   $(263,719)  $6,692,360
                                        =========    ===========    ==========   =========    ===========    =========   ==========

                 See notes to consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          CUMBERLAND TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                               Years ended December 31,
                                                                            --------------------------------------------------------
                                                                                   1999                   1998                 1997
                                                                            --------------------------------------------------------
<S>                                                                         <C>                     <C>                  <C>

Operating activities:
Net income (loss) ................................................          $ 1,148,070           $  (321,409)          $   170,520
Adjustments to reconcile net income (loss) to cash
  provided by (used in) operating activities:
     Amortization/accretion of investment
         premiums and discounts ..................................                 (165)                  392                (2,788)
     Policy acquisition costs amortized ..........................            2,895,834             2,252,195             1,778,808
     Policy acquisition costs deferred ...........................           (3,250,706)           (2,686,005)           (1,956,364)
     Depreciation and amortization ...............................              188,890               225,108               370,553
     Net realized (gains) losses on sales of
         investments .............................................             (129,101)              437,565              (201,863)
     Provision for bad debts .....................................               27,000                  --                 113,120
     (Increase) decrease in:
          Accrued investment income ..............................              (10,740)               27,473                 6,831
          Reinsurance recoverable ................................             (592,050)             (289,616)             (425,900)
          Accounts receivables ...................................             (193,584)           (1,422,558)             (852,285)
          Income tax recoverable .................................              120,000              (120,000)                 --
          Deferred income tax asset ..............................             (304,983)                 --                    --
          Other assets ...........................................              (80,868)               11,434                57,079
     Increase (decrease) in:
          Policy liabilities and accruals ........................            2,449,743             1,790,820             1,325,672
          Ceded reinsurance payable ..............................             (746,361)           (1,344,906)            1,690,766
          Accounts payable and other liabilities .................              408,966             1,245,773              (148,246)
          Income tax payable .....................................               35,132                  --                    --
                                                                              ---------            ----------            -----------
Net cash provided by (used in) operating activities ..............            1,965,077              (193,734)            1,925,903
Investing activities:
Securities available-for-sale :
     Purchases - fixed maturities ................................           (2,998,992)             (968,313)           (1,493,023)
     Sales - fixed maturities ....................................            1,286,262             2,479,916               954,039
     Purchases - equities ........................................                 --              (2,819,999)           (4,536,969)
     Sales - equities ............................................              347,707             2,999,085             4,269,885
Securities held-to-maturity:
     Purchases- fixed maturities .................................           (1,860,015)             (100,000)             (299,492)
     Maturities ..................................................                 --                 127,140               985,000
Purchases - mortgage loan ........................................             (895,877)                 --                    --
Other investment .................................................               (6,812)             (308,398)             (244,208)
Proceeds from short-term investments .............................               (6,246)                  887                  --
                                                                             ----------             ---------            -----------
Net cash (used in) provided by  investing activities .............           (4,133,973)            1,410,318              (364,768)
Financing activities:
Purchases of treasury stock ......................................                 --                 (13,500)               (9,448)
Payments on long-term debt .......................................              (49,159)              (87,932)             (114,745)
Stock options exercised ..........................................               45,028                  --                    --
Net change in advances to (from) affiliates ......................              (29,177)              283,669              (302,488)
Net proceeds from affiliated debt ................................                 --               1,000,000                  --
                                                                             ----------             ---------            -----------
Net cash (used in ) provided by financing activities .............              (33,308)            1,182,237              (426,681)
                                                                             ----------             ---------            -----------
(Decrease) increase in cash and cash equivalents .................           (2,202,204)            2,398,821             1,134,454
Cash and cash equivalents, beginning of year .....................            4,202,351             1,803,530               669,076
                                                                             ----------           -----------            -----------
Cash and cash equivalents, end of year ...........................          $ 2,000,147           $ 4,202,351           $ 1,803,530
                                                                             ==========           ===========           ===========

Supplemental cash flows disclosure:
Cash paid for interest ...........................................          $   114,027           $   118,239           $   124,928
                                                                             ----------           -----------            -----------
Cash paid for income taxes .......................................          $   148,950           $   120,000           $      --
                                                                             ==========           ===========           ============
</TABLE>

                 See notes to consolidated financial statements.


<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         Cumberland Technologies,  Inc. ("CTI") f/k/a Cumberland Holdings, Inc.,
a Florida corporation,  was formed on November 18, 1991, to be a Holding company
and a  wholly-owned  subsidiary of Kimmins Corp.  ("KC").  Effective  October 1,
1992, KC  contributed  all of the  outstanding  common stock of two of its other
wholly-owned  subsidiaries,  Cumberland  Casualty & Surety  Company  ("CCS") and
Surety Specialists, Inc. ("SSI") to CTI. KC then distributed to its stockholders
CTI's  common  stock on the basis of one  share of common  stock of CTI for each
five  shares  of  KC  common   stock  and  Class  B  common   stock  owned  (the
Distribution). Effective January 30, 1997, Cumberland Holdings, Inc. changed its
name to  Cumberland  Technologies,  Inc. CTI conducts its business  through five
subsidiaries.   CCS,  a  Florida   corporation  formed  in  May  1988,  provides
underwriting  for  specialty  surety  and  performance  and  payment  bonds  for
contractors.  The surety services provided include direct surety and to a lesser
extent,  assumed reinsurance.  SSI, a Florida corporation formed in August 1988,
is a general lines agency which operates as an independent  agent.  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."

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

      Principles of Consolidation

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

      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
consolidated 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, which is calculated under
the interest method, is included in investment income.

<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         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  income taxes,  reported as a separate  component of
other comprehensive income (loss). The amortized cost of debt securities in this
category,  which is  calculated  under the  interest  method,  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 current  operations.  The cost of
securities  sold is based on the specific  identification  method.  Interest and
dividends on securities available-for-sale are included in investment income.

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

         Cash Equivalents

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

         Deferred Policy Acquisition Costs

         To the extent  recoverable  from future policy  revenues,  the costs of
acquiring  new  surety  business,  principally  commissions,  are  deferred  and
amortized in a manner which charges each year's  operations in direct proportion
to the premium revenue recognized.

         Intangibles

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

         The  carrying  value of goodwill  and other  intangible  assets will be
reviewed if  circumstances  suggest  that they may be  impaired.  If this review
indicates  that the  intangible  assets will not be  recoverable,  as determined
based on the  undiscounted  cash flows of the entity acquired over the remaining
amortization   period,   the  Company's  carrying  value  of  the  goodwill  and
intangibles will be reduced to fair value.

<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         Loss and Loss Adjustment Expenses

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

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

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

         Unearned Premiums

         Unearned premiums are calculated using the monthly pro rata basis.

         Reinsurance

         The Company assumes and cedes  reinsurance and  participates in various
pools. The accompanying  consolidated  financial  statements  reflect  premiums,
benefits and settlement expenses,  and deferred policy acquisition costs, net of
reinsurance ceded (see Note 12). Amounts  recoverable from reinsurers for unpaid
losses are estimated in a manner consistent with the claim liability  associated
with the reinsured policies.

         Revenue Recognition

         Direct insurance and assumed reinsurance premiums earned are recognized
on a pro-rata basis over the period of risk.  Commission income, which is earned
on ceded premiums and premiums written for other third party insurance carriers,
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.

<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         Income Taxes

         Deferred  income 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  income tax assets and  liabilities are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary  differences are expected to be recovered or settled.  The
effect on deferred income tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

        The  Company  files a  consolidated  tax return  that  includes  all of
its subsidiaries. See Note 7.

         Earnings Per Share

     The Company computes and discloses  earnings (loss) per share in accordance
with the  provisions  of Statement of Financial  Accounting  Standards  No. 128,
Earnings Per Share.  The 134,500 and 189,086  outstanding  stock options for the
years ended December 31, 1999 and 1997, respectively had no effect on the result
of the calculation of earnings per share. Additionally,  the 187,086 outstanding
stock options at December 31, 1998 were antidilutive.

         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 consolidated financial statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts  reported in the consolidated  financial
statements and accompanying  notes.  Such estimates and assumptions could change
in the future as more  information  becomes known which would affect the amounts
reported and disclosed herein.
<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         New Accounting Standards

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

         In June 1998, the Financial Accounting Standards Board issued Statement
No. 133,  Accounting  for Derivative  Instruments  and Hedging  Activity  ("SFAS
133"),  which  establishes  accounting  and reporting  standards for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and hedging activities.  The Financial Accounting Standards Board has
issued  Statement No. 137,  Accounting  for Derivative  Instruments  and Hedging
Activities - Deferral of the  Effective  Date of SFAS No. 133,  which delays the
implementation  date of SFAS 133 for one year, to fiscal years  beginning  after
June 15, 2000.  Because of the Company's minimal use of derivatives,  management
does not anticipate that the adoption of SFAS 133 will have a significant effect
on the Company's results of operations or financial position.

         Reclassifications

         Certain amounts in the 1998 and 1997 consolidated  financial statements
have been reclassified to conform to the 1999 financial statement presentation.

3.       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  $10,342,  $14,907 and $1,738 for the years ended  December 31,
1999, 1998 and 1997,  respectively.  Qualex performs  consulting services for KC
and  affiliates.  Other income from affiliates  consist  primarily of consulting
services provided to KC.

<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         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. During 1998, KC reimbursed SSI for certain
project premiums.  As a result, a related note receivable was paid in full and a
commission of $83,952 was recognized by CCS.

     Cumberland  leases office space from a company owned by the Chairman of the
Board of  Directors at a monthly  rate of $7,278.  The rate  increases to $9,878
effective  March  1,  2000  as  a  result  of  increased   operating  costs  and
improvements.

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

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

<TABLE>
<CAPTION>

                                                                                         Gross            Gross
                                                                   Amortized         Unrealized Gains   Unrealized    Estimated Fair
                                                                     Cost                                Losses           Value
                                                                   -----------------------------------------------------------------
<S>                                                                   <C>               <C>              <C>              <C>

Available-for-sale securities at December 31, 1999:
   Debt securities:
     U.S. Government bonds .....................................       $3,274,876       $     --         $    4,635       $3,270,241
     State and municipal bonds .................................          496,433             --             68,168          428,265
                                                                       ----------       ----------       ----------       ----------
   Total debt securities .......................................        3,771,309             --             72,803        3,698,506
                                                                       ----------       ----------       ----------       ----------
   Equity securities ...........................................          570,288           31,906             --            602,194
                                                                       ----------       ----------       ----------       ----------
Total ..........................................................       $4,341,597       $   31,906       $   72,803       $4,300,700
                                                                       ==========       ==========       ==========       ==========

Held-to-maturity securities at December 31, 1999:
   Debt securities:
     U.S. Government bonds .....................................       $2,722,489       $    2,583       $   10,271       $2,714,801
                                                                       ==========       ==========       ==========       ==========

Available-for-sale securities at December 31, 1998:
   Debt securities:
     U.S. Government and government agency
        bonds ...................................... ...........       $1,553,407       $   19,426       $      563       $1,572,270
     State and municipal bonds .................................          496,380           13,120             --            509,500
                                                                       ----------       ----------       ----------       ----------
   Total debt securities .......................................        2,049,787           32,546              563        2,081,770
                                                                       ----------       ----------       ----------       ----------
   Equity securities ...........................................          799,487             --            222,912          576,575
                                                                       ----------       ----------       ----------       ----------
Total ..........................................................       $2,849,274       $   32,546       $  223,475       $2,658,345
                                                                       ==========       ==========       ==========       ==========

Held-to-maturity securities at December 31, 1998:
   Debt securities:
     U.S. Government bonds .....................................       $  860,508       $   35,738       $     --         $  896,246
                                                                       ==========       ==========       ==========       ==========
</TABLE>

<PAGE>


                                              CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

4.     Investments (continued)

       The amortized  cost and fair value of the Company's  investments  in debt
securities,  segregated by available-for-sale and held-to-maturity,  at December
31, 1999 are summarized, by stated maturity, as follows:

<TABLE>
<CAPTION>

                                                                  Available-for-Sale                      Held-to-Maturity
                                                            ------------------------------------------------------------------------
              Maturity                                       Amortized Cost       Fair Value        Amortized Cost        Fair Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>               <C>                   <C>

Due in one year or less ............................          $3,099,153          $3,098,991          $1,501,286          $1,500,000
Due after one year through five
   years ...........................................             125,723             121,250           1,221,203           1,214,801
Due after ten years through
   fifteen years ...................................              50,000              50,000                --                  --
Due after twenty years .............................             496,433             428,265                --                  --
                                                             -----------          ----------          ----------          ----------
                                                              $3,771,309          $3,698,506          $2,722,489          $2,714,801
                                                             ===========          ==========          ==========          ==========
</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, 1999 and 1998,  the  Company had $2.9  million and $3.4
million, respectively, in restricted investments (debt 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.

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

<TABLE>
<CAPTION>

                                                                                                    Year ended December 31,
                                                                                ----------------------------------------------------
                                                                                         1999               1998               1997
                                                                                ----------------------------------------------------
<S>                                                                                 <C>                <C>               <C>

Debt and equity securities ................................................         $ 143,416          $ 246,618          $ 344,459
Mortgage loans on real estate .............................................             3,480              6,711              4,105
Short-term investments, including cash and
    cash equivalents ......................................................           199,208            135,926             70,857
                                                                                    ---------          ---------           ---------
                                                                                      346,104            389,255            419,421
Less investment expenses ..................................................           (12,642)           (12,037)           (11,371)
                                                                                    ---------            -------           ---------
Net investment income .....................................................         $ 333,462          $ 377,218          $ 408,050
                                                                                    =========          =========          =========
Realized gains (losses) on available-for-sale securities:
    Debt securities - gains ...............................................         $  10,592          $  15,589          $    --
    Equity securities - gains .............................................           118,509            226,613            201,863
    Equity securities - losses ............................................              --             (679,767)              --
                                                                                    ---------          ---------          ---------
Net realized investment gains (losses) ....................................         $ 129,101          $(437,565)         $ 201,863
                                                                                    =========          =========          =========
</TABLE>

<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

5.     Fair Value of Financial Instruments

       The  carrying  amounts  and  fair  values  of  the  Company's   financial
instruments at December 31, 1999 and 1998 are as follows:

                                                            December 31, 1999
                                                    ----------------------------
                                                     Carrying Amount  Fair Value
                                                    ----------------------------
Assets:
   Cash and cash equivalents, including short-
       term investments ............................    $2,430,386    $2,430,386
   Investments .....................................     7,023,189     7,015,501
   Mortgage loans on real estate ...................       940,304       940,304
   Accounts receivable .............................     3,300,839     3,300,839
   Reinsurance recoverable .........................     2,898,422     2,898,422

Liabilities:
   Long-term debt ..................................     2,281,429     2,190,520
   Ceded reinsurance payable .......................       367,906       367,906

                                                            December 31, 1998
                                                      --------------------------
                                                      Carrying Amount Fair Value
                                                      --------------------------
Assets:
   Cash and cash equivalents, including short-
       term investments ............................    $4,626,344    $4,626,344
   Investments .....................................     3,563,280     3,554,591
   Accounts receivable .............................     3,105,078     3,105,078
   Reinsurance recoverable .........................     2,306,372     2,306,372

Liabilities:
   Long-term debt ..................................     2,330,588     2,239,679
   Ceded reinsurance payable .......................     1,114,267     1,114,267

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

         Cash and cash equivalents,  short-term  investments,  mortgage loans on
real estate, accounts receivable,  long-term debt and ceded reinsurance payable:
The carrying amount reported in the balance sheet approximates its fair value.

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

<PAGE>

                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

6.       Intangibles

         Intangibles at December 31 are comprised of the following:

                                                             December 31,
                                                     ---------------------------
                                                           1999             1998
                                                     ---------------------------
Deferred state admission costs ...............       $  227,171       $  227,171
Customer lists and acquisition costs .........        1,084,041        1,084,041
Product development ..........................          262,194          262,194
Goodwill .....................................          926,661          926,661
                                                     ----------       ----------
                                                      2,500,067        2,500,067
Accumulated amortization .....................        1,233,432        1,044,542
                                                     ----------       ----------
Total ........................................       $1,266,635       $1,455,525
                                                     ==========       ==========

         Amortization expense amounted to $188,890 in 1999, $225,108 in 1998 and
$275,169 in 1997.

7.     Other Investment

       The Company has a 30 percent  investment  in Global  Solutions  Insurance
Services,  Inc.  ("GSIS"),  an agency  located in  California  that issues cargo
insurance and customs bonds, which is accounted for under the equity method.

       Summarized financial information of GSIS is as follows:
<TABLE>
<CAPTION>

                                                                                                         Year ended December 31,
                                                                                                ------------------------------------
                                                                                                      1999         1998         1997
                                                                                                ------------------------------------
<S>                                                                                            <C>           <C>         <C>

Revenues .................................................................................. .  $  227,652   $  310,877   $  254,975
Net loss ....................................................................................      677,516      452,055      366,079

<CAPTION>

                                                                                                        As of December 31,
                                                                                                 -----------------------------------
                                                                                                      1999         1998
                                                                                                 -----------------------------------
<S>                                                                                            <C>           <C>

Current assets ..............................................................................   $  574,964   $  745,406
Non-current assets ..........................................................................      107,906      122,420
Current liabilities .........................................................................      269,781      424,420
Non-current liabilities .....................................................................    1,902,601    1,267,421

</TABLE>

<PAGE>
                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

8.       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, 1999, 1998 and 1997, to the gross amounts reported in the Company's
consolidated balance sheets:

<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                ----------------------------------------------------
                                                                                       1999                 1998                1997
                                                                                ----------------------------------------------------
<S>                                                                             <C>                 <C>                 <C>

Liability for losses and LAE, net of reinsurance
    recoverable on unpaid losses, at beginning of
    year ..............................................................         $ 1,680,580          $ 1,392,931         $   594,922
Provision for losses and LAE for claims occurring
    in the current year, net of reinsurance ...........................           2,810,532            2,331,074           1,743,117
Increase in estimated losses and LAE for claims
    occurring in prior years, net of reinsurance ......................            (416,000)             317,000              49,000
                                                                                  ---------          -----------         -----------
Incurred losses during the current year, net of
    reinsurance .......................................................           2,394,532            2,648,074           1,792,117
Losses and LAE payments for claims, net of
    reinsurance, occurring during:
    Current year ......................................................             135,635              557,997             553,629
    Prior years .......................................................           1,130,750            1,802,428             440,479
                                                                                  ---------            ---------         -----------
                                                                                  1,266,385            2,360,425             994,108
                                                                                  ---------           ----------         -----------
Liability for losses and LAE, net of reinsurance
    recoverables on unpaid losses, at end of year .....................           2,808,727            1,680,580           1,392,931
Reinsurance recoverables on unpaid losses at end of
    year ..............................................................           1,767,812            1,539,877           1,157,369
                                                                                  ---------            ---------         -----------
Liability for losses and LAE, gross of reinsurance
    recoverables on unpaid losses, at end of year .....................         $ 4,576,539          $ 3,220,457         $ 2,550,300
                                                                                ===========          ===========         ===========

</TABLE>


         Cumberland  experienced  a  $416,000  redundancy  and  deficiencies  of
$317,000 and $49,000 for losses and loss  adjustment  expenses in 1999, 1998 and
1997,  respectively.   The  redundancy  principally  resulted  from  subrogation
received on pooling  agreement case base reserves and claims in prior years. The
deficiency  in 1998 and 1997  principally  resulted  from  settling  case  basis
reserves established in prior years for amounts that were more than expected.

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

<PAGE>


                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                                                                          December 31,
                                                             -----------------------------------------------------------------------
                                                                  1999                          1998                          1997
                                                             -----------------------------------------------------------------------
<S>                                                         <C>                      <C>                           <C>

Current:
    Federal ...................................              $ 283,252               $            --                $           --
    State .....................................                 58,417                            --                            --
    Total current .............................                341,669                            --                            --

Deferred:
    Federal ...................................               (260,407)                           --                            --
    State .....................................                (44,576)                           --                            --
    Total deferred ............................               (304,983)                           --                            --
                                                             ---------               ---------------                ----------------
Total provision ...............................              $  36,686               $            --                $           --

                                                             =========               ===============                ================
</TABLE>

         A  reconciliation  of the  statutory  federal  income tax rate with the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>

                                                                                                         December 31,
                                                                                ----------------------------------------------------
                                                                                     1999                   1998                1997
                                                                                ----------------------------------------------------
<S>                                                                                <C>                   <C>                   <C>

Statutory federal rate .........................................                   34.00%                (34.00%)              34.0%
State income taxes, net ........................................                    0.78                  (3.00)                3.9
Tax exempt income ..............................................                    0.00                  (9.70)               (7.2)
Change in valuation allowance ..................................                  (35.30)                 31.20               (40.8)
Nondeductible expenses .........................................                    0.46                  15.50                10.1
Miscellaneous ..................................................                    3.16                    --                   --
                                                                                  ------                 ------               ------
Effective tax rate .............................................                    3.10%                   --                   --
                                                                                  ======                 ======               ======
</TABLE>

         The following  summarizes the effect of deferred income taxes items and
their  impact  of  "temporary   differences"   between  amounts  of  assets  and
liabilities for financial reporting purposes and such amounts as measured by tax
laws.  Temporary  differences  and  carry-forwards  which give rise to  deferred
income tax assets and liabilities are as follows:

<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

<TABLE>
<CAPTION>
                                                                                                   December 31,
                                                                        ------------------------------------------------------------
                                                                                1999                    1998                   1997
                                                                        ------------------------------------------------------------
<S>                                                                     <C>                    <C>                      <C>

Deferred income tax liabilities:
--------------------------------
Deferred acquisition costs .................................            $  (632,564)            $  (544,339)            $  (305,836)
States taxes ...............................................                (15,156)                   --                      --
Unrealized gain on investments .............................                (12,603)                   --                   (50,500)
                                                                        -----------             -----------              -----------
Total deferred income tax
    liabilities ............................................               (660,323)               (544,339)               (356,336)

Deferred income tax assets:
---------------------------
Basis difference in fixed assets ...........................                 17,990                  17,139                   8,931
Unrealized loss in investments .............................                   --                   290,236                    --
Basis difference in investments ............................                 96,201                  91,646                  40,620
Reserve discounting ........................................                 33,112                  54,885                  19,050
Unearned premiums ..........................................                605,246                 245,321                 166,961
Amortization ...............................................                105,358                  96,160                  69,028
Net operating loss carryforward ............................                   --                    85,789                 232,012
Alternative minimum credit
    carryforward ...........................................                   --                    27,648                  15,555
Surplus notes ..............................................                107,399                 102,314                 102,314
                                                                        -----------             -----------              -----------
Total deferred income tax assets ...........................                965,306               1,011,138                 654,471
Less valuation allowance ...................................                   --                  (466,799)               (298,135)
                                                                        -----------             -----------              -----------
Total deferred income tax assets ...........................                965,306                 544,339                 356,336
                                                                        -----------             -----------              -----------
Net deferred income tax asset ..............................            $   304,983             $      --               $      --
                                                                        ===========             ===========              ===========
</TABLE>

10.    Long-Term Debt
---    --------------

         Long-term debt as of December 31, consists of the following:

                                                             1999           1998
                                                      --------------------------
Affiliate:
    Convertible note payable due November 10,
     2001 ........................................     $1,000,000     $1,000,000
Nonaffiliate:
    Note payable due March 1, 2002 ...............        374,086        374,087
    Note payable due June 30, 2010 ...............        907,343        956,501
                                                       ----------     ----------
                                                       $2,281,429     $2,330,588
                                                       ==========     ==========

<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         Convertible Note Payable to Affiliate

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

         Notes Payable to Nonaffiliates

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

         Interest paid in 1999,  1998 and 1997 for term notes due  nonaffiliates
was $114,027, $118,239 and $124,298, respectively.

         Maturities of notes payable for the five years succeeding  December 31,
1999 and thereafter are as follows:


                   Year Ending December 31,
           ----------------------------------------- ---------------------------
                           2000                       $         183,448
                           2001                               1,184,254
                           2002                                 183,296
                           2003                                  70,365
                           2004                                  83,696
                        Thereafter                              576,370

11.   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  deferrals.  The  Company's
contributions to the plan totaled $22,730,  $11,701 and $9,367 in 1999, 1998 and
1997, respectively.

<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

12.   Stock Option Plan
---   -----------------

         During the fiscal year ended December 31, 1999, the Company  registered
the 1991 Stock Option Plan. (the"Plan").  The Company applies APB Opinion No. 25
and  related  interpretations  in  accounting  for  the  Plan.  Accordingly,  no
compensation  cost has been recognized for the Plan. Had compensation  cost been
determined  based on the fair market  value at the grant dates for awards  under
the Plan consistent with the method of FASB Statement No.123,  the effect on the
Company's net income and earnings per share would have been immaterial.

         The fair value of each  option  grant is  estimated  on the date of the
grant  using  the   Black-Scholes   option-pricing   model  with  the  following
weighted-average  assumptions  used for grants for the years ended  December 31,
1999 and  1998,  respectively;  dividend  yield of 0% for all  years,  risk free
interest rates of 5.40%, and 6.05%,  expected lives of 4 years and volatility of
99.98% for all years.

         Options  granted  under  this  plan  have a term of ten  years and vest
ratably  over a four year  period  immediately  following  the grant  date.  The
following  table  summarizes  all stock option  transaction  for the years ended
December 31, 1999 and 1998:

<TABLE>
<CAPTION>

                                             1999                                   1998                         1997
                                  ---------------------------------     -------------------------   --------------------------------

                                                  Weighted-Average               Weighted-Average                   Weighted-Average
                                      Shares      Exercise Price         Shares  Exercise Price        Shares         Exercise Price
                                  -----------     ----------------     --------- ----------------   -------------   ----------------
<S>                                <C>             <C>                  <C>     <C>                 <C>             <C>

Outstanding at
  beginning of year .........        187,086      $     .35             189,086   $    .21             189,086       $          .21

Grants ......................            --              --              12,000   $   2.25                  --                   --

Exercised ...................       (52,286)      $     .15                  --         --                  --                   --

Forfeited ...................          (300)      $     .15             (14,000)  $    .15                  --                   --
                                    -------       ---------        ------------  ---------            --------       ---------------


Outstanding at end of
  year .....................        134,500       $     .42             187,086   $    .35             189,086       $          .21
                                   ========       ===========       ============ ==========          =========       ===============
Exercisable at
  end of year .............         122,800       $     .30             168,486   $    .22             175,586       $          .17
                                   ========       ===========       ========================         =========       ===============

Weighted-average
fair value of
options granted
during the year ..........              --        $      --                 --  $   2.375                  --         $          --
                                    =======       ===========       ========================         =========       ===============

</TABLE>

         The proceeds from the exercise of stock options  include certain income
tax benefits, which are included in capital in excess of par value.

<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

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

         The  following  table  summarizes  information  about stock  options at
December 31, 1999:

<TABLE>
<CAPTION>

                             Options Outstanding                                        Options Exercisable
                     ------------------------------------- ------------------- --------------------------------------
                          Number        Weighted-Average                            Number
                      Outstanding at        Remaining       Weighted-Average    Exercisable at     Weighted-Average
 Range of Exercise   December 31, 1999  Contractual Life     Exercise Price    December 31, 1999    Exercise Price
      Prices
-------------------- ------------------ ------------------ ------------------- ------------------ -------------------
<S>                 <C>                 <C>                 <C>                <C>                <C>

$ .125 ............          100,000            2 years    $           .125           100,000     $         .125
$ .75 - 1.00 ......           22,500            7 years    $           .780            18,000     $         .780
$ 2.25 ............           12,000            9 years    $           2.25             4,800     $         2.25
                     ------------------ ------------------ ------------------- ------------------ -------------------
                             134,500            9 years    $            .42           122,800     $          .30
                     ================== ================== =================== ================== ===================

</TABLE>

13.   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, 1999.

14.   Reinsurance
---   -----------

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

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

         CCS  assumed  reinsurance  primarily  from a  pooling  agreement  which
expired  in April,  1997 for which CCS  assumed  10  percent  of the risk with a
maximum  exposure to CCS of $125,000 per bond. CCS is still  receiving  residual
revenues  from a pooling  agreement  for which CCS  assumed  25  percent  and 20
percent of the risk with a maximum  exposure to CCS of $125,000 and $600,000 per
bond, respectively.

<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

14.   Reinsurance (continued)
---   -----------------------

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

         Gross and net written premiums in 1999, 1998 and 1997 are summarized as
follows:

<TABLE>
<CAPTION>

                                           1999                               1998                                 1997
------------------------     ------------------------------      -----------------------------       -------------------------------
                                  Written            Earned           Written           Earned           Written          Earned
------------------------     ------------------------------      -----------------------------       -------------------------------
<S>                           <C>              <C>               <C>               <C>              <C>                <C>

   Direct
  premiums .............     $ 10,816,114      $ 10,064,121      $  9,451,746      $  8,541,161      $  6,797,136      $  5,838,393

  Assumed
  premiums .............        2,421,346         2,079,680         1,478,109         1,268,032         1,189,689         1,381,264

   Ceded
  premiums .............       (2,740,148)       (2,526,009)       (2,354,970)       (2,275,509)       (1,752,564)       (1,535,712)
                             ------------      ------------      ------------      ------------      ------------      ------------
   Net
   premiums ...........      $ 10,497,312      $  9,617,792      $  8,574,885      $  7,533,684      $  6,234,261      $  5,683,945
                             ============      ============      ============      ============      ============      ============
</TABLE>

         Loss  and  loss  adjustment  expenses  in  1999,  1998,  and  1997  are
summarized as follows:

<TABLE>
<CAPTION>

                                                                              1999                     1998                     1997
                                                                       -------------------------------------------------------------
<S>                                                                   <C>                      <C>                      <C>

Direct ...................................................             $ 3,932,278              $ 1,743,448              $ 1,048,450
Assumed ..................................................                 714,117                1,343,334                  741,351
Ceded ....................................................              (2,251,863)                (438,708)                   2,316
                                                                       -----------              -----------              -----------
Net losses and loss adjustment
    expenses .............................................             $ 2,394,532              $ 2,648,074              $ 1,792,117
                                                                       ===========              ===========              ===========
</TABLE>

         The  Company  reported  reinsurance  recoverables  on  paid  losses  of
$408,708 and $448,553 at 1999 and 1998, respectively.

<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997

15.      Commitments and Contingencies
---      -----------------------------

         The  Company   leases   certain   office  space  and  equipment   under
noncancelable operating leases. Rent expense was $178,429,  $163,409 and $87,048
for the years ended  December 31,  1999,  1998 and 1997,  respectively.  Minimum
future  rental  commitments  as of  December  31,  1999  for  all  noncancelable
operating leases with an initial term of over one year are as follows:

                   Year Ending December 31,
          ---------------------------------------- ----------------------------
                            2000                    $            169,453
                            2001                                 146,645
                            2002                                 109,969
                            2003                                 107,893
                            2004                                 101,653
                         Thereafter                              418,154
                                                    ----------------------------
                                                    $          1,053,767
                                                    ============================

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

         Statutory  surplus and net income as reported to the domiciliary  state
insurance  department in accordance  with its prescribed or permitted  statutory
accounting practices for CCS is summarized as follows:

<TABLE>
<CAPTION>

                                                                                                         Year Ended December 31,
                                                                                              --------------------------------------
                                                                                                    1999          1998          1997
                                                                                              --------------------------------------
<S>                                                                                           <C>           <C>           <C>

Statutory capital and surplus ............................................................    $5,106,241    $4,843,478    $5,044,527
Net income ...............................................................................       675,975        74,157       959,304

</TABLE>

         CCS  is  domiciled   in  Florida  and   prepares  its   statutory-basis
consolidated  financial  statements  in  accordance  with  accounting  practices
prescribed  or  permitted  by the  Florida  Insurance  Department.  "Prescribed"
statutory  accounting  practices  include state laws,  regulations,  and general
administrative  rules,  as well as a variety  of  publications  of the  National
Association  of  Insurance   Commissioners   ("NAIC").   "Permitted"   statutory
accounting practices encompass all accounting practices that are not prescribed;
such  practices  may differ  from state to state,  may  differ  from  company to
company  within a state,  and may change in the future.  In 1998,  the  National
Association  of Insurance  Commissioner  adopted the  Codification  of Statutory
Accounting  Principles  (Codification)  for insurance  companies.  Codification,
which is intended to  standardize  regulatory  accounting  and reporting for the
insurance  industry,  is effective January 1, 2001.  However, it is uncertain if
and when  individual  states  will  require  adoption  of  Codification  for the
preparation of statutory financial statements. The Company has not finalized the
quantification  of  the  effects  of  Codification  on its  statutory  financial
statements.


<PAGE>



                          CUMBERLAND TECHNOLOGIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997


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

     Under applicable state insurance statues, CCS must maintain minimum capital
and  surplus of  $2,500,000  (as of  December  31,  1999).  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, 1999,  no dividends  from CCS are  available  for
payment  to  the  Company  without  the  prior  approval  of the  Department  of
Insurance.  The more  significant  variances  between  statutory  reporting  and
generally accepted accounting  principles are deferred policy acquisition costs,
deferred  income taxes and nonadmitted  assets.  Insurance  regulations  dictate
expensing  commissions and income taxes when paid.  Nonadmitted assets represent
non-liquid  assets and are  excluded  from the  stautory  statement  of admitted
assets, liabilities and capital and surplus.

17.      Comprehensive Income

     The  Company  adopted  the  provisions  of the  SFAS  No.  130,  "Reporting
Comprehensive Income," in 1998. Comprehensive income is defined as any change in
equity from transactions and other events originating from nonowner sources. The
Company's  comprehensive  income is comprised of reported net income and changes
in the unrealized appreciation of available-for-sale  securities.  The following
summarizes the components of comprehensive income:

<TABLE>
<CAPTION>

                                                                                   Consolidated Statements of Comprehensive Income
                                                                           ---------------------------------------------------------
                                                                                          Twelve Months Ended December 31,
                                                                           ---------------------------------------------------------
                                                                                   1999                  1998                   1997
                                                                           ------------        ---------------        --------------
<S>                                                                          <C>                  <C>                 <C>

Net income (loss) ...............................................            $1,148,070            $ (321,409)            $  170,520
Other comprehensive income, net of tax:
      Unrealized appreciation
         (depreciation) of available-for-
         sale securities arising during
         period .................................................               230,552              (830,088)               160,525
      Less:   reclassification adjustment
              for gains (losses) included in
              net income ........................................            $   80,520            $ (504,958)            $  126,000
                                                                             ----------            ----------             ----------
Comprehensive income (loss)......................................            $1,298,102            $ (646,539)            $  205,045
                                                                             ==========            ==========             ==========
</TABLE>


<PAGE>

                  SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                  OF REGISTRANT

                          CUMBERLAND TECHNOLOGIES, INC.
<TABLE>
<CAPTION>

                                                                                        December 31,
------------------------------------------------------------------------------------------------------------------------------------
Condensed Balance Sheets                                                                            1999         1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>            <C>

Assets:
Trade receivables .........................................................................  $      --     $      --
Accounts receivable from affiliates .......................................................         --            --
Investment in wholly-owned subsidiaries ...................................................    6,246,436     1,701,379
Other assets ..............................................................................       73,093        68,363
Other investments .........................................................................      559,418       552,606
Surplus debenture receivable from subsidiary ..............................................    2,048,734     5,026,354
                                                                                             -----------   -----------
                                                                                             $ 8,927,681   $ 7,348,702
                                                                                             ===========   ===========
Liabilities:
Accounts payable to affiliates ............................................................  $ 2,223,760   $ 1,994,771
Accounts payable ..........................................................................       11,561         4,701
                                                                                             -----------   -----------
                                                                                               2,235,321     1,999,472
Stockholders' equity:
Common stock ..............................................................................        5,816         5,763
Other stockholders' equity ................................................................    6,686,544     5,343,467
                                                                                             -----------   -----------
                                                                                               6,692,360     5,349,230
                                                                                             -----------   -----------
                                                                                             $ 8,927,681   $ 7,348,702
                                                                                             ===========   ===========

<CAPTION>



Condensed Statements of Operations                                                                       Year Ended December 31,
----------------------------------                                                           ---------------------------------------
                                                                                                    1999          1998          1997
                                                                                             -----------   -----------   -----------
<S>                                                                                          <C>           <C>           <C>

Management fees from wholly-
   owned subsidiaries .....................................................................  $   233,226   $   217,892   $    88,378
Interest income from subsidiary ...........................................................         --         262,500       271,875
                                                                                             -----------   -----------   -----------
                                                                                                 233,226       480,392       360,253
Costs and expenses:
Selling and administrative expenses .......................................................      469,534       415,242       294,901
Interest expense to affiliates ............................................................      100,000          --            --
                                                                                             -----------   -----------   -----------
                                                                                                 569,534       415,242       294,901
                                                                                             -----------   -----------   -----------
Income (loss) before income taxes
   and equity in net income (loss)
   of subsidiaries ........................................................................     (336,308)       65,150        65,352
Income taxes expense ......................................................................      (36,686)         --            --
Equity in net income (loss) of
   subsidiaries ...........................................................................    1,521,064      (386,559)      105,168
                                                                                             -----------    ----------   -----------
Net income (loss) .........................................................................  $ 1,148,070   $  (321,409)  $   170,520
                                                                                             ===========   ===========   ===========
</TABLE>



<PAGE>



                  SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                            OF REGISTRANT (CONTINUED)

                          CUMBERLAND TECHNOLOGIES, INC.

Supplemental Schedule of Noncash Investing and Financing Activities

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

Notes to Condensed Financial Statements

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

         Organization - Cumberland Technologies, Inc. ("CTI" or "Cumberland"), a
Florida  corporation,  was formed on November 18, 1991, to be a holding  company
and a  wholly-owned  subsidiary of Kimmins Corp.  ("KC").  Effective  October 1,
1992,  KC  contributed  all  of  the  outstanding  common  stock  of  two of its
wholly-owned  subsidiaries,  Cumberland  Casualty & Surety  Company  ("CCS") and
Surety Specialists, Inc. ("SSI") to CTI. KC then distributed to its stockholders
CTI's  common  stock on the basis of one  share of common  stock of CTI for each
five  shares  of  KC  common   stock  and  Class  B  common   stock  owned  (the
"Distribution").  CTI conducts its business through its subsidiaries,  CCS, SSI,
Surety Group,  Inc. ("SG"),  Surety  Associates  ("SA"),  and Qualex  Consulting
Group, Inc. ("Qualex")  (collectively together with Cumberland,  the "Company.")
CCS, a Florida corporation formed in May 1988, provides  performance and payment
bonds for  contractors  and  miscellaneous  surety  bonds to  federal  and local
government agencies.  The surety services provided include direct surety and, to
a lesser extent, reinsurance.  SSI, a Florida corporation formed in August 1988,
is a general lines agency which operates as an independent  agent. SG, a Georgia
corporation,  and Associates Acquisition Corp. d/b/a Surety Associates,  a South
Carolina  corporation,  purchased  by  Cumberland  in  February  and July  1995,
respectively,  are general lines insurance agencies which operate as independent
agencies.  Qualex, a Florida corporation formed in November 1995, provides claim
and contracting consulting services.

         For the years ended  December 31, 1999,  1998 and 1997, CTI charged its
subsidiaries excluding CCS, a management fee.

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

     Investment in  subsidiaries  includes the net  unrealized  depreciation  in
available-for-sale  securities  held by  CCS,  of  $40,897  and  $190,929  as of
December 31, 1999 and 1998,  respectively.  These  amounts have been included in
the CTI "other stockholders' equity" amounts.


<PAGE>




                  SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                            OF REGISTRANT (CONTINUED)

                          CUMBERLAND TECHNOLOGIES, INC.

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 from CCS. As a
result, CCS increased paid-in-capital by $375,000. On June 30, 1999, CTI forgave
$576,266 of its  $2,625,000  surplus  debenture  due from CCS. As a result,  CCS
increased  paid-in-capital  to $1,000,000.  As of December 31, 1999, no payments
could be made under the terms of the debenture.

<PAGE>