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<SEC-DOCUMENT>0000916641-01-501009.txt : 20010820
<SEC-HEADER>0000916641-01-501009.hdr.sgml : 20010820
ACCESSION NUMBER:		0000916641-01-501009
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010817

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SMITH MIDLAND CORP
		CENTRAL INDEX KEY:			0000924719
		STANDARD INDUSTRIAL CLASSIFICATION:	CONCRETE PRODUCTS, EXCEPT BLOCK & BRICK [3272]
		IRS NUMBER:				541727060
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13752
		FILM NUMBER:		1718122

	BUSINESS ADDRESS:	
		STREET 1:		ROUTE 28
		STREET 2:		P O BOX 300
		CITY:			MIDLAND
		STATE:			VA
		ZIP:			22728
		BUSINESS PHONE:		5404393266

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 300
		STREET 2:		P.O. BOX 300
		CITY:			MIDLAND
		STATE:			VA
		ZIP:			22728
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>d10qsb.txt
<DESCRIPTION>FORM 10QSB
<TEXT>
<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

                  Quarterly Report under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934



For the quarterly period ended                     Commission File Number
       June 30, 2001                                       1-13752
     -----------------                                    ---------


                            SMITH-MIDLAND CORPORATION
                            -------------------------
                          (Exact Name of Small Business
                       Issuer as Specified in Its Charter)


           Delaware                                      54-1727060
    ------------------------                             ----------
    (State of Incorporation)                      (I.R.S. Employer I.D. No.)


                Route 28, P.O. Box 300, Midland, Virginia 22728
                -----------------------------------------------
                    (Address of Principal Executive Offices)

                                 (540) 439-3266
                                 --------------
                (Issuer's Telephone Number, Including Area Code)



         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
                      -------                                    -------


         As of August 13, 2001, the Company had outstanding 3,086,798 shares of
Common Stock, $.01 par value per share.
<PAGE>

                            SMITH-MIDLAND CORPORATION

                                      INDEX


PART I.  FINANCIAL INFORMATION                                       PAGE NUMBER
                                                                     -----------

         Item 1.  Financial Statements

                       Consolidated Balance Sheets (Unaudited);                3
                       June 30, 2001 and December 31, 2000

                       Consolidated Statements of Operations                   4
                       (Unaudited); Three months ended
                       June 30, 2001  and 2000

                       Consolidated Statements of Operations                   5
                       (Unaudited); Six months ended
                       June 30, 2001  and 2000

                       Consolidated Statements of Cash Flows                   6
                       (Unaudited); Six months ended
                       June 30, 2001 and 2000

                       Notes to Consolidated Financial Statements (Unaudited)  7

         Item 2.  Management's Discussion and Analysis of Financial            9
                   Condition and Results of Operations

PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings                                           15

         Item 2.  Changes in Securities and Use of Proceeds                   15

         Item 3.  Defaults Upon Senior Securities                             15

         Item 4.  Submission of Matters to a Vote of Security Holders         15

         Item 5.  Other Information                                           15

         Item 6.  Exhibits and Reports on Form 8-K                            15

         Signatures                                                           16

                                       2
<PAGE>

                         PART I - Financial Information

Item 1.  Financial Statements
         --------------------

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                         June 30,         December 31,
         Assets                                                            2001               2000
         ------                                                        -----------         ----------

Current assets:
<S>                                                                    <C>                 <C>
   Cash and cash equivalents                                           $  348,452          $  218,264
   Accounts receivable:
     Trade - billed, less allowances for doubtful accounts of
       $279,542 and $258,542                                            4,638,929           4,122,118
     Trade - unbilled                                                     118,852               2,405
   Inventories:
     Raw materials                                                        592,449             576,995
     Finished goods                                                     1,065,932           1,475,383
   Prepaid expenses and other assets                                      116,379              62,811
                                                                      -----------        ------------
  Total current assets                                                  6,880,993           6,457,976
                                                                      -----------        ------------

Property and equipment, net                                             2,668,534           2,684,918
                                                                      -----------        ------------

Other assets:
   Note receivable, officer                                               630,700             630,700
   Claims and accounts receivable                                         960,254             960,254
   Other                                                                  300,904             309,374
                                                                      -----------        ------------
       Total other assets                                               1,891,858           1,900,328
                                                                      -----------        ------------
       Total Assets                                                   $11,441,385        $ 11,043,222
                                                                      ===========        ============

         Liabilities and Stockholders' Equity
         ------------------------------------
Current liabilities:
   Current maturities of notes payable                                $   745,270        $    524,305
   Accounts payable - trade                                             1,921,976           2,482,238
   Accrued expenses and other liabilities                                 710,908             347,674
   Customer deposits                                                      266,716             416,816
                                                                      -----------        ------------
     Total current liabilities                                          3,644,870           3,771,033
Reserves for Contract Losses                                            1,064,845             995,845
Notes payable - less current maturities                                 4,150,010           4,281,528
Notes payable - related parties                                            85,091              87,188
                                                                      -----------        ------------
     Total Liabilities                                                  8,944,816           9,135,594
                                                                      -----------        ------------


Stockholders' equity:
   Preferred stock, $.01 par value; authorized 1,000,000 shares,
     none outstanding                                                         --                  --
   Common stock, $.01 par value; authorized 8,000,000 shares,
     issued 3,127,718 and 3,091,718 shares,
     outstanding, 3,086,798 and 3,050,798 shares                           31,277              30,917
   Additional capital                                                   3,472,034           3,453,222
   Treasury Stock                                                        (102,300)           (102,300)
    Retained earnings (deficit)                                          (904,442)         (1,474,211)
                                                                      -----------        ------------
     Total Stockholders' Equity                                         2,496,569           1,907,628
                                                                      -----------        ------------
       Total Liabilities and Stockholders'  Equity                    $11,441,385        $ 11,043,222
                                                                      ===========        ============
</TABLE>

                                       3
<PAGE>

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


                                       4
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                             June 30,
                                                     2001               2000
                                                 ------------       -----------
<S>                                              <C>                <C>
Revenue                                            $5,989,964        $3,780,164

Cost of goods sold                                  4,805,998         2,916,570
                                                  -----------        ----------

Gross profit                                        1,183,966           863,594
                                                  -----------        ----------

Operating expenses:
     General and administrative expenses              581,479           532,031
     Selling expenses                                 179,136            93,185
                                                  -----------        ----------

     Total operating expenses                         760,615           625,216
                                                  -----------        ----------

Operating income                                      423,351           238,378
                                                  -----------        ----------

Other income (expense):
     Royalties                                        242,116           102,404
     Interest expense                                (121,281)         (140,987)
     Interest income                                   11,771            21,223
     Other                                            (15,291)          (12,007)
                                                  -----------        ----------
         Total other income (expense)                 117,315           (29,367)
                                                  -----------        ----------
Income before income taxes                            540,666           209,011
Income tax expense (benefit)                               --                --
                                                  -----------        ----------

         Net income                               $   540,666        $  209,011
                                                  ===========        ==========

Basic and diluted earnings per share              $       .18        $      .07
                                                  ===========        ==========

Weighted average common shares outstanding          3,056,230         3,050,798
                                                  ===========        ==========
</TABLE>


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

                                       5
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                      Six Months Ended
                                                           June 30,
                                                     2001              2000
                                                 ------------      ------------
<S>                                               <C>                <C>
Revenue                                           $10,748,492        $6,254,612

Cost of goods sold                                  8,837,845         4,830,207
                                                  -----------      ------------

Gross profit                                        1,910,647         1,424,405
                                                  -----------      ------------

Operating expenses:
     General and administrative expenses            1,212,053         1,134,125
     Selling expenses                                 310,070           190,221
                                                  -----------      ------------

     Total operating expenses                       1,522,123         1,324,346
                                                  -----------      ------------

Operating income                                      388,524           100,059
                                                  -----------      ------------
Other income (expense):
     Royalties
                                                      409,103           182,292
     Interest expense                                (255,533)         (277,112)
     Interest income                                   24,143            35,376
     Other                                              3,509            18,993
                                                  -----------      ------------

         Total other income (expense)                 181,222           (40,451)
                                                  -----------      ------------

Income before income taxes                            569,746            59,608
Income tax expense (benefit)                               --                --
                                                  -----------      ------------

         Net income                               $   569,746      $     59,608
                                                  ===========      ============

Basic and diluted earnings per share              $       .19      $        .02
                                                  ===========      ============

Weighted average common shares outstanding          3,053,529         3,050,798
                                                  ===========      ============
</TABLE>


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

                                       6
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                        Six Months Ended
                                                                                             June 30,
                                                                                       2001            2000
                                                                                  -------------     -----------
Cash flows from operating activities:
<S>                                                                               <C>               <C>
     Cash received from customers                                                 $  10,374,237     $ 6,817,949
     Cash paid to suppliers and employees                                            (9,950,919)     (6,285,218)
     Interest paid                                                                     (255,533)       (277,112)
     Other                                                                               27,652         141,653
                                                                                  -------------     -----------
       Net cash provided by operating activities                                        195,437         397,272
                                                                                  -------------     -----------
Cash flows from investing activities:
     Purchases of property and equipment                                               (171,794)       (204,013)
                                                                                  -------------     -----------
       Net cash absorbed by investing activities                                       (171,794)       (204,013)
                                                                                  -------------     -----------
Cash flows from financing activities:
     Proceeds from bank borrowings                                                      198,080         551,900
     Repayments of bank borrowings-related party                                         (2,097)         (4,749)
     Repayments of bank borrowings                                                     (108,610)        (92,379)
     Proceeds from issuance of common stock, net                                         19,172           3,590
                                                                                  -------------     -----------
       Net cash provided by financing activities                                        106,545         458,362
                                                                                  -------------     -----------

Net increase in cash and cash equivalents                                               130,188         651,621

Cash and cash equivalents at beginning of period                                        218,264         374,190
                                                                                  -------------     -----------

Cash and cash equivalents at end of period                                        $     348,452     $ 1,025,811
                                                                                  =============     ===========
Reconciliation of net income to net cash provided
     (absorbed) by operating activities:

Net income                                                                        $     569,746     $    59,607
Adjustments to reconcile net income to net cash
     provided (absorbed) by operating activities:
       Depreciation and amortization                                                    188,178         184,657
       Decrease (increase) in other assets                                                8,470          (8,527)
       Decrease (increase) in:
         Accounts receivable - billed                                                  (516,811)       (289,231)
         Accounts receivable - unbilled                                                (116,447)        185,974
         Inventories                                                                    393,997        (277,060)
         Prepaid expenses and other assets                                              (53,568)        (52,782)
       Increase (decrease) in:
         Accounts payable - trade                                                      (560,262)       (157,851)
         Accrued expenses and other liabilities                                         432,234         268,183
         Customer deposits                                                             (150,100)        484,302
                                                                                  -------------     -----------
Net cash provided (absorbed) by operating activities                              $     195,437     $   397,272
                                                                                  =============     ===========
</TABLE>


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


                                       7
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  June 30, 2001
                                   (Unaudited)


Basis of Presentation

     As permitted by the rules of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-QSB, these notes are condensed and do
not contain all disclosures required by generally accepted accounting
principles. Reference should be made to the consolidated financial statements
and related notes included in the Smith-Midland Corporation's Annual Report on
Form 10-KSB for the year ended December 31, 2000.

     In the opinion of the management of Smith-Midland Corporation (the
"Company"), the accompanying financial statements reflect all adjustments of a
normal recurring nature which were necessary for a fair presentation of the
Company's results of operations for the three- and six-month periods ended June
30, 2001 and 2000.

     The results disclosed in the consolidated statements of operations are not
necessarily indicative of the results to be expected for any future periods.

Principles of Consolidation

     The Company's accompanying consolidated financial statements include the
accounts of Smith-Midland Corporation, a Delaware corporation, and its wholly
owned subsidiaries: Smith-Midland Corporation, a Virginia corporation; Easi-Set
Industries, Inc., a Virginia corporation; Smith-Carolina Corporation, a North
Carolina corporation; Concrete Safety Systems, Inc., a Virginia corporation; and
Midland Advertising & Design, Inc., a Virginia corporation. All significant
inter-company accounts and transactions have been eliminated in consolidation.

Reclassifications

       Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 2001 presentation.

Inventories

     Inventories are stated at the lower of cost, using the first-in, first-out
(FIFO) method, or market.

                                       8
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

Property and Equipment

     Property and equipment, net is stated at depreciated cost. Expenditures for
ordinary maintenance and repairs are charged to income as incurred. Costs of
betterments, renewals, and major replacements are capitalized. At the time
properties are retired or otherwise disposed of, the related cost and allowance
for depreciation are eliminated from the accounts and any gain or loss on
disposition is reflected in income.

Depreciation is computed using the straight-line method over the following
estimated useful lives:

                                                                 Years
                                                                 -----

       Buildings...............................................  10-33
       Trucks and automotive equipment.........................   3-10
       Shop machinery and equipment............................   3-10
       Land improvements.......................................  10-30
       Office equipment........................................   3-10

Income Taxes

     The provision for income taxes is based on earnings reported in the
financial statements. A deferred income tax asset or liability is determined by
applying currently enacted tax laws and rates to the expected reversal of the
cumulative temporary differences between the carrying value of assets and
liabilities for financial statement and income tax purposes. Deferred income tax
expense is measured by the change in the deferred income tax asset or liability
during the year.

     No provision for income taxes has been made for the three- and six-month
periods ended June 30, 2001 and 2000, as the Company does not expect to incur
income tax expense for 2001 and did not incur income tax expense during 2000 due
to net operating loss carryforwards.

Revenue Recognition

The Company primarily recognizes revenue on the sale of its standard precast
concrete products at shipment date, including revenue derived from any projects
to be completed under short-term contracts. Installation services for precast
concrete products, leasing and royalties are recognized as revenue as they are
earned on an accrual basis. Licensing fees are recognized under the accrual
method unless collectibility is in doubt, in which event revenue is recognized
as cash is received. Certain sales of soundwall and Slenderwall/TM/ concrete
products are recognized upon completion of production and customer site
inspections. Provisions for estimated losses on contracts are

                                       9
<PAGE>

made in the period in which such losses are determined.


                                      10
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)


Estimates

     The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.

Earnings (Loss) Per Share

     Basic earnings (loss) per share is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilutive
effect of securities that could share in earnings of an entity. At June 30, 2001
there was no material dilutive effect on earnings (loss) per share.

Item 2.    Management's Discussion and Analysis of Financial Condition
           -----------------------------------------------------------
                            and Results of Operations
                            -------------------------


General

     The Company generates revenues primarily from the sale, licensing, leasing,
shipping and installation of precast concrete products for the construction,
utility and farming industries. The Company's operating strategy has involved
producing innovative and proprietary products, including SlenderwallTM, a
patent-pending, lightweight, energy efficient concrete and steel exterior wall
panel for use in building construction; J-J Hooks/TM/ Highway Safety Barrier, a
patented, positive-connected highway safety barrier; Sierra Wall, a soundwall
barrier primarily for roadside use; and transportable concrete buildings. In
addition, the Company produces custom order precast concrete products, with
various architectural surfaces, typically used in commercial building
construction as well as utility vaults, and farm products such as cattleguards
and water and feed troughs.

     This Form 10-QSB contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements and the results for the
three and six months ended June 30, 2001 are not necessarily indicative of the
results for the Company's operations for the year ending December 31, 2001.
Factors that might cause such a difference include, but are not limited to,
product demand, the impact of competitive products and pricing, capacity and
supply constraints or difficulties, general business and economic conditions,
the effect of the Company's accounting

                                      11
<PAGE>

policies and other risks detailed in the Company's Annual Report on Form 10-KSB
and other filings with the Securities and Exchange Commission.

Results of Operations

     Three months ended June 30, 2001 compared to the three months ended June
30, 2000

     For the three months ended June 30, 2001, the Company had total revenue of
$5,989,964 compared to total revenue of $3,780,164 for the three months ended
June 30, 2000, an increase of $2,209,800, or 58%. The Company had higher product
sales of $5,053,247 for the three months ended June 30, 2001 compared to
$2,843,961 for the same period in 2000, an increase of $2,209,286, or 78%.
Because of the strong product demand in its major market areas, almost all major
product categories had significant increases, including Easi-Set Precast
Buildings, Slenderwall, architectural precast products and highway safety
barrier. Shipping and installation revenue remained relatively constant at
$936,717 for the three months ended June 30, 2001 and $936,203 for the same
period in 2000.

     Total cost of goods sold for the three months ended June 30, 2001 was
$4,805,998, an increase of $1,889,428, or 65%, from $2,916,570 for the three
months ended June 30, 2000. The majority of the increase was the result of the
higher sales volume however, total cost of goods sold, as a percentage of total
revenue, also increased to 80% for the three months ended June 30, 2001, from
77% for the three months ended June 30, 2000 as the Company incurred higher
production costs relative to the revenue and higher shipping and installation
expenses.

     For the three months ended June 30, 2001, the Company's general and
administrative expenses increased $49,448 to $581,479 from $532,031 during the
same period in 2000. The 9% increase was mainly attributable to higher legal
fees and office supplies offset by lower professional fees from the lower use of
consultants.

     Selling expenses for the three months ended June 30, 2001 increased
$85,951, or 92%, to $179,136 from $93,185 for the three months ended June 30,
2000, resulting from increased staffing levels and slightly higher advertising
costs.

     The Company's operating income for the three months ended June 30, 2001 was
$423,351, compared to operating income of $238,378 for the three months ended
June 30, 2000, an increase of $184,973, or 78%. The overall gross profit
improved from the increased sales volume, but higher selling expenses and
general and administrative expenses, caused a reduction in overall operating
income.

     Royalty income totaled $242,116 for the three months ended June 30, 2001,
compared to $102,404 for the same three months in 2000. The increase of
$139,712, or 136%, was due to increased start-up license fees and increased
building and barrier royalties based on increased

                                      12
<PAGE>

sales activity by the Company's licensees in the 2001 period as compared to the
2000 period.

     Interest expense was $121,281 for the three months ended June 30, 2001,
compared to $140,987 for the three months ended June 30, 2000. The decrease of
$19,706, or 14%, was due to lower interest rates as the average levels of debt
outstanding in the 2001 period increased slightly.

     Other expense was $15,291 for the three months ended June 30, 2001 compared
to $12,007 for the three months ended June 30, 2000, an increase of $3,284. The
increase is attributable to the net effects of an increase in miscellaneous
expenses offset by barrier rental income.

     The net profit was $540,666 for the three months ended June 30, 2001,
compared to a net profit of $209,011 for the same period in 2000. The basic and
diluted net profit per share for the current three month period was $.18
compared to basic and diluted net profit per share of $.07 for the three months
ended June 30, 2000.


 Six months ended June 30, 2001 compared to the six months ended June 30, 2000

     For the six months ended June 30, 2001, the Company had total revenue of
$10,748,492 compared to total revenue of $6,254,612 for the six months ended
June 30, 2000, a increase of $4,493,880, or 72%. The Company had higher product
sales of $9,227,534 for the six months ended June 30, 2001, compared to
$5,055,127 for the same period in 2000, an increase of $4,172,407, or 83%. Every
major product category except soundwall incurred significant sales increases in
the current six month period. Easi-Set Precast Buildings, Slenderwall,
architectural precast panels, highway safety barrier and utility manholes all
enjoyed strong product demand in the Company's major market areas. Shipping and
installation revenue was $1,520,959 for the six months ended June 30, 2001 and
$1,199,485 for the same period in 2000, an increase of $321,474, or 27%. The
increase was attributable to higher overall sales of products requiring
installation and shipping in the 2001 period, as compared to the 2000 period.

     Total cost of goods sold for the six months ended June 30, 2001 was
$8,837,846, an increase of $4,007,639, or 83%, from $4,830,207 for the six
months ended June 30, 2000. The majority of the increase was the result of the
higher volume of sales however, total cost of goods sold, as a percentage of
total revenue, also increased to 82% for the six months ended June 30, 2001,
from 77% for the six months ended June 30, 2000 as the Company incurred higher
production costs relative to the revenue and higher shipping and installation
expenses.

     For the six months ended June 30, 2001, the Company's general and
administrative expenses increased $77,928, or 7%, from $1,134,125 for the same
period in 2000. The increase occurred primarily in legal expense, office
supplies and finance charges offset by lower professional fees from the lower
use of consultants, and lower salaries and related expenses from lower staff
levels.

     Selling expenses for the six months ended June 30, 2001 increased $119,849,
or 63%, to

                                      13
<PAGE>

$310,070 from $190,221 for the six months ended June 30, 2000. The increase was
primarily a result of increased staffing levels as the Company sought to
increase its sales effort in the face of anticipated slower economic conditions.

     The Company's operating income for the six months ended June 30, 2001 was
$388,524, compared to operating income of $100,059 for the six months ended June
30, 2000, an increase of $288,465. The overall gross profit improved due to the
increased sales volume, but higher selling and general and administrative
expenses caused a reduction in overall operating income.

     Royalty income totaled $409,103 for the six months ended June 30, 2001,
compared to $182,292 for the same six months in 2000. The increase of $226,811,
or 124% was due to increased start-up fees and increased building and barrier
royalties based on increased sales activity by the Company's licensees in the
2001 period as compared to the 2000 period.

       Interest expense was $255,533 for the six months ended June 30, 2001,
compared to $277,112 for the six months ended June 30, 2000. The decrease of
$21,579, or 8%, was a result of lower interest rates in the current period with
slightly higher levels of debt outstanding.

     Other income was $3,509 for the six months ended June 30, 2001 compared to
$18,993 for the six months ended June 30, 2000, a decrease of $15,484. The
decrease was attributable to lower levels of income from miscellaneous sources.

     Net income was $569,746 for the six months ended June 30, 2001, compared to
net income of $59,608 for the same period in 2000. The basic and diluted
earnings per share for the current six month period was $.19 compared to $.02
per share for the six months ended June 30, 2000.


Liquidity and Capital Resources

     The Company has financed its capital expenditures, operating requirements
and growth to date primarily with proceeds from operations, bank and other
borrowings, and equity financing. The Company had $4,895,280 of indebtedness at
June 30, 2001, of which $745,270 was scheduled to mature within twelve months.

     In June 1998, the Company successfully restructured substantially all of
its debt into one $4,000,000 note with First International Bank ("FIB"),
formerly the First National Bank of New England, headquartered in Hartford,
Connecticut. The Company closed on this loan on June 25, 1998. The Company
obtained a twenty three year term on this note at 1.5% above prime, secured by
equipment and real estate. The term of the note dramatically improved the
Company's current debt ratio and debt service. The loan is guaranteed in part by
the U.S. Department of Agriculture Rural Business-Cooperative Service's loan
guarantee. Under the terms of the note, the Company's unfinanced fixed asset
expenditures are limited to $300,000 per year for a five year period. In
addition, FIB will permit chattel mortgages on purchased equipment not to exceed
$200,000 on an annual basis so long as the Company is not in default. The
Company was also

                                      14
<PAGE>

granted a $500,000 operating line of credit by FIB. This commercial revolving
promissory note, which carries a variable interest rate of 1% above prime
expired in May 2001, and the Company and the Bank have agreed to extend the line
to May 2002. On December 20, 1999, the Company secured an additional term loan
of $500,000 from FIB. The term loan is payable in monthly installments over a
five year period and carries an interest rate of 1.75% above prime.

     Capital spending totaled $171,794 in the six month period ended June 30,
2001, which was a decrease of 16% from $204,013 in the comparable period of the
prior year. Planned capital expenditures for 2001 are limited as stated above by
the FIB loan agreement. No other significant cash commitments for capital
expenditures are planned in 2001.

     As a result of the Company's substantial debt burden, the Company is
especially sensitive to changes in the prevailing interest rates. Fluctuations
in such interest rates may materially and adversely affect the Company's ability
to finance its operations either by increasing the Company's cost to service its
current debt, or by creating a more burdensome refinancing environment, if
interest rates should increase.

     The Company's cash flow from operations is affected by production schedules
set by contractors, which generally provide for payment 45 to 75 days after the
products are produced. This payment schedule has resulted in liquidity problems
for the Company because it must bear the cost of production for its products
long before it receives payment. In the event cash flow from operations and
existing credit facilities are not adequate to support operations, the Company
is currently investigating alternative sources of both short-term and long-term
financing, for which there can be no assurance of obtaining.

Other Comments

       As of June 30, 2001 the Company's backlog was approximately $8.1 million
versus a backlog of approximately $5.5 million as of June 30, 2000. As of August
13, 2001, the Company's backlog had decreased to approximately $7.3 million
versus a backlog of $6.6 million for the comparable period in 2001. The majority
of the projects relating to the backlog as of August 13, 2001 are contracted to
be constructed in 2001. The recent drop in the Company's backlog is due to (1)
increased production levels at the Company, resulting in a lower degree of
deferral in commencing projects, and (2) a decreased level of new sales and
projects, in view of the slower economy. In the event the economic slow down
continues, future sales levels are liable to be adversely effected.

     Management believes that the Company's operations have not been materially
affected by inflation.

Recent Accounting Pronouncements

          In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and
Other Intangible

                                      15
<PAGE>

Assets (SFAS 142). SFAS 141 requires the use of the purchase method of
accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142. Adoption of SFAS 141 and 142
will not have a material impact on the Company's financial position or results
of operations.

                                      16
<PAGE>

                           PART II - Other Information


Item 1.  Legal Proceedings.
         ------------------

         Reference is made to Item 3 of the Company's Annual Report on Form
10-KSB for the year ended December 31, 2000 for information as to reported legal
proceedings.

Item 2.  Changes in Securities and Use of Proceeds.  None.
         -----------------------------------------


Item 3.  Defaults Upon Senior Securities.  None
         -------------------------------


Item 4.  Submission of Matters to a Vote of Security Holders.  None
         ---------------------------------------------------


Item 5.  Other Information.  None.
         -----------------


Item 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------

         The Company filed Reports on Form 8-K on June 11, 2001 and June 27,
2001. In each case, the Company reported an extension of the expiration date of
it public warrants.

                                      17
<PAGE>

                                   SIGNATURES
                                   ----------


     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            SMITH-MIDLAND CORPORATION




Date: August 17, 2001                    By: /s/ Rodney I. Smith
                                         -----------------------
                                         Rodney I. Smith
                                         Chairman of the Board,
                                         Chief Executive Officer and President
                                         (principal executive officer)


Date: August 17, 2001                    By: /s/ Robert E. Albrecht, Jr.
                                         -------------------------------
                                         Robert E. Albrecht, Jr.
                                         Chief Financial Officer
                                         (principal financial officer)

                                      18

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