10-K/A 1 kim10ka103.txt FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- Amendment No.1 FORM 10-K/A [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, 2001 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) FLORIDA 59-3598343 (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. [ ] As of March 22, 2002 there were outstanding 4,872,135 shares of Common Stock and 1,666,569 shares of Class B common stock. The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 22, 2002, was $494,873. ------------------------------ DOCUMENTS INCORPORATED BY REFERENCE: NONE KIMMINS CORP. FORM 10-K/A TABLE OF CONTENTS Page No. PART I Item 1 Business...................................................3 Item 2 Properties.................................................8 Item 3 Legal Proceedings..........................................8 Item 4 Submission of Matters to a Vote of Security Holders........8 PART II Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters................................9 Item 6 Selected Financial Data...................................10 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations....................11 Item 7A Quantitative and Qualitative Disclosures about Market Risk......................................17 Item 8 Financial Statements and Supplementary Data...............18 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures................45 PART III Item 10 Directors and Executive Officers of the Registrant........45 Item 11 Executive Compensation....................................47 Item 12 Security Ownership of Certain Beneficial Owners and Management..................................49 Item 13 Certain Relationships and Related Transactions............50 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K...............................51 2 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; facilities demolition and dismantling; and asbestos abatement. The Company 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 include commercial and residential site work and earthwork activities for the phosphate mining industry. Utility contracting includes infrastructure services such as sewer lines, water lines, and roads and site remediation services. << Industrial demolition, dismantling, and abatement - Dismantling of facilities or structures includes 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. 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 seasonal. 3 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, 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. As part of its earthwork and utility contracting 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. 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. 4 DISCONTINUED OPERATIONS SOLID WASTE MANAGEMENT SERVICES: ------------------------------- 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 , Inc. (EESI). 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 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 $69,400,000 in the form of cash and EESI common stock. On December 31, 1998, EESI was acquired by Waste Management, Inc. (WMI) and the Company received stock of Waste Management, Inc. in exchange for its EESI stock. On June 27, 2000, the Company received net of related legal fees, $3,525,000 from WMI as final settlement. This settlement was for adjustments required under the purchase agreement and for other disputes related to the sale of the SWMS operations. All WMI stock was sold as of December 31, 2001. 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") and 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 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, 2000 and 2001, 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 $15,000,000 for individual projects and $30,000,000 in the aggregate. This capacity is not intended to be either a limitation or 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. 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. 5 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 corporations engaged in heavy manufacturing, such as phosphate mining, commercial and residential real estate developers, as well as public utilities and federal, state and local government agencies. For the years ended December 31, 1999, 2000 and 2001, the following table summarizes the revenue earned on contracts with significant customers that aggregated more than 10% percent of the continuing operations revenues: (In thousands) -------------- 1999 2000 2001 ---- ---- ---- Phosphate mining $ 14,372 $ 8,010 $ 7,160 Utility municipal -0- 6,025 5,190 Real estate development -0- 14,891 7,285 ---------- ----------- ---------- Total from above customers $ 14,372 $ 28,926 $ 19,635 ========== =========== ========== Percentage of gross revenue 22.7% 47.6% 41.7% ========== =========== ========== For the year ended December 31, 2001, 67.3 percent and 32.7 percent, respectively, of the Company's gross revenue were derived from private and governmental customers, respectively. Government contracts, which represent a significant portion of the Company's gross revenue, are subject to significant risks including 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. BACKLOG As of December 31, 2001, the Company had a backlog of uncompleted projects under contract aggregating approximately $10,531,000 (compared to approximately $20,745,000 as of December 31, 2000), of which approximately $9,263,000 is attributable to earthwork and utility contracting services, approximately $217,000 is attributable to demolition and dismantling services, and approximately $1,051,000 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 2002. 6 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 $11,000,000 for any single occurrence and $13,000,000 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. 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 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 regulations of most importance to the Company are governed by the Occupational Safety and Health Administration ("OSHA"), the Mine Safety and Health Administration ("MSHA"), and the Department of Transportation ("DOT"). We are substantially in compliance with all regulations. The Company conducts training programs and inspections on a regular basis. In addition, our brokers and insurance carriers also conduct inspections. 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. 7 EMPLOYEES The Company has approximately 327 employees, of which 5 are employed in executive capacities, 32 in professional capacities, 14 in administrative capacities, 50 as field supervisors and 226 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, 2001, of approximately $1,154,000. This variable rate note matures on October 1, 2004 and currently bears interest at the base rate plus 1/2% (6% at December 31, 2001). The Company owns property on 53rd Street in Tampa, Florida. The property is being used for processing of construction materials and storage of equipment and supplies. The Company's subsidiary, TransCor, owns vacant property on 34th Street and Clark Street in Tampa. The Company placed its new shop in service during the first quarter of 2000. The shop is approximately 9,000 square feet and is located at 1617 Second Avenue East, which is adjacent to the Company's principal executive offices. The Company's subsidiary, TransCor, owns vacant property outside of Nashville, Tennessee. The land is undeveloped and listed for sale. This property is included in property held for sale - non-current. 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 are expected to have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 8 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 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 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: o does not impose listing standards; o does not provide automated trade executions; o does not maintain relationships with quoted issuers; and o 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 NASD OTCBB: 2000 High Low ---- ---- --- First Quarter $ 0.7500 $ 0.3125 Second Quarter $ 0.5312 $ 0.1900 Third Quarter $ 0.5000 $ 0.2000 Fourth Quarter $ 0.4375 $ 0.2300 2001 First Quarter $ 0.7500 $ 0.3100 Second Quarter $ 0.7000 $ 0.4375 Third Quarter $ 0.7500 $ 0.3000 Fourth Quarter $ 0.4800 $ 0.2400 The closing stock price for the Company's stock on March 12, 2002, was $0.3500. On March 1, 2002 there were approximately 464 holders of record of the Company's 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. Recent Sales of Unregistered Securities The following information relates to equity securities of the Company issued or sold during the year ended December 31, 2001, that were not registered under the Securities Act of 1993, as amended (the "Securities Act"). 9 The Company issued no securities during 2001 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. HISTORICAL OPERATING STATEMENT DATA:

10 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.

YEAR ENDED DECEMBER 31, 2001, COMPARED TO YEAR ENDED DECEMBER 31, 2000 CONTINUING OPERATIONS Net revenue for the year ended December 31, 2001, decreased by approximately $9,950,000 or 19.1 percent to $42,299,000 from $52,249,000 for the 11 same period in 2000. The decrease is due primarily to decreases in the Company's demolition services ($8,055,000 decrease in net revenue), mine services ($2,700,000 decrease in net revenue), and other services ($51,000 decrease in net revenue). These decreases were somewhat offset by increases in the Company's utility services ($856,000 increase in net revenue). During the year ended December 31, 2001, the Company's percentage of gross revenues from private customers remained unchanged from 2000 at 67 percent. Outside services, which largely represent subcontractor costs, decreased as a percentage of net revenue to approximately 11 percent for the year ended December 31, 2001 from approximately 16 percent for the same period in 2000. 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. Cost of revenue earned as a percentage of net revenue for the year ended December 31, 2001 increased to 93 percent from 83 percent for the same period in 2000. As a result, the gross profit for the year ended December 31, 2001 was approximately $3,136,000 (7 percent of net revenue) compared to $8,764,000 (17 percent of net revenue) for the same period in 2000. The decrease in the dollar amount $5,628,000 and percentage of gross margin (10 percent) is primarily associated with the Company's demolition services ($3,557,000 decrease in gross profit), utility contracting services ($2,055,000 decrease in gross profit), mining services ($12,000 decrease in gross profit) and other services ($4,000 decrease in gross profit). Depreciation and amortization decreased to approximately $5,442,000 in 2001 from approximately $7,671,000 in 2000. The decrease relates primarily to the sale of some underutilized heavy construction equipment which was sold in 2001. Included in the Company's operating results for the years ended December 31, 2000 and 2001 is the activity related to the settlement and/or resolution of contract claims and unapproved change orders. The "Excess of recovery over cost" amounts have been reserved for other claims, or reduced by current costs associated with claims. This activity can be summarized as follows: Years Ended December 31, 2000 2001 ---- ---- Claim recoveries $ 801,000 $ 865,000 Cost of recoveries (33,000) (127,000) ------------- -------------- Excess of recovery over cost $ 768,000 $ 738,000 ============= ============== The Company had the following balances recorded relating to contract claims and unsigned change orders at December 31, 2000 and 2001. Years Ended December 31, 2000 2001 ---- ---- Claims $ 9,902,000 $ 6,953,000 Unapproved change orders -0- -0- -------------- ------------ $ 9,902,000 $ 6,953,000 ============== ============ Cumulative external claim preparation costs included above $ -0- $ -0- ============== ============ During the year ended December 31, 2001, selling, general and administrative expenses decreased to approximately $4,067,000 (10 percent of net revenue) from $4,531,000 (9 percent of net revenue) for the same period in 2000. The dollar and percentage decrease are attributable to reductions in administrative costs including salaries and wages, ESOP compensation expenses, legal fees, bad debt expense, supplies and bank charges. During the year ended December 31, 2001, the Company recognized a loss on disposal of equipment of approximately $1.4 million related to sale of construction equipment with an approximate book value of approximately $5.7 million. The loss incurred in 2001 was a byproduct of management's effort to reduce outstanding debt. The loss of approximately $15,000 in 2000 related to the sale of construction equipment with an approximate book value of approximately $3.9 million. 12 During 2001, the Company sold its entire portfolio of marketable securities and recogizned a loss of approximately $6.3 million. The largest component of the loss was $5.9 million related to the sale of the Company's investment in Waste Management stock (NYSE:WMI). The Company acquired this stock in 1999 in connection with the sale of the assets of its TransCor subsidiary. In 2000, the Company had gains of $1.0 million in its portfolio, related to the sale of trading securities. Interest expense, net of interest income for the year ended December 31, 2001 was approximately $3,006,000 as compared to approximately $4,285,000 for the year ended December 31, 2000. The average amount of debt decreased between periods, since debt payments during the year exceeded borrowings by approximately $17,881,000. The Company's income tax benefit for continuing operations was calculated using a rate of approximately 49 percent for the year ended December 31, 2001. The Company's income tax provision for continuing operations was calculated using a rate of approximately 37 percent for the year ended December 31, 2000. The increase in 2001 is attributed to the tax benefits realized on the carryback of capital losses sustained in the current year. As a result of the foregoing, the Company recorded loss from continuing operations of approximately $5,709,000 for the year ended December 31, 2001, as compared to income from continuing operations of approximately $471,000 for the year ended December 31, 2000. On June 27, 2000, the Company received, net of related legal fees, $3,525,000 as final settlement from WMI. This amount was for adjustments required under the purchase agreement and for other disputes related to the sale of the SWMS operations. YEAR ENDED DECEMBER 31, 2000, COMPARED TO YEAR ENDED DECEMBER 31, 1999 CONTINUING OPERATIONS Net revenue for the year ended December 31, 2000, decreased by approximately $3,992,000 or 7.1 percent to $52,249,000 from $56,241,000 for the same period in 1999. The decrease is due primarily to decreases in the Company's utility contracting services ($8,036,000 decrease in net revenue), and mine services ($6,409,000). These decreases were somewhat offset by increases in the Company's demolition services ($10,386,000 increase in net revenue) and other services ($67,000 increase in net revenue). During the year ended December 31, 2000, the Company's percentage of gross revenues from private customers remained unchanged from 1999 at 69 percent. Outside services, which largely represent subcontractor costs, increased as a percentage of net revenue to approximately 16 percent for the year ended December 31, 2000 from approximately 13 percent for the same period in 1999. 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 greater extent during 2000 than 1999 due to the specific contracts in progress and the associated work requirements. Cost of revenue earned as a percentage of net revenue for the year ended December 31, 2000 decreased to 83 percent from 91 percent for the same period in 1999. As a result, the gross profit for the year ended December 31, 2000 was approximately $8,764,000 (17 percent of net revenue) compared to $5,019,000 (9 percent of net revenue) for the same period in 1999. The increase in the dollar amount $3,745,000 and percentage of gross margin (8 percent) is primarily associated with the Company's demolition services ($2,285,000 increase in gross profit), utility contracting services ($1,017,000 increase in gross profit), mining services ($432,000 increase in gross profit) and other services ($11,000 increase in gross profit). Depreciation and amortization decreased to approximately $7,671,000 in 2000 from approximately $9,197,000 in 1999. The decrease relates primarily to the sale of some underutilized heavy construction equipment which was sold in late 1999 and 2000. Included in the Company's operating results for the years ended December 31, 1999 and 2000 is the activity related to the settlement and/or resolution of contract claims and unapproved change orders. The "Excess of recovery over cost" amounts have been reserved for other claims, or reduced by current costs associated with claims. This activity can be summarized as follows: Years Ended December 31, 1999 2000 ---- ---- Claim recoveries $ 1,400,000 $ 801,000 Cost of recoveries (1,014,000) (33,000) ------------- -------------- Excess of recovery over cost $ 386,000 $ 768,000 ============= ============== 13 The Company had the following balances recorded relating to contract claims and unsigned change orders at December 31, 1999 and 2000. Years Ended December 31, 1999 2000 ---- ---- Claims $ 10,731,000 $ 9,902,000 Unapproved change orders -0- -0- -------------- ------------ $ 10,731,000 $ 9,902,000 ============== ============ Cumulative external claim preparation costs included above $ -0- $ -0- ============== ============ During the year ended December 31, 2000, selling, general and administrative expenses decreased to approximately $4,531,000 (9 percent of net revenue) from $7,221,000 (13 percent of net revenue) for the same period in 1999. The dollar and percentage decrease are attributable to reductions in administrative costs including salaries and wages, ESOP compensation expenses, legal fees, bad debt expense, supplies and bank charges. Interest expense, net of interest income for the year ended December 31, 2000 was approximately $4,285,000 as compared to approximately $5,000,000 for the year ended December 31, 1999. The average amount of debt decreased between periods, since debt payments during the year exceeded borrowings by approximately $12,944,000. The Company's income tax expense for continuing operations was calculated using a rate of approximately 37 percent for the year ended December 31, 2000. The Company's income tax provision for continuing operations was calculated using a rate of approximately 30 percent for the year ended December 31, 1999. As a result of the foregoing, the Company recorded income from continuing operations of approximately $471,000 for the year ended December 31, 2000, as compared to a loss from continuing operations of approximately $3,340,000 for the year ended December 31, 1999. On June 27, 2000, the Company received, net of related legal fees, $3,525,000 as final settlement from WMI. This amount was for adjustments required under the purchase agreement and for other disputes related to the sale of the SWMS operations. LIQUIDITY AND CAPITAL RESOURCES Cash provided by (used in) operating activities was approximately $5,426,000, $7,547,000 and $559,000 for the years ended December 31, 1999, 2000 and 2001. During 2001, the Company generated cash from investing activities of approximately $21,883,000. This amount was primarily the result of cash proceeds from the sale of marketable securities of approximately $14,942,000 as well as the net proceeds from the sale of the investment in the apartments of $4,637,000. 14 The Company made capital expenditures of approximately $5,029,000, $4,031,000 and $201,000 in 1999, 2000 and 2001, respectively. The expenditures in 2001 were primarily related to the acquisition of equipment associated with the Company's utility contracting operations. Management believes future capital expenditures will be financed by available cash resources, cash flow from operations and available credit resources, as needed. During 2001, the Company used cash in financing activities of approximately $17,881,000. The 2001 borrowings and the related debt payments resulted in a decrease in the total indebtedness of the Company to approximately $30,802,000 at December 31, 2001 (approximately $48,623,000 at December 31, 2000). Current maturities of total indebtedness amount to approximately $5,139,000 at December 31, 2001 (approximately $17,875,000 at December 31, 2000). Payments on long term debt were approximately $19,989,000 during 2001. These payments were partially offset by new borrowings of approximately $2,109,000 during 2001. During the years ended December 31, 2000 and 2001, the Company's average contract and trade receivables were outstanding for 65 and 63 days, respectively. This improvement is primarily the result of the Company's 2001 mix of business as well as the concentrated effort by the senior management team to accelerate cash collections. The Company anticipates sustaining the current rate of collection for the year ended December 31, 2002. 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. In addition to the sales above, the Company has discontinued the use of certain assets with a net book value of approximately $4,474,000 and has placed them for sale. Of these assets, approximately $1,800,000 net of $1,177,500 of deposits received relates to assets from the discontinuance of a certain remediation business in the specialty-contracting segment. In addition, approximately $3,440,000 of construction equipment has been placed as available for sale. The remaining balance of approximately $411,000 represents the net book value of land for sale located in Nashville, Tennessee. Subsequent to December 31, 2000, the Company received approximately $4,637,000 from the sale of its investment in the Apartments. This amount represented the book value of the Apartments as of February 28, 2001, and no gain or loss resulted from this transaction. The Company's current bonding coverage for non-environmental projects is $15,000,000 for an individual project and $30,000,000 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. 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, weather 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. 15 QUARTERLY EFFECT OF EXTRAORDINARY ITEM

(1) EXTRAORDINARY ITEM - During 1989, Kimmins Corp. entered into an indemnification agreement with Cumberland to issue a surety bond to an unrelated contractor. Kimmins received a fee from the contractor for the indemnification. In April 1991, the contractor was served with a "Default Termination Notice". On May 2, 1991, Cumberland executed a "Takeover Agreement" with the Navy and shortly thereafter contracted with Kimmins Corp. to complete the original contract. During 1991, the contractor sued and settled with Cumberland and Kimmins Corp. for $30,000 in exchange for the right to recover from the Navy for wrongful termination. The original hearing determined wrongful termination and was appealed by the Navy. During 2000, the Federal Circuit Court of Appeals reversed the original decision. Cumberland then directed the contractor to file a Petition for Writ of Certiorari to the United States Supreme Court. On April 23, 2001, the Supreme Court of The United States entered an order to deny the writ of certiorari. As a result, Cumberland demanded payment from Kimmins Corp. of $1,851,000. Payment of $1,500,000 was made in full satisfaction of the indemnification on November 15, 2001. 16 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK During 2001, the Company entered into certain transactions using derivative financial instruments. As of the end of the year, the Company had no outstanding derivative financial instruments. As of December 31, 2001, the Company has debt of approximately $29,747,000 of which $28,588,000 has a fixed interest rate. The remaining debt of $1,154,000 has variable interest rates. However, an increase in the rates of 1% would have an effect of only $18,000, exclusive of the effect of income taxes. Accordingly, the Company believes its exposure to market risk is not material 17 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA KIMMINS CORP. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Page Report of Independent Certified Public Accountants...........................19 Consolidated balance sheets at December 31, 2000 and 2001....................20 Consolidated statements of operations for each of the three years in the period ended December 31, 2001.....................................22 Consolidated statements of comprehensive income for each of the years in the period ended December 31, 2001........................24 Consolidated statements of stockholders' equity for each of the three years in the period ended December 31, 2001.........................25 Consolidated statements of cash flows for each of the three years in the period ended December 31, 2001.....................................26 Notes to consolidated financial statements...................................27 Financial statement schedule: Schedule II - Valuation and qualifying accounts..............................45 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. 18 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, 2000 and 2001, 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, 2001. 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 auditing standards generally accepted in the United States of America. 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, 2000 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the Unites States of America. 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/ Ferlita, Walsh & Gonzalez, P.A. Tampa, Florida March 22, 2002 19 KIMMINS CORP. CONSOLIDATED BALANCE SHEETS ASSETS

The accompanying notes are an integral part of these consolidated financial statements. 20 KIMMINS CORP. CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY

The accompanying notes are an integral part of these consolidated financial statements. 21 KIMMINS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these consolidated financial statements. 22 KIMMINS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED

The accompanying notes are an integral part of these consolidated financial statements. 23 KIMMINS CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The accompanying notes are an integral part of these consolidated financial statements. 24 KIMMINS CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

The accompanying notes are an integral part of these consolidated financial statements. 25 KIMMINS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these consolidated financial statements. 26 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"). PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of Kimmins Corp. and its subsidiaries, including TransCor, a 95 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 and cash equivalents. Trade receivables are comprised primarily of amounts due from 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. The Company's cash account balances are insured by the F.D.I.C. up to $100,000 per bank. The Company's cash balances on deposit exceeded the balance insured by the F.D.I.C. in the amount of $-0- and $5,023,000 at December 31, 2000 and 2001, respectively. CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand, on deposit with financial institutions, cash in interest bearing accounts and certificates of deposit with maturities of 90 days or less. ACCOUNTS RECEIVABLE - CONTRACT AND TRADE, includes $12,617,000 and $9,261,000 net of allowance for doubtful accounts of approximately $488,000 and $422,000, respectively, at December 31, 2000 and 2001. The Company's policy for allowance for doubtful accounts is to provide for specific accounts considered to be uncollectible. MARKETABLE SECURITIES - Prior to December 31, 2001, the Company's investments in marketable securities consisted primarily of common stock of Waste Management, Inc. (WMI), received as a result of the sale of Kimmins Recycling Corp., and other common stocks of public corporations. During 2001, the Company also traded covered options of WMI. As of December 31, 2001, the Company had sold its entire portfolio balance. For the years ended December 31, 1999, 2000 and 2001, income (loss) from marketable securities is summarized as follows: 1999 2000 2001 ---- ---- ---- Realized gains (losses) $ 2,460,000 $ 999,500 $ (6,298,000) Dividends 51,000 32,000 19,000 Portfolio management fees (16,000) (15,500) (16,000) ------------ ------------ ------------ $ 2,495,000 $ 1,016,000 $ (6,295,000) ============ ============ ============ 27 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Prior to their reclassification to the trading securities category in 2001, and in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," the marketable securities were classified as available-for-sale securities and their underlying unrealized gains or losses, net of tax, were reported as a separate component of stockholders' equity, along with the Company's allocable share of its equity method investee's reported unrealized gains or losses (Cumberland Technologies, Inc.,). The balance of the net unrealized gains and (losses) account is summarized as follows:

INVESTMENTS - The Company's 31 percent investment in Cumberland Technologies, Inc. (Cumberland) is accounted for using the equity method of accounting. The original carrying amount in excess of the underlying equity in Cumberland is being amortized over 20 years, the estimated useful life of the intangible. 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" (SFAS 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 SFAS 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 12 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. 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. 28 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Thecontract 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. 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. 29 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2000 and 2001, no claim preparation and legal costs were deferred. Fees arising from services other than contracting activities are recognized when the negotiated services are provided. BACKLOG - As of December 31, 2001, the Company had a backlog of uncompleted projects under contract aggregating approximately $10,531,000 (compared to approximately $20,745,000 as of December 31, 2000), of which approximately $9,263,000 is attributable to earthwork and utility contracting services, approximately $217,000 is attributable to demolition and dismantling services, and approximately $1,051,000 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 2002. NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial Accounting Standards Board issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The Financial Accounting Standards Board has issued Statement No. 137 Accounting for Derivative Instruments and Hedging Activities - Deferral of the effective date of SFAS No. 133, which delays the implementation date of SFAS 133 for one year, to fiscal years beginning after June 15, 2000. 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 the Statement to have a significant effect on earnings or the financial position of the Company. In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141. "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 addresses financial accounting and reporting for all business combinations and requires that all business combinations entered into subsequent to June 2001 be recorded under the purchase method. This statement also addresses financial accounting and reporting for goodwill and other intangible assets acquired in a business combination at acquisition. SFAS No. 142 addresses financial accounting and reporting for intangible assets acquired individually or with a group of other assets at acquisition. This statement also addresses financial accounting and reporting for goodwill and other intangible assets subsequent to their acquisition. These statements were adopted by the Company on January 1, 2002. Goodwill amortization will cease as of December 31, 2001, and the Company will be required to complete an impairment test of the remaining goodwill balance annually (or more frequently if impairment indictors arise). The Company has not yet determined the financial impact the adoption of these pronouncements will have on its financial position or results of operations. As of December 31, 2001, the Company has goodwill of approximately $2,472,000, net of accumulated amortization, related to the acquisition of Cumberland and recognized approximately $165,000 of amortization expense during 2001. The valuation of this goodwill will be subject to an impairment test at the date of adoption. The Company will complete the first step of the impairment test by June 30, 2002 and, if necessary, will complete the second step by December 31, 2002. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets. The statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Live Assets and for Long-Lived Assets to Be Disposed Of", and the accounting and reporting provisions of APB Opinion No. 30. SFAS No. 144 removes goodwill from its scope, as goodwill is addressed in the impairment test described above under SFAS No. 142. The Company will adopt SFAS No. 144 on January 1, 2002. The adoption is not expected to have a material effect on the Company's financial position, results of operations or cash flows. 30 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS RECLASSIFICATION - Certain amounts in the 1999 and 2000 consolidated financial statements have been reclassified to conform to the 2001 presentation. 2. SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION

3. RELATED PARTY TRANSACTIONS Mr. Francis M. Williams, the Company's President and majority stockholder, also controls Cumberland Technologies, Inc. (Cumberland) (see Footnote 9 for the Company's investment in Cumberland), a publicly traded 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. There were no such fees paid to Cumberland for the years ended December 31, 1999, 2000 and 2001. On November 10, 1998, the Company loaned $1,000,000 to Cumberland, which is evidenced by a convertible term note, which was 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 Bank of America. The Company has the right to convert the principal amount of the note into shares of common stock of Cumberland at $3.00 per share. In 2001, the terms of the note were extended with a new due date of November 10, 2002. All other terms remained the same as the original note. The balance of the convertible term note at December 31, 2000 and 2001 is $1,000,000 and $604,055, respectively. During 2000 and 2001, the Company recorded approximately $96,000 and $69,000, respectively, of interest income on its note from Cumberland. Qualex, Inc., a subsidiary of Cumberland, provided professional services to the Company, during 2000 and 2001. The Company recorded approximately $220,000 and $86,000, respectively for these services. During 2000 and 2001, the Company offset interest receivable of approximately $96,000 and $56,000, respectively, on the $1,000,000 note receivable due from Cumberland against the payable to Qualex, Inc. The Company recorded bond fees payable to officers, who are also shareholders of the Company, of approximately $50,000 and $52,000 during 2000 and 2001, respectively, although only $58,000 were paid in 2001. Mr. Francis M. Williams, the Company's President and majority stockholder, Mr. John V. Simon, Jr., President of Kimmins Contracting Corp., and Mr. Joseph M. Williams, the Company's Secretary and Treasurer are partners in an entity called JFJ Investments (JFJ). During 2001, the Company was provided no services by JFJ and all outstanding balances due to JFJ were paid as of December 31, 2001. Effective with the sale of Kimmins Recycling during 1998, the Company accrued $1,000,000 payable to Mr. Francis M. Williams for a 10-year non-compete agreement. On December 31, 2000 Mr. Williams agreed to accept a 6% interest bearing promissory note that matures on December 31, 2005. The Company paid Mr. Francis M. Williams $500,000 on this note. The payment consisted of approximately $440,000 principle and $60,000 of interest. Mr. Williams then loaned the Company $500,000 in the form of a demand note. 31 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During 2001, the Company made payments to Cumberland for an indemnification agreement on a bonding issue that was entered into in 1989. Due to the conditions of the indemnification agreement, the Company was required to pay approximately $1,850,000 to Cumberland, and settled for $1,500,000 on November 15, 2001. (See Extraordinary Footnote 21). The remaining balance has been set aside as a reserve for claims. The case will be appealed. The Company performed miscellaneous construction work for the Kimmins Terrier Foundation, a private foundation controlled by Mr. Francis M. Williams. Of the approximately $28,000 of work performed in 2001 for the Foundation, all but approximately $500 was billed. Mr. Francis M. Williams, the Company's President and majority stockholder, purchased a backhoe from the Company in 2001. The purchase price was in excess of the net book value of the asset and the proceeds were used to reduce the Company's payable to Mr. Williams. The following is a summary of the related party accounts receivable and accounts payable at December 31, 2000 and 2001:

32 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. ACCOUNTS RECEIVABLE

All unbilled receivables relate to work performed or material shipped by the balance sheet date and are billed as soon as administratively feasible. Accounts receivable not expected to be collected within one year of the balance sheet date are classified as non-current. At December 31, 2000 and 2001, the non-current portion of accounts receivable were all claim related. 5. OTHER CURRENT ASSETS The majority of the change in the other current assets account during 2000 and 2001 was a result of the Company's cash collateral deposit payments of approximately $383,000 and $204,000, respectively, in connection with the Company's workers' compensation insurance. The balance of the other current assets account at December 31, 2000 and 2001, was approximately $537,000 and $806,000, respectively. 6. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS

During 2000 and 2001, the Company settled claims that resulted in approximately $768,000 and $758,000, respectively, in excess of the recorded amount. The excess recoveries have been reserved for other claims, or reduced by current costs associated with claims. 33 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2000 and 2001, 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 $7,583,000 and $5,725,000, 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, 2000 and 2001, that were not expected to be collected within twelve months are classified as a non-current asset. 7. 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. A purchase agreement for the sale of the incinerator for $1,800,000 was executed in February 1998. The sale of the transportable incineration system will be completed upon full receipt of the purchase price by the Company. As of December 31, 2001, the Company had received $1,177,500 which has been netted against the carrying value of the asset resulting in $622,500 being included in long-term "property held for sale" at December 31, 2001. The Company has a plan to dispose of approximately $3,441,000 (net book value) of construction equipment within the next year. The depreciation on these items was stopped at December 31, 2001 and these assets were reclassified as current property held for sale. The Company also has real estate for sale in Nashville, Tennessee, which has a net book value of approximately $411,000. This amount is included in long-term "property held for sale" as management does not expect the property to be disposed of within the next twelve months. 8. PROPERTY AND EQUIPMENT December 31, 2000 2001 ---- ---- Land $ 1,058,234 $ 1,058,234 Buildings and improvements 2,891,804 2,891,804 Construction equipment 50,457,355 24,341,962 Furniture and fixtures 523,367 550,340 ------------- ------------- 54,930,760 28,842,340 Less accumulated depreciation (28,962,865) (17,057,161) -------------- --------------- Net property and equipment $ 25,967,895 $ 11,785,179 ============== =============== 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 $8,630,000, $7,104,000 and $5,211,000 for the years ended December 31, 1999, 2000 and 2001, respectively. 9. INVESTMENTS IN CUMBERLAND TECHNOLOGIES, INC., SUMMERBREEZE APARTMENTS, LTD., AND SUNSHADOW APARTMENTS, LTD. CUMBERLAND - In 1988, Cumberland Casualty & Surety Company ("CCS") issued a 10 percent interest bearing surplus debenture to the Company 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). 34 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On November 5, 1996, the Company received 1,723,290 shares, or 30 percent of the outstanding common stock, of Cumberland 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. Cumberland is a publicly traded corporation and at December 31, 2001, the market value of the Cumberland common stock held by the Company was approximately $1,637,000 based on a stock price of $.95. As of December 31, 2000 and 2001, the Company's balance in its equity method investment in Cumberland was approximately $5,078,000 and $4,927,000, respectively. The unamortized goodwill balance was approximately $2,637,000 and $2,472,000 at December 31, 2000 and 2001, respectively. The Company has evaluated the balance in its equity investment in Cumberland at December 31, 2001. Under the tests outlined in FAS-121, the Company believes that evaluating the fair value of the investment in the "quoted market price in active markets" is not an accurate test of the fair value, due to the extremely low trading volume of the stock. FAS-121 also identifies using "estimates based on valuation techniques to determine the fair value." The Company evaluated the fair value of its investment in Cumberland using some of these techniques. This evaluation supported the current fair value. The Company also considered Cumberland's historical financial performance as well as their future projected income levels. The Company has the intent to retain its investment in Cumberland for the long-term. At December 31, 2001, the Company believes that there should be no value adjustment to the carrying value of the Cumberland investment. The following is a summary of the financial position of Cumberland at December 31, 2000 and 2001:

During the years ended December 31, 2000 and December 31, 2001, Cumberland's operating results included revenue of approximately $14,425,000 and $16,461,000. During the same periods, Cumberland recognized net income (loss) of approximately $1,042,000 and ($29,000), respectively. The Company's equity in this net income amounted to approximately $297,000 and $1,000 for the years ended December 31, 2000 and 2001, respectively. In addition, approximately $165,000 of amortization expense was recorded by the Company related to the investment in both 2000 and 2001. 35 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APARTMENTS - In March of 2001, the Partnership's properties were sold and the Company received approximately $4,637,000 as its distributive equity interest preference on complete liquidation. For the years ended December 31, 2000 and 2001, respectively, the Company recorded approximately $397,000 and $106,000 of net losses from its share of the Apartment's operations, including goodwill amortization. The Company's 2001 net loss from Apartments includes approximately $3,802,000 in net income from operations and the Company's share of the Partnership's gain on sale, $67,000 of goodwill amortization, and $3,841,000 loss on disposal of investment. 10. ACCRUED EXPENSES December 31, 2000 2001 ---- ---- Accrued insurance $ 2,868,175 $ 1,514,074 Accrued interest 113,049 13,546 Accrued property taxes 2,054,726 669,095 Accrued salaries, wages and payroll taxes 725,736 567,802 Other 96,121 70,685 ------------ -------------- Total accrued expenses $ 5,857,807 $ 2,835,202 ============ ============== 11. LONG-TERM DEBT

36 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Annual principal maturities subsequent to December 31, 2001, are as follows: 2002 $ 5,138,682 2003 5,584,630 2004 6,294,484 2005 6,192,249 2006 6,531,966 -------------- $ 29,742,011 ============== The Company's outstanding letter of credit facility of approximately $430,000 is secured by a restricted cash account at a local financial institution. At December 31, 2000 and 2001, there were no borrowings outstanding against the letter of credit facility. The Company established loan and collateral account agreements with firms holding the Company's marketable securities during 1999 and 2000. The margin lines of credit provide cash advances to the Company and are based on the current value of the Waste Management shares and other marketable securities held by the Company. At December 31, 2001, this margin line was closed out and all Waste Management shares held by the Company were sold. 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, 1999, 2000, and 2001, was approximately $7,741,000, $5,466,000 and $4,369,000, respectively. Since 1998, some of the heavy construction equipment previously leased was purchased by the Company which is the primary reason for the significant and continued decreases in 2000 and 2001 rental expense. The Company formerly leased some of its heavy construction equipment under capital leases. The economic substance of each lease is that the Company is financing the acquisition of the assets through the lease, and accordingly, it was recorded in the Company's assets and liabilities. For the years 2000 and 2001, the Company had no leases that were recorded as a capital lease. 13. PENSION AND OTHER BENEFIT PLANS 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 fair market 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. 37 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the transactions for the three years ended December 31, 2001 relating to the Plan: Weighted Number of Average Shares Exercise Price ------ -------------- Outstanding December 31, 1998 257,599 $ 3.56 Granted 699,099 .27 Exercised -0- -0- Canceled (236,266) 3.56 ------------ ---------------- Outstanding December 31, 1999 720,432 0.36 Granted 321,976 .25 Exercised -0- -0- Canceled (3,000) .25 ------------ ---------------- Outstanding December 31, 2000 1,039,408 0.33 Granted -0- -0- Exercised -0- -0- Canceled (7,500) .25 ------------ ---------------- Outstanding December 31, 2001 1,031,908 $ 0.33 ------------ ---------------- Exercisable December 31, 2001 560,293 $ 0.37 ============ ================ The following table summarizes information about stock options at December 31, 2001:

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 1999, 2000 and 2001; 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 38 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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:

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. To accommodate the 2002 EGTRRA requirements, the vesting schedule for Company Contributions has been amended to vest 20 percent after two years of service and 20 percent each year thereafter. The Company contributed approximately $42,000, and $48,000 in 2000, and 2001, respectively. 14. INCOME TAXES As of December 31, 2000 and 2001, the Company had consolidated income tax net operating loss ("NOL") carryforwards for federal tax purposes of approximately $4,200,000 and $17,177,000, respectively. The remaining consolidated federal tax NOL carryforward of $17,177,000 will expire approximately one-half in 2012 and one-half in 2019 through 2021 if not used. The Company had alternative minimum tax credit carryforwards of approximately $1,063,000 and $746,000 available at December 31, 2000 and 2001, respectively, to reduce future federal regular income taxes. The AMT credit carryforwards do not expire. Charitable contribution carryforwards of approximately $349,000 at December 31, 2001 expire 2003 through 2006. 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. The components of the provision for income taxes (benefits) are attributable to continuing operations as follows:

39 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 assets and liabilities are as follows:

As reflected above, the Company has recorded a net deferred tax asset of $2,364,046 and $5,517,054 at December 31, 2000 and 2001, respectively. Management has determined that a valuation allowance is not necessary at December 31, 2000 and 2001, because it is expected that the net deferred tax assets will be realized through future profits in operations and settlement of pending claims. The amount of the net deferred tax assets considered realizable, however, could change in the near future if estimates of future taxable income during the carryforward period are changed. Factors causing the effective tax rate to differ from the statutory rate are as follows: Years Ended December 31, ------------------------ 1999 2000 2001 ---- ---- ---- Statutory federal rate (34.0%) 34.0% (34.0%) State income taxes net of federal benefit (3.5%) 3.5% (3.5%) Excess tax deductions (non-timing related) 0.0% 0.0% (2.6%) Nondeductible expenses 1.5% 1.3% 1.8% Changes in estimates (1.5%) 0.0% (4.3%) Other 7.8% (5.9%) (6.0%) ---------- ---------- ---------- Effective tax rate (29.7%) 32.9% (48.6%) ========== ========== ========== 40 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 per the Class B common stock conversion agreement (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, 2000 or 2001. Based on 1998 earnings, 625,000 shares of Class B common stock became eligible for conversion into common stock. The 625,000 Class B shares were converted to common stock in 1999. 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, during 1999, the holder of the Class B common stock, Mr. Francis M. Williams converted 625,000 Class B shares into common stock. 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. During the year ended December 31, 2001, the Company acquired no shares of treasury stock. At December 31, 2001, the balance of the Company's treasury stock was $845,892. 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. 41 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During 2000, the Company entered into a three-year "Club Seat" membership agreement with a local sports venue, for a total of approximately $40,000 per year. Part of the cost of the agreement is shared with the Company's affiliate, Cumberland Technologies, Inc. 17. FOURTH QUARTER ADJUSTMENTS During the fourth quarter of 2000, the Company evaluated its self insurance accounts and determined that they were over reserved by approximately $125,000. The reserve for insurance claims was accordingly reduced by $125,000 as of December 31, 2000. The company recorded $1,500,000 for an indemnification agreement, in the fourth quarter of 2001. (See Footnote 21: Extraordinary Item.) 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. 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. 42 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:

Unexercised options to purchase approximately 154,000, 361,000 and 563,000 shares of common stock for 1999, 2000, and 2001, respectively, were not included in the computations of diluted loss per share because the assumed conversion would be antidilutive. 43 KIMMINS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 20. DISCONTINUED OPERATIONS On June 27, 2000, the Company received net of related legal fees, $3,525,000 from WMI as final settlement. This settlement was for adjustments required under the purchase agreement and for other disputes related to the sale of the SWMS operations. This amount net of tax of $1,135,000 has been reflected on the Statement of Operations as Income from Discontinued Operations. 21. EXTRAORDINARY ITEM During 1989, Kimmins Corp. entered into an indemnification agreement with Cumberland to issue a surety bond to an unrelated contractor. Kimmins received a fee from the Contractor for the indemnification. In April 1991, the contract was served with a "Default Termination Notice". On May 2, 1991, Cumberland executed a "Takeover Agreement" with the Navy and shortly thereafter contracted with Kimmins Corp. to complete the original contract. During 1991, the contractor sued and settled with Cumberland and Kimmins Corp. for $30,000 in exchange for the right to recover from the Navy for wrongful termination. The original hearing determined wrongful termination and was appealed by the Navy. During 2000, the Federal Circuit Court of Appeals reversed the original decision. Cumberland then directed the contractor to file a Petition for Writ of Certiorari to the United States Supreme Court. On April 23, 2001, the Supreme Court of The United States entered an order to deny the writ of certiorari. As a result, Cumberland demanded payment from Kimmins Corp. of $1,851,000. Payment of $1,500,000 was made in full satisfaction of the indemnification on November 15, 2001. 44 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS ALLOWANCE FOR DOUBTFUL ACCOUNTS

(a) This amount represents additional collections of the St. Lucie receivables which were fully reserved as well as the write-off of uncollectible accounts in 1998 and 1999. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE As reported in Kimmins Corp. Current Report on Form 8-K, filed November 18, 1999, Kimmins has changed its accountants. On November 11, 1999, the Board of Directors of the Company approved the engagement of Ferlita, Walsh & Gonzalez, P.A. as its independent auditors for the fiscal year ending December 31, 1999 to replace the firm of Ernst & Young LLP, who were dismissed as auditors of the Company effective November 11, 1999. The reports of Ernst & Young LLP on the Company's financial statements for the past two years did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. The Company had authorized Ernst & Young LLP to discuss the results of the past two years audits with Giunta, Ferlita & Walsh. In connection with the audits of the Company's consolidated financial statements for each of the two years ended December 31, 1998 and in the subsequent interim periods, there we no disagreements with Ernst & Young LLP on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to make reference to the matter in their report. 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 60 President, Chief Executive Officer and Director Karl Burgin 55 Vice President Joseph M. Williams 45 Secretary and Treasurer Michael Gold 53 Director R. Donald Finn 58 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. 45 Karl Burgin has been Chief Financial Officer of the Company since May 2001 and has been employed by the Company as its Controller since January 2000. From July 1998 until November 1999, Mr. Burgin served as Chief Financial Officer of Laker Airways, Inc. and Star Air Tours, Inc. From December 1994 until June 1998, Mr Burgin was a self-employed Financial Consultant. From December 1991 until November 1994, Mr. Burgin served as Chief Financial Officer of Integrated Waste Services, Inc. From October 1984 until November 1991, Mr. Burgin served as Chief Financial Officer of Reger Capital Corp. Prior to September 1984, Mr. Burgin served in various financial capacities for public and private companies engaged in the construction, waste disposal, and real estate development businesses. 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 last 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. Set forth below is information regarding certain key employees of the Company: John V. Simon Jr., 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 2001, 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, except that Mr. Burgin filed one late Form 3. 46 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, 2001 (the "Named Executives"): SUMMARY COMPENSATION TABLE

(1) 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. (2) Reflects 21,333 options granted during 1999 upon cancellation of 21,333 options originally granted in 1997. Grant of Options. During 1999, 420,000 options were granted to Francis M. Williams in recognition of his performance. During 2000, options were granted to Mr. Simon and other management personnel in recognition of their performance. During 2001, no options were granted. No stock appreciation rights (SARs) have been granted by the Company. 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 2000 and the value of outstanding options as of December 31, 2000, for the Named Executives. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

(1) Value is calculated using the Company's closing stock price on December 31, 2001, per share, less the exercise price for such shares. 47 Compensation Committee Interlocks and Insider Participation. During the year ended December 31, 2001, 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. Karl Burgin served as Chief Financial Officer of the Company and TransCor. Compensation of Directors. During the year ended December 31, 2001, 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. 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. 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 fair market 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. See Item 12 for Named Executives holding options at December 31, 2001. 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. To accommodate the 2002 EGTRRA requirements, the vesting schedule for Company Contributions has been amended to vest 20 percent after two years of service and 20 percent each year thereafter. 48 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 15, 2002, 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:

(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 2,385,319 shares owned directly by Mr. Francis M. Williams; includes 168,000 shares issuable upon exercise of currently exercisable stock options; 48,908 shares owned by Mr. Williams' wife; 30,493 shares held by Mr. Williams as Trustee for his wife and children; 24,626 shares held by Mr. Williams as Custodian under the Florida Uniform Gifts to Minors Act for his children; 1,066 shares held by Kimmins Realty Investment, Inc., which is owned 100 percent by Mr. Williams; and 34,826 shares held by the Company's 401(k) Plan of which Mr. Williams is fully vested. (3) Includes 51,500 shares owned by Mr. Joseph M. Williams; 108,000 shares issuable upon exercise of currently exercisable stock options; 5,500 shares held by Mr. Williams as trustee for his children; 131,220 shares held by the Company's 401K plan of which Mr. Williams is a trustee of the 401(k) Plan with shared voting and investment power. (4) Includes 1,500 shares owned by Mr. Simon; 83,000 shares issuable upon exercise of currently exercisable stock options; and 58,054 shares held by the Company's 401(k) plan 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 19,100 shares issuable upon exercise of currently exercisable stock options. (6) Includes 5,154 shares owned by Mr. Finn; and 13,100 shares issuable upon exercise of currently exercisable stock options. 49 (7) Includes 303,799 shares issuable upon exercise of currently exercisable stock options; 92,880 shares held by the Company's 401(k) Plan of which certain officers of the Company are fully vested; and 131,220 shares held by the Company's 401(k) Plan of which the Secretary of the Company is a trustee. (8) Includes 4,000 shares that may be purchased by Mr. Burgin pursuant to immediately exercisable options. *Less than one percent. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED 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, 1997 and 1998, were approximately $43,000 and $29,000, respectively. There were no related fees paid to Cumberland for the years ended December 31, 2000 and 2001. The Company recorded bond fees payable to officers of the Company of approximately $50,000 and $52,000 during 2000 and 2001. During 2000 and 2001 approximately $10,000 and $58,000 of those fees were paid respectfully. 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 percent. At December 31, 2000 and 2001, the market value of the Cumberland common stock held by the Company (based on the non-actively traded stock price) was approximately $2,585,000 and $1,637,000, 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. At this date an agreement was entered into that extended the note, the new due date being November 10, 2002. All other terms remained the same as the original note. 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 to convert the principal amount of note into shares of common stock of Cumberland at $3.00 per share. 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. Qualex, which is controlled by Mr. Francis M. Williams, provides some services, including legal counsel to the Company. During 2000 and 2001, the Company recorded approximately $220,000 and $165,000, respectively, for these services. Effective with the sale of Kimmins Recycling during 1998, the Company accrued $1,000,000 payable to Mr. Francis M. Williams for a 10-year non-compete agreement. In 1999 and 2000, the accrual amount remained unchanged. In 2001, the Company paid Mr. Francis M. Williams $500,000 which in turn he loaned back to the Company payable by the Company in the form of a demand note. Mr. Francis M. Williams, the Company's President and majority stockholder, Mr. John V. Simon, Jr., President of Kimmins Contracting Corp., and Mr. Joseph M. Williams, the Company's Secretary and Treasurer are partners in an entity named JFJ Investments (JFJ). During 2000, JFJ loaned $90,000 to the Company of which $65,000 was owed as of December 31, 2000. In addition, JFJ provided $38,000 of services to the Company during 2000 which were unpaid as of December 31, 2000. In 2001, JFJ provided no services to the Company and all outstanding balances due were paid. 50 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 - Report of Independent Certified Public Accountants - Consolidated balance sheets at December 31, 2000 and 2001 - Consolidated statements of operations for each of the three years in the period ended December 31, 2001 - Consolidated statements of comprehensive income for each of the three years in the period ended December 31, 2001 - Consolidated statements of stockholders' equity for each of the three years in the period ended December 31, 2001 - Consolidated statements of cash flows for each of the three years in the period ended December 31, 2001 - 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: 2.1 -Plan and Agreement of Merger (incorporated by reference to Appendix A to the Company's definitive Proxy Statement for its 1999 Annual Meeting of Stockholders, dated August 16, 1999, filed with the Commission on August 16, 1999 (the "Proxy Statement"). 3.1 -Articles of Incorporation of the Registrant (incorporated by reference to Appendix B to the Proxy Statement). 3.2 -Bylaws of the Registrant (incorporated by reference to the Registrant's Current Report on Form 8-K dated October 19, 1999 as filed with the Securities and Exchange Commission). 10.1(1) -Stock Option Plan 10.2(1) -Form of Stock Option Agreement for Executives 10.3(2) -The Apartments Partnership Agreements 10.4(2) -Term Notes for equipment financed with Caterpillar Financial Services 10.5(3) -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 10.7(5) -Second Amended and Restated Loan Agreement between Registrant and SouthTrust Bank, NA 10.8(5) -Amendment to Second Amended and Restated Loan Agreement 16.1 -Letter re change in Certifying Accountant (incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 8-K dated November 18, 1999 as filed with the Securities and Exchange Commission). 21 -Subsidiaries of the Registrant (Previously filed). 23.1 -Consent of Ferlita, Walsh & Gonzalez, PA 1 Previously filed on June 29, 1989, as part of Registrant's Form S-8, File No. 33-29612, and incorporated herein by reference thereto. 51 2 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. 3 Previously filed on April 15, 1999 as part of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, 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. 5 Previously filed on April 4, 2000 as part of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000, File No. 001-10489 and incorporated herein by reference thereto. (b) Reports on Form 8-K. 52 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: January 6, 2003 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: January 6, 2003 /s/ Francis M. Williams ---------------------- ----------------------------------- Francis M. Williams President and Director (Chief Executive Officer) Date: January 6, 2003 /s/ Joseph M. Williams ----------------------- ----------------------------------- Joseph M. Williams Secretary/Treasurer Date: January 6, 2003 /s/ Karl Burgin ---------------------- ----------------------------------- Karl Burgin Vice President and Chief Financial Officer (Principal Accounting and Financial Officer) Date: January 6, 2003 /s/ Michael A. Gold --------------------- ----------------------------------- Michael A. Gold, Director Date: January 6, 2003 /s/ R. Donald Finn -------------------- ----------------------------------- R. Donald Finn, Director 53 KIMMINS CORP., CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-K I, Karl Burgin, certify that: 1. I have reviewed this annual report on Form 10-K of Kimmins Corp.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; Date: January 6, 2003 /s/ Karl Burgin --------------------------------------------- Karl Burgin, Chief Financial Officer 54 KIMMINS CORP., CERTIFICATION FOR ANNUAL REPORT ON FORM 10-K I, Francis M. Williams, certify that: 1. I have reviewed this annual report on Form 10-K of Kimmins Corp.; 2. Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods presented in this annual report; Date: January 6, 2003 /s/ Francis M. Williams -------------------------------------------- Francis M. Williams Chairman of the Board, President and Chief Executive Officer 55

KIMMINS CORP/DE 10-K/A