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<SEC-DOCUMENT>0001127264-01-500108.txt : 20020411
<SEC-HEADER>0001127264-01-500108.hdr.sgml : 20020411
ACCESSION NUMBER:		0001127264-01-500108
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010930
FILED AS OF DATE:		20011119

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:		1795446

	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>smith_10q.txt
<DESCRIPTION>THIRD QUARTER 2001 REPORT
<TEXT>

                    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
     September 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.)


            5119 Catlett Road, 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 November 12, 2001, the Company had outstanding  3,110,131  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
                     September 30, 2001 and December 31, 2000

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

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

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

                     Notes to Consolidated Financial Statements
                     (Unaudited)                                          7

         Item 2. Management's Discussion and Analysis of Financial       10
                  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>
<TABLE>
                                          PART I - Financial Information
Item 1.    Financial Statements
           --------------------
                                    SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                                           Consolidated Balance Sheets
                                                   (Unaudited)
<CAPTION>
                                                                                September 30,       December 31,
         Assets                                                                     2001                2000
         ------                                                                 ------------        ------------
<S>                                                                              <C>                 <C>
Current assets:
   Cash and cash equivalents                                                        $655,046            $218,264
   Accounts receivable:
     Trade - billed, less allowances for doubtful accounts of
       $289,197 and $258,542                                                       6,975,780           4,122,118
     Trade - Cost in excess of billings                                              226,687               2,405
   Inventories:
     Raw materials                                                                   639,059             576,995
     Finished goods                                                                  817,776           1,475,383
   Prepaid expenses and other assets                                                 204,315              62,811
                                                                                ------------        ------------
        Total current assets                                                       9,518,663           6,457,976
                                                                                ------------        ------------

Property and equipment, net                                                        2,622,422           2,684,918
                                                                                ------------        ------------

Other assets:
   Note receivable, officer                                                          630,700             630,700
   Claims and accounts receivable                                                    960,182             960,254
   Other                                                                             298,102             309,374
                                                                                ------------        ------------
     Total other assets                                                            1,888,984           1,900,328
                                                                                ------------        ------------
       Total Assets                                                              $14,030,069         $11,043,222
                                                                                ============        ============

     Liabilities and Stockholders' Equity
     ------------------------------------
Current liabilities:
   Current maturities of notes payable                                              $715,502            $524,305
   Accounts payable - trade                                                        3,322,009           2,482,238
   Accrued expenses and other liabilities                                            718,158             347,674
   Customer deposits                                                                 416,716             416,816
                                                                                ------------        ------------
     Total current liabilities                                                     5,172,385           3,771,033
Reserve for Contract Loss                                                          1,025,556             995,845
Notes payable - less current maturities                                            4,130,302           4,281,528
Notes payable - related parties                                                       82,464              87,188
                                                                                ------------        ------------
       Total Liabilities                                                          10,410,707           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 3,141,051 shares,  outstanding 3,100,131 shares                           31,410              30,917
   Additional capital                                                              3,479,037           3,453,222
   Treasury stock                                                                   (102,300)           (102,300)
   Retained earnings (deficit)                                                       211,215          (1,474,211)
                                                                                ------------        ------------
     Total Stockholders' Equity                                                    3,619,362           1,907,628
                                                                                ------------        ------------
       Total Liabilities and Stockholders'  Equity                               $14,030,069         $11,043,222
                                                                                ============        ============

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

                                                        3
<PAGE>
<TABLE>
                                    SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                                      Consolidated Statements of Operations
                                                   (Unaudited)


<CAPTION>
                                                                                     Three Months Ended
                                                                                        September 30,
                                                                                 2001                   2000
                                                                              -----------            -----------
<S>                                                                           <C>                    <C>
Revenue                                                                       $ 7,089,314            $ 4,110,102

Cost of goods sold                                                              5,286,480              3,015,023
                                                                              -----------            -----------

Gross profit                                                                    1,802,834              1,095,079
                                                                              -----------            -----------

Operating expenses:
     General and administrative expenses                                          656,806                523,369
     Selling expenses                                                             238,895                153,578
                                                                              -----------            -----------

     Total operating expenses                                                     895,701                676,947
                                                                              -----------            -----------

Operating income                                                                  907,133                418,132
                                                                              -----------            -----------

Other income (expense):
     Royalties                                                                    325,134                 65,374
     Interest expense                                                            (110,072)              (139,264)
     Interest income                                                               11,490                 16,752
     Other                                                                        (18,028)               (38,423)
                                                                              -----------            -----------

         Total other income (expense)                                             208,524                (95,561)
                                                                              -----------            -----------

Income before income taxes                                                      1,115,657                322,571
Income tax expense (benefit)                                                         --                     --
                                                                              -----------            -----------

         Net income                                                           $ 1,115,657            $   322,571
                                                                              ===========            ===========

Basic and diluted earnings per share                                          $       .36            $       .11
                                                                              ===========            ===========

Weighted average common shares outstanding                                      3,092,921              3,050,798
                                                                              ===========            ===========

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


                                                        4
<PAGE>
<TABLE>
                                    SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                                      Consolidated Statements of Operations
                                                   (Unaudited)


<CAPTION>
                                                                                      Nine Months Ended
                                                                                         September 30,
                                                                                  2001                   2000
                                                                              ------------           ------------
<S>                                                                           <C>                    <C>
Revenue                                                                       $ 17,837,805           $ 10,364,713

Cost of goods sold                                                              14,124,301              7,845,231
                                                                              ------------           ------------

Gross profit                                                                     3,713,504              2,519,482
                                                                              ------------           ------------

Operating expenses:
     General and administrative expenses                                         1,868,859              1,657,494
     Selling expenses                                                              548,965                343,799
                                                                              ------------           ------------


     Total operating expenses                                                    2,417,824              2,001,293
                                                                              ------------           ------------

Operating income                                                                 1,295,680                518,189
                                                                              ------------           ------------

Other income (expense):
     Royalties                                                                     734,237                247,666
     Interest expense                                                             (365,605)              (416,376)
     Interest income                                                                35,633                 52,128
     Other                                                                         (14,520)               (19,430)
                                                                              ------------           ------------

         Total other income (expense)                                              389,745               (136,012)
                                                                              ------------           ------------

Income before income taxes                                                       1,685,425                382,177
Income tax expense (benefit)                                                          --                     --
                                                                              ------------           ------------

         Net income                                                           $  1,685,425           $    382,177
                                                                              ============           ============

Basic and diluted earnings per share                                          $        .55           $        .13
                                                                              ============           ============

Weighted average common shares outstanding                                       3,066,804              3,049,988
                                                                              ============           ============


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

                                                        5
<PAGE>
<TABLE>
                                    SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                                      Consolidated Statements of Cash Flows
                                                   (Unaudited)
<CAPTION>
                                                                                      Nine Months Ended
                                                                                         September 30,
                                                                                  2001                   2000
                                                                              ------------           ------------
Cash flows from operating activities:
<S>                                                                           <C>                    <C>
     Cash received from customers                                             $ 15,494,197           $ 10,703,402
     Cash paid to suppliers and employees                                      (14,571,294)           (10,074,073)
     Interest paid                                                                (365,605)              (416,376)
     Other                                                                          21,114                 32,698
                                                                              ------------           ------------
       Net cash provided (absorbed) by operating activities                        578,412                245,651
                                                                              ------------           ------------

Cash flows from investing activities:
     Purchases of property and equipment                                          (203,186)              (284,170)
     Decrease (increase) in officer note receivable                                   --                     --
                                                                              ------------           ------------
         Net cash absorbed by investing activities                                (203,186)              (284,170)
                                                                              ------------           ------------

Cash flows from financing activities:
     Proceeds from borrowings                                                      213,758                561,823
     Repayment of borrowings-related party                                          (4,724)                (7,193)
     Repayments of  borrowings                                                    (173,786)              (541,380)
     Proceeds from issuance of common stock, net                                    26,308                  3,590
                                                                              ------------           ------------
       Net cash provided (absorbed) by financing activities                         61,556                 16,840


Net increase (decrease) in cash and cash equivalents                               436,782                (21,679)

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

Cash and cash equivalents at end of period                                    $    655,046           $    352,511
                                                                              ============           ============



Reconciliation of net income (loss) to net cash provided
     (absorbed) by operating activities:

Net income                                                                    $  1,685,425           $    382,177
Adjustments to reconcile net income to net cash
     provided  (absorbed) by operating activities:
       Depreciation and amortization                                               288,170                278,574
       Decrease (increase) in:
         Accounts receivable - billed                                           (2,853,662)              (446,698)
         Accounts receivable - unbilled                                           (224,282)               418,319
         Inventories                                                               595,543               (343,582)
         Prepaid expenses and other assets                                        (152,848)               (37,091)
       Increase (decrease) in:
         Accounts payable - trade                                                  839,771               (132,832)
         Accrued expenses and other liabilities                                    400,195                  7,382
         Customer deposits                                                             100                119,402
                                                                              ------------           ------------
Net cash provided (absorbed) by operating activities                          $    578,412           $    245,651
                                                                              ============           ============


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

                                                        6
<PAGE>
                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 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  nine-month  periods ended
September 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.

                                       7
<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  nine-month
periods  ended  September  30, 2001 and 2000,  as the Company does not expect to
incur federal  income tax expense for 2001 and did not incur federal  income tax
expense during 2000.

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,  architectural
precast  panels  and   SlenderwallTM   concrete  products  are  recognized  upon
completion of production and customer site inspections. Provisions for estimated
losses on contracts are made in the period in which such losses are determined.

                                       8
<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 Per Share

     Earnings  per share is based on the  weighted  average  number of shares of
Common Stock and dilutive common stock equivalents  outstanding.  Basic earnings
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.  For the three- and  nine-month  periods
ended  September  30,  2001 and 2000 there was no  material  dilutive  effect on
earnings per share.



                                       9
<PAGE>

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 HooksTM Highway Safety Barrier,  a
patented,  positive-connected  highway  safety  barrier;  Sierra  Wall,  a sound
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,  farm products such as  cattleguards,
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 nine months ended September 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 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  September  30, 2001  compared to the three months ended
September 30, 2000

     For the three  months  ended  September  30,  2001,  the  Company had total
revenue of  $7,089,314  compared to total  revenue of  $4,110,102  for the three
months  ended  September  30, 2000,  an increase of  $2,979,212,  or 72%.  Total
product  sales were  $6,039,687  for the three months ended  September  30, 2001
compared to $3,578,211  for the same period in 2000, an increase of  $2,461,476,
or 69%.  Strong  product  demand in most of the  Company's  market areas allowed
almost all major product categories to record significant  increases,  including
Easi-Set Precast Buildings,  SlenderwallTM,  architectural  precast products and
highway safety barriers. At the same time the Company's increased  manufacturing
capability  allowed it to produce higher product volumes and reduce its backlog.
Shipping  and  installation  revenue was  $1,049,627  for the three months ended
September  30, 2001 and  $531,891  for the same  period in 2000,  an increase of
$517,736,  or 97%. The increase was  attributable to higher shipping revenue due
to the overall  increase in sales volume combined with an increase  installation
activity primarily on the commercial building products.



                                       10
<PAGE>

     Total cost of goods sold for the three months ended  September 30, 2001 was
$5,286,480,  an increase of  $2,271,457,  or 75%, from  $3,015,023 for the three
months ended  September  30,  2000.  The majority of the increase was due to the
increased volume. Cost of goods sold, as a percentage of total revenue increased
only slightly to 74.6% for the three months ended September 30, 2001, from 73.4%
for the three months ended September 30, 2000.

     For the three months ended  September 30, 2001,  the Company's  general and
administrative  expenses increased $133,437 to $656,806 from $523,369 during the
same period in 2000.  The 26% increase is due to higher  personnel and personnel
related costs, as well as higher legal fees and insurance costs,  offset in part
by lower professional fees.

     Selling  expenses for the three months ended  September 30, 2001  increased
$85,317,  or 56%, to $238,895 from $153,577 for the three months ended September
30, 2000,  resulting  primarily  from  increased  salary  expenses due to higher
staffing  levels in the 2001 period and increased  sales  commissions due to the
higher sales volume.

     The  Company's  operating  income for the three months ended  September 30,
2001 was $907,133  compared to operating income of $418,132 for the three months
ended  September  30, 2000,  an increase of  $489,001,  or 117%.  The  increased
operating income was a result of the higher sales in the current year, which was
partially offset by increased operating expenses.

     Royalty  income totaled  $325,133 for the three months ended  September 30,
2001,  compared to $65,374 for the same three  months in 2000.  The  increase of
$259,759,  or 397%,  was due to increased  start-up  license fees and  increased
building,  SlenderwallTM and barrier royalties based on increased sales activity
by the Company's licensees in the 2001 period as compared to the 2000 period and
the new  Slenderwall(TM)  licensee  in the 2001  period.  Sales  activity of the
Company's  barrier  licensees  has  benefited  from new highway  safety  barrier
standards being implemented in many states.

     Interest  expense was $110,072 for the three  months  ended  September  30,
2001,  compared to $139,264 for the three months ended  September 30, 2000.  The
decrease of $29,192, or 21%, was due to a lower average interest rate during the
2001 period and a slight reduction in the average debt outstanding.

     Net income was  $1,115,657  for the three months ended  September 30, 2001,
compared  to net income of $322,571  for the same period in 2000.  The basic and
diluted  net  income  per share for the  current  three  month  period  was $.36
compared $.11 per share for the three months ended September 30, 2000.




                                       11
<PAGE>

     Nine months  ended  September  30, 2001  compared to the nine months  ended
September 30, 2000

     For the nine months ended September 30, 2001, the Company had total revenue
of  $17,837,805  compared to total  revenue of  $10,364,713  for the nine months
ended September 30, 2000, an increase of $7,473,092, or 72%. Total product sales
were  $15,267,220  for the nine months ended  September  30,  2001,  compared to
$8,633,337 for the same period in 2000, an increase of  $6,633,883,  or 77%. All
major product  categories  incurred  significant  sales increases in the current
nine month period with Easi-Set Precast Buildings, SlenderwallTM,  architectural
precast  panels,   highway  safety  barrier  and  utility  manholes   displaying
particularly  strong product demand in the Company's  major market areas. At the
same time the Company's increased manufacturing capability allowed it to produce
higher product volumes. Shipping and installation revenue was $2,570,585 for the
nine months ended September 30, 2001 and $1,731,376 for the same period in 2000,
an increase of  $839,209,  or 48%.  The  increase is  attributable  to increased
installation   revenue  related  to  SlenderwallTM  and  architectural   precast
contracts in the 2001 period,  as compared to the 2000 period, as well as higher
shipping revenues due to the higher overall sales volume.

     Total cost of goods sold for the nine months ended  September  30, 2001 was
$14,124,301,  an increase of  $6,279,070,  or 80%, from  $7,845,231 for the nine
months ended  September 30, 2000. The majority of the increase was the result of
the higher  volume of sales.  Total cost of goods sold, as a percentage of total
revenue,  also  increased to 79% for the nine months ended  September  30, 2001,
from 76% for the nine months ended  September  30, 2000 as the Company  incurred
higher  production  costs  relative  to the  revenue  and  higher  shipping  and
installation expenses.

     For the nine months ended  September 30, 2001,  the  Company's  general and
administrative  expenses  increased  $211,365,  or  13%,  to  $1,868,859,   from
$1,657,494 during the same period in 2000. The increase was primarily attributed
to increased costs for personnel and personnel  recruitment,  legal services and
insurance partially offset by lower professional fees.

     Selling  expenses for the nine months ended  September  30, 2001  increased
$205,166,  or 60%, to $548,965 from $343,799 for the nine months ended September
30, 2000.  The increase  was due to increased  staffing  levels and higher sales
commissions incurred during the 2001 period as compared to the 2000 period.

     The Company's operating income for the nine months ended September 30, 2001
was  $1,295,680,  compared to  operating  income of $518,189 for the nine months
ended September 30, 2000, an increase of $777,491, or 150%. The higher operating
income for the current  nine month  period  resulted  from the  increased  sales
volume  experienced  in the first three  quarters of the fiscal year,  partially
offset by a lower gross margin and higher operating expenses.

     Royalty  income  totaled  $734,237 for the nine months ended  September 30,
2001,  compared to $247,666  for the same nine months in 2000.  The  increase of
$486,571,  or 196%,  was due to increased  start-up  license fees and  increased
building,  SlenderwallTM and barrier royalties based on increased sales activity
by the  Company's  licensees  in the 2001 period as compared to the 2000 period.
and the new Slenderwall(TM) licensee in the 2001 period.  Sales  activity of the
Company's  barrier  licensees  has  benefited  from new highway  safety  barrier
standards being implemented in many states.

       Interest  expense was $365,605 for the nine months  ended  September  30,
2001,  compared to $416,376 for the nine months ended  September  30, 2000.  The


                                       12
<PAGE>

decrease  of  $50,771,  or  12%,  was  due to  slightly  higher  levels  of debt
outstanding in the 2001 period but with lower average interest rates.

     Net income was  $1,685,426  for the nine months ended  September  30, 2001,
compared to net income of $382,177  for the same period in 2000.  Net income per
share for the  current  nine month  period was $.55  compared  to net income per
share of $.13 for the nine  months  ended  September  30,  2000  with  3,066,804
weighted  average shares  outstanding in the 2001 period versus 3,049,988 in the
2000 period.


     Liquidity and Capital Resources

     The Company has financed its capital expenditures,  operating  requirements
and growth to date primarily with proceeds from  operations,  and bank and other
borrowings. The Company had $4,845,804 of indebtedness at September 30, 2001, of
which $715,502 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. 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
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.  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 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,  was renewed and is now scheduled to terminate
on May 1, 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 $203,186 in the nine month period ended September
30, 2001, which was a decrease of 28% from $284,170 in the comparable  period of
the prior year. The decrease resulted primarily from the completion, in 2000, of
a new  engineering  building  addition  to the  Company's  facility  in Midland,
Virginia.  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.



                                       13
<PAGE>

     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,
collection of claims, and existing credit facilities are not adequate to support
operations,  the Company would be required to obtain alternative sources of both
short-term  and  long-term  financing,  for which there can be no  assurance  of
obtaining.

Other Comments

     The Company  services the construction  industry  primarily in areas of the
United States where construction activity is inhibited by adverse weather during
the winter. As a result, the Company traditionally  experiences reduced revenues
from Decemebr  through March and realizes the  substantial  part of its revenues
during the other months of the year.  The Company  typically  experiences  lower
profits,  or losses,  during the winter months, and must have sufficient working
capital to fund its  operations  at a reduced  level  until  spring construction
season.

     As of  September  30, 2001 the  Company's  backlog was  approximately  $6.4
million versus a backlog of approximately $6.2 million as of September 30, 2000.
As of November 12, 2001,  the Company's  backlog had decreased to  approximately
$4.2 million versus a backlog of $8.8 million for the comparable period in 2000.
The majority of the projects  relating to the backlog as of November 1, 2001 are
contracted to be  constructed in 2001 and the first quarter of 2002. The 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.


                                       14
<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.  None.
         --------------------------------



                                       15
<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: November 19, 2001                  By: /s/ Rodney I. Smith
                                         -------------------------------------
                                         Rodney I. Smith
                                         Chairman of the Board,
                                         Chief Executive Officer and President
                                         (principal executive officer)


Date: November 19, 2001                  By: /s/ Robert E. Albrecht, Jr.
                                         -------------------------------------
                                         Robert E. Albrecht, Jr.
                                         Chief Financial Officer
                                         (principal financial officer)




                                       16

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