SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           ---------------------------
                                    FORM 10-K
[MARK ONE]
[X]      Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

                   For the fiscal year ended December 31, 1998
                                       OR
[  ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934

         For the transition period from _____________ to _____________.

                           Commission File No. 1-10489
                              ---------------------
                                  KIMMINS CORP.
             (Exact name of registrant as specified in its charter)

         Delaware                                           59-2763096
  (State of Incorporation)                 (I.R.S. Employer Identification No.)

                 1501 Second Avenue, East, Tampa, Florida 33605
              (Address of registrant's principal executive offices,
                               including zip code)

      (Registrant's telephone number, including area code): (813) 248-3878

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

                                                         Name of Exchange
            Title of Each Class                         on Which Registered
       -----------------------------                    -------------------
       Common Stock, $.001 par value                           None


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

                                      NONE

     Indicate by a 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  filers  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]

     As of March 31, 1999,  there were  outstanding  4,296,969  shares of Common
Stock and 2,291,569  shares of Class B common stock.  The aggregate market value
of the voting stock held by  non-affiliates  of the  registrant  as of March 31,
1999, was $1,372,933.
                         ------------------------------
                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      NONE
<PAGE>

                                  KIMMINS CORP.

                                    Form 10-K

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>               <C>                                                                                         <C>    

                                                                                                              Page
                                                                                                               No.
PART I
     Item 1       Business........................................................................................3
     Item 2       Properties......................................................................................8
     Item 3       Legal Proceedings...............................................................................9
     Item 4       Submission of Matters to a vote of Security Holders.............................................9

PART II
     Item 5       Market for the Registrant's Common Equity and Related Stockholder Matters......................10
     Item 6       Selected Financial Data........................................................................11
     Item 7       Management's Discussion and Analysis of Financial Condition and
                     Results of Operations.......................................................................12
     Item 7A      Quantitative and Qualitative Disclosures about Market Risk.....................................23
     Item 8       Financial Statements and Supplementary Data....................................................24
     Item 9       Changes in and Disagreements with Accountants on Accounting and
                     Financial Disclosures.......................................................................55

PART III
     Item 10      Directors and Executive Officers of the Registrant.............................................56
     Item 11      Executive Compensation.........................................................................58
     Item 12      Security Ownership of Certain Beneficial Owners and Management.................................61
     Item 13      Certain Relationships and Related Transactions.................................................62

PART IV
     Item 14      Exhibits, Financial Statement Schedules and Reports on Form 8-K................................64

</TABLE>

<PAGE>


         Note:  The  discussions  in  this  Form  10-K  contain  forward-looking
statements that involve risks and  uncertainties.  Statements  contained in this
Form 10-K that are not historical facts are forward looking  statements that are
subject to the safe harbor created by the Private  Securities  Litigation Reform
Act of 1995. A number of important factors could cause future results of Kimmins
Corp. and its  subsidiaries to differ  materially and  significantly  from those
expressed or implied in past results and in any forward looking  statements made
by, or on behalf of, the Company. Factors that could cause or contribute to such
differences  include,  but are not limited to, those discussed in "Business" and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  as well as those  discussed  elsewhere  in this Form  10-K.  These
factors  include,  without  limitation,  those  listed in "Risk  Factors" in the
Company's Registration Statement on Form S-1 (File No.
33-12677).

                                     PART I

Item 1.  Business
                                   THE COMPANY

         Kimmins  Corp.  and  its  subsidiaries  (collectively,  the  "Company")
provide  specialty-contracting   services  in  the  south,  mainly  in  Florida,
including  earthwork;  infrastructure  development;   underground  construction;
roadwork; site remediation services such as excavation,  removal and disposal of
contaminated  soil;   facilities   demolition  and  dismantling;   and  asbestos
abatement.  The Company has historically  operated two business segments:  solid
waste  management  services  and  specialty  contracting  services.  The Company
previously  provided solid waste management  services through its TransCor Waste
Services, Inc., ("TransCor") subsidiary to commercial, industrial,  residential,
and municipal  customers in the state of Florida. As a result of TransCor's sale
of its wholly owned subsidiary  Kimmins Recycling Corp.  ("KRC") in August 1998,
the Company no longer provides solid waste management services.

         The Company's specialty contracting services are as follows:

          *    Earthwork  and  utility   contracting   -  Earthwork   activities
               including  commercial  and  residential  site work and  earthwork
               activities   for   the   phosphate   mining   industry.   Utility
               contracting,  including  infrastructure  services  such as  sewer
               lines, water lines, and roads.

          *    Industrial demolition,  dismantling,  and abatement - Dismantling
               of  facilities or structures  including  offshore oil  platforms;
               draining  liquid wastes from pipes and tanks;  asbestos  removal,
               cleanup,  disposal,  and  reinsulation;  removal  of  above-  and
               below-ground  tanks;  removal  and  disposal  or  sale  of  other
               equipment; and sale of scrap materials.

          *    Hazardous   waste  services  -  Containment  and  excavation  and
               removal.

         The Company's  services may be used  individually  or in combination as
required  to meet  the  specific  needs of  customers.  The  Company's  business
strategy is to draw upon its contracting  experience to perform complex projects
requiring a broad range of services.  Although  each of the  Company's  business
lines can operate  independently  from the other related  services,  the Company
believes that integration of these services gives it a competitive  advantage by
relieving  the  customer of the burden of  coordinating  activities  of multiple
contractors.

         During its initial years of operation,  the Company  emphasized,  among
other services offered, a broad range of contracting  services.  As the need for
waste-related  and  specialty  contracting  services  has grown in  response  to
heightened  public concern and government  regulation,  the Company has used its
capabilities  in facilities  demolition and dismantling and in the management of
complex   construction    projects   to   become   increasingly    involved   in
project-oriented activities.

         The Company's strategy is to continue to focus on specialty contracting
projects for private and governmental  customers.  The Company does not consider
its business to be highly seasonable.
<PAGE>
SERVICES

Specialty Contracting:

Earthwork and Utility Contracting Services

         Since 1988, the Company has directed its focus toward environmental and
utility contracting,  including  infrastructure and reconstructive service work.
The Company,  through its subsidiary,  Kimmins  Contracting Corp.,  continues to
provide   comprehensive    non-hazardous    contracting   services,    including
infrastructure  services such as water and sewer line installation,  replacement
and repair to  private  and  governmental  customers  primarily  in the state of
Florida. Related infrastructure  development includes road installation,  repair
and  widening,  and  installation,   repair  and  enhancement  of  drainage  and
wastewater services.

         Kimmins Contracting Corp. has broadened its array of services by adding
earthwork  operations.  These  operations are mainly directed toward the private
sector in the state of Florida and include land  reclamation,  dam  construction
and  other  earthwork   operations  for  the  phosphate  mining  industry,   and
residential and commercial site work services.

Industrial Demolition, Dismantling, and Abatement Services

         The  Company  offers   demolition  and  dismantling  of  facilities  or
structures;  asbestos removal; cleanup,  disposal, and reinsulation;  removal of
above-  and  below  ground  storage  tanks;  removal  and  disposal  or  sale of
industrial equipment; and the sale of equipment and scrap materials.

         Demolition  and  dismantling   projects  result  from  the  closing  or
retooling of facilities  due to such factors as  technological  obsolescence  of
facilities,   corporate  mergers  and  consolidations  of  operations,  and  the
relocation of manufacturing  operations to low-cost labor areas or areas subject
to less stringent regulation,  primarily in foreign countries. In addition, site
remediation,  particularly in the case of environmental contamination of a site,
frequently requires the demolition or dismantling of a contaminated facility.

         Dismantling is the precise disassembly of a manufacturing or production
facility on a piece-by-piece  basis to recover  equipment as complete  operating
units that can be  reinstalled  at another  location.  Dismantling  enhances the
value of the facility above scrap market  values.  The Company is paid a fee for
dismantling  services and,  usually,  a commission on the sale of  non-relocated
equipment.

         Demolition  usually requires wrecking services for which the Company is
paid a fee by the customer.  In certain  projects,  the Company may also receive
additional  revenue from selling the scrap material.  The Company's  services in
these areas include  dismantling  large structures  (including  refineries,  and
utility plants); draining liquid wastes from pipes and tanks; removing above and
below-ground  tanks;  cleaning and  disposing  of  contaminated  equipment;  and
controlled demolition.

         Certain demolition projects also involve asbestos removal,  cleanup and
disposal.  The Company is  continuing  to  de-emphasize  its asbestos  abatement
services and generally  will only perform  these  services in  conjunction  with
other environmental demolition activities.

Hazardous Waste Services

         The Company  offers a range of services for the removal and disposal of
hazardous  materials.  The services offered include  construction of containment
systems and the excavation and removal of contaminated material. The Company has
de-emphasized  its hazardous waste services and will only perform these services
in conjunction with other environmental demolition activities.
<PAGE>
         Containment.   Containment  systems  are  constructed  to  prevent  the
migration of hazardous  materials  from a site to the  surrounding  groundwater,
surface  water,  soil or air.  While  containment  can be a  permanent  remedial
solution,  it is also used as an interim step followed by excavation and removal
or on-site  treatment.  The Company  installs  containment  systems that include
containment cells, surface caps, and slurry walls.

         Excavation and removal.  Excavation and removal  involve the excavation
of contaminated  materials for containment or off-site  disposal.  When off-site
disposal is required,  the Company  subcontracts with licensed third parties for
the transportation of the material for off-site disposal. As part of its quality
control program,  the Company regularly samples and analyzes excavated materials
to verify that the  contaminants  are  consistent  with those  identified in the
remediation plan.

DISCONTINUED OPERATIONS

Solid Waste Management Services:

         TransCor adopted a formal plan to dispose of its solid waste management
services  operations on July 17, 1998 by selling its wholly owned subsidiary KRC
to Eastern Environmental  Services,  Inc. (EESI). On August 31, 1998 the Company
completed the sale of the solid waste management services (SWMS) operations. The
assets sold consisted primarily of accounts receivables, contracts, property and
equipment and goodwill.  The selling price was approximately  $57,800,000 in the
form of cash and EESI common stock.  On December 31, 1998,  EESI was acquired by
Waste Management,  Inc. and the Company received stock of Waste Management, Inc.
in exchange for its EESI stock.

         The Company, through its majority-owned subsidiary,  TransCor, formerly
provided solid waste management services to commercial, industrial, residential,
and municipal customers. In connection with such services, the Company owned and
operated  fully  permitted  construction  and  demolition  ("C&D")  transfer and
recycling ("T&R") facilities in four of the largest  metropolitan regions in the
state of Florida; Jacksonville,  Clearwater, Tampa and Miami. In addition to its
T&R operations, the Company collected and disposed of all types of non-hazardous
solid waste for  industrial  and  commercial  customers in its T&R regions.  The
Company  also  provided  residential  garbage  collection  services  for several
municipalities  located in Lee  County and  Hillsborough  County,  Florida.  The
Company  also  engaged,   pursuant  to  several  municipal  contracts,   in  the
residential  curbside  collection of a variety of already segregated  recyclable
forms of  solid  waste,  including  such  materials  as  newspapers,  cardboard,
plastic, metals, and glass.

PERFORMANCE BONDS

         The Company is required to post  performance  bonds in connection  with
certain asbestos  abatement,  waste  remediation,  demolition,  and construction
contracts.  For the years ended December 31, 1997 and 1998 most of the Company's
revenue was derived from contracts or projects that required the Company to post
performance  bonds.  The Company's  current bonding  capacity for  qualification
purposes  is  $60,000,000  for  individual  projects  and  $120,000,000  in  the
aggregate.  This capacity is not intended to be a limitation nor a commitment as
to  the  Company's  bond  capacity,  but  rather  guidelines  for  qualification
purposes.  It is customary for surety bond  companies to underwrite  each surety
obligation  individually;  therefore,  the  potential  for more or less capacity
exists  based on the merits of the  obligation.  Historically,  the  Company has
obtained surety bond support for individual  projects in the  $53,000,000  range
while the aggregate  approached $100 million.  The Company has obtained  bonding
coverage in amounts up to $8,500,000 for environmental projects.

         However,  some  environmental  projects either do not require a bond or
require a bond for less than the complete  contract  price of the project value.
The Company has obtained  bonding coverage for  environmental  projects for more
than $8,500,000 as a result of personal surety bonds or collateral  furnished by
Mr.  Francis  M.  Williams,  President  of  the  Company.  Mr.  Williams  has no
obligation  to provide  surety  bonds,  collateral  or  otherwise  to assist the
Company in connection with bonding  coverage.  Management  believes that bonding
coverages are adequate for the size and scope of projects being performed.
<PAGE>
MARKETING

         The Company's  specialty  contracting  business results  primarily from
customers  for  whom  the  Company  has  previously  provided  services,   prior
customer's  references,  and from direct marketing efforts.  In particular,  the
Company believes its national reputation as a leading demolition and dismantling
contractor has  contributed  significantly  to its ability to attract  specialty
service business.

         The Company's specialty contracting subsidiaries direct their marketing
activities through the home office in Tampa,  Florida. This office is located in
an area with a high concentration of industrial facilities. The Company believes
that  accurate  bidding is crucial in  securing  new  contracting  projects  and
completing them  profitably.  The Company uses  computerized  bidding systems in
conjunction with site visits to develop bids for contracting projects. While bid
price is an important  factor in  obtaining  contracts,  potential  clients also
consider the reputation, experience, safety record and financial strength of the
bidders in awarding contracts.

         The Company also obtains contracts for its services through the process
of  competitive  bidding,  purchase  orders,  or  negotiations.   The  Company's
marketing  efforts include  door-to-door  sales,  monitoring  trade journals and
other industry  sources for bid  solicitations  by various  entities,  including
government authorities and related instrumentalities, and responding to such bid
solicitations,  which may include  requests for proposals  ("RFPs") and requests
for qualifications  ("RFQs").  The Company also attempts to be included on lists
of qualified  bidders  frequently  contained in RFPs and RFQs. In response to an
RFP or RFQ, the soliciting entity requires a written response within a specified
period.  Generally, in the case of an RFP, a bidder submits a proposal detailing
its qualifications, the services to be provided, and the cost of the services to
the  soliciting  entity;  then,  such  entity,  based on its  evaluation  of the
proposals  submitted,  awards the contract to the successful bidder. In the case
of  an  RFQ,  a  bidder  submits  a  response   describing  its  experience  and
qualifications, the soliciting entity then selects the bidder believed to be the
most qualified, and then negotiates all of the terms of the contract,  including
the cost of the services.


CUSTOMERS

         The primary private customers for the Company's  specialty  contracting
services are Fortune 500 corporations  engaged in heavy  manufacturing,  such as
chemical mining, petroleum, petrochemical, paper, and steel companies as well as
public utilities and federal, state and local government agencies. For the years
ended  December 31, 1996,  1997 and 1998,  the following  table  summarizes  the
revenue earned on contracts with significant customers that aggregated more than
10 percent of the continuing operations revenues:
<TABLE>
<CAPTION>

                                                                  (In thousands)
                                                        1996            1997             1998
                                                        ----            ----             ----
<S>                                                <C>            <C>              <C>    
Governmental infrastructure                        $     14,884   $       10,648   $       6,950
Phosphate mining                                          2,562           25,061          17,594
Commercial real estate developer                            -0-           12,070          10,039
                                                      ----------     ------------     -----------
Total from above customers                         $     17,446   $       47,779   $      34,583
                                                      ==========     ============     ===========

Percentage of total revenue                               22.2%            46.5%           45.3%
                                                      ==========     ============     ===========
</TABLE>

         For the year  ended  December  31,  1998,  68 percent  and 32  percent,
respectively,  of the  Company's  gross  revenue  were  derived from private and
governmental  customers,  respectively.  This  represents  a 23% increase in the
amount of private sector revenue as compared to total revenue for the year ended
December 31, 1997. Government  contracts,  which represent a significant portion
of the Company's gross revenue, are subject to legislation  mandating a balanced
budget;  delays in funding;  lengthy  review  processes for awarding  contracts;
delay or termination  of contracts at the  convenience  of the  government;  and
termination,  reduction or  modification of contracts in the event of changes in
the  government's  policies or because of  budgetary  constraints.  Furthermore,
increased or  unexpected  costs could result in losses or reduced  profits under
fixed-price government as well as commercial contracts. The Company continues to
focus efforts on securing more private customers.
<PAGE>
BACKLOG

         As of December  31,  1998,  the  Company  had a backlog of  uncompleted
projects  under  contract  aggregating  approximately  $33,237,000  (compared to
approximately  $53,210,000  as of December  31,  1997),  of which  approximately
$30,442,000  is  attributable  to earthwork  and utility  contracting  services,
approximately $2,132,000 is attributable to demolition and dismantling services,
approximately $663,000 is attributable to asbestos abatement and other services.
The Company anticipates that it will recognize approximately 99% of the revenues
from these projects by the end of 1999.

COMPETITION

         The  Company  believes  that  its  ability  to  offer a broad  range of
specialty   contracting  services  provides  it  with  significant   competitive
advantage.   Nevertheless,   the  Company  faces  substantial  competition  from
national, regional and local competitors, many of which are well established and
have much greater marketing,  financial,  technological and other resources than
the Company.

         The Company believes the principal competitive factors in the specialty
contracting  services industry are safety,  reputation,  technical  proficiency,
surety bonding capability, managerial experience, price, and breadth of services
offered.

INSURANCE COVERAGE

         The  Company  currently  maintains   comprehensive   general  liability
insurance,  with total  coverage of  $51,000,000  for any single  occurrence and
$53,000,000  for  aggregate  claims  relating to damage to persons or  property.
These policies cover all activities of the Company and its  subsidiaries  except
for its asbestos-related activities and certain non-asbestos related liabilities
such as pollution  liability  damage (sudden or gradual) caused by the discharge
or  release of any  irritant  or  contaminant.  In  addition,  the  Company  has
comprehensive  general  liability  coverage  that  covers,  among other  things,
specific  asbestos-related risks up to $1,000,000.  In addition, the Company has
obtained a $2,000,000  per  occurrence/$2,000,000  aggregate  blanket policy for
contractors  pollution liabilities and can obtain additional coverage of up to a
total of $6,000,000 as required on a project-by-project basis.

GOVERNMENT REGULATION

         The  Company  is  subject  to  an  extensive  and  frequently  changing
statutory and regulatory  framework of federal,  state, and local environmental,
health,  safety,  and  transportation   authorities,   which  framework  imposes
significant  compliance burdens and risks upon the Company. The Company believes
it is in substantial compliance with all material federal, state, and local laws
governing its material business operations. Nevertheless, amendments to existing
statutes  and  regulations,  adoption of new statutes  and  regulations  and the
Company's  expansion  into other  jurisdictions  and types of  operations  could
result  not  only in the  additional  risk  of  noncompliance,  but  also in the
increase in regulatory  burden that could cause  related  increases in costs and
expenses.

         The federal statutes of most importance to the Company are the Resource
Conservation  and Recovery Act of 1976, as amended,  and the EPA's  implementing
regulations (collectively "RCRA") and the Comprehensive  Environmental Response,
Compensation and Liability Act of 1980; as amended ("CERCLA").  RCRA establishes
a  comprehensive  framework  for  state  and  federal  regulation  of solid  and
hazardous  waste   management.   It  seeks  to  prevent  the  release  into  the
environmental  of  hazardous  waste  through  the  development  of  solid  waste
management  plans and the regulation of the  generation,  treatment,  transport,
storage and  disposal of  hazardous  wastes.  It also  establishes  a program to
ensure that non-hazardous  wastes are disposed of in environmentally  controlled
facilities.  While RCRA was  implemented  to prevent  the  release of  hazardous
wastes  into the  environment,  CERCLA  was  designed  to  establish  a national
strategy to remediate or improve existing  hazardous  environmental  conditions.
CERCLA  establishes  liability for cleanup costs and  environmental  damages for
current and former  facility  owners and  operators  and  persons who  generate,
transport, or arrange for transportation of hazardous substances for disposal at
a particular facility.
<PAGE>
     Most states,  including  Florida,  have statutes similar to RCRA and CERCLA
that  regulate the  handling of  hazardous  substances,  hazardous  wastes,  and
non-hazardous  wastes.  Many  such  states  impose  requirements  that  are more
stringent  than their  federal  counterparts.  The  Company  could be subject to
substantial  liability under these statutes to private parties and  governmental
entities, in some instances without any fault, for fines, remediation costs, and
environmental  damage  because of the  mishandling,  release or existence of any
hazardous  substances at any of its facilities or the improper operation of such
facilities.

PERMITS AND LICENSES

         Many states license such areas of the Company's  operations as asbestos
abatement  and  general   contracting.   Licensing  requires  that  workers  and
supervisors receive training from EPA approved and state certified organizations
and pass  required  tests.  The  Company is  currently  licensed  to perform its
services in  approximately a dozen states.  The Company also operates in certain
states  that do not have a special  asbestos  abatement  or general  contracting
license requirement;  however,  these states have adopted regulations  regarding
worker safety with which the Company must comply.

         The Company  may need  additional  licenses  to expand its  operations.
Although  there can be no  assurance,  based upon the level of  training  of its
employees and its experience,  the Company currently believes that it can obtain
all such required licenses.

EMPLOYEES

         The Company has approximately 667 employees, of which 4 are employed in
executive  capacities,  21 in  professional  capacities,  21  in  administrative
capacities,  96 as field  supervisors and 525 in field  operations.  None of the
Company's  employees  are union  members  or covered  by  collective  bargaining
agreements.  The Company has not  experienced  any strikes or work stoppages and
considers its relationship with its employees to be satisfactory.

         The Company, through its subsidiaries,  has implemented employee safety
programs  that require each  employee to complete a general  training and safety
program.  Training  topics include  approved work  procedures and instruction on
personal safety and the use of protective equipment.  In addition, all employees
engaged  in  asbestos  abatement  activities  are  required  to attend a minimum
three-day to four-day  course  approved by the EPA and  Occupational  Safety and
Health Administration, and all supervisors of abatement projects are required to
attend a 40-hour safety course annually. Moreover, employees are issued detailed
training materials and are required to attend ongoing safety seminars.

         The Company's  subsidiaries also conduct job safety analysis in the job
bidding  stage.  Besides the  precautions  taken with respect to  projects,  the
Company takes  additional  measures to protect its asbestos and site remediation
workers,  including  providing  them with  additional  protective  equipment and
sponsoring periodic medical examinations.


Item 2.  Properties

         The Company owns its  principal  executive  offices that are located in
approximately 20,600 square feet of office space at 1501 and 1502 Second Avenue,
East,  Tampa,  Florida  33605.  The offices are subject to a mortgage,  securing
indebtedness evidenced by a promissory note with an outstanding principal amount
at December 31, 1998,  of  approximately  $1,544,000.  This  variable  rate note
matures on August 24, 1999,  and currently  bears  interest at 2.0 percent above
the lender's prime rate.
<PAGE>
         The Company's subsidiary, TransCor owns the following properties:

         Fort Myers, Lee County, Florida

              TransCor's  Fort Myers  facility is located on  approximately  two
         acres and is zoned  industrial.  The  facility  contains a building  of
         approximately 6,400 square feet and office areas of approximately 2,200
         square feet. The Fort Myers facility, which began operations on October
         1, 1995, is subject to a mortgage securing indebtedness  evidenced by a
         promissory  note with an outstanding  principal  amount at December 31,
         1998, of  approximately  $319,000.  The note matures on August 9, 2000,
         and bears interest at the rate of 9.25 percent.

              As a result of the sale of Kimmins Recycling Corp. and its related
         solid waste franchise  agreement with the cities of Cape Coral and Fort
         Myers, Florida, the Company no longer requires this facility.
         The Company has this facility listed for sale.

         Nashville, Tennessee

              TransCor  owns vacant  property in an  industrial  park outside of
         Nashville, Tennessee. The land is undeveloped and listed for sale.

     In August  1998,  the Company sold its solid waste  management  subsidiary,
Kimmins  Recycling Corp. and as part of the sale, the following  properties were
transferred to EESI: land and buildings in Clearwater  (Pinellas  County),  Fort
Myers (Lee  County),  Fort Pierce (St.  Lucie  County),  Miami (Dade County) and
Tampa (Hillsborough County).


Item 3.  Legal Proceedings

         The Company is involved in various legal actions and claims  arising in
the  ordinary  course  of its  business,  none of  which is  expected  to have a
material effect on the Company's financial position or results of operations.


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

         None.


<PAGE>
                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
         Matters

         The  Company's  common  stock  is  currently  traded  on  the  National
Association of Securities Dealers, Inc., (NASD)  Over-the-Counter (OTC) Bulletin
Board.  The  Company's  common  stock was traded on the New York Stock  Exchange
(NYSE) under the symbol "KVN" prior to March 1999.

         As a result of the  Company no longer  meeting  the  continued  listing
criteria of the New York Stock Exchange ("NYSE"),  the Company was delisted from
the NYSE after the close of business on March 1, 1999.  On March 10,  1999,  the
Company's application for registration on the National Association of Securities
Dealers (NASD) Over the Counter Bulletin Board (OTCBB) was cleared. On March 11,
1999 the Company began trading on the OTCBB under the symbol  "KVNM".  The OTCBB
is a regulated  quotation  service that  displays  real-time  quotes,  last-sale
prices, and volume information in over-the-counter  (OTC) equity securities.  An
OTC equity  security  generally  is any  equity  that is not listed or traded on
Nasdaq or a national  securities  exchange.  OTCBB securities  include national,
regional,  and foreign  equity  issues,  warrants,  units,  American  Depository
Receipts  (ADRs)  and  Direct  Participation  Programs  (DPPs).  The  OTCBB is a
quotation medium for subscribing  members,  not an issuer listing  service,  and
should not be confused with the Nasdaq Stock Market. OTCBB securities are traded
by a community of Market  Makers that enter quotes and trade  reports  through a
highly sophisticated  closed computer network,  which is accessed through Nasdaq
Workstation II. The OTCBB is unlike the NYSE in that it:

          *  does not impose  listing  standards;
          *  does not provide automated trade executions;
          *  does not maintain relationships with quoted issuers; and
          *  does not have the same obligations for Market Makers.

         The following  table sets forth for the periods  indicated high and low
sales prices of the Company's common stock as reported by the NYSE:

            1998                 High           Low
            ----                 ----           ---
      First Quarter         $    5.3750    $   4.1875
      Second Quarter        $    4.3750    $   3.0000
      Third Quarter         $    5.3125    $   3.0000
      Fourth Quarter        $    3.5000    $   2.0000


             1997                 High           Low
             ----                 ----           ---
      First Quarter           $   4.250     $    3.000
      Second Quarter          $   4.000     $    2.500
      Third Quarter           $   6.000     $    3.813
      Fourth Quarter          $   7.000     $    4.500

         The closing stock price for the Company's  stock on March 31, 1999, was
$0.5625.  On March 19, 1999, there were  approximately  805 holders of record of
the common  stock.  Certain  record  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
financial  condition,  as well as other  relevant  factors.  Certain  agreements
between  the  Company and its lending  institutions  prohibit  the Company  from
paying cash  dividends  without  the  lenders'  consent.  Other than a three and
one-third  cent per share of a common stock cash dividend paid in July 1989, the
Company has not paid any cash dividends  since its  inception,  and the Board of
Directors does not plan to declare or pay any cash dividends in the future.
<PAGE>
Recent Sales of Unregistered Securities

         The following  information  relates to equity securities of the Company
issued or sold during the year ended December 31, 1998, that were not registered
under the Securities Act in 1993, as amended (the "Securities Act").

         The  Company  issued no  securities  during  1998 that were exempt from
registration under the Securities Act by virtue of Section 4(2) as a transaction
not involving a public offering.


Item 6.  Selected Financial Data

         The following selected financial data are derived from the consolidated
financial  statements  of Kimmins Corp.  The data should be read in  conjunction
with the consolidated  financial statements,  related notes, and other financial
information included herein.
<TABLE>
<CAPTION>

HISTORICAL OPERATING STATEMENT DATA:

                                                  Years ended December 31,
                                           (In thousands, except per share data)
                              1994          1995           1996           1997          1998
                              ----          ----           ----           ----          ----
<S>                       <C>           <C>           <C>            <C>           <C>    

Gross revenue             $   73,699    $   78,978    $     78,552   $   102,717   $     74,051
Net revenue                   62,297        63,058          63,288        80,932         59,302
Operating income (loss)        2,564         3,201         (6,930)       (2,524)       (14,850)
Income (loss)from        
  continuing operations        1,106           879         (7,231)       (5,611)       (15,088)
Income (loss)from        
  discontinued operations      (309)           464         (1,452)       (2,907)         19,431
Net income (loss)                797         1,343         (8,683)       (8,518)          4,343

PER SHARE DATA :

Income (loss)from
  continuing operations
  per share:
     Basic                $      .25    $      .20    $     (1.63)   $    (1.30)   $     (3.51)
     Diluted              $      .25    $      .19    $     (1.63)   $    (1.30)   $     (3.51)
Income    (loss)   from
discontinued operations
   per share:
     Basic                $    (.07)    $      .10    $      (.33)   $     (.67)   $       4.52
     Diluted              $    (.07)    $      .10    $      (.33)   $     (.67)   $       4.52

Net income (loss) per share:
     Basic                $      .18    $      .30    $     (1.96)   $    (1.97)   $       1.01
     Diluted              $      .18    $      .29    $     (1.96)   $    (1.97)   $       1.01
Weighted average
  number of shares of
  common stock used
  in the calculation:
     Basic                     4,443         4,445           4,420         4,318          4,297
     Diluted                   4,496         4,578           4,420         4,318          4,297
Dividends per share             None          None            None          None           None
</TABLE>
<TABLE>
<CAPTION>

HISTORICAL BALANCE SHEET DATA:

                                                          As of December 31,
                                                            (In thousands)
                           1994            1995           1996          1997           1998
                           ----            ----           ----          ----           ----
<S>                  <C>              <C>            <C>           <C>             <C>   

Current assets       $     39,885     $    44,202    $    41,381   $     38,322    $    47,205
Working capital
  (deficiency)             21,219          22,477         16,898          (633)          6,053
Net assets of
  discontinued            
  operations                8,640           6,691          6,073          7,091            -0-
Total assets               59,672          66,816         66,493        110,330        114,300
Long term debt             10,344          10,571         16,556         54,595         50,769
Stockholder's equity       24,514          26,381         17,853          9,393         14,671
</TABLE>
<PAGE>

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

Introduction

         The Company conducts its business in one segment: specialty-contracting
services.  This segment provides  comprehensive services including earth moving,
land reclamation and site  preparation,  facilities  demolition and dismantling;
installation  of sewer  lines,  water lines and roads;  excavation,  removal and
disposal of contaminated soil, groundwater treatment and asbestos abatement.

Results of Operations

         The  following  table  sets  forth for the  periods  indicated  (i) the
percentage  of net  revenue  represented  by  certain  items  in  the  financial
statements of the Company,  and (ii) the percentage  change in the dollar amount
of such items from period to period.
<TABLE>
<CAPTION>

                                                    Percentage of Net Revenue              Percentage Increase (Decrease)
                                                     Year Ended December 31,                  Year ended December 31,
                                                     -----------------------                  -----------------------
                                            1996           1997            1998           1998 vs. 1997     1997 vs. 1996
                                            ----           ----            ----           -------------     -------------
<S>                                         <C>            <C>               <C>            <C>                <C>    

          Gross revenues                     124.1%         126.9%            124.9%           (27.9%)            30.8%
          Outside services                    24.1%          26.9%             24.9%           (32.3%)            42.7%
                                          ----------     ----------     -------------    --------------   --------------
          Net revenue                        100.0%         100.0%            100.0%           (26.7%)            27.9%
          Cost of revenue earned              97.2%          93.7%            113.1%           (11.6%)            23.3%
                                          ----------     ----------     -------------    --------------   --------------
          Gross profit                         2.8%           6.3%           (13.1%)          (253.5%)           188.2%
          Selling, general and
             administrative expense           13.7%           9.4%             11.9%            (6.8%)          (12.6%)
                                          ----------     ----------     -------------    --------------   --------------
          Operating income (loss)           (10.9%)         (3.1%)           (25.0%)            488.4%          (63.6%)
          Minority interest in net
             (income) loss of subsidiary     (0.2%)         (0.6%)              6.1%
          Interest expense, net                2.5%           3.7%             10.9%            114.4%            88.8%
                                          ----------     ----------     -------------    --------------   --------------
          Income (loss) before
             provision for income taxes
             (benefit)                      (13.2%)         (6.2%)           (42.1%)            398.2%          (40.3%)
          Provision for income taxes
             (benefit)                       (1.8%)           0.7%           (16.6%)        (1,738.9%)         (151.7%)
                                          ----------     ----------     -------------    --------------   --------------
          Net income (loss) from
             continued operations           (11.4%)         (6.9%)           (25.5%)            168.9%          (22.4%)
          Net income (loss) from
             discontinued operations         (2.3%)         (3.6%)             32.8%          (768.4%)           100.2%
                                          ----------     ----------     -------------    --------------   --------------
          Net income (loss)                 (13.7%)        (10.5%)              7.3%          (151.0%)           (1.9%)
                                          ==========     ==========     =============    ==============   ==============
</TABLE>


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

CONTINUING OPERATIONS

       Net  revenue  for  the  year  ended  December  31,  1998,   decreased  by
$21,630,000 or 27 percent to $59,302,000 from $80,932,000 for the same period in
1997.  The  decrease is due  primarily to  decreases  in the  Company's  utility
contracting  services  ($11,217,000  decrease in net revenue,  caused by weather
related delays), demolition services ($3,455,000 decrease in net revenue) and to
decreases in remediation services ($6,092,000 decrease in net revenue, caused by
the  closing  of its New York  Operations).  In  addition,  abatement  and other
services decreased net revenues by $866,000.
<PAGE>
       The Company continues to focus on securing more private customers. During
the year ended  December 31, 1998,  the Company's  percentage of gross  revenues
from private customers increased from 56 percent to 68 percent.  The increase in
private  work is  mainly  attributable  to  earthwork  projects  including  land
reclamation and site  preparation.  The decrease in the percentage of government
work from 44% to 31% for the year ended December 31, 1998 is mainly attributable
to  fewer  road   construction   projects   with  the  Florida   Department   of
Transportation and local municipalities.

       Outside services, which largely represent subcontractor costs, decreased,
as a  percentage  of net revenue to 25 percent for the year ended  December  31,
1998 from 27  percent  for the same  period in 1997.  The  Company  will use the
services of a subcontractor  when it determines that it is more economical to do
so than internally providing the services.  The Company utilized the services of
subcontractors  to a lesser  extent  during  1998 than 1997 due to the  specific
contracts in progress and the associated  work  requirements,  especially due to
the  increase in land  reclamation  work where  little or no  subcontracting  is
utilized and the decrease in road construction  work which requires  significant
use of subcontractors.

       Cost of revenue  earned as a percentage of net revenue for the year ended
December  31, 1998  increased to 113 percent from 94 percent for the same period
in 1997.  As a result,  the gross loss for the year ended  December 31, 1998 was
$7,777,000  (negative  13 percent of net  revenue)  compared  to  $5,067,000  (6
percent of net revenue)  gross profit for the same period in 1997.  The decrease
in the dollar amount  ($12,844,000) and percentage of gross margin (negative 253
percent) is primarily  associated with cost overruns  (caused by weather related
delays) in the Company's utility contracting services  ($11,465,000  decrease in
gross profit),  and demolition services  ($1,774,000  decrease in gross profit).
These  decreases  are  partially  offset by increases in  remediation,  asbestos
abatement and other services  ($395,000  decrease in gross loss) attributable to
the Company's closure of the northeastern operations.

       Depreciation and amortization,  included in cost of revenue, increased to
approximately  $9,522,000 in 1998 from  approximately  $4,644,000  in 1997.  The
increase  relates  primarily to  depreciation  expense,  and  resulted  from the
purchase during the fourth quarter of 1997 of approximately $28,000,000 of heavy
construction equipment that had previously been leased under operating leases.

       Included in the Company's  operating results for the years ended December
31, 1997 and 1998 is the activity related to the settlement and/or resolution of
contract claims and unapproved change orders. This activity can be summarized as
follows:

                                       Years ended December 31,
                                        1997             1998
                                        ----             ----
Claim recoveries                 $       431,000  $     1,058,000

Cost of recoveries                     1,278,000        2,311,000
                                    -------------    -------------

Gain (loss) on resolved claims   $     (847,000)  $   (1,253,000)
                                    =============    =============

       In addition, the Company incurred costs associated with unresolved claims
of $3,216,000 and $500,000 during 1997 and 1998  respectively.  The Company also
recorded a reserve of $500,000 during 1998.

       The  Company had the  following  balances  recorded  relating to contract
claims and unsigned change orders at December 31, 1997 and 1998.

                                         Years ended December 31,
                                          1997             1998
                                          ----             ----
Claims                             $    11,989,000   $    9,678,000
Unapproved change orders                       -0-              -0-
                                      -------------     ------------
                                   $    11,989,000   $    9,678,000
                                      =============     ============
Cumulative external claim
   Preparation  costs included     $           -0-   $          -0-
   above
                                      =============     ============
<PAGE>
       During  the  year  ended   December  31,  1998,   selling,   general  and
administrative expenses decreased to $7,072,000 (12 percent of net revenue) from
$7,591,000 (9 percent of net revenue) for the same period in 1997.
The dollar decrease and percentage increase is attributable to reduced revenues.

       Interest expense,  net of interest income for the year ended December 31,
1998 was  approximately  $6,489,000 as compared to approximately  $3,027,000 for
the year ended December 31, 1997.  The average amount of debt increased  between
periods,  mainly due to  approximately  $28,000,000 in equipment  notes executed
during the fourth quarter of 1997.

       The Company's income tax benefit for continuing operations was calculated
using a rate of  approximately  40 percent for the year ended December 31, 1998.
The Company's  income tax provision for  continuing  operations  was  calculated
using a rate of  approximately  negative 12 percent for the year ended  December
31, 1997.

       As a result of the foregoing, the Company recorded a loss from continuing
operations  of  approximately  $15,088,000  and  $5,611,000  for the years ended
December 31, 1998 and 1997 respectively.

DISCONTINUED OPERATIONS

         Discontinued   operations   from  solid   waste   management   services
experienced a 34 percent  decrease in revenue of  $11,068,000  to  approximately
$21,526,000  for the year ended  December  31, 1998,  compared to  approximately
$32,594,000 in 1997.  The decrease was primarily the result of the August,  1998
sale of Kimmins  Recycling  Corp.  to EESI and other sales of operating  assets,
including customer contracts.

         Operating expenses, including depreciation, for the year ended December
31, 1998 were approximately $18,176,000 representing a decrease of $9,593,000 or
35 percent, from approximately $27,769,000 for the year ended December 31, 1997.
This decrease in the percentage of operating expenses was attributable primarily
to the August, 1998 sale of Kimmins Recycling Corp.

         Selling, general and administrative expenses, including management fees
for the year ended December 31, 1998 were approximately  $4,002,000 representing
a decrease of $4,091,000 or 51 percent,  from  approximately  $8,093,000 for the
same period in 1997. The dollar and percentage decrease in selling,  general and
administrative  expenses is primarily  attributable  to reduced  overhead costs,
such as  administrative,  sales,  marketing and labor costs that are  associated
with facilities that have been closed or sold and from  management's  actions to
reduce overhead costs.

         The Company  incurred losses from  discontinued  solid waste management
services  operations of  approximately  $180,000 for the year ended December 31,
1998  representing  a decrease of  $2,762,000  or 94 percent from  approximately
$2,942,000  for the year ended  December  31,  1997.  The dollar and  percentage
decrease in losses is primarily  attributable to reduced  overhead costs such as
administrative,  sales,  marketing  and  labor  costs  as a result  of  facility
closures and management's actions to reduce overhead costs.

         In May  1998,  the  Company  sold its  Jacksonville  area  solid  waste
collection  and  recycling  operating  assets  and  certain  assets of the Miami
front-end load and rear-load commercial waste and recycling business to EESI for
approximately  $11,600,000 in cash. This transaction combined with the Company's
sale of certain other  vehicles,  waste  containers and equipment  resulted in a
gain of approximately  $5,263,000.  These assets were primarily  utilized in the
Company's  commercial and residential  waste collection  services.  This gain is
included in gain on sale of discontinued  operations for the year ended December
31, 1998.

         The Company's sale of Kimmins Recycling Corp. to EESI for approximately
$57,800,000  resulted in a gain,  when  combined  with the gain in the preceding
paragraph, of $19,611,000 net of taxes of $11,861,000.

         The  Company   reported   income  from   discontinued   operations   of
approximately  $19,431,000  for the year ended December 31, 1998 compared with a
loss of  approximately  $2,907,000 for the same period during 1997. The increase
in income from discontinued operations is mainly attributable to the gain on the
sale of Kimmins Recycling Corp.
in August 1998.
<PAGE>
Year Ended December 31, 1997, Compared to Year Ended December 31, 1996

CONTINUING OPERATIONS

         The Company  incurred a net loss of  approximately  $5,611,000  for the
year ended December 31, 1997, compared to a net loss of approximately $7,232,000
for the year ended December 31, 1996.  Approximately $6,454,000 of the 1997 loss
was attributable to the Company's specialty  contracting  segment.  During 1998,
TransCor  has sold or placed for sale certain of the  non-performing  assets and
contracts that contributed to the waste management segment losses. Sales of such
assets  resulted in proceeds to TransCor in 1998 of  approximately  $11,600,000.
The net loss in the specialty  contracting  segment was attributable to a number
of factors,  including  delays and  disruption  of  contracts  during the fourth
quarter of 1997 and the first quarter of 1998,  caused by the severe  influences
of weather  patterns (the "El Nino  Effects")  that affected the  southeast.  In
addition,  the  two  remaining  contracts  in the  Company's  Northeastern  (New
York-based) Division,  which the Company has exited,  incurred additional losses
in 1997 of  approximately  $3,409,000  that were due to  conditions  that  arose
during 1997.  Finally,  certain utility and roadwork  contracts with the Florida
Department  of  Transportation  ("FDOT")  resulted  in losses  of  approximately
$3,200,000 related to customer-caused and weather-caused delays. The Company has
discontinued  any new FDOT  contracting,  in  order to focus on more  profitable
specialty contracting services.

         During the year ended  December  31,  1997,  net revenue  increased  by
approximately  $17,644,000,  or 28 percent,  to  approximately  $80,932,000 from
approximately  $63,288,000 for the year ended December 31, 1996. The increase in
net  revenue  associated  with  the  Company's  utility   contracting   services
($22,435,000  increase in net revenue) is due to the  Company's  change in focus
towards  non-environmental  projects.  Net revenue for land reclamation services
increased from approximately $2,562,000 in 1996 to approximately  $25,061,000 in
1997 and represents 31 percent of specialty contracting services.  This increase
was  partially  offset by a decrease in other  utility  contracting  services of
approximately  $2,626,000.  The change in revenue  associated with the Company's
remediation services (approximately  $6,079,000 decrease in net revenue), is due
to the Company  de-emphasizing  these services and only  performing this work in
conjunction with the Company's other non-environmental  activities. In addition,
asbestos  abatement services  (approximately  $649,000 increase in net revenue),
and demolition and other services  ($639,000  increase in net revenue).  Utility
contracting  services  net  revenue,  as a  percentage  of  total  net  revenue,
increased to approximately 80 percent for the year ended December 31, 1997, from
66 percent for the year ended  December 31,  1996.  Remediation,  abatement  and
demolition services combined decreased to 20 percent from 34 percent. The impact
of price increases on net revenue is less than 1 percent.

         Outside  services,  which  primarily  consist of  subcontractor  costs,
increased as a percentage of net revenue from  approximately  24 percent  during
the year ended December 31, 1996, to  approximately  27 percent during 1997. The
Company will use the services of a  subcontractor  when it determines that it is
more  economical to do so than  internally  providing the services.  The Company
utilized the services of subcontractors to a higher extent during 1997 than 1996
due to the ongoing contracts and the specific work requirements.

         Cost of revenue earned increased to  approximately  $75,865,000 for the
year ended December 31, 1997, from approximately  $61,530,000 for the comparable
period of 1996.  As a result,  gross profit  during the year ended  December 31,
1997,  increased to  approximately  $5,067,000  (6 percent of net revenue)  from
approximately $1,758,000 (3 percent of net revenue) in 1996. The increase in the
dollar amount and  percentage of gross profit  primarily is associated  with the
Company's  utility  contracting  (approximately  $2,949,000  increase  in  gross
profit),  demolition  contracting  ($1,285,000 decrease in gross loss), asbestos
abatement  services  (approximately  $316,000 decrease in gross loss), and other
services  ($40,000  increase  in gross  profit)  and were  partially  offset  by
decreases in gross profit from remediation  services  (approximately  $1,281,000
increase in gross loss).  The increase in gross profit from utility  contracting
services is  attributable  mainly to new contracts  with higher  profit  margins
regarding land reclamation  services for phosphate mining  companies,  which was
partially offset by losses on certain FDOT contracts.
<PAGE>
         The  decrease  in  losses at the gross  margin  level for  remediation,
abatement and  demolition  operations is directly  related to the closure of the
northeast  office.  However,  losses of $2,948,000,  including loss reserves for
future  performance,  were  recorded in 1997 with  respect to the two  remaining
contracts in the former  Northeast  Division  service area. Costs for legal fees
associated  with a claim  comprise  approximately  $304,000 of the total loss of
approximately  $405,000  for  remediation  operations  and the majority of costs
included in the $129,000 loss for abatement operations in the northeast.

         Depreciation and amortization,  included in cost of revenue,  increased
to approximately  $4,644,000 in 1997, from approximately $1,909,000 in 1996. The
increase  relates  primarily to  depreciation  expense,  and  resulted  from the
purchase  during  the  first  and  fourth  quarters  of  1997  of  approximately
$39,000,000 of heavy  construction  equipment  that had  previously  been leased
under operating leases.

       Included in the Company's  operating results for the years ended December
31, 1997 and 1996 is the activity related to the settlement and/or resolution of
contract claims and unapproved change orders. This activity can be summarized as
follows:

                                            Years ended December 31,
                                             1996              1997
                                             ----              ----

   Claim recoveries                 $      2,013,000   $      431,000

   Cost of recoveries                      4,916,000        1,278,000
                                        --------------     ------------

   Gain (loss) on resolved claims   $    (2,903,000)   $    (847,000)
                                        ==============     ============

     In addition,  the Company incurred costs associated with unresolved  claims
of $2,079,000 and $3,216,000 during 1996 and 1997, respectively.

     The Company had the following balances recorded relating to contract claims
and unsigned change orders at December 31, 1996 and 1997:

                                                    December 31,
                                               1996               1997
                                               ----               ----

   Claims                               $    5,558,000   $     11,989,000
   Unapproved change orders                  3,392,000                -0-
                                          ============     ==============
                                        $    8,950,000         11,989,000
                                          ============     ==============
   Cumulative external claim
     Preparation costs included
     above                              $      295,000   $            -0-
                                          ============     ==============

         During 1997, selling,  general and administrative expenses decreased to
$7,591,000 (9 percent) from $8,688,000 (14 percent) of net revenues for the year
ended  December  31,  1996.  The  dollar  decrease  in  selling,   general,  and
administrative  expenses  primarily is attributable to decreased overhead costs,
such as office salaries and marketing costs. The percentage decrease in selling,
general and administrative  expenses primarily was associated with the growth of
the Company's specialty contracting operations.

         The percentage decrease in selling, general and administrative expenses
for  specialty  contracting  operations is  attributable  to the increase in net
revenue  of  approximately  $17,644,000,  which  represents  an  increase  of 28
percent.

         As a  result  of  the  foregoing,  the  Company's  operating  loss  was
approximately  $2,524,000  (negative 3 percent of net  revenue)  during the year
ended  December  31,  1997,  compared  to an  operating  loss  of  approximately
$6,930,000 (negative 11 percent of net revenue) during the same period in 1996.
<PAGE>
         Minority   interest  in  net  loss  of  the  TransCor   subsidiary  was
approximately  $542,000  for the year  ended  December  31,  1997,  compared  to
minority  interest  in net loss of  approximately  $138,000  for the year  ended
December  31,  1996.  The  minority  interest  in net  income  or  loss  of such
subsidiary  reflects an approximate 26 percent ownership  interest in TransCor's
earnings  as a  result  of the  March  25,  1993,  initial  public  offering  of
TransCor's  common stock.  The decrease in TransCor's  earnings between years is
attributable  to  the  lower  profit  margins  earned  on  certain  solid  waste
management services in 1997.

         Interest  expense,  net of interest income,  increased to approximately
$3,027,000  during the year ended December 31, 1997,  compared to  approximately
$1,603,000,  for the year ended December 31, 1996. The increase is  attributable
to  increases  in  average  borrowings  during  the  year  and to  approximately
$43,000,000 of heavy  construction  equipment  financing in the first and fourth
quarters of 1997 relating to the specialty-contracting segment.

         During  1997,  the  Company  contributed  approximately  $6,000,000  in
receivables  from  affiliates to Sunshadow  Apartments,  Ltd., and  Summerbreeze
Apartments,  Ltd., two Florida real estate limited  partnerships  (collectively,
the "Apartments"), in exchange for 49 percent non-controlling, preferred limited
partnership interests in the Apartments.  The amount in excess of the underlying
equity  (approximately  $12,066,000)  was  attributed  to goodwill  and is being
amortized over 30 years. The Company recorded equity in losses in the Apartments
of approximately $81,000, which represents the Company's  proportionate share of
the Apartment' net loss for the period  October 22, 1997,  through  December 31,
1997.  The Company also recorded  equity in income of  Cumberland  Technologies,
Inc.  ("Cumberland")  of  approximately  $51,000 for the year ended December 31,
1997.

         The  Company's  effective  tax rate was 12  percent  for the year ended
December 31,  1997,  compared to a tax benefit rate of 13.9 percent for the year
ended  December 31, 1996. The change in the effective tax rate was primarily due
to the net operating loss generated by the Company and the resulting recognition
of future tax benefits  from credit and loss  carryforwards.  The net  operating
loss ("NOL")  generated in the year ended December 31, 1997,  was  approximately
$7,465,000.  The NOL will be carried  forward to offset  any  taxable  income in
future years.  For alternative  minimum tax purposes,  the loss  carryforward is
approximately  $4,933,000.  Management  expects to fully  utilize these loss and
credit carryforwards before they expire in the year 2011; however, in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," a valuation  allowance of approximately  $2,801,000 has been recognized.
In addition to the loss carryforwards, the Company has approximately $697,000 of
alternative minimum tax credit carryforwards  available to offset future federal
regular income taxes. This credit does not expire.

         As a  result  of the  foregoing,  the  Company  incurred  a  loss  from
continuing  operations  for the year ended  December 31, 1997, of  approximately
$5,611,000  (7 percent of net revenue)  compared to a net loss of  approximately
$7,231,000 (11 percent of net revenue) during the same period in 1996.

DISCONTINUED OPERATIONS

         Total revenue for the year ended December 31, 1997,  was  approximately
$32,594,000,   representing  a  decrease  of  $2,095,000,  or  6  percent,  from
approximately $34,689,000 for the year ended December 31, 1996. The net decrease
in total  revenue of  approximately  $2,095,000 is  attributable  to the loss of
solid  waste  management  service  revenues  associated  with the  transfer  and
recycling  operations of approximately  $2,637,000,  waste paper  wholesaling of
approximately   $1,471,000,   and  other  solid  waste  management  services  of
$1,527,000.  These  decreases  are  partially  offset by increases in commercial
roll-off container service of approximately $3,540,000.

         The  loss  of  revenue  associated  with  the  transfer  and  recycling
operations is mainly  attributable to a decrease of approximately  $2,000,000 in
the Company's  Jacksonville  operations as a result of the city's lower landfill
disposal  charges  and a newly  enacted  franchise  fee of 12  percent  in Duval
County,  which made the Company's  Jacksonville T&R facility less competitive to
outside third party waste disposal companies.

         The loss of revenue  associated with waste paper sales is the result of
the Company's management deciding to exit the paper commodities business because
of  decreases  in the price of waste  paper and the  closure  of its Palm  Beach
County facility.
<PAGE>
         The loss of  revenue  associated  with  other  solid  waste  management
services  is the  result  of market  pricing  pressures  and  sales of  customer
contracts  associated with the Company's  residential services contract with St.
Lucie County and commercial customer contracts in Pinellas County. The St. Lucie
facility was closed after the residential service contract with St. Lucie County
was sold. On an annual basis,  the St. Lucie  facility  generated  approximately
$3,000,000 in revenue.  On an annual  basis,  the Pinellas  commercial  customer
contracts, which were sold, generated approximately $1,000,000 in revenue

         On  October 1, 1997,  the  Company  began  performing  services  on its
residential  solid  waste  management  and  recycling   services  contract  with
Hillsborough County. Revenue generated for the fourth quarter ended December 31,
1997,  was  approximately  $1,549,000,  and  based on  contract  provisions  and
management  projections,  the  Company's  management  expected the  Hillsborough
County  residential  contracts  and  related  commercial  services  to  generate
approximately $6,196,000 in annual revenue for eight years.

         During the first quarter of 1998,  the Company was awarded an exclusive
franchise agreement with the City of Cape Coral, Florida, to provide residential
and commercial solid waste management services. Based on contract provisions and
management  projections,  the  Company  expected  this  franchise  agreement  to
generate approximately  $7,500,000 in annual revenue. The contract was scheduled
to begin October 1, 1998, and last for five years.

         The impact of price  increases  was less than 3 percent  for 1997 and 3
percent for 1996.

         Operating expenses, including depreciation, for the year ended December
31, 1997, were approximately $27,769,000, representing an decrease of $1,663,000
or 5.6 percent from  approximately  $29,432,000  for the year ended December 31,
1996.  Operating  expenses  include fees charged by landfills for waste disposal
(which,  to date,  have been the largest  component of the  Company's  operating
expenses), and direct labor costs associated with the collection,  transfer, and
recycling of waste. The dollar decrease in operating expenses is attributable to
the decrease in revenue.  Decreases in labor and disposal  costs were  partially
offset  by  increases  in  depreciation  primarily  attributable  to  additional
equipment  acquired  during the last quarter of 1995 and during 1996 and 1997 to
service the  Company's  increased  level of  operations in Fort Myers and Tampa,
Florida,  associated with solid waste management service contracts with the City
of Tampa,  Hillsborough  County,  and Lee  County.  The  increase  in  operating
expenses,  as a percentage of total revenue,  primarily was  attributable to the
increase  in  revenues  from the  Company's  residential  services,  which  have
historically  had lower  profit  margins  than the  Company's  other solid waste
management  operations,  and certain  reclassifications  of costs from  selling,
general and administrative to operating costs,  including taxes and insurance of
approximately $228,000 and $324,000 respectively

         Selling,  general,  and administrative  expenses,  including management
fees,  for the year ended  December 31,  1997,  were  approximately  $8,093,000,
representing  an  increase  of  $1,960,000  or  32  percent  from  approximately
$6,133,000 for the year ended December 31, 1996. The dollar and percent increase
in selling,  general, and administrative  expenses was primarily attributable to
advertising costs for a new contract of approximately $500,000, costs associated
with the closing and sale of facilities  and operating  assets of  approximately
$1,173,000,  and an increase of approximately  $563,000 in compensation expense.
The  $1,173,000  includes an  impairment  loss of  $590,000 to certain  land and
buildings,  a write-off of intangible assets of approximately  $183,000,  and an
addition to the reserve for doubtful accounts of $400,000  regarding the sale of
residential service contracts with St. Lucie. None of these costs were recurring
in nature. The increase in compensation  costs was primarily  attributable to an
increase in staff.  During the fourth quarter of 1997, most of these incremental
costs  were  eliminated  by having  Kimmins  perform  additional  administrative
services,  by transferring  certain staff to Kimmins, and by eliminating certain
positions.   The   management   fee  covers  the  cost  of  certain   executive,
administrative,  and financial services provided by Kimmins.  The management fee
rate  increased,  effective  January 1, 1997,  from 1.5  percent to 3 percent of
revenue,  resulting  in  approximately  $458,000 of  additional  management  fee
expense.

         The Company sold certain  contracts  and related  equipment  during the
year ended  December 31, 1997,  resulting in a gain of  approximately  $444,000.
These assets were primarily utilized in the Company's commercial and residential
solid waste management  services and was related to facility closures.  Prior to
the closures, the facilities in Lantana and St. Lucie were generating net losses
before taxes of approximately $62,000 and $24,000 per month, respectively.
<PAGE>
         Interest expense,  net of interest income,  for the year ended December
31, 1997, was approximately  $1,409,000,  as compared to $1,504,000 for the year
ended  December 31, 1996.  Interest  expense  associated  with debt decreased to
approximately  $1,663,000  from  $1,950,000  as a result of the  decrease in the
effective  interest rates achieved on a refinancing of approximately  $7,700,000
of  equipment  notes.   Debt  related  to  equipment   financing   increased  by
approximately $784,000 during the year. Interest expense increased as the result
of  expenditures  for the purchase of equipment in connection with the Company's
contracts with the City of Tampa, Hillsborough County, and Lee County to provide
solid waste management services.

         The Company's  income tax benefit for the years ended December 31, 1997
and  1996,  was  calculated  using a rate of  approximately  38  percent  and 39
percent,  respectively. For tax purposes, temporary differences between carrying
amounts of assets and  liabilities  resulted  in a federal  net  operating  loss
("NOL") in 1997 of  approximately  $3,982,000.  The largest  component  of these
book-tax   differences  is  depreciation   on  operating   assets  that  created
approximately  $1,206,000 of additional  depreciation expense in calculating the
1997 tax NOL. The entire 1997 NOL of  approximately  $3,982,000  will be carried
forward to offset taxable income in future years.  Management expects to utilize
this NOL before it expires in the year 2012. An alternative minimum tax NOL will
be carried back resulting in a federal tax refund of approximately  $144,000. In
addition to the alternative minimum tax NOL carryback, the Company has a $33,000
alternative minimum tax credit available to offset future federal regular income
tax. This credit does not expire.

         As a  result  of the  foregoing,  the  Company  incurred  a  loss  from
discontinued operations of approximately  $2,907,000 for the year ended December
31, 1997,  as compared to a net loss of  approximately  $1,452,000  for the year
ended December 31, 1996.


Liquidity and Capital Resources

     Cash used in operating activities was approximately $2,666,000,  $2,452,000
and  $20,333,000 for the years ended December 31, 1996, 1997 and 1998. Cash used
in operations was primarily the result of the sale of the solid waste management
operations.  The change in net book value of assets of  discontinued  operations
resulted in a cash usage of approximately $7,909,000. This, as well as the taxes
on the gain of assets sold (approximately  $11,861,000) were the primary reasons
for the net cash used in operating activities.

     During  1998,  the Company  generated  cash from  investing  activities  of
$18,938,000. This amount was primarily the result of cash proceeds from the sale
of the solid waste management services  operations of approximately  $26,869,000
as well as proceeds  from the sale of property and  equipment  used by specialty
contracting operations of approximately $3,225,000.  The proceeds were partially
offset by capital  expenditures  of  $6,459,000  and the purchase of  marketable
securities for approximately $4,697,000.

     Effective May 31, 1998,  certain  assets,  businesses  and contracts of the
waste management  segment,  with a net book value of  approximately  $6,100,000,
were sold for cash of approximately $11,600,000.  Cash from this transaction was
used to pay  approximately  $3,800,000  of  TransCor  debt  and  $1,300,000  was
advanced to Kimmins.  The remaining  cash is  unrestricted  and available to the
Company for use in operations.

         The  August  31,  1998  sale of the  common  stock of the  solid  waste
management services operations to EESI for approximately  $57,800,000,  combined
with the May 31, 1998 asset sale of  $11,596,000  resulted  in cash  proceeds of
$28,869,000  net of debt  payoffs of  $18,507,000,  funding  of working  capital
adjustment  of  $6,669,000  and closing  costs of $351,000  and stock in EESI of
$17,000,000.
<PAGE>
     The  Company  made  capital   expenditures  of  approximately   $6,968,000,
$8,341,000  and  $6,459,000  in  1996,  1997,  and  1998,  respectively.   These
expenditures were primarily  related to the acquisition of equipment  associated
with the Company's solid waste management and utility contracting operations. In
addition to cash expenditures for equipment,  the Company acquired approximately
$39,000,000 of heavy construction equipment during the first and fourth quarters
of 1997 that, as further discussed below, were previously leased under operating
leases.  Since the  equipment was financed by the former  lessor,  the equipment
acquisitions   were  accounted  for  as  a  non-cash   financing  and  investing
activities.  Management believes future capital expenditures will be financed by
available  cash  resources,  cash  flow from  operations  and  available  credit
resources, as needed.

     During 1998, the Company used cash in financing activities of approximately
$419,000. Approximately $7,000,000 of the drawings on the line of credit in 1997
was used to pay down an existing line of credit to approximately $4,235,000. The
1998 borrowings and the related  payments,  resulted in an increase in the total
indebtedness  of the Company to  approximately  $69,039,000 at December 31, 1998
(approximately  $67,319,000 at December 31, 1997).  Current  maturities of total
indebtedness   amount  to   approximately   $18,270,000  at  December  31,  1998
(approximately $12,724,000 at December 31, 1997).

     On February 26, 1997, the Company,  through its Kimmins  Contracting  Corp.
subsidiary,  entered into a credit  agreement with a financial  institution that
provided for  unrestricted  borrowings up to $11,000,000.  On November 24, 1997,
the credit agreement was increased to $16,000,000.  As of December 31, 1998, the
Company has drawn approximately $13,700,000 on the facility.  Borrowings on this
facility are due in March 31,  2000.  In  addition,  on February  26, 1997,  the
Company  issued  approximately   $13,041,000  of  term  debt  to  acquire  heavy
construction  equipment used in the specialty contracting business that had been
leased under operating leases.  The term debt requires periodic payments through
February  2004.  On  November  24,  1997,  proceeds  of a  second  term  loan of
approximately  $28,590,000  were used to  finance  additional  operating  assets
currently  used in the specialty  contracting  services  segment.  The term debt
requires  periodic  payments  through  December  2002 and a balloon  payment  in
January 2003.

         The  Company is subject to a variety  of  restrictive  covenants  under
various  debt  agreements  with one of its  institutional  lenders.  In 1998 the
Company  failed  to  meet  the   consolidated  net  income   requirement   under
approximately $4,235,000 of its bank debt and approximately $54,000,000 of other
financial  institution  debt.  As of December  31,  1998,  the Company  obtained
waivers for these  covenants.  While  management  believes that the Company will
maintain  compliance  under  the  terms  of  the  agreements,   including  those
conditions  amended or waived,  any further inability to achieve compliance with
the loan covenants  could affect the Company's  access to further  borrowings or
require it to secure additional equity by other means.

         As a result of the  Company no longer  meeting  the  continued  listing
criteria of the New York Stock Exchange ("NYSE"),  the Company was delisted from
the NYSE after the close of business on March 1, 1999.  On March 10,  1999,  the
Company's application for registration on the National Association of Securities
Dealers (NASD) Over the County Bulletin Board (OTCBB) was cleared.  On March 11,
1999 the Company began trading on the OTCBB under the symbol "KVNM".

         During  the years  ended  December  31,  1997 and 1998,  the  Company's
average  contract and trade  receivables  were  outstanding for 92 and 122 days,
respectively. The Company anticipates sustaining this rate of collection for the
year  ended  December  31,  1999.  Management  believes  that the number of days
outstanding  for  its  receivables  approximates  industry  norms.  Part  of the
Company's contracting operations is subcontracted,  and any delay in collections
of receivables relating to primary contracts will generally result in a delay of
payment to subcontractors.
<PAGE>
         In addition to the sales above, the Company has discontinued the use of
certain assets with a net book value of approximately  $2,083,000 and has placed
them for sale.  Of these  assets,  approximately  $1,234,000  net of $566,000 of
deposits  received  relates  to  assets  from the  discontinuance  of a  certain
remediation business in the specialty-contracting segment.

         As a result  of the 1998 gain on the sale of  discontinued  operations,
loss from continuing  operations which included the accrual of losses for future
contract  performance  on  certain  specialty  contracting  contracts,  and  the
financing  arrangements  described  above,  that had the effect of significantly
increasing  current  maturities of long-term debt over levels in previous years,
the  Company  has  working  capital  of  $5,960,000  as of  December  31,  1998.
Management of the Company  anticipates  that its projected  operations,  coupled
with the cash and marketable  securities  resulting from the aforementioned sale
of the solid waste business,  will provide  sufficient levels of cash to fulfill
its current and future obligations in the normal course of business.

         The Company had a note  receivable in an original  amount of $3,638,696
from the Apartments, of which Mr. Francis M. Williams is the sole shareholder of
the corporate general partner and the sole limited partner.  The note receivable
accrued  interest  at prime  plus  1.375  percent,  increasing  to prime  plus 2
percent,  with principal and interest  payable in monthly  installments  through
December 31,  1998,  and was  guaranteed  by Mr.  Williams.  The Company did not
receive any interest or  principal  payments  during 1997  relating to this note
receivable,  and the Company has not recognized  interest income since 1996. The
amount  due  from  the  Apartments  at  December  31,  1996,  was  approximately
$3,851,000.  On October 22, 1997, the Company contributed its note receivable in
an amount of approximately  $3,851,000 from the Apartments and other receivables
of $3,059,000 for a non-controlling  49 percent  preferred  limited  partnership
interest in the Apartments and a receivable of $900,000 from the Apartments. The
amount of  $12,066,000  in excess of the  underlying  equity was  attributed  to
goodwill and is being amortized over thirty years. The Company will be allocated
49 percent of operating  income,  losses and cash flow.  The  preference  in the
Company's  equity  interest  in the  Apartments  occurs  upon  the  sale  of the
underlying partnership properties. Upon the occurrence of a capital transaction,
the  Company  would  receive  cash  flows  from the sale or  refinancing  of the
Apartments' assets equal to its capital  contribution prior to any other partner
receiving  any  proceeds.  The  Company  accounts  for  its  investment  in  the
Apartments using the equity method.

         The Company's current bonding coverage for  non-environmental  projects
is  $60,000,000  for an individual  project and  $120,000,000  in the aggregate.
Historically,  the  Company  has  obtained  bonding  coverage  in  amounts up to
$8,500,000 for  environmental  projects and  $53,000,000  for  non-environmental
projects.  However,  bonding  coverage is not  guaranteed  on projects up to the
above  limits  because  each  project has its own  distinct  and  separate  bond
requirements,  and it is customary  for surety  bonding  companies to underwrite
each surety obligation individually.  Management believes that bonding coverages
are adequate for the size and scope of projects being performed.

New Accounting Pronouncements

     In June 1997, the FASB issued Statement of Financial  Accounting  Standards
No. 130, Reporting  Comprehensive Income ("SFAS No. 130"). SFAS No. 130 requires
that total comprehensive income be displayed in a financial statement with equal
prominence as other  financial  statements.  Comprehensive  income is defined as
changes in stockholders'  equity  exclusive of transactions  with owners such as
capital contributions and dividends.  The Company adopted the provisions of SFAS
effective January 1, 1998.

     In June 1997, the FASB issued Statement of Financial  Accounting  Standards
No. 131,  "Disclosure  about Segments of an Enterprise and Related  Information"
("SFAS No. 131"), which supercedes  Financial  Accounting Standards No. 14. SFAS
No.  131  uses  a  management  approach  to  report  financial  and  descriptive
information  about  a  Company's  operating  segments.  Operating  segments  are
revenue-producing  components of the  enterprise  for which  separate  financial
information  is produced  internally  for the Company's  management.  During the
fourth quarter of 1998, the Company  adopted the provisions of SFAS No. 131. The
adoption of SFAS No. 131 did not affect the results of  operations  or financial
position of the Company. Based on management's assessment,  the Company operates
one dominant segment.
<PAGE>
         In June 1998, the Financial Accounting Standards Board Issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities,  which is
required to be adopted in years  beginning  after June 15, 1999.  The  Statement
requires the companies to recognize all derivatives on the balance sheet at fair
value.  Derivatives  that are not hedges must be adjusted to fair value  through
income.  If the  derivative  is a hedge,  depending  on the nature of the hedge,
changes in the fair value of derivatives are either offset against the change in
fair  value of assets,  liabilities  or firm  commitments  through  earnings  or
recognized in other comprehensive  income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately  recognized  in earnings.  Because of the  Company's  minimal use of
derivatives,  management  does not anticipate that the adoption of the statement
to have a  significant  effect on  earnings  or the  financial  position  of the
Company.

         Given the  complexity of the new Standard and that the impact hinges on
market values at the date of adoption, it is extremely difficult to estimate the
impact of adoption unless adoption is imminent.

Impact of Year 2000

         Some of the Company's  older  computer  programs were written using two
digits rather than four digits to define the applicable year. As a result, those
computer programs have time-sensitive  software that recognize a date using "00"
as the year 1900 rather than the year 2000. This could cause a system failure or
miscalculations  causing  disruptions  of  operations,  including,  among  other
things, a temporary inability to process transactions,  send invoices, or engage
in similar normal business activities.

         The  Company has  completed  an  assessment  and will have to modify or
replace  portions of its  software so that its computer  systems  will  function
properly with respect to dates in the year 2000 and  thereafter.  The total cost
of the Year 2000  project is  estimated to be $15,000.  To date,  the  Company's
incremental  costs for assessment of the Year 2000 issue,  the  development of a
modification  plan,  and the  purchase of new software  have been  approximately
$13,000.

         The majority of software  used by the Company is licensed  from various
software  providers  who are  currently  updating  the  programs to be Year 2000
compliant.  In-house  developed  programs  comprise a small portion of the total
software  utilized,  and the majority of these  programs are believed to be Year
2000 compliant.

         The  project is  estimated  to be  completed  not later than June 1999,
which is prior to any anticipated impact on the Company's  operating system. The
Company believes, with modifications to existing software and conversions to new
software, the Year 2000 issue will not pose significant operational problems for
its computer  systems.  However,  if such  modifications and conversions are not
made,  or are not  completed  timely,  the Year 2000 Issue could have a material
impact  on the  operations  of the  Company.  If the  above  plan is not  timely
implemented,  the Company's contingency plan would be to maintain the accounting
system manually and devote  additional  resources,  staff and consultants to the
project.

         The  Company  has  initiated  formal  communications  with  all  of its
significant  suppliers and large  customers to determine the extent to which the
Company's  interface  systems are vulnerable to those third parties'  failure to
remediate their own Year 2000 Issues.  There is no guarantee that the systems of
other companies on which the Company's systems rely will be timely converted and
would not have an adverse effect on the Company's systems.

         The costs of the project and the date on which the Company  believes it
will  complete  the Year  2000  modifications  are  based on  management's  best
estimates,  which were derived utilizing numerous  assumptions of future events,
including the continued  availability  of certain  resources and other  factors.
However,  there can be no assurance  that these  estimates  will be achieved and
actual results could differ materially from those anticipated.  Specific factors
that might cause such material  differences include, but are not limited to, the
availability  and cost of personnel  trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
<PAGE>
Forward-Looking Information

         The foregoing  discussion in  "Management's  Discussion and Analysis of
Financial  Condition  and  Results  of  Operations"   contains   forward-looking
statements that reflect management's current views with respect to future events
and financial performance. Such statements involve risks and uncertainties,  and
there are certain  important  factors that could cause actual  results to differ
materially  from those  anticipated.  Some of the  important  factors that could
cause actual results to differ  materially from those anticipated  include,  but
are not limited to, economic conditions,  competitive factors, changes in market
prices of the Company's  investments and other  uncertainties,  all of which are
difficult  to predict and many of which are beyond the  control of the  Company.
Due to such  uncertainties  and risk,  readers are  cautioned not to place undue
reliance  on such  forward-looking  statements,  which speak only as of the date
hereof.

Effect of Inflation

         Inflation  has not had, and is not expected to have, a material  impact
upon the Company's operations.  If inflation increases, the Company will attempt
to increase its prices to offset its  increased  expenses.  No assurance  can be
given,  however, that the Company will be able to adequately increase its prices
in response to inflation.


Item 7A.   Quantitative and Qualitative Disclosures about Market Risk

         During  1998,  the  Company did not enter into any  transactions  using
derivative  financial  instruments or derivative  commodity  instruments.  As of
December 31, 1998,  the Company has debt of  approximately  $69,000,000 of which
$52,000,000  has a fixed interest  rate.  The remaining debt of $17,000,000  has
variable interest rates.  However,  an increase in the rates of 1% would have an
effect of only $170,000,  exclusive of the effect of income taxes.  Accordingly,
the Company believes its exposure to market risk is not material. As of December
31, 1998,  the Company held for other than trading  purposes  marketable  equity
securities  of  publicly  traded  companies  having  a  value  of  approximately
$22,022,000  ($16,452,000  related to Waste Management,  Inc.). These securities
are subject to price risk.

         Beginning in January 1999, the Company began trading covered options on
Waste  Management,  Inc.  common stock.  Management  believes  although there is
always price risk in this type of transaction, management is able to reduce this
risk due to its knowledge of the solid waste industry.


<PAGE>
Item 8.  Financial Statements and Supplementary Data


                                  KIMMINS CORP.
                        INDEX TO FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULE

                                                                            Page

Report of Independent Certified Public Accountants............................25

Consolidated balance sheets at December 31, 1997 and 1998.....................26

Consolidated statements of operations for each of the three years
   in the period ended December 31, 1998......................................28

Consolidated statements of comprehensive income for each
   of the years in the period ended December 31, 1998.........................30

Consolidated statements of stockholders' equity for each of the
   three years in the period ended December 31, 1998..........................31

Consolidated statements of cash flows for each of the three years
   in the period ended December 31, 1998......................................32

Notes to consolidated financial statements....................................33


Financial statement schedule:

Schedule II - Valuation and qualifying accounts...............................54


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



<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




The Board of Directors and Stockholders
Kimmins Corp.


         We have audited the accompanying consolidated balance sheets of Kimmins
Corp. as of December 31, 1997 and 1998, and the related consolidated  statements
of operations,  comprehensive  income,  stockholders'  equity and cash flows for
each of the three years in the period ended  December 31, 1998.  Our audits also
included the  financial  statement  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 the 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
Kimmins Corp. at December 31, 1997 and 1998, and the consolidated results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1998, in conformity with generally accepted accounting  principles.
Also, in our opinion, the related financial statement schedule,  when considered
in relation to the basic financial statements taken as a whole,  presents fairly
in all material respects the information set forth therein.



                                                /s/ Ernst & Young LLP




Tampa, Florida
April 7, 1999


<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                                       December 31,
                                                                   1997              1998
                                                                   ----              ----
<S>                                                         <C>               <C>    
Current assets:
   Cash and cash equivalents                                $     3,674,027   $      1,859,275
   Marketable securities                                                -0-         22,022,296
   Accounts receivable, net
     Contract and trade                                          19,080,602         17,550,528
     Affiliates                                                     104,658            282,903
   Costs and estimated earnings in excess of billings on
     uncompleted contracts                                        5,434,123          1,743,644
   Income tax refund receivable                                     247,561                -0-
   Deferred income tax, net                                       1,980,148          1,437,707
   Property and equipment held for sale                             410,680          2,083,083
   Other current assets                                             298,739            225,677
   Net assets of discontinued solid waste operations              7,091,052                -0-
                                                              --------------    ---------------

     Total current assets                                   $    38,321,590   $     47,205,113
                                                              --------------    ---------------

Property and equipment, net                                      48,439,463         45,646,719
Property held for sale                                            1,801,674                -0-
Non-current portion of costs and estimated earnings in
   excess of billings on uncompleted contracts                    9,130,090          8,804,728
Non-current portion of accounts receivable, net contract
   and trade                                                        874,048            874,048
Accounts receivable - affiliate                                     900,000            900,000
Note receivable - affiliate                                             -0-          1,010,764
Investment in the Apartments                                      5,862,067          5,231,080
Investment in Cumberland Technologies, Inc.                       4,991,956          4,628,019
Other assets, net                                                     8,840                -0-
                                                              --------------    ---------------
Total assets                                                $   110,329,728   $    114,300,471
                                                              ==============    ===============
</TABLE>













The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                               December 31,
                                                                         1997              1998
                                                                         ----              ----
<S>                                                              <C>               <C>    
Current liabilities:
Accounts payable - trade                                         $    15,583,606   $     11,799,293
Income tax payable                                                           -0-            489,353
Accrued expenses                                                       5,584,209          6,080,388
Billings in excess of costs and estimated earnings on
   uncompleted contracts                                               4,583,533          4,152,522

Current portion of long-term debt                                     12,723,528         18,270,156
Current portion of Employee Stock Ownership Plan
   Trust debt                                                            480,000            360,000
                                                                   --------------    ---------------
      Total current liabilities                                       38,954,876         41,151,712
                                                                   --------------    ---------------

Long term debt                                                        54,595,219         50,768,960
Capital lease obligations                                                    -0-          1,242,101
Employee Stock Ownership Plan Trust debt                                 960,000            449,498
Deferred income taxes                                                  3,527,480          1,812,182
Minority interest in subsidiary                                        2,898,777          4,204,938

Commitments and contingencies (Note 16)

Stockholders' equity:
   Common stock, $.001 par value; 32,500,000 shares
      authorized; 4,447,397 shares issued and 4,296,969 and                4,447              4,447
      4,288,956 outstanding as of December 31, 1997 and 1998,
      respectively
   Class B common stock, $.001 par value; 10,000,000 shares
       authorized, 2,291,569 shares issued and outstanding                 2,292              2,292
   Capital in excess of par value                                     18,730,173         19,114,603
   Unrealized gain on securities (net of tax)                                -0-            101,064
   Retained earnings (deficit)                                       (7,290,073)        (2,947,063)
   Unearned employee compensation from Employee Stock
      Ownership Plan Trust                                           (1,320,000)          (840,000)
                                                                   --------------    ---------------
                                                                      10,126,839         15,435,343

Less treasury stock, at cost (150,428 shares and 158,441               (733,463)          (764,263)
   shares)
                                                                   --------------    ---------------
Total stockholders' equity                                             9,393,376         14,671,080
                                                                   --------------    ---------------
Total liabilities and stockholders' equity                       $   110,329,728   $    114,300,471
                                                                   ==============    ===============
</TABLE>







The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                  Years ended December 31,
                                                           1996             1997               1998
                                                           ----             ----               ----
<S>                                                 <C>               <C>               <C>    
Revenue:
   Gross revenue                                    $     78,551,938  $    102,717,119  $     74,051,465
   Outside services, at cost                            (15,264,042)      (21,785,161)      (14,749,222)
                                                      ---------------   ---------------   ---------------

   Net revenue                                            63,287,896        80,931,958        59,302,243

Costs and expenses:
   Cost of revenue earned                                 61,530,345        75,864,915        67,079,477
   Selling, general and administrative expenses            8,687,967         7,591,346         7,072,487
                                                      ---------------   ---------------   ---------------

Operating loss                                           (6,930,416)       (2,524,303)      (14,849,721)

Minority interest in net operations of subsidiary            138,060           541,904       (3,615,248)

Interest expense (net of interest income of
   approximately $569,000, $169,000, and $427,000
   for the years ended December 31, 1996, 1997,            1,602,865         3,027,090         6,489,329
   and 1998)
                                                      ---------------   ---------------   ---------------

   Loss before provision for income taxes (benefit)      (8,395,221)       (5,009,489)      (24,954,298)

Provision for income taxes (benefit)
   Current                                                    69,045           601,517      (11,232,732)
   Deferred                                              (1,232,753)               -0-         1,366,733
                                                      ---------------   ---------------   ---------------
                                                         (1,163,708)           601,517       (9,865,999)
                                                      ---------------   ---------------   ---------------

Loss from continuing operations                          (7,231,513)       (5,611,006)      (15,088,299)

Discontinued operations:
   Loss from discontinued solid waste division
   operations- net of tax benefits of $928,281
   in 1996, $1,770,226 in 1997 and $81,593 in 1998       (1,451,926)       (2,907,234)         (180,043)
       
Gain on sale of discontinued solid waste division
   net of tax of $11,860,848                                     -0-               -0-        19,611,352
                                                      ---------------   ---------------   ---------------
Income (loss) from discontinued operations               (1,451,926)       (2,907,234)        19,431,309
                                                      ---------------   ---------------   ---------------

Net income (loss)                                   $    (8,683,439)  $    (8,518,240)  $      4,343,010
                                                      ===============   ===============   ===============

</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                CONSOLIDATED STATEMENTS OF OPERATIONS, continued

                                                        Year Ended December 31,
                                                   1996             1997            1998
                                                   ----             ----            ----
<S>                                          <C>              <C>             <C>    

Share data:
   Basic and diluted income (loss) per       $      (1.63)    $      (1.30)   $      (3.51)
   share from  continuing operations
                                                ===========      ===========     ===========

   Basic and diluted income (loss) per       $       (.33)    $       (.67)   $        4.52
   share from discontinued operations
                                                ===========      ===========     ===========

   Total basic and diluted income (loss)     $      (1.96)    $      (1.97)   $        1.01
   per share
                                                ===========      ===========     ===========

Weighted average number of shares outstanding
used in computations:
   Basic and diluted                             4,420,175        4,318,481       4,296,969
                                                ===========      ===========     ===========
</TABLE>






The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                        Year Ended December 31,
                                                1996                1997                1998
                                                ----                ----                ----
<S>                                      <C>                 <C>                  <C>   

Net income (loss).                       $   (8,683,439)     $    (8,518,240)     $    4,343,010

Unrealized gains on investments in
marketable securities, net of tax of                 -0-                  -0-            198,603
$126,975

Less minority interest                               -0-                  -0-           (28,639)

Allocable share of unrealized loss on
   investments in marketable
   securities held by Cumberland                  11,575               10,909           (97,539)
   
                                            -------------       --------------       ------------

Comprehensive income (loss)              $   (8,671,864)     $      8,507,331     $    4,415,435
                                            =============       ==============       ============
</TABLE>





































The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>

<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                                                                         
                                                                                                          
                                                                                                          Unearned
                                                                                                          Employee
                                                                                                        Compensation
                         Common Stock         Class B Common Stock                                          from
                         ------------         --------------------        Capital                         Employee         
                                                                          in Excess        Retained         Stock          
                                                                              of           (Deficit)     Ownership         
                    Shares       Amount       Shares         Amount       Par Value        Earnings       Plan Trust       
                    ------       ------       ------         ------       ---------        --------       ----------       
<S>                <C>        <C>            <C>         <C>           <C>             <C>                 <C>             

Balance at         4,447,397  $    4,447     2,291,569   $     2,292   $  18,730,173   $    9,911,606      (2,267,082)       
December 31,
1995

Employee compensation                                                                                          467,082   
from Employee Stock
Ownership Trust

Purchase of treasury                                                                                                      
stock, at cost
Net loss                                                                                  (8,683,439)                     
                   ----------    --------    ----------     ---------     -----------     ------------   --------------    
Balance at         4,447,397       4,447     2,291,569         2,292      18,730,173        1,228,167      (1,800,000)        
December 31,
1996

Employee compensation                                                                                         480,000      
from Employee Stock
Ownership Trust

Purchase of treasury stock, at                                                                                             
cost 

Net loss                                                                                  (8,518,240)                      
                   ----------    --------    ----------     ---------     -----------     ------------   --------------    

Balance at         4,447,397       4,447     2,291,569         2,292      18,730,173      (7,290,073)      (1,320,000)     
December 31,
1997

Net income                                                                                  4,343,010                           
Employee compensation                                                                                         480,000          
from Employee Stock
Ownership Trust

Unrealized gain on                                                                                                          
net of tax

Changes in ownership                                                         384,430                                         
percentage of subsidiary
due to treasury stock
purchased by subsidiary
Purchase of Treasury                                                                                                        
Stock, at cost
                   ----------    --------    ----------     ---------     -----------     ------------   --------------    

Balance at         4,447,397  $    4,447     2,291,569   $     2,292   $  19,114,603   $  (2,947,063)        (840,000)  
December 31,
1998
                   ==========    ========    ==========     =========     ===========     ============   ==============    

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>

<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                                                                         
                                                                                                          
                                                                            
                                                                               
                        
                         
                     Unrealized
                      Gain on                          Total
                     Marketable      Treasury      Stockholders
                     Securities       Stock          Equity
                     ----------       -----          ------
<S>                   <C>           <C>          <C>

Balance at                              -0-      $ 26,381,436                  
December 31,
1995

Employee compensation                                 467,082
from Employee Stock
Ownership Trust

Purchase of treasury                  (311,783)       (311,783)
stock, at cost
Net loss                                            (8,683,439)
                        --------    -----------    ------------

Balance at                            (311,783)      17,853,296
December 31,
1996

Employee compensation                                   480,000
from Employee Stock
Ownership Trust

Purchase of treasury stock, at         (421,680)       (421,680)
cost 

Net loss                                              (8,518,240)
                       -----------    -----------    ------------

Balance at                             (733,463)       9,393,376
December 31,
1997

Net income                                              4,343,010
Employee compensation                                     480,000
from Employee Stock
Ownership Trust
                          101,064                         101,064
marketable securities,
net of tax

Changes in ownership                                      384,430
percentage of subsidiary
due to treasury stock
purchased by subsidiary
Purchase of Treasury                     (30,800)        (30,800)
Stock, at cost
                        -----------    -----------    ------------

Balance at           $     101,064  $   (764,263)  $   14,671,080
December 31,
1998
                       ===========    ===========    ============

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>
<TABLE>
<CAPTION>


                                  KIMMINS CORP.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                           Twelve months ended December 31,
                                                       1996               1997               1998
                                                       ----               ----               ----
<S>                                              <C>                <C>                 <C>    
Cash flows from operating activities:
   Net income (loss)from continuing             
     operations                                  $  (7,231,513)     $ (5,611,006)       $ (15,088,299)
   Adjustments to reconcile net income
     from continuing operations to
     net cash provided (used) by operating
     activities:
        Depreciation and amortization                 2,038,686         4,721,987            9,871,206
        Provision for uncollectible accounts           
          receivable                                    430,381           772,522               87,275
        Deferred income taxes                       (1,157,125)       (1,112,944)            1,366,733
        Minority interest in operations
          of subsidiary                               (138,060)         (541,904)            1,306,161
        Gain on disposal of property 
          and equipment                                  41,833           350,112            (596,465)
        Accrued interest on term note                 (372,066)               -0-                  -0-
        Equity in losses of equity investees             36,766            29,556              330,361
        Unearned employee compensation from
          Employee Stock Ownership Plan Trust           467,082           480,000              480,000
Changes in operating assets and liabilities:
        Accounts receivable                             710,121       (4,013,391)            1,264,554
        Costs and estimated earnings in excess of
          billings on uncompleted contracts           1,033,414         1,403,660            4,015,841            
        Income tax refund receivable and         
          payable                                     (149,150)           952,214              736,914
        Other                                          (97,301)          (29,957)            (438,065)
        Accounts payable                              1,071,122           245,866          (3,784,313)
        Accrued expenses                                926,233         2,012,955              496,179
        Billings in excess of costs and
          estimated earnings on                                   
          uncompleted contracts                         145,673         3,831,246            (431,011)
                                                   --------------    ---------------     --------------
   Total adjustments                                  4,987,609         9,101,922           14,705,370
                                                   --------------    ---------------     --------------
   Net cash provided by (used in) continuing       
     operations                                     (2,243,904)         3,490,916            (382,929)

   Net loss from discontinued operations            (1,451,926)       (2,907,234)            (180,043)
   Net book value of assets of discontinued
     operations                                       1,030,329       (3,035,821)          (7,909,434)
   Taxes on gain of sale of assets of
     discontinued operations                                -0-               -0-         (11,860,848)
                                                   --------------    ---------------     --------------
   Net cash provided by (used in) operating
     activities                                     (2,665,501)       (2,452,139)         (20,333,254)
                                                   --------------    ---------------     --------------

Cash flows from investing activities:
   Capital expenditures                             (4,428,705)       (2,169,546)          (6,459,245)
   Proceeds from sale of property and           
     equipment                                          191,705            99,589            3,224,897
   Cash proceeds on sale of assets of               
     discontinued operations                                -0-               -0-           26,868,891
   Purchase of marketable securities                        -0-               -0-          (4,696,719)
                                                   --------------    ---------------     --------------
Net cash provided by (used in) investing       
  activities                                        (4,237,000)       (2,069,957)           18,937,824
                                                   --------------    ---------------     --------------

Cash flows from financing activities:
     Proceeds from long-term debt                    11,041,017        19,320,110           12,573,508
     Repayments of long-term debt
       and capital leases                           (3,538,558)      (11,190,945)         (11,331,528)
     Repayments of Employee Stock Ownership
       Plan                                           (480,000)         (480,000)            (630,502)
     Cash loan to Cumberland Technologies, Inc.             -0-               -0-          (1,000,000)
     Purchase of treasury stock                       (311,783)         (421,680)             (30,800)
                                                   --------------    ---------------     --------------
Net cash provided by (used in) financing
  activities                                          6,710,676         7,227,485            (419,322)
                                                   --------------    ---------------     --------------

Net increase (decrease) in cash                       (191,825)         2,705,389          (1,814,752)
Cash, beginning of period                             1,160,463           968,638            3,674,027
                                                   --------------    ---------------     --------------
Cash, end of period                              $      968,638     $   3,674,027       $    1,859,275
                                                   ==============    ===============     ==============
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Organization and summary of significant accounting policies

         Organization - Kimmins Corp. and its  subsidiaries  (collectively,  the
"Company")  operate one business segment:  specialty-contracting  services.  The
Company  provides  specialty-contracting  services  in the  southeastern  United
States,  primarily Florida,  including  earthwork;  infrastructure  development;
underground   construction;   roadwork;   site  remediation   services  such  as
excavation, removal and disposal of contaminated soil; facilities demolition and
dismantling;  and asbestos abatement.  The Company formerly provided solid waste
management services through its subsidiary, TransCor Waste Services, Inc.
("TransCor"), (See Note 20).

         Principles of  consolidation - The  consolidated  financial  statements
include the accounts of Kimmins and its subsidiaries,  including TransCor, an 86
percent  owned  subsidiary.  All material  intercompany  transactions  have been
eliminated.

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

         Concentrations of credit risk - Financial instruments which subject the
Company to  concentrations of credit risk consist primarily of trade receivables
in the State of Florida.  Trade  receivables are comprised  primarily of amounts
due  from  solid  waste  management  customers  and  on  specialty   contracting
contracts. Credit is extended based on an evaluation of the customer's financial
condition.  Collateral is generally not required;  however,  the Company has the
ability  to file for a  mechanic's  lien to protect  its  interest  in  contract
accounts receivable.  Credit losses are provided for in the financial statements
and have been within management's expectations.

         Accounts  receivable - contract  and trade,  includes  $23,628,000  and
$18,245,000  net of allowance  for doubtful  accounts of $921,000 and  $739,000,
respectively at December 31, 1997 and 1998. These balances include approximately
$724,000  ($213,000 net of allowance for doubtful  accounts) and $680,000  ($-0-
net of  allowance  for  doubtful  accounts)  as of  December  31, 1997 and 1998,
respectively,  related to a municipal solid waste  management  contract with St.
Lucie County. Unlike other municipal solid waste management contracts, St. Lucie
County  required  the  Company  to bill and  collect  directly  from  individual
property owners.  Pursuant to St. Lucie County ordinances,  property owners that
are  delinquent  in payment are  subject to lien  rules.  The Company has placed
liens on  approximately  2,120  and  1,857  individual  properties  representing
approximately  $474,000  and $426,000 of the balance as of December 31, 1997 and
1998, respectively.  Management intends to file additional liens when considered
appropriate  and all such liens will be maintained in accordance with applicable
laws  until  the  outstanding  balances  are  recovered  by  payment,  judgment,
foreclosure,  or in other action.  However, given that the Company no longer has
the  contract  with  St.  Lucie  County,  the  Company  fully  provided  for the
outstanding receivables at December 31, 1998.

         Marketable  Securities  - As a result of the sale of Kimmins  Recycling
corp. (KRC) to Eastern Environmental Services, Inc. (EESI), the Company received
555,329  shares  of  common  stock of EESI.  Subsequent  to the sale of  Kimmins
Recycling Corp. to EESI, Waste Management, Inc. acquired EESI. Accordingly,  the
Company now holds Waste Management, Inc. common stock. Additionally,  commencing
in  September  1998,  the  Company  began  purchasing  common  stocks  and other
marketable securities with a portion of the cash proceeds received from the sale
of KRC. In accordance with the Statement of Financial  Accounting  Standards No.
115.  "Accounting for Certain  Investments in Debt and Equity  Securities",  the
investments are classified as available-for-sale securities. Such securities are
carried at an aggregate market value of approximately $22,022,000 as of December
31,  1998.  The  Company's  cost  basis in these  investments  is  approximately
$21,697,000,  and the unrealized gain of approximately $199,000, net of deferred
income taxes of approximately  $126,000,  is reported as a separate component of
shareholder's  equity.  Additionally,  the  Company's  allocable  share  of  the
unrealized  gains  and  losses  on  marketable  securities  held  by  Cumberland
Technologies,  Inc. ("Cumberland") is approximately $12,000, $11,000 and $98,000
for the years ended December 31, 1996, 1997 and 1998, respectively.  The balance
of  unrealized  gains and losses net of deferred tax is $101,000 at December 31,
1998.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Intangible assets - Intangible assets consisted primarily of the excess
of cost over fair  market  value of the net assets of the  acquired  businesses,
which were being  amortized  on a  straight-line  basis over twenty  years,  and
customer  contracts,  which were being amortized on a  straight-line  basis over
five years.  Amortization  expense was $124,000,  $109,000,  and $37,000 for the
years  ended  December  31,  1996,  1997  and  1998,  respectively.  Accumulated
amortization  was  approximately  $245,000 at December 31, 1997.  The intangible
assets  were all  related  to the  Company's  solid  waste  management  services
operations  which were  disposed of in 1998 (See Note 20).  Consequently,  these
assets were included in net assets of discontinued solid waste operations in the
balance sheet and were written off in the sale of these operations.

         Investments  - The Company's  31.6 percent  investment in Cumberland is
accounted  for using the equity method of  accounting.  The Company's 49 percent
investments in Summerbreeze  Apartments,  Ltd., and Sunshadow  Apartments,  Ltd.
(the  "Apartments"),   are  also  accounted  for  using  the  equity  method  of
accounting.  The original carrying amounts in excess of the underlying equity in
these  companies is amortized over the estimated  useful life of the investment.
The estimated useful lives of these  intangibles are twenty years for Cumberland
and thirty years for the Apartments.

         Other assets - Other assets consisted  primarily of pre-contract  costs
associated with  residential  solid waste management  contracts  obtained during
1997 and 1998,  which were being  amortized on a  straight-line  basis over five
years, the term of the contracts,  and loan costs, which were amortized over the
term of the loans. Amortization expense was $178,000, $236,000, and $365,000 for
the years ended  December 31,  1996,  1997 and 1998,  respectively.  Accumulated
amortization  was  $533,000  at December  31,  1997.  The other  assets were all
related to the Company's solid waste management  services  operations which were
disposed of in 1998 (See Note 20).  Consequently,  these assets were included in
net assets of discontinued  solid waste operations in the balance sheet and were
written off in the sale of these operations.

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

         Contracts and revenue recognition - Contracts generally range from 6 to
18 months in duration,  and earnings from  contracting  operations  are reported
under the percentage-of-completion  method for financial statement purposes. The
estimated  earnings for each contract  reflected in the  accompanying  financial
statements  represent  the  percentage  of estimated  total  earnings that costs
incurred to date bear to estimated total costs,  based on the Company's  current
estimates.  With  respect to contracts  that extend over one or more  accounting
periods,  revisions in costs and earnings  estimates are reflected in the period
the  revisions  become known.  When current  estimates of total  contract  costs
indicate a loss,  provision is made for the entire  estimated loss in the period
indications  of  a  loss  become  known.   The  estimates  can  be  affected  by
uncertainties,  such as weather  related delays,  and it is reasonably  possible
that a change in estimate could occur in the near term.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Change  orders  are   modifications   to  an  original   contract  that
effectively  change the scope  and/or  price of the  contract.  They may include
changes  in  specifications   or  design,   method  or  manner  of  performance,
facilities,  equipment,  materials,  site, or period for completion of the work.
Certain  change  orders  may be priced  under the terms of the  contract.  Other
change  orders are  unpriced;  that is,  the work to be  performed  is  defined;
however,  the  adjustment  to the contract  price is  negotiated  subsequent  to
performance.  Finally, in some cases, both scope and price of a change order may
be  unapproved  or in  dispute.  Accounting  for  change  orders  depends on the
underlying  circumstances,  which may differ for each change order  depending on
the customer,  the contract, and the nature of the change. The Company evaluates
each change order  according to its  characteristics  and the  circumstances  in
which they occur.

         Contract revenue and associated profit are recognized for change orders
that have been approved by the customer and the contractor  regarding both scope
and price to the extent performance related to the change order has occurred.

         Accounting for change orders, where either scope or price have not been
determined,  depends on careful consideration of the underlying  characteristics
and the  circumstances  in which they occur.  For all  unpriced  change  orders,
recovery is deemed  probable if the terms of the  contracts or other  applicable
legal principles  provide a legal basis for  recoverability,  the costs incurred
are objective and  verifiable,  and,  finally,  all future events  necessary for
recovery are more likely than not to occur. The Company  considers the following
factors in  evaluating  whether  recovery is probable:  the  customer's  written
approval  of the  scope  and/or  price of the  change  order,  the  objectivity,
verifiability,  and  reasonableness of underlying  accounting  documentation for
change order costs, and the Company's experience in negotiating change orders in
similar instances.

     The  following  guidelines  are utilized by the Company in  accounting  for
change  orders under which  either the scope or price have not been  approved by
the customer.

         A.   Costs  directly  attributable  to change orders whose scope and/or
              price is not  determinable  are charged  directly to operations in
              the period in which the costs are  incurred if it is not  probable
              that the costs will be recovered  through a change in the contract
              price.

         B.   If it is  probable  that the  costs  will be  recovered  through a
              change in the  contract  price,  the costs are treated as costs of
              contract  performance in the period in which they are incurred and
              contract  revenue  is  recognized  to  the  extent  of  the  costs
              incurred. Costs incurred in excess of amounts that are probable of
              recovery are charged directly to operations when incurred.

          C.  In the case of change  orders  that are  approved as to scope but
              not price,  profit  recognition  is deferred until receipt of the
              priced change order.

         Contract claims are amounts incurred by the Company related to contract
changes that are unapproved as to both scope and price, or are directly disputed
or contested as to either, by the customer.  Claims are amounts in excess of the
agreed upon  contract  price (or amounts not included in the  original  contract
price)  that are due to  customer-caused  delays,  errors in  specification  and
designs,  contract  terminations,  or other causes of  unanticipated  additional
costs. The Company recognizes  contract revenue relating to claims to the extent
of its costs  incurred  only if it is  probable  that the claim  will  result in
additional  contract  revenue and if the amount of contract  revenue and related
costs can be reliably  estimated.  Those two  requirements  are satisfied by the
existence of all of the following conditions:

          A.   The  contract or other  applicable  legal  principles  provides a
               legal basis for the claim;  or a legal opinion has been obtained,
               stating that the Company is entitled to recover amounts under the
               contract or other applicable legal principles.

          B.   Additional costs are caused by circumstances that were unforeseen
               at the contract  date and are not the result of  deficiencies  in
               the contractor's performance.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          C.   Costs incurred by the Company that are associated  with the claim
               are identifiable and reasonable in view of the work performed.

          D.   The evidence supporting the claim is objective and verifiable.

         In evaluating  the  probability  of recovery and the  estimation of the
amounts that will be recovered,  the Company  consults with outside  consultants
and legal  counsel as the claims  progress  through the stages of  negotiations,
actual  filing of formal  claims,  and/or  litigation.  Legal  counsel  has been
engaged for the majority of the claims, both in number and recorded amounts.

         For those claims (see Note 5) where outside counsel has been engaged to
review the claim, the recorded amount is not in excess of the amounts  estimated
by outside counsel to be recoverable.

         Except in rare  circumstances,  claim  preparation  and legal costs are
expensed  as  incurred.  Exceptions  include  instances  in which  the  contract
document  provides  for their  recovery  or legal  costs are  incurred to pursue
approved settlements by court ruling, binding arbitration, and otherwise. In all
instances  where such  amounts are  recorded,  it is  probable  that the amounts
associated  with claim  preparation  and legal  costs will be  recovered.  As of
December 31, 1997 and 1998, no claim preparation and legal costs were deferred.

         Fees  arising  from  services  other than  contracting  activities  are
recognized when the negotiated services are provided.

         Advertising costs - Advertising costs are expensed as incurred. For the
years ended December 31, 1996, 1997 and 1998,  TransCor  expensed  approximately
$114,000,  $536,000, and $40,000,  respectively in advertising costs. All of the
advertising  costs are associated with the  discontinued  solid waste management
operations.

         Stock based compensation - The Company grants stock options for a fixed
number of shares to employees  with an exercise price equal to the fair value of
the shares at the date of grant. The Company accounts for stock option grants in
accordance  with  Accounting  Principles  Board Opinion No. 25,  "Accounting for
Stock Issued to  Employees"  ("APB No. 25"),  and,  accordingly,  recognizes  no
compensation expense for the stock option grants.

         In October 1995,  the Financial  Accounting  Standards  Board  ("FASB")
issued  Statement  No. 123 ("SFAS  No.  123"),  "Accounting  and  Disclosure  of
Stock-Based  Compensation," which encourages, but does not require, companies to
recognize stock awards based on their fair value at the date of grant.

         Earnings (loss) per share - In February 1997, the FASB issued Statement
of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS No. 128"),
which establishes standards for computing and presenting earnings per share. The
Company  adopted the provisions of SFAS No. 128 effective  December 31, 1997 and
all earnings per share amounts for all periods presented, and where appropriate,
have been restated to conform to SFAS No. 128 requirements.

         Comprehensive  income - In June  1997,  the FASB  issued  Statement  of
Financial  Accounting  Standards No. 130, Reporting  Comprehensive Income ("SFAS
No. 130"). SFAS No. 130 requires that total comprehensive income be displayed in
a financial  statement  with equal  prominence  as other  financial  statements.
Comprehensive  income is defined as changes in stockholders' equity exclusive of
transactions  with  owners  such as capital  contributions  and  dividends.  The
Company adopted the provisions of SFAS effective January 1, 1998.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Segments - In June 1997, the FASB issued Statement of Financial  Accounting
Standards No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information" ("SFAS No. 131"), which supersedes  Financial  Accounting Standards
No.  14.  SFAS No.  131 uses a  management  approach  to  report  financial  and
descriptive information about a Company's operating segments. Operating segments
are revenue-producing  components of the enterprise for which separate financial
information  is produced  internally  for the Company's  management.  During the
fourth quarter of 1998, the Company  adopted the provisions of SFAS No. 131. The
adoption of SFAS No. 131 did not affect the results of  operations  or financial
position of the Company.

     The Company's continuing operations are specialty contracting.  See Note 20
for a discussion of discontinued operations. The Company's specialty contracting
is performed for third parties  located  primarily in the state of Florida.  The
Company  evaluates the  performance of each of its contracts.  However,  because
each of the contracts have similar economic characteristics,  the contracts have
been aggregated into a single dominant  segment.  All segment  measurements  are
disclosed in the Company's consolidated financial statements.

     Proposed  accounting  standards - In June 1998,  the  Financial  Accounting
Standards Board issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging  Activities,"  which is  required  to be adopted in years  beginning
after  June  15,  1999.  The  Statement  requires  companies  to  recognize  all
derivatives on the balance sheet at fair value.  Derivatives that are not hedges
must be adjusted to fair value  through  income.  If the  derivative is a hedge,
depending on the nature of the hedge,  changes in the fair value of  derivatives
are either offset  against the change in fair value of assets,  liabilities,  or
firm commitments through earnings,  or recognized in other comprehensive  income
until the hedged item is recognized in earnings.  The  ineffective  portion of a
derivative's  change in fair value will be  immediately  recognized in earnings.
Because  of the  Company's  minimal  use of  derivatives,  management  does  not
anticipate  that the adoption of the Statement to have a  significant  affect on
earnings or the financial position of the Company.

     Reclassification  -  Certain  amounts  in the 1996  and  1997  consolidated
financial statements have been reclassified to conform to the 1998 presentation.


2.     Supplemental statements of cash flows information
<TABLE>
<CAPTION>

                                                             Years ended December 31,
                                                      1996            1997           1998
                                                      ----            ----           ----
<S>                                           <C>                <C>               <C>    

Cash paid:
    Interest                                   $    3,524,000     $    4,543,000   $   7,013,000
    Income taxes                                       28,000             30,000          54,815
Non-cash investing and financing activity:
Capitalized leases                             $          -0-     $          -0-   $   2,020,000
Seller financing of equipment addition         $          -0-     $   39,408,000             -0-
Receipt of EESI stock                          $           -0-    $          -0-   $  17,000,000
Unrealized gain on marketable
  securities                                   $           -0-    $          -0-   $     325,578
Transfer to property held for sale             
  from discontinued operations                 $           -0-    $          -0-   $     397,195
Transfer to discontinued operations
  from property and equipment                  $           -0-    $          -0-   $     267,696
</TABLE>
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.     Related party transactions

         Mr.  Francis  M.  Williams,   the  Company's   President  and  majority
stockholder, also controls Cumberland, a property and casualty insurance company
that provides insurance for specialty sureties and performance and payment bonds
for contractors.  Through Cumberland,  the Company has obtained  performance and
payment bonds in connection with certain of its contracts and projects. The fees
that the Company paid for these  services for the years ended December 31, 1996,
1997 and 1998, were approximately  $2,900,  $43,000, and $29,448,  respectively.
The Company also has a 31.6 percent  investment in Cumberland (see Note 8 of the
Notes to the Consolidated Financial Statements).

         Effective July 1, 1997, employees associated with TransCor's demolition
contracting services unit were transferred to Kimmins Contracting Corp. ("KCC"),
a  wholly-owned  subsidiary of the Company,  for  administrative  and accounting
purposes. As a result, contracting services previously performed by employees of
TransCor were  subcontracted  to KCC. For the years ended  December 31, 1997 and
1998,  TransCor paid  $3,417,574 and $2,761,000 to KCC for services  rendered by
KCC as a subcontractor.  In addition,  TransCor rents equipment from KCC for use
in performing demolition contracts.  TransCor incurred approximately $2,103,000,
$2,573,000,  and  $1,822,000 in equipment  rental charges with KCC for the years
ended December 31, 1996, 1997, and 1998, respectively.

         During 1996, the Company paid landfill fees of approximately  $139,000,
to a company that is primarily owned by the brother of the Company's  President.
In 1997 and 1998,  there  were no  transactions  with this  related  party.  The
amounts  paid  approximated  the  fair  market  rate  for the  type of  services
involved.

         On August 14, 1998 the Company acquired an additional 297,200 shares of
common stock in TransCor for $3,031,000 from Mr. Francis M. Williams,  President
and Chief  Executive  Officer of the  Company.  The  acquisition  increased  the
Company's ownership  percentage to 81 percent from 74 percent and results in the
ability to consolidate  the Company and TransCor for federal income tax purposes
on a prospective basis.

         On November 10, 1998, the Company loaned $1,000,000 to Cumberland which
is  controlled  by Mr.  Francis M.  Williams,  Kimmins'  President  and majority
stockholder.  Cumberland  is a property  and  casualty  insurance  company.  The
$1,000,000  is evidenced by a convertible  term note,  which is due November 10,
2001. Quarterly interest payments are due beginning January 1, 1999 at a rate of
one half of one percent  over the prime rate  established  by  NationsBank.  The
Company has the right,  after six months, to convert the principal amount of the
note into shares of Common Stock of Cumberland  at $3.00 per share.  The balance
of the convertible term note,  including accrued interest of $10,764 at December
31, 1998, is $1,010,764.

     During the year ended December 31, 1998, TransCor contributed $1,000,000 to
the Kimmins Terrier Foundation,  a private foundation  controlled by Mr. Francis
M. Williams.
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.   Accounts receivable

                                                       December 31,
                                                1997                1998
                                                ----                ----
Contract and trade:
   Billed contract receivables
     Completed and uncompleted contracts  $    9,581,464      $    8,561,529
     Retainage                                 6,042,716           4,045,971
   Unbilled contract receivables               4,924,002           5,986,709
   Trade receivables                           4,000,641             569,590
                                            -------------       -------------
                                              24,548,823          19,163,799
Less allowance for doubtful accounts           (921,301)           (739,223)
                                            -------------       -------------
                                              23,627,522          18,424,576
Less noncurrent portion                          874,048             874,048
                                            -------------       -------------
Less amount included in net assets
   of discontinued operations                (3,672,872)                 -0-
                                            -------------       -------------
Net accounts receivable -
   contract and trade                     $   19,080,602      $   17,550,528
                                            =============       =============

         All unbilled  receivables  relate to work performed or material shipped
by the balance sheet date and are billed as soon as  administratively  feasible.
The  portions  at  December  31,  1997 and 1998  that  were not  expected  to be
collected within twelve months are classified as a non-current asset.

         The Company had a note  receivable in an original  amount of $3,638,696
from Sunshadow Apartments,  Ltd., and Summerbreeze Apartments, Ltd., two Florida
real estate limited  partnerships  (collectively,  the  "Apartments").  The note
receivable  originally accrued interest at prime plus 1.375 percent,  increasing
to prime plus 2 percent on July 1, 1995, with principal and interest  payable in
monthly  installments  through  December 31,  1998,  and was  guaranteed  by Mr.
Francis M. Williams,  majority owner of the Company. The Company did not receive
any interest or principal payments during 1997 relating to this note receivable,
and management of the Company  discontinued  recognition  of interest  income in
1996. The amount due from the Apartments at December 31, 1996, was approximately
$3,851,000.

         During 1997, the note receivable and other receivables were contributed
to the Apartments in exchange for 49 percent  non-controlling  preferred limited
partnership  interests in the  Apartments.  See Note 8 of Notes to  Consolidated
Financial Statements for additional information.

         Most of these  receivables  were  contributed  as an  investment in the
Apartments  as described  above.  At December 31, 1997 and 1998,  the balance of
accounts  receivable  -  affiliates  was  $1,004,658  and  $1,182,903,  of which
$900,000  is  classified  as a long-term  receivable  and is  guaranteed  by Mr.
Francis M. Williams.
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5. Costs and estimated earnings in excess of billings on uncompleted contracts
<TABLE>
<CAPTION>

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

Expenditures on uncompleted contracts              $   115,708,567     $   140,139,011
Estimated earnings on uncompleted contracts              6,141,672         (1,242,975)
                                                     --------------      --------------
                                                       121,850,239         138,896,036
Less actual and allowable billings on
uncompleted contracts                                  111,869,559         132,500,186
                                                     --------------      --------------
                                                   $     9,980,680     $     6,395,850
                                                     ==============      ==============
Costs and estimated earnings in excess of
billings on uncompleted contracts                  $    14,564,213     $    10,548,372
Billings in excess of costs and estimated            
earnings on uncompleted contracts                      (4,583,533)         (4,152,522)
                                                     --------------      --------------
                                                   $     9,980,680     $     6,395,850
                                                     ==============      ==============
</TABLE>


         During  the  years  ended  December  31,  1996 and  1997,  the  Company
recognized  revenue from contract  claims of  approximately  $38,000 and $56,000
respectively.  The Company recognized no revenue from contract claims during the
year ended December 31, 1998.  During 1996,  1997 and 1998, the Company  settled
contract  claims  that  resulted  in net losses of  approximately  ($2,903,000),
($847,000) and ($1,253,000), respectively.

         As of December 31, 1997 and 1998,  the costs and estimated  earnings in
excess  of  billings  on  uncompleted  contracts  includes  the  Company's  cost
associated with unapproved or disputed  contract change orders and costs claimed
from  customers  on  completed   contracts  of  approximately   $12,000,000  and
$10,000,000,  respectively.  During  the  performance  of these  contracts,  the
Company encountered site conditions that differed from bid specifications.  As a
result, the Company incurred  additional labor and equipment costs in performing
the  contract.  By their  nature,  recovery of these amounts is often subject to
negotiation  with  the  customer  and,  in  certain  cases,  resolution  through
litigation.  As a result,  the recovery of these  amounts may extend  beyond one
year.  The portions at December 31, 1997 and 1998,  that were not expected to be
collected within twelve months are classified as a non-current asset.

6.     Property and equipment held for sale

         As a  result  of  management's  decision  to  cease  operations  in the
northeast and to de-emphasize the performance of certain environmental  services
within  the  specialty  contracting  segment,  the  Company  decided to sell its
transportable   incineration   system.  This  asset  has  a  carrying  value  of
approximately  $1,800,000 as of December 31, 1998 and 1997. A purchase agreement
for the sale of the  incinerator  for  $1,800,000 was executed in February 1998.
The  Company  wrote down the  carrying  value of the asset by $40,000 in 1997 to
reflect the fair market value based on the purchase agreement.  During the years
ended December 31, 1997 and 1998, the Company  received  approximately  $566,000
from the buyer towards the purchase. The sale of the transportable  incineration
system will be completed upon full receipt of the purchase price by the Company,
which is expected during 1999. The deposits of $566,000 have been netted against
the  carrying  value of the asset  resulting  in  $1,234,000  being  included in
"property held for sale" at December 31, 1998.

         As a result of the Company's sale of its solid waste operations, all of
the  Company's  operating  facilities  were disposed of with the exception of an
idle facility in Ft. Myers (Lee County) Florida. In accordance with Statement of
Financial  Accounting  Standards No. 121, "Impairment of Long-Lived Assets to be
Disposed  Of," in 1997 the Company  reduced the  carrying  value of certain land
held for sale by $90,000,  that management  believed had carrying amounts higher
than its fair market value.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The land and  buildings  are  listed for sale and are  expected  to be sold
during 1999.  Accordingly,  the carrying value of these assets of  approximately
$808,000,  net of the  impairment  loss of $90,000,  is  classified as a current
asset under the caption  "Property  Held for Sale" in the  consolidated  balance
sheet.

7. Property and equipment

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

  Land                                     $     4,323,053   $     1,058,234
  Buildings and improvements                     6,235,460         2,166,984
  Construction and recycling equipment          88,085,391        60,752,336
  Furniture and fixtures                         1,503,217           698,628
  Construction in progress                          48,419           548,816
                                             --------------    --------------
                                               100,195,540        65,224,998
  Less accumulated depreciation               (27,420,533)      (19,578,279)
                                             --------------    --------------
                                                72,775,007        45,646,719
  P&E, discontinued operations                (24,335,544)               -0-
                                             --------------    --------------
  Net P&E                                  $    48,439,463   $    45,646,719
                                             ==============    ==============

         Property and  equipment is recorded at cost.  Depreciation  is provided
using the straight-line  method over estimated useful lives ranging from 3 to 30
years.  Depreciation  expense  was  approximately  $5,219,000,   $8,000,000  and
$11,202,000 for the years ended December 31, 1996, 1997 and 1998,  respectively.
Approximately $3,309,000, $3,625,000 and $2,248,000 for the years ended December
31, 1996, 1997 and 1998 respectively, of depreciation expense is attributable to
discontinued  operations,   with  the  remaining  depreciation  attributable  to
continuing  operations.  Construction  in progress will be depreciated  over the
estimated useful lives of respective assets when placed into service.


8.     Investments in Cumberland Technologies, Inc.,
       Summerbreeze Apartments, Ltd., and Sunshadow Apartments, Ltd.

         Cumberland  - In 1988,  Cumberland  Casualty & Surety  Company  ("CCS")
issued a surplus  debenture to the Company that bears interest at 10 percent per
annum in exchange  for  $3,000,000.  In 1992,  such  debenture  was  assigned to
Cumberland Technologies,  Inc. ("Cumberland"),  a holding company that provides,
among other  services,  reinsurance  for specialty  sureties and performance and
payment bonds for  contractors.  Cumberland  entered into a term note  agreement
with the Company for the outstanding amount of the debenture,  including accrued
interest.  Interest  accrued on the term note was  $506,755 at December 31, 1995
($372,066 in 1996 prior to the conversion discussed below).

         On  November 5, 1996,  the Company  received  1,723,290  shares,  or 30
percent of the outstanding  common stock, of Cumberland common stock in exchange
for the term note from affiliate.  The Cumberland common stock had a fair market
value of $3.00  per share on the date of the  exchange,  based  upon the  quoted
market price.  This  investment is accounted  for under the equity  method.  The
amount of  $3,300,000  in excess of the  underlying  equity  was  attributed  to
goodwill and is being  amortized  over twenty years.  At December 31, 1998,  the
market  value  of  the   Cumberland   common  stock  held  by  the  Company  was
approximately $3,447,000 based on a stock price of $2.00.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The following is a summary of the  financial  position of Cumberland at
December 31, 1998:

                                                    December 31, 1998

Cash and cash equivalents                       $0     4,202,000
Investments in various marketable securities     0     3,987,000
Accounts receivable - trade, net                 0     1,810,000
Reinsurance recoverable                          0     2,306,000
Intangibles                                      0     1,456,000
Other                                                  2,584,000
                                                    ------------
   Total assets                                   $   16,345,000
                                                    =============

Policy liabilities and accruals                   $    8,085,000
Long-term debt                                         2,331,000
Other                                                    580,000
                                                    -------------
   Total liabilities                                  10,996,000

Stockholders' equity                                   5,349,000
                                                    -------------

   Total liabilities and stockholders' equity     $   16,345,000
                                                    =============

         Cumberland's   operating  results  included  revenue  of  approximately
$9,010,000  and a net loss of  approximately  $321,000  during  the  year  ended
December  31,  1998.  The  Company's   equity  in  this  net  loss  amounted  to
approximately  $102,000.  In addition,  approximately  $165,000 of  amortization
expense was recorded by the Company related to the investment.

         Apartments  - On October 22,  1997,  the Company  contributed  its note
receivable in an amount of  approximately  $3,851,000  from the  Apartments  and
other  receivables  of $3,059,000  for a  non-controlling  49 percent  preferred
limited partnership interest in the Apartments and a receivable of $900,000 from
the  Apartments.  The  amount  of  approximately  $12,066,000  in  excess of the
underlying  equity was attributed to goodwill and is being amortized over thirty
years. The Company will be allocated 49 percent of operating income,  losses and
cash flow.  The  preference in the Company's  equity  interest in the Apartments
occurs  upon  the  sale  of the  underlying  partnership  properties.  Upon  the
occurrence of a capital  transaction,  the Company would receive cash flows from
the  sale  or  refinancing  of the  Apartments'  assets  equal  to  its  capital
contribution  prior to any other partner  receiving  any  proceeds.  The Company
accounts for its investment in the Apartments using the equity method.

         During the period  from  October 22 through  December  31, 1997 and the
year ended December 31, 1998, the Apartments recognized revenue of approximately
$722,000 and $4,495,000.  During the same periods, the Apartments recognized net
income  of  approximately  $4,000  and a net  loss  of  approximately  $467,000,
respectively.  The Company has recorded its 49 percent  share of the net results
of operations.  In addition,  approximately $67,000 and $402,000 of amortization
expense  was  recorded  by  the  Company  related  to  the  investments  in  the
Apartments.  At December 31, 1997 and 1998,  the Company's  balance in its total
investment  in the  Apartments  was  approximately  $6,762,000  and  $6,131,000,
respectively.
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The following is a summary of the financial  position of the Apartments
at December 31, 1997 and 1998:

<TABLE>
<CAPTION>
                                                          Total investment
                                                        1997              1998
                                                        ----              ----
<S>                                               <C>              <C>    

   Cash and cash equivalents                      $       63,000   $         66,000
   Accounts receivable - affiliate                       959,000                -0-
   Land                                                3,800,000          3,800,000
   Buildings, capitalized construction interest,
   furniture and equipment, net                       17,194,000         16,420,000
   Other                                                 550,000            638,000
                                                    -------------    ---------------
   Total assets                                   $   22,566,000   $     20,924,000
                                                    =============    ===============

   Accounts payable and accrued expenses          $      783,000   $        846,000
   Accounts payable to affiliates                      1,670,000          1,489,000
   Mortgage loan payable                              21,141,000         20,993,000
   Note payable to partner - Francis M. Williams       2,860,000          2,860,000
                                                    -------------    ---------------
   Total liabilities                                  26,454,000         26,188,000
   Partners' deficit                                 (3,888,000)        (5,264,000)
                                                    -------------    ---------------
   Total liabilities and partners' deficit        $   22,566,000   $     20,924,000
                                                    =============    ===============
</TABLE>


   9.   Accrued expenses


                                              December 31,
                                        1997             1998
                                        ----             ----
Accrued insurance               $     3,743,584   $    2,435,280
Deferred revenue                        919,631              -0-
Accrued interest                        383,088          285,780
Accrued disposal costs                  407,229              -0-
Accrued property taxes                  601,682        1,210,800
Accrued salaries, wages and             404,880          729,786
payroll taxes
Other                                 1,333,502        1,418,742
                                  --------------    -------------
                                $     7,793,596   $    6,080,388
Accrued expenses,                   (2,209,387)              -0-
discontinued operations          --------------    -------------

Total accrued expenses          $     5,584,209   $    6,080,388
                                  ==============    =============

<PAGE>
<TABLE>
<CAPTION>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.      Long-term debt

                                                                               December 31,
                                                                         1997              1998
                                                                         ----              ----
<S>                                                              <C>               <C>    
Notes payable, principal and interest payable
  in monthly installments through March 1, 2003,
  interest at varying rates up to 13 percent,                                                           
  collateralized by equipment                                    $    63,076,321   $    51,712,212

Revolving term bank line of credit, including letters of
  credit, $4,424,000 in 1998 (see below), due March 31, 2001,
  interest payable monthly at lender's base rate plus                                                            
  .5 percent.  At December 31, 1998 the rate is 8.25 percent           4,235,377         1,764,003

Revolving term line of credit, $16,000,000 maximum, due March
  31, 2000, interest payable monthly at lender's base
  rate of LIBOR plus 2.5 percent, collateralized by equipment.          
  At December 31, 1998 the rate is 8.2656 percent                     12,200,000        13,700,000

Mortgage notes,  principal and interest payable in monthly
  installments through January 1, 2012, interest at
  varying  rates up to prime plus 1.75 percent, collateralized
  by land and buildings. At December 31, 1998 the average                                                 
  rate is 9 percent.                                                   6,535,013         1,862,901
                                                                  --------------    --------------

Total debt                                                            86,046,711        69,039,116
Less debt of discontinued operations                                  18,727,964               -0-
                                                                  --------------    --------------
Net total debt                                                        67,318,747        69,039,116
Less current portion                                                  12,723,528        18,270,156
                                                                 --------------     --------------
Net long term debt                                               $    54,595,219    $   50,768,960
                                                                  ==============    ==============
</TABLE>

         Annual  principal  maturities  subsequent to December 31, 1998,  are as
follows:


                           1999            $     18,270,156
                           2000                  23,942,917
                           2001                  12,162,043
                           2002                   8,313,549
                           2003                   6,350,451
                                              --------------
                                           $     69,039,116
                                              ==============

         At December 31, 1998,  there was  approximately  $334,000 of borrowings
available under the revolving term bank line of credit.  The revolving term bank
line of $4,424,000  includes the letter of credit  facility of $2,526,000 and is
secured  by a pledge  of all of the  stock  of the  Company's  subsidiaries  and
substantially all of the unsecured assets of the Company. The use of funds under
these lines is limited among certain  subsidiaries,  and repayment is guaranteed
by  Cumberland.  

         The revolving term line of credit of $16,000,000 is secured by a pledge
of the trade receivables of Kimmins Contracting Corp.
<PAGE>


                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The  revolving  term  bank line of credit  agreement  contains  certain
covenants,  the most restrictive of which require  maintenance of a consolidated
tangible net worth,  as defined,  of not less than  $6,500,000 and net income of
not less than $1,500,000.  In addition,  the covenants prohibit the Company from
paying dividends without lender approval.  Specifically  regarding the revolving
term bank  line of  credit of  approximately  $1,764,000,  the  Company  met the
tangible net worth and net income  requirements  under the credit agreement with
the bank.  As of  December  31,  1998,  the Company  was in  compliance  with or
obtained waivers for all loan covenants.

         During  1997,  Kimmins   Contracting  Corp.   ("KCC"),  a  wholly-owned
subsidiary  of the Company,  entered into four  separate  debt  agreements.  KCC
converted  equipment  previously  rented under  operating  leases into equipment
notes of approximately  $13,041,000 in February 1997 and $28,590,000 in November
1997 under terms similar to the Company's other equipment notes outstanding.  In
addition, KCC obtained a working capital loan with a revolving term bank line of
credit of $16,000,000 as of December 31, 1997 and 1998.

         The above  equipment  notes and the  working  capital  loan  agreements
contain certain covenants,  the most restrictive of which require maintenance of
a total  liabilities  to adjusted  tangible  net worth ratio of 7.5 to 1.0 and a
current ratio of 1.5 to 1.0.  Regarding  the  revolving  term line of credit for
$13,700,000 and outstanding  equipment notes of approximately  $38,386,000,  KCC
and the Company,  as  guarantor,  did not meet the total  liability to net worth
ratio,  current  ratio or net  income  requirements  under the  credit  and note
agreements.  The equipment  notes and working capital loan are guaranteed by the
Company and require the Company to maintain a liability to adjusted tangible net
worth ratio not  exceeding  6.0 to 1 and a current ratio of not less than 1.2 to
1. The Company and KCC have obtained  waivers of these  financial  covenants for
the  year  ended  December  31,  1998.  In  addition,  the  Company  received  a
modification  of the covenants for the year ended December 31, 1999,  with which
the Company believes it will comply.

11.      Employee Stock Ownership Plan Trust Debt

         In March  1990,  the  Company's  Employee  Stock  Ownership  Plan Trust
("ESOP") (Note 13) originally was funded from a $5,100,000  loan.  This loan was
refinanced  during  December 1995 and bears  interest at prime plus 0.5 percent,
with quarterly principal and monthly interest payments through October 2000. The
balance  at  December  31,  1997,  was  approximately  $1,440,000.  The  loan is
guaranteed  by  the  Company  as to  payment  of  principal  and  interest  and,
therefore,  the unpaid  balance of the  borrowing  is  reflected  as debt of the
Company. An equivalent amount representing unearned employee compensation,  less
the Company's  accrued  contribution  (Note 13), is recorded as a deduction from
stockholders' equity.

         Annual  principal  maturities  for each of the next  four  years are as
follows:

                       1999              $    360,000
                       2000                   449,498
                                            ----------
                                         $    809,498
                                            ==========

12.      Leasing arrangements

         The Company rents equipment and machinery as needed,  as well as office
space, under operating leases for varying periods not to exceed one year. Rental
expense for the years ended December 31, 1996, 1997, and 1998, was approximately
$11,808,000, $11,853,000 and $11,858,000, respectively.
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The  Company's  future  minimum  lease  payments  under  non-cancelable
operating leases are as follows:

               1999              $  2,952,120
               2000              $  2,183,364
               2001              $     26,500

13.      Pension and other benefit plans

         Employee Stock Ownership Plan. On January 1, 1989, the Company, for the
benefit of its  employees,  formed the ESOP to purchase  shares of the Company's
common stock from time to time in the open market or in negotiated  transactions
at prices  deemed to be  attractive.  Contributions  to the ESOP are made at the
discretion  of the Board of Directors.  During 1989,  the ESOP acquired from the
Company's President 257,371 shares of common stock at a cost of $5,100,000.  The
shares were acquired in exchange for a note payable to the Company's  President.
Simultaneous  with this  purchase,  the Company's  President  purchased  certain
receivables and interests in certain investments from the Company for a purchase
price of  approximately  $5,100,000,  which  was paid by the  assignment  to the
Company  of the note  received  from the ESOP.  The note  originally  was funded
during March 1990,  through a long-term bank financing  agreement  guaranteed by
the  Company  (Note  11).  As the  debt is  repaid,  shares  are  released  from
collateral  and allocated to active  employees,  based on the proportion of debt
service paid in the current year.  Debt of the ESOP is recorded as debt, and the
shares pledged as collateral are reported as unearned  employee  compensation in
the balance sheet. For financial statement purposes, as of December 31, 1997 and
1998,  the  unearned  employee  compensation  is  reflected  as a  reduction  in
stockholders'  equity.  The  Company's  accounting  treatment  for  the  ESOP as
described  above  is  in  accordance  with  SOP  76-3  for  grandfathered  plans
established prior to 1993.

         Interest and compensation expenses relating to the ESOP are as follows:

                              Years ended December 31,

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

Interest               $    185,7285    $28 133,023  $    102,852
Compensation           $    467,082     $   480,000  $    480,000


         The ESOP shares were as follows:

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

    Allocated shares                          183,000         214,525
    Shares released for allocation                -0-             -0-
    Unreleased shares                          72,000          40,475
                                            ----------      ----------
    Total ESOP shares                         255,000         255,000
                                            ==========      ==========

    Market value of unreleased shares     $   383,000     $    83,000
                                            ==========      ==========
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Stock Option Plan. The Company  originally  reserved  975,000 shares of
its common stock for issuance  upon the exercise of options to be granted  under
the Company's 1987 Stock Option Plan (the Company  Plan).  The exercise price of
an incentive  stock option  granted  under the Company Plan may not be less than
the fair market value of the common stock at the time the option is granted. The
exercise  price of a  non-qualified  stock option granted under the Company Plan
may be any amount determined by the Board of Directors but not less than the par
value of the common stock on the date of the grant.  Options  granted  under the
Company Plan must,  in general,  expire no later than ten years from the date of
the grant.

         The  Company's  Plan has the option to acquire an  aggregate of 975,000
shares of common stock that may be granted to employees, officers, directors and
consultants  of the Company.  The Plan  authorizes  the Board of Directors  (the
"Board")  to issue  incentive  stock  options  ("ISOs"),  as  defined in Section
422A(b) of the Internal  Revenue Code,  and stock options that do not conform to
the requirements of that Code section ("Non-ISOs").  The Board has discretionary
authority to  determine  the types of stock  options to be granted,  the persons
among those eligible to whom options will be granted, the number of shares to be
subject to such options,  and the terms of the stock option agreements.  Options
may be exercised in the manner and at such times as fixed by the Board,  but may
not be exercised after the tenth anniversary of the grant of such options.

         The following  table  summarizes the  transactions  for the three years
ended December 31, 1998, relating to the Plan:
    
                                             Number of          
                                               Shares          Exercise Price
                                            ------------      -----------------
     Outstanding January 1, 1996:                208,243      $  3.33 - $ 4.50
        Granted                                      -0-                   -0-
        Exercised                                    -0-                   -0-
        Canceled                                (51,167)      $   3.33 - $4.50
                                            -------------
     Outstanding December 31, 1996:              157,076      $   3.33 - $4.50
        Granted                                  270,742      $   2.62 - $3.94
        Exercised                                    -0-      $            -0-
        Canceled                               (153,743)      $   3.33 - $4.50
                                            -------------
     Outstanding December 31, 1997               274,075      $   2.62 - $4.50
        Granted                                      -0-                   -0-
        Exercised                                    -0-                   -0-
        Canceled                                (16,476)      $    2.62 - 4.50
                                            -------------
     Outstanding December 31, 1998               257,599      $    2.62 - 4.50
                                            =============
     Exercisable December 31, 1998               104,373      $    2.62 - 4.50
                                            =============

         Pro forma  information  regarding  net income  (loss) and  earnings per
share is required by SFAS No. 123,  which also requires that the  information be
determined  as if the Company  had  accounted  for its  employee  stock  options
granted  subsequent  to December 31,  1993,  under the fair value method of that
Statement.  The fair value for these  options was estimated at the date of grant
using a Black-Scholes  option pricing model with the following  weighted-average
assumptions for 1996, 1997 and 1998;  risk-free interest rates of 5.5 percent; a
dividend yield of zero;  volatility  factors of the expected market price of the
Company's  common  stock  based on  historical  trends;  and a  weighted-average
expected life of the options of seven years.

         The  Black-Scholes  option  valuation  model was  developed  for use in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly  different from those of traded options and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         For purposes of pro forma disclosures,  the estimated fair value of the
options is amortized to expense over the options' vesting period.  The Company's
pro forma information is as follows:

                                                                1996            1997              1998
                                                                ----            ----              ----
<S>                                                       <C>             <C>              <C>    

Proforma net income (loss) attributable to stockholders   $  (8,685,767)  $   (8,549,501)  $      4,271,103
Proforma income (loss) per common share:
      Basic and diluted                                           (1.96)           (1.98)               .99
</TABLE>


         Multi-Employer  Defined Contribution Plan. The Company made payments to
collectively  bargained,  multi-employer  defined  contribution  plans  covering
Company union employees.  Under the Multi-Employer Pension Plan Amendment Act, a
withdrawing  employer is  required  to continue  funding its share of the plan's
unfunded vested benefits. The Company does not possess sufficient information to
determine its portion of the unfunded vested benefits, if any.  Contributions to
such plans for the years ended  December  31,  1996,  1997,  and 1998,  were not
significant. As of December 31, 1998 there were no union employees.


14.      Income taxes

         As of December 31, 1997,  the Company had  consolidated  income tax net
operating loss ("NOL")  carryforwards  for federal tax purposes of approximately
$17,909,000.  Of this amount,  approximately  $13,927,000  was  generated by the
Company and approximately $3,982,000 was generated by TransCor, which previously
filed  separate  income  tax  returns,   as  explained  below.   TransCor's  NOL
carryforward is being utilized against 1998 taxable income. Of the Company's NOL
carryforward from 1997,  approximately $6,900,000 is being utilized against 1998
taxable  income.  The remaining  consolidated  federal tax NOL  carryforward  of
$7,076,000  will  expire  through  the year  2012 if not used.  For  alternative
minimum tax ("AMT") purposes, the NOL carryforward is approximately  $1,435,000.
The  Company  also  has  alternative   minimum  tax  credit   carryforwards   of
approximately  $887,000 available to reduce future federal regular income taxes.
The AMT credit carryforwards do not expire.

         Prior to August 15, 1998,  TransCor and the Company were not  permitted
to file consolidated  income tax returns because the Company owned less than 80%
of TransCor.  On August 15, 1998,  the Company  acquired an additional 6% of the
stock of TransCor, raising its ownership above 80% thereby permitting the filing
of consolidated tax returns prospectively.

         At  December  31,  1997,  the Company  had net  deferred  tax assets of
approximately  $4.5 million.  Because of the Company's net cumulative losses and
the  uncertainty  of being able to utilize  those net deferred  tax assets,  the
Company recorded a valuation  allowance of approximately  $4.5 million.  Because
the Company and TransCor can now file consolidated tax returns,  the Company may
utilize the net deferred tax credits of  approximately  $1.8 million of TransCor
to offset the  deferred  tax assets by that  amount.  Consequently,  the Company
reduced the valuation  allowance by $1.8 million with a corresponding  reduction
in the  recorded  amount  paid  for the  additional  6%  interest  in  TransCor.
Additionally, the Company had previously recorded deferred income tax credits of
approximately  $600,000  for the  additional  taxes on its  share of  TransCor's
earnings.  Because the Company and TransCor can now file consolidated income tax
returns, this deferred income tax credit is no longer required. Accordingly, the
Company reduced the deferred income tax credits by $600,000 with a corresponding
reduction  in the  recorded  amount  paid  for the  additional  6%  interest  in
TransCor.

           As of December 31, 1998,  management has determined  that a valuation
allowance is not necessary because the Company now has net deferred tax credits.
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The  components of the provision for income taxes are  attributable  to
continuing operations as follows:


                       1996               1997               1998
                       ----               ----               ----
Current         $         69,045   $       601,517   $    (11,232,732)
Deferred             (1,232,753)               -0-           1,366,733
                   --------------     -------------     ---------------
                $    (1,163,708)   $       601,517   $     (9,865,999)
                   ==============     =============     ===============

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

                                                            December 31,
                                                      1997                1998
                                                      ----                ----
Deferred tax assets                                              
   Net Operating loss carryforward             $     6,741,983   $    2,389,217
   Valuation allowance                             (4,507,740)              -0-
   Allowance for doubtful accounts                     354,602           11,250
   Costs deferred for tax expensed for books           304,207          509,549
   Alternate minimum tax credit carryforwards          696,623          886,682
   Accrued worker's compensation                     1,217,647          942,772
   Uncompleted long-term contracts                     167,690          110,126
   State tax credit carryforward                        52,730              -0-
   Other                                               599,011          790,722
                                                  -------------    -------------
                                                     5,626,753        5,640,318
                                                  -------------    -------------
Deferred tax liabilities:
   Excess of tax over book depreciation              6,488,973        5,878,803
   Unrealized gain on marketable securities                -0-          126,975
   Costs deferred for book expensed for tax            425,864            9,014
   Outside basis difference in TransCor                259,248              -0-
                                                  -------------    -------------
                                                     7,174,085        6,014,792
                                                  -------------    -------------
Net deferred tax liability                           1,547,332          374,476
Less current net deferred asset                      1,980,148        1,437,707
                                                  -------------    -------------
   Net non-current deferred liability          $     3,527,480   $    1,812,183
                                                  =============    =============

         Factors  causing the  effective  tax rate to differ from the  statutory
rate are as follows:

                                             Years ended December 31,
                                          1996        1997        1998
                                          ----        ----        ----

Federal statutory rate                    (34.0%)     (34.0%)     (34.0%)
Valuation allowance                         20.4%       59.5%     (10.0%)
State income taxes, net of
   federal benefit                         (3.5%)      (3.1%)      (2.7%)
Additional tax (benefit) on the
   Company's shares of
   TransCor's earnings                       3.0%     (11.4%)        5.4%
Other                                         .2%        1.0%        1.8%
                                        ----------  ----------  ----------
Effective tax rate                        (13.9%)       12.0%     (39.5%)
                                        ==========  ==========  ==========

<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.      Stockholders' equity

         The Company's Class B common stock has the same voting rights as common
stock and is not entitled to participate in cash dividends.  Upon liquidation or
dissolution of the Company,  the holders of common stock are entitled to receive
up to $9.00 per  share,  after  which the  holders  of Class B common  stock are
entitled to receive up to $9.00 per share. Thereafter,  all assets remaining for
distribution  will be  distributed  pro rata to the holders of common  stock and
Class B common stock.  The right to convert Class B common stock to common stock
occurs in any fiscal year in which the Company  achieves net earnings equal to a
specified amount  (currently $.84 per share),  which is calculated by adding the
total shares  outstanding  at fiscal year end to the number of shares that could
be converted during the fiscal year.

         The holders of the Class B common stock will  thereafter have the right
to convert up to 625,000  shares of Class B common  stock into common stock on a
share for share basis as follows.  Each cumulative  incremental  increase in net
earnings in any subsequent  year of $.21 per share above the specified  level of
earnings  previously  obtained will afford holders the right to convert up to an
additional  625,000  shares of Class B common stock into common stock on a share
for share basis. Holders of Class B common stock will not be entitled to convert
more than 625,000 of such shares in any fiscal year unless the Company  achieves
earnings  of $1.44 per share of common  stock in any  fiscal  year,  which  will
entitle holders to convert all shares of Class B common stock into common stock.
In addition, conversion occurs if a sale of part of the Company's business as to
which  there  is  a  bona  fide  offer  to  purchase   would  have  resulted  in
convertibility  of  any  of the  outstanding  Class  B  Common  Stock  and it is
determined  by the Board of  Directors  of the  Company  not to  approve  such a
transaction,  then,  upon  request of the holder or holders of a majority of the
outstanding  Class B Common Stock, the number of shares thereof which would have
become  convertible had the  transaction  occurred would become  convertible.  A
similar provision  provides that if there is an independent  valuation of a part
of the business of the Company such that if such part of the business were sold,
the result would allow conversion of all outstanding Class B Common Stock and if
the Board of Directors of the Company does not authorize such sale,  then,  upon
request of the holder or holders of a majority of the outstanding Class B Common
Stock, the outstanding Class B Common Stock would become convertible.  No shares
of Class B common stock became  eligible for conversion into common stock during
the years ended December 31, 1996 or 1997.

         As a result  of  TransCor's  sale of KRC to EESI in  August  1998,  the
Company's net income for the year ended December 31, 1998 exceeded the threshold
amount of $.84 per share.  Thus,  subsequent to year end, the Board of Directors
will set the conversion date and the holder of the Class B Common Stock, Mr.
Francis M.  Williams,  will be entitled to convert  625,000  Class B shares into
common stock.

Had this occurred on January 1, 1998, the affect on the  calculation of earnings
per share would be as follows:
<TABLE>
<CAPTION>

                                                                            Year Ended December 31, 1998

                                                                               Actual          Conversion
                                                                             ------------     -------------
<S>                                                                       <C>              <C>    

Share data:
   Basic and diluted income (loss) per share from continuing operations   $       (3.51)   $        (3.07)
                                                                             ============     =============
   Basic and diluted income per share from discontinued operations        $         4.52   $          3.95
                                                                             ============     =============
                                                                             ============     =============

   Total basic and diluted income per share                               $         1.01   $           .88
                                                                             ============     =============

Weighted average number of shares outstanding used in computations:
   Basic and diluted                                                           4,296,969         4,921,969

</TABLE>
<PAGE>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The Company has authorized  1,000,000  shares of preferred stock with a par
value of $.001, none of which is presently outstanding. Such preferred stock may
be issued in series and will have such designations,  rights,  preferences,  and
limitations as may be fixed by the Board of Directors.

     Net unrealized gains on marketable securities of approximately $228,000 net
of taxes of $127,000 are recorded as an increase to  stockholders'  equity as of
December 31, 1998.

     During the year ended  December  31, 1997 and 1998,  the  Company  acquired
76,600 and 8,013  shares of treasury  stock at a cost of $267,331  and  $30,800,
respectively.  At December 31, 1998, the balance of the Company's treasury stock
was $764,263.


16.      Commitments and Contingencies

     The Company is involved in various legal actions and claims  arising in the
ordinary course of its business. After taking into consideration legal counsel's
evaluation  of such actions and claims,  management is of the opinion that their
outcome will not have a material  adverse effect on the  consolidated  financial
position of the Company.


17.      Fourth quarter adjustments

     During  the fourth  quarters  of 1997 and 1998,  the  Company  revised  its
estimates of costs to complete certain  contracts  primarily as a result of work
slowdowns  caused by excessive  rainfall and recorded certain charges related to
contract  claim and change  order  settlements.  The  aggregate  effect of these
revised  estimates  on the  Company's  pretax  income  for  1997  and 1998 was a
reduction   of   approximately   $10,000,000   and   $5,000,000,   respectively.
Approximately  $1,000,000  of the  total  1997  fourth  quarter  adjustments  of
$10,000,000 are related to contract claim and change order settlements.

     During the fourth quarter of 1998, the Company evaluated its self insurance
accounts  and  determined   that  they  were  over  reserved  by   approximately
$1,600,000.  The  reserve  for  insurance  claims  was  accordingly  reduced  by
$1,600,000.


18.    Fair value of financial instruments

     The  following  estimated  fair value  amounts have been  determined  using
available market information and appropriate valuation  methodologies.  However,
considerable  judgment is necessarily  required in  interpreting  market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily  indicative of the amounts that the Company could realize in
a current  market  exchange.  The use of  different  market  assumptions  and/or
estimation  methodologies may have a material effect on the estimated fair value
amounts.

     Cash,  accounts  receivable,  note  receivable  -  affiliate,  and accounts
payable.  The carrying amount  reported in the balance sheet for cash,  accounts
receivable, and accounts payable approximates their fair value.

     Marketable  Securities - The carrying  amount reported in the balance sheet
for  marketable  securities   approximates  their  fair  value  based  on  price
quotations listed on national markets.

     Long-term  debt.  The  fair  values  of the  Company's  long-term  debt are
estimated using  discounted cash flow analyses,  based on the Company's  current
incremental  borrowing  rates for similar types of borrowing  arrangements.  The
carrying value of the Company's long-term debt approximates the fair value.
<PAGE>
<TABLE>
<CAPTION>

                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


19.      Earnings (loss) per share

         As required by FASB  Statement No. 128, the following  table sets forth
the computation of basic and diluted earnings per share:

                                                   Years ended December 31,
                                             1996             1997               1998
                                             ----             ----               ----
<S>                                   <C>               <C>                <C>    

Numerator:
----------

Income (loss) from continuing          $  (7,231,513)   $  (5,611,006)     $  (15,088,299)
  operations
Adjustment for basic earnings per                 -0-              -0-                 -0-
  share
                                         -------------    -------------      --------------
Numerator for basic earnings per
share -
   income (loss) available to             (7,231,513)      (5,611,006)        (15,088,299)
   common stockholders
   from continuing operations

Effect of dilutive securities                     -0-              -0-                 -0-
Numerator for diluted earnings per
  share:
Income (loss) from continuing             (7,231,513)      (5,611,006)        (15,008,299)
  operations
Income (loss) from discontinued           (1,451,926)      (2,907,234)          19,431,309
  operations
                                         -------------    -------------      --------------
Income (loss) applicable to common
  stockholders after assumed
  conversions                           $ (8,653,439)   $  (8,518,240)     $     4,343,010
   
                                         =============    =============      ==============

Denominator:
------------

Denominator for basic earnings per
 share -                                     
   weighted-average shares                  4,420,175        4,318,481           4,296,969
Effective of dilutive securities:
Stock options                                     -0-              -0-                 -0-
Dilutive potential common shares                  -0-              -0-                 -0-
                                         -------------    -------------      --------------
Denominator for diluted earnings
  per share - adjusted                 
   weighted-average shares and
   assumed conversions                 $    4,420,175   $    4,318,481     $     4,296,969
                                         =============    =============      ==============
Basic and diluted earnings per
  share from continuing operations    $       (1.63)    $       (1.30)     $        (3.51)
   
                                         =============    =============      ==============
Basic and diluted earnings per
  share from discontinued operations  $        (.33)    $        (.67)     $        (4.52)
   
                                         =============    =============      ==============
Basic and diluted earnings per share   $       (1.96)   $       (1.97)     $         1.01)
                                         =============    =============      ==============

</TABLE>
<PAGE>

                                 KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Unexercised  options to purchase  92,000,  56,000 and 104,000 shares of
common  stock for 1996,  1997 and 1998,  respectively,  were not included in the
computations of diluted loss per share because the assumed  conversion  would be
antidilutive.

20.      Discontinued Operations

         On  May  31,  1998,  the  Company  sold  its  Jacksonville  area  waste
collection  and  recycling  operating  assets  and  certain  assets of the Miami
front-end load and rear-load  commercial waste and recycling business to Eastern
Environmental Services of Florida, Inc., for approximately  $11,600,000 in cash.
The  proceeds  exceeded  the net book  value of the  underlying  assets  sold by
approximately  $5,200,000.  This gain is shown in the Consolidated Statements of
Operations as part of "gain on sale of discontinued operations."

         On July 17, 1998,  the Company  adopted a formal plan to sell its solid
waste  management  services  operations  to EESI. On August 31, 1998 the Company
completed the sale of the solid waste management services (SWMS) operations. The
assets sold consisted primarily of accounts receivables,  contracts and property
and equipment.  The selling price was  approximately  $57,800,000 in the form of
cash and EESI common stock.

         Revenues  and  expenses  of the SWMS  operations  for the years  ending
December 31, 1996, 1997 and 1998 are shown separately in the schedule below. The
consolidated statements of operations for the year ended December 31, 1996, 1997
and 1998 have been restated to show separately the operating results of the SWMS
operations.  These amounts are included in the income or loss from  discontinued
operations  portion of the accompanying  consolidated  statements of operations.
Approximately  $7,610,000 of these net revenues was received after the Company's
adoption  of the plan to sell the SWMS  operations.  Information  related to the
discontinued  SWMS operations of KRC for the years ended December 31, 1996, 1997
and 1998, is as follows:
<TABLE>
<CAPTION>

                                                         Year Ended December 31,
                                                 1996              1997             1998
                                                 ----              ----             ----
<S>                                       <C>               <C>              <C>    


Net revenue                               $     34,689,000  $    32,594,000  $     21,526,000
Operating expenses, including                   29,432,000       27,769,000        18,176,000
  depreciation
Selling, general and administrative              6,133,000        8,093,000         4,002,000
  expenses
                                             --------------    -------------    --------------
Operating loss                                     876,000        3,268,000           652,000
Interest expense, net                            1,504,000        1,409,000           913,000
                                             --------------    -------------    --------------
Loss before provision for income                 2,380,000        4,677,000         1,565,000
   tax benefit
Provision for income tax benefit                   928,000        1,770,000           618,000
                                             --------------    -------------    --------------
Loss from discontinued operations         $      1,452,000  $     2,907,000  $        947,000
                                             ==============    =============    ==============
</TABLE>

         For the year ended December, 1998, approximately $180,000 is shown as a
loss from discontinued  operations and the remainder of approximately  $767,000,
in accordance  with APB No. 30, income or loss  incurred  after the  measurement
date is included in the gain on the sale of discontinued operations. Included in
the  gain  is a  $1,000,000  charitable  contribution  to a  private  foundation
controlled by Mr. Francis M.  Williams.  The loss from  discontinued  operations
included write-offs of intangible and other assets.

         Net assets sold have been  separately  classified  in the  accompanying
balance sheet at December 31, 1997.

         The  sale  of the  Company's  SWMS  operations  resulted  in a gain  of
approximately $19,611,000 net of taxes approximately $11,861,000.  Approximately
$15.1 million of the cash proceeds were used to pay off debt on the property and
equipment of the SWMS  operations.  An additional  $6.6 million was used to fund
the working capital deficit of the SWMS operations at August 31, 1998.
<PAGE>
<TABLE>
<CAPTION>

                 Schedule II - Valuation and Qualifying Accounts

                         Allowance for Doubtful Accounts


                                                         Additions
                                       Balance at       Charged to        Deductions
                                        Beginning        Costs and           from          Balance at
            Description                 of Period        Expenses       Allowances (a)   End of Period
            -----------                ----------       ----------      --------------   --------------
<S>                                  <C>             <C>               <C>               <C>    


Year ended December 31, 1998         $      921,301  $       87,275    $      (269,353)  $      739,223
Year ended December 31, 1997         $      616,708  $      772,522    $      (467,929)  $      921,301
Year ended December 31, 1996         $      397,211  $      430,381    $      (210,884)  $      616,708


(a)  Balance represents the write-off of uncollectible accounts.

</TABLE>
<PAGE>
                                  KIMMINS CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

         None.


<PAGE>


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant

         The directors and executive officers of the Company are as follows:

            Name       Age                           Position
            ----       ---                           --------
Francis M. Williams     57       President, Chief Executive Officer and Director
Norman S. Dominiak      54       Vice President
Joseph M. Williams      42       Secretary and Treasurer
Michael Gold            50       Director
R. Donald Finn          55       Director

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

       Francis M.  Williams has been  President and Chairman of the Board of the
Company  since its  inception and Chairman of the Board of Directors of TransCor
since  November  1992.  For more than five years  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 also the  President  and a Director of
College Venture Equity Corp., a small business investment 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.

     Norman S. Dominiak has been Vice  President of the Company since March 1995
and has been  employed  by the  Company  as its Chief  Financial  Officer  since
January 1994.  Mr.  Dominiak has also been Chief  Financial  Officer of TransCor
since  January 1994.  Mr.  Dominiak  served as Controller of ThermoCor  Kimmins,
Inc., a subsidiary of the Company,  from October 1991 until  January 1994.  From
May 1988 until  September  1991, Mr. Dominiak served as Senior Vice President of
Creative  Edge,  a company  engaged in the  manufacturing  and  distribution  of
educational products. From October 1982 until April 1988, Mr. Dominiak served as
Senior Vice President of Cecos Environmental  Services,  Inc., a company engaged
in treatment,  transportation,  and disposal of hazardous waste. From 1965 until
1982,   Mr.Dominiak  was  employed  in  various  financial  capacities  for  the
Carborundum Company.

     Joseph M.  Williams  has been the  Secretary  and  Treasurer of the Company
since October 1988.  Since  September  1997, Mr. Williams has been President and
Chief  Executive  Officer of TransCor.  Since November  1991,  Mr.  Williams has
served as President and has been a Director of Cumberland Technologies,  Inc., a
holding  company  whose  wholly  owned  subsidiaries   provide  reinsurance  and
specialty  sureties and  performance  and payment  bonds.  Since June 1986,  Mr.
Williams has served as President  and Vice  President and has been a Director of
Cumberland  Real  Estate  Holdings,  Inc.,  the  corporate  general  partner  of
Sunshadow  Apartments,  Ltd.  ("Sunshadow")  and Summerbreeze  Apartments,  Ltd.
("Summerbreeze"),  both of which are limited partnerships. Mr. Williams has been
employed by the Company and its subsidiaries 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.

     Michael Gold has been a Director of the Company since  November  1987.  For
more than the past five years, Mr. Gold has been a partner in the Niagara Falls,
New York law firm of Gold and Gold.

     R. Donald Finn has been a Director of the Company since  November 1992. 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>
         Set forth below is information  regarding  certain key employees of the
Company:

         John V.  Simon Jr.,  42,  has been  President  and  General  Manager of
Kimmins  Contracting Corp.,  responsible for supervising  utility  construction,
since May 1981,  and served as a Vice  President  of the Company from 1981 until
October 1988. From January 1978 to May 1981, Mr. Simon owned Simon  Construction
Company,  a company  that  performed  site  work and  utilities  and  demolition
projects.

         Section 16(a) Beneficial  Ownership Reporting  Compliance.  Pursuant to
Section  16(a)  of the  Securities  Exchange  Act of 1934 and the  rules  issued
thereunder,  the  Company's  executive  officers and  directors  and any persons
holding more than 10 percent of the Company's  common stock are required to file
with the  Securities  and Exchange  Commission  and the New York Stock  Exchange
reports of their initial ownership of the Company's common stock and any changes
in ownership of such common stock. Specific due dates have been established, and
the Company is required to disclose in its Annual  Report on Form 10-K and Proxy
Statement  any  failure  to file such  reports  by these  dates.  Copies of such
reports are required to be furnished to the Company.  Based solely on its review
of  the  copies  of  such  reports   furnished   to  the  Company,   or  written
representations that no reports were required, the Company believes that, during
1996, all of its executive  officers  (including the Named Executive  Officers),
directors and persons  owning more than 10 percent of its common stock  complied
with the Section 16(a) requirements.
<PAGE>
Item 11.   Executive Compensation

         Summary  Compensation  Table.  The  following  table  provides  certain
summary information  concerning  compensation paid or accrued by the Company and
its subsidiaries to the Chief Executive Officer and all other executive officers
whose salary and bonus  exceeded  $100,000 for the year ended  December 31, 1998
(the "Named Executives"):
<TABLE>
<CAPTION>

                                             SUMMARY COMPENSATION TABLE

                                                                                Long Term Compensation
                                             Annual Compensation                        Awards
                                                                                      Securities
     Name and                                                 Other Annual            Underlying               All Other
Principal Position    Year         Salary          Bonus      Compensation         Options/SAR's (#)         Compensation
------------------    ----         ------          -----      ------------      ----------------------       ------------
<S>                   <C>       <C>              <C>            <C>             <C>                         <C>

Francis M. Williams   1998      $   119,991      $ 193,217      $-0-            $       -0-                 $     996 (*)
   Chairman of the    1997          172,120      $     -0-      $-0-            $       -0-                 $     996 (*)
   Board              1996          184,810      $     -0-      $-0-            $       -0-                 $     995 (*)
   President and                                                                                              
   Chief Executive                                                                                            
   Officer                                                                                                       
                                                                                                              
John V. Simon, Jr.    1998      $    126,069     $  30,000      $-0-            $       -0-                 $   1,698 (*)
   President of       1997      $    100,019     $ 108,032      $-0-            $    71,666                 $   1,698 (*)
   Kimmins            1996      $     95,000     $  25,000      $-0-            $       -0-                 $   1,655 (*)
   Contracting                                                                                                
   Corp.                                                                                                         
                                                                                                              
Michael D. O'Brien    1998      $     63,942     $ 167,155**    $-0-            $       -0-                 $     695 (*)
   Vice President     1997      $    105,427     $     -0-      $-0-            $     2,000                 $     695 (*)
   of Transcor        1996      $     95,000     $     -0-      $-0-            $       -0-                 $     695 (*)
   TransCor                                                                                                   
                                                                                                              
Norman S. Dominiak    1998      $    80,673      $  20,000      $-0-            $       -0-                 $       -0-
   Vice President     1997              -0-            -0-      $-0-                    -0-                         -0-
   and                1996              -0-            -0-      $-0-                    -0-                         -0-
   Chief Financial                                                                                            
   Officer                                                                                                     

Joseph M. Williams    1998      $       -0-      $ 380,000**    $-0-            $    10,000                 $       -0-
   Secretary and      1997              -0-             -0-     $-0-                 25,000                         -0-
   Treasurer          1996              -0-             -0-     $-0-                    -0-                         -0-

</TABLE>

(*)  Represents  the Company's  contribution  to the  employee's  account of the
Company's  401(k) Plan and premiums paid by the Company for term life  insurance
and long-term  disability.  These plans,  subject to the terms and conditions of
each plan, are available to all employees.

(**) Mr.  O'Brien's and Mr.  Williams'  salaries and other  compensation are not
paid by the  Company.  Their  bonuses  were paid by TransCor  and were  strictly
incentive based.


<PAGE>


     Stock  Option/SAR  Grants  in the Last  Fiscal  Year.  There  were no stock
options or stock appreciation rights granted to Named Executives during the year
ended December 31, 1998.

     Aggregated  Option/SAR  Exercises  in Last Fiscal Year and Fiscal Year- End
Option/SAR  Values. The following table summarizes the net value realized on the
exercise of options in 1998 and the value of outstanding  options as of December
31, 1998, for the Named Executives.
<TABLE>
<CAPTION>

                                 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                        AND FISCAL YEAR-END OPTION/SAR VALUES

                                    Number of
                                                                            Securities              Value of
                                                                            Underlying            Unexercised
                                                                           Unexercised            In-the-Money
                                                                         Options/SARs at        Options/SARs at
                                    Shares                                 Year-End (#)         Year-End ($) (1)
                                   Acquired              Value             Exercisable/           Exercisable/
            Name                on Exercise (#)       Realized ($)        Unexercisable          Unexercisable
            ----                ---------------       ------------        -------------          -------------
<S>                                   <C>                  <C>           <C>                         <C>    

Norman S. Dominiak                     0                   $0              3,000/4,500               $0/$0

John V. Simon, Jr.                     0                   $0             28,666/43,000              $0/$0


(1) Value is calculated using the Company's  closing stock price on December 31,
    1998, per share less the exercise price for such shares.
</TABLE>

                         TEN-YEAR OPTION/SAR REPRICINGS

There were no stock options or SAR repricings during the year ended December 31,
1998.

         Compensation Committee Interlocks and Insider Participation. During the
year ended December 31, 1998, Mr. Francis M. Williams,  the Company's  President
and Chairman of the Board of Directors,  served as President and Chairman of the
Board of Directors  of  TransCor,  and Mr.  Norman S.  Dominiak  served as Chief
Financial Officer of the Company and TransCor.

         Compensation of Directors. During the year ended December 31, 1998, the
Company paid non-officer  Directors an annual fee of $5,000 and $1,000 per board
meeting  attended.  Directors  are  reimbursed  for all  out-of-pocket  expenses
incurred in attending  Board of Directors and committee  meetings.  In addition,
Mr. Gold received $20,000 as compensation for option buyouts.

Stock Option and Other Plans

1987 Stock Option Plan

         The Company adopted a stock option plan (the "Plan")  pursuant to which
975,000 shares of common stock were originally  reserved for issuance to persons
upon exercise of options  designated as "incentive  stock  options,"  within the
meaning of Section 422A of the Internal  Revenue code of 1986 (the "Code"),  and
non-qualified stock options. The purpose of the Plan is to attract,  retain, and
motivate  officers and other  full-time  employees  of the Company,  and certain
other persons  instrumental  to the success of the Company,  and to provide them
with a means to acquire a proprietary interest in the Company.
<PAGE>
         The Plan is administered by a committee  consisting of three members of
the Board of Directors.  The exercise price of an incentive stock option granted
under the Plan may not be less than the fair market value of the common stock at
the time the option is granted  (110 percent of fair market value in the case of
an incentive  stock option granted to an employee owning more than 10 percent of
the voting stock of the Company).  The exercise price of a  non-qualified  stock
option  granted  under  the Plan may be any  amount  determined  by the Board of
Directors but not less than the par value of the common stock on the date of the
grant. Options granted under the Plan must, in general, expire no later than ten
years from the date of the grant  (five years from the date of grant in the case
of an incentive  stock option granted to an employee owning more than 10 percent
of the voting stock of the  Company).  All options  granted to date provide that
the  grantees'  rights vest over five years from the date of grant.  At December
31, 1998, Joseph M. Williams held 63,333 options to purchase the Company's stock
at $2.62 per share of which 25,333 shares are exercisable. At December 31, 1998,
John V. Simon, Jr., held 71,666 options to purchase the Company's stock at $2.62
per share, of which 28,666 shares are exercisable.  At December 31, 1998, Norman
S. Dominiak  held 7,500 options to purchase the Company's  common stock at $2.62
per share of which 3,000 options are exercisable.

Savings and Profit-Sharing Plan

         The  Company  offers a savings  and profit  sharing  plan (the  "401(k)
Plan"),  which qualifies under Sections 401(a) and (k) of the Code. Employees of
the Company and certain affiliates who have been employed for a specified period
of time are eligible to participate in the 401(k) Plan. All  contributions  made
by the employees' vest immediately.  Amounts  contributed by the Company vest 20
percent after three years of service and 20 percent each year thereafter.

Employee Stock Ownership Plan

         Effective  January 1, 1989, the Company formed the ESOP for the benefit
of the employees of the Company and its  subsidiaries  to purchase shares of the
Company's  common  stock from time to time on the open  market or in  negotiated
transactions at prices deemed to be attractive and,  simultaneously,  the Profit
Participation Plan was merged into the ESOP.  Contributions to the ESOP are made
at the discretion of the Board of Directors. During 1989, the ESOP acquired from
the Company's President  approximately  772,000 shares of common stock at a cost
of  $5,100,000.  The shares were  acquired in exchange for a note payable to the
President.  Simultaneously  with such purchase,  the President purchased certain
receivables and interests in certain investments from the Company for a purchase
price of $5,100,000, which was paid by the assignment to the Company of the note
received  from the ESOP.  The note was  funded,  during  March  1990,  through a
long-term  bank  financing  agreement  guaranteed by the Company.  Expenses with
respect to the ESOP include the recognition of interest  expense relating to the
ESOP debt and to earned  compensation.  For the year ended  December  31,  1998,
interest expense and compensation expense relating to the ESOP were $102,000 and
$480,000,  respectively.  As of December 31, 1998,  the unpaid ESOP debt is also
reflected as a reduction in stockholders' equity of approximately $840,000.
<PAGE>
Item 12.   Security Ownership of Certain Beneficial Owners and Management

         The  following  table sets forth the number of shares of the  Company's
common stock  beneficially  owned as of March 31, 1999,  by (i) persons known by
the  Company  to own more than 5 percent  of the  Company's  outstanding  common
stock,  (ii) by each Named Executive and director of the Company,  and (iii) all
executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>

                                                                                             Percent of
                                                                                  Percent       Total
     Name and Address of                                                             of        Voting
     Beneficial Owner(1)            Title of Class           Number of Shares      Class        Power
     -------------------            --------------           ----------------      -----        -----
<S>                           <C>                            <C>                    <C>         <C>    
Francis M. Williams            Common Stock                  1,858,975  (2)          41.8%      61.6%
                               Class B Common Stock          2,291,569              100.0%

Joseph M. Williams             Common Stock                    366,917  (3)           8.2%       5.4%

John V. Simon, Jr.             Common Stock                     24,167  (4)              *          *

Michael Gold                   Common Stock                     13,523  (5)              *          *

George Chandler                Common Stock                      6,714  (6)              *          *

Norman S. Dominiak             Common Stock                      1,500  (8)              *          *

All executive officers and     Common Stock                  2,280,354  (2)(3)       51.1%      
directors as a group                                                    (5)(7)
(five persons)                 Class B Common Stock          2,291,569  (8)         100.0%      67.8% 
</TABLE>

(1)  The  addresses of all officers  and  directors of the Company  above are in
     care of the Company at 1501 Second Avenue, East, Tampa, Florida 33605.

(2)  Includes  1,479,136  shares  owned  directly  by Mr.  Francis M.  Williams;
     133,333 shares owned by Summerbreeze and 121,750 shares owned by Sunshadow,
     both of which Mr. Williams is the sole shareholder of the corporate general
     partner  and  a  50  percent   limited   partner  (see  Item  13,  "Certain
     Relationships  and  Related  Transactions");  48,908  shares  owned  by Mr.
     Williams' wife;  30,493 shares held by Mr. Williams as Trustee for his wife
     and children; 37,913 shares held by Mr. Williams as Custodian under the New
     York Uniform Gifts to Minors Act for his children; 6,375 shares held by the
     Company's 401(k) and ESOP Plans of which Mr. Williams is fully vested;  and
     1,067 shares held by Kimmins Realty  Investment,  Inc.,  which is owned 100
     percent by Mr. Williams.

(3)  Includes  10,000  shares owned by Mr.  Joseph M.  Williams;  25,333  shares
     issuable upon exercise of currently exercisable stock options; 3,030 shares
     held by the Company's  401(k) and ESOP Plans of which Mr. Williams is fully
     vested;  and 341,220  shares held by the Company's  401(k) Plan and ESOP of
     which Mr. Williams is a trustee with shared voting and investment power.

(4)  Includes  1,500 shares owned by Mr.  Simon;  28,666  shares  issuable  upon
     exercise of currently  exercisable stock options;  and 8,334 shares held by
     the Company's 401(k) and ESOP plans of which Mr. Simon is fully vested.

(5)  Includes 1,150 shares owned by Mr. Gold;  5,775 shares  currently  owned by
     Mr.  Gold's  wife;  2,898 held by Mr. Gold as trustee for Mr.  Gold's minor
     children;  and 3,700 shares issuable upon exercise of currently exercisable
     stock options.

(6)  Includes 3,114 shares owned by Mr. Chandler; and 3,600 shares issuable upon
     exercise of currently exercisable stock options.
<PAGE>


(7)  Includes  38,995 shares  issuable  upon  exercise of currently  exercisable
     stock options; 23,102 shares held by the Company's 401(k) and ESOP Plans of
     which certain officers of the Company are fully vested;  and 341,471 shares
     held by the  Company's  401(k) and ESOP Plans of which the Secretary of the
     Company is a trustee.

(8)  Includes  3,000 shares that may be purchased  by Mr.  Dominiak  pursuant to
     immediately  exercisable options. Does not include 6,000 shares issuable to
     him upon exercise of options  vesting at various times  commencing in April
     1999.

     * Less than one percent.

Item 13.   Certain Relationships and Related Transactions

         During  1996,  1997  and  1998,  the  Company  paid  landfill  fees  of
approximately $139,000, $0, and $-0-,  respectively,  to a company that is owned
primarily  by  the  brother  of  Mr.  Francis  M.  Williams.   The  amount  paid
approximated fair market rates for the type of services involved.

         The Company had a note  receivable in an original  amount of $3,638,696
from Sunshadow Apartments,  Ltd., and Summerbreeze Apartments, Ltd., two Florida
real estate limited partnerships (collectively,  the "Apartments"), of which Mr.
Francis M. Williams is the sole shareholder of the corporate general partner and
was the sole limited partner. The note receivable originally accrued interest at
prime plus 1.375  percent,  increasing  to prime plus 2 percent on July 1, 1995,
with principal and interest payable in monthly installments through December 31,
1998,  and was  guaranteed  by Mr.  Williams.  The  Company  did not receive any
interest or principal payments during 1997 relating to this note receivable, and
management  of the  Company  discontinued  recognition  of  interest  income  of
approximately $551,000 for the year. Amounts due from the Apartments at December
31, 1996, were approximately $3,851,000.

         On October 22, 1997, the Company  contributed its note receivable in an
original amount of approximately $3,851,000 from Sunshadow Apartments, Ltd., and
Summerbreeze Apartments, Ltd., and other receivables of approximately $3,059,000
for a non-controlling 49 percent preferred limited  partnership  interest in the
Apartments. The Company will be allocated 49 percent of operating income, losses
and cash flow. The preference in the Company's equity interest in the Apartments
occurs  upon  the  sale  of the  underlying  partnership  properties.  Upon  the
occurrence of a capital  transaction,  the Company would receive cash flows from
the  sale  or  refinancing  of the  Apartments'  assets  equal  to  its  capital
contribution  prior to any other partner  receiving any proceeds.  See Note 8 of
Notes to Consolidated Financial Statements for additional information.

         On  November  5,  1996,  the  Company  received   1,723,290  shares  of
Cumberland  common  stock in exchange for the term note of  $5,169,870  due from
Cumberland.  The  Cumberland  common  stock had a fair market value of $3.00 per
share on the date of the  exchange,  based upon the quoted  market  price.  This
investment is accounted for under the equity method,  and the Company's interest
in Cumberland  represents an ownership share of approximately  31.6 percent.  At
December 31, 1997 and 1998, the market value of the Cumberland common stock held
by the Company was approximately $4,739,000 and $3,447,000, respectively.

         On November 10, 1998,  TransCor  loaned  $1,000,000 to Cumberland.  The
TransCor loan to Cumberland is evidenced by a convertible term note which is due
November 10, 2001. Quarterly interest payments are due beginning January 1, 1999
at a rate of one half of one percent over the rate  established by  NationsBank.
TransCor has the right,  after six months,  to convert the  principal  amount of
note into shares of common stock of Cumberland at $3.00 per share.

         Effective July 1, 1997, employees associated with TransCor's demolition
contracting  services unit was transferred to Kimmins Contracting Corp. ("KCC"),
a  wholly-owned  subsidiary of the Company,  for  administrative  and accounting
purposes. As a result, contracting services previously performed by employees of
TransCor were  subcontracted  to KCC. For the years ended  December 31, 1997 and
1998,  TransCor paid  $3,418,000 and $2,761,000 to KCC for services  rendered by
Kimmins as a subcontractor.  In addition,  TransCor rents equipment from KCC for
use  in  performing  demolition  contracts.   TransCor  incurred   approximately
$2,103,000,  $2,573,000, and $1,822,000 in equipment rental charges with KCC for
the years-ended December 31, 1996, 1997, and 1998, respectively.
<PAGE>

         On August 14, 1998, the Company  acquired an additional  297,200 shares
of common  stock in  TransCor  from  Francis M.  Williams,  President  and Chief
Executive Officer. The acquisition  increased the Company's ownership percentage
to 81 percent  from 74 percent  and results in the  ability to  consolidate  the
Company and TransCor for federal income tax purposes on a prospective basis.

         During  the  year  ended  December  31,  1998,   TransCor   contributed
$1,000,000 to the Kimmins Terrier Foundation, a private foundation controlled by
Francis M. Williams.


<PAGE>


                                     PART IV

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

(a)  List of documents filed as part of this Report

     1.  Financial Statements

         - Report of  Independent  Certified  Public  Accountants
         - Consolidated balance sheets at December 31, 1997 and 1998
         - Consolidated statements of operations for each of the three years
               in the period ended December 31, 1998
         - Consolidated statements of comprehensive income for each of the
               three years in the period ended December 31, 1998
         - Consolidated statements of stockholders' equity for each of the
               three years in the period ended December 31, 1998
         - Consolidated statements of cash flows for each of the three years
               in the period ended December 31, 1998
         - Notes to consolidated financial statements

     2.  Financial Statement Schedule

         II-  Valuation and Qualifying Accounts

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

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

          3(a)    --Restated Certificate of Incorporation of Registrant, as
                      amended.
          3(b) 1  --By-laws of  Registrant
         10.1 2   -- Stock Option Plan
         10.2 2   --Form of Stock  Option  Agreement  for  Executives
         10.3 3   --The Apartments  Partnership  Agreements
         10.4 3   --Term Notes for equipment financed with Caterpillar Financial
                    Services
         10.5       Stock  Purchase Agreement dated August 14, 1998 between
                       the Company and Francis M. Williams
         10.6 4     Stock Purchase Agreement between TransCor and Eastern
                       Environmental Services dated July 17, 1998
         21       --Subsidiaries of the Registrant
         23       --Consent of Ernst & Young LLP
         27       --Financial Data Schedule (for SEC use only)

1    Previously  filed on March 17, 1987, as part of  Registrant's  Registration
     Statement  on Form  S-1,  File No.  33-12677,  and  incorporated  herein by
     reference thereto.

2    Previously  filed on June 29, 1989, as part of Registrant's  Form S-8, File
     No. 33-29612,  and incorporated  herein by reference  thereto.

3    Previously filed on July 2, 1998 as part of the Registrant's  Annual Report
     on Form 10-K for the year ended  December  31, 1997,  File No.  1-10489 and
     incorporated  herein by reference  thereto.

4    Previously filed as part of TransCor's  amended Form 8-K, File No. 1-11822,
     filed on August 4, 1998

(b) Reports on Form 8-K.

     None
<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.



                                             KIMMINS CORP.



Date:                         , 1999         By: /s/ Francis M. Williams
       -----------------------------         -----------------------
                                             Francis 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:                        , 1999          /s/ Francis M. Williams
     ------------------------------          -----------------------------
                                             Francis M. Williams
                                             President and Director
                                             (Chief Executive Officer)

Date:                        , 1999          /s/ Joseph M. Williams
     ------------------------------          -----------------------------
                                             Joseph M. Williams
                                             Secretary/Treasurer

Date:                        , 1999          /s/ Norman S. Dominiak
     ------------------------------          -----------------------------
                                             Norman S. Dominiak
                                             Vice President and Chief
                                             Financial Officer
                                             (Principal Accounting and
                                             Financial Officer)

Date:                        , 1999          /s/ Michael A. Gold
     ------------------------------          -----------------------------
                                             Michael A. Gold, Director

Date:                        , 1999          /s/ R. Donald Finn
     ------------------------------          -----------------------------
                                             R. Donald Finn, Director


<PAGE>

                                                                     EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT




                                                         State or Providence
                                                           of Incorporation
                                Company                    or Organization
--------------------------------------------------------------------------------

Kimmins Contracting Corp..............................  Florida

Kimmins Ltd...........................................  Ontario, Canada

Kimmins Industrial Service Corp.......................  Delaware

Kimmins Abatement Corp................................  Delaware

ThermoCor Kimmins, Inc................................  Florida
   (f/k/a Kimmins Thermal Corp.)

Kimmins Specialty Contracting, Inc....................  Florida

Kimmins Associates, Inc...............................  Delaware

Kimmins Equipment Leasing Corp.......................   Florida

TransCor Waste Services, Inc..........................  Florida

Bay Area Recycling and Fibers, Inc....................  Florida

Kimmins Incorporated..................................  Texas

Kimmins International.................................  Florida

Factory Street Corporation............................  Tennessee



<PAGE>


                                                                     EXHIBIT 23








               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


         We  consent  to the  incorporation  by  reference  in the  Registration
Statement  (Form S-8 No.  33-29612)  pertaining to the 1987 Stock Option Plan of
Kimmins Corp. and in the related Prospectus,  of our report dated April 7, 1999,
with respect to the  consolidated  financial  statements and schedule of Kimmins
Corp.
included in the Annual Report (Form 10-K) for the year ended December 31, 1998.







                                                      /s/ Ernst & Young LLP




Tampa, Florida
April 14, 1999