SMITH MIDLAND CORP
10QSB, 1997-11-12
CONCRETE PRODUCTS, EXCEPT BLOCK & BRICK
Previous: SECURITY CAPITAL ATLANTIC INC, 10-Q, 1997-11-12
Next: AMERILINK CORP, 10-Q, 1997-11-12


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

                                   FORM 10-QSB


            Quarterly Report Filed Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934



For the quarter year ended                               Commission File Number
    September  30, 1997                                          1-13752



                            SMITH-MIDLAND CORPORATION
                             (Name of Small Business
                       Issuer As Specified In Its Charter)



           Delaware                                             54-1727060
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

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

                                 (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 11, 1997, the Company had outstanding  3,044,798  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;                           1
                      September 30, 1997 (Unaudited);
                      and December 31, 1996 (Unaudited)

                      Consolidated Statements of Operations                  2
                      (Unaudited); Three months ended
                      September 30, 1997  and 1996

                      Consolidated Statements of Operations                  3
                      (Unaudited); Nine months ended
                      September 30, 1997 and 1996

                      Consolidated Statements of Cash Flows                  4
                      (Unaudited); Nine months ended
                      September 30, 1997 and 1996

                      Notes to Consolidated Financial Statements (Unaudited) 5

         Item 2. Management's Discussion and Analysis of Financial           8
                  Condition and Results of Operations

PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings                                         13

         Item 2.  Changes in Securities                                     13

         Item 3.  Defaults Upon Senior Securities                           13

         Item 4.  Submission of Matters to a Vote of Security Holders       13

         Item 5. Other Information                                          13

         Item 6.  Exhibits and Reports on Form 8-K                          13

         Signatures                                                         14


<PAGE>
<TABLE>

                                         PART I - Financial Information
Item 1.  Financial Statements

                                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                                          Consolidated Balance Sheets
                                                  (Unaudited)
<CAPTION>
<S> <C>
                                                                   September 30,  December 31,
         Assets                                                        1997           1996
                                                                   -----------    -----------
Current assets:
   Cash and cash equivalents                                       $   264,820    $   438,079
   Accounts receivable:
     Trade - billed, less allowances for doubtful accounts of
       $221,464 and $334,062                                         3,321,232      2,705,325
     Trade - unbilled                                                  568,953        113,299
   Inventories:
     Raw materials                                                     492,221        440,225
     Finished goods                                                    820,160      1,090,815
   Prepaid expenses and other assets                                    47,863         92,383
                                                                   -----------    -----------
        Total current assets                                         5,515,249      4,880,126

Property and equipment, net                                          1,487,665      1,380,871
                                                                   -----------    -----------

Other assets:
   Cash - restricted                                                   196,977        194,617
   Note receivable, officer                                            684,200        659,000
   Other                                                                74,096         80,260
                                                                   -----------    -----------
         Total other assets                                            955,273        933,877
                                                                   -----------    -----------
       Total Assets                                                $ 7,958,187    $ 7,194,874
                                                                   ===========    ===========

         Liabilities and Stockholders' Equity
Current liabilities:
   Current maturities of notes payable                             $ 2,307,333    $ 2,066,253
   Accounts payable -- trade                                         1,700,026      1,439,934
   Accrued expenses and other liabilities                              611,796        515,479
   Customer deposits                                                   515,550        200,623
                                                                   -----------    -----------
     Total current liabilities                                       5,134,705      4,222,289
Notes payable -- less current maturities                               737,420      1,068,124
Notes payable -- related parties                                       115,598        115,598
                                                                   -----------    -----------
     Total Liabilities                                               5,987,723      5,406,011

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 and outstanding 3,044,798 and 3,044,798                     30,857         30,857
   Additional capital                                                3,450,085      3,450,085
   Treasury Stock

                                                                      (102,300)      (102,300)
    Retained earnings (deficit)
                                                                    (1,408,178)    (1,589,779)
                                                                   -----------    -----------
     Total Stockholders' Equity                                      1,970,464      1,788,863
                                                                   -----------    -----------
       Total Liabilities and Stockholders'  Equity                 $ 7,958,187    $ 7,194,874
                                                                   ===========    ===========


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


<PAGE>


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

                                                                                    Three Months Ended
                                                                                        September 30,
                                                                                     1997            1996
                                                                               -----------       -----------
Revenue:
     Net sales                                                                  $2,735,079        $2,914,155
     Shipping and installation income                                              729,015           387,301
                                                                               -----------       -----------

         Total revenue                                                           3,464,094         3,301,456
                                                                               -----------       -----------

Cost of goods sold:
     Cost of goods sold -- sales                                                 2,178,815         2,057,194
     Shipping and installation expense                                             468,056           303,262
                                                                               -----------       -----------

         Total cost of goods sold                                                2,646,871         2,360,456
                                                                                ----------       -----------

Gross profit                                                                       817,223           941,000
                                                                               -----------       -----------

Operating expenses:
     General and administrative expenses                                           493,812           538,143
     Selling expenses                                                              210,346           181,606
                                                                               -----------       -----------

     Total operating expenses                                                      704,158           719,749
                                                                               -----------       -----------

Operating income                                                                   113,065           221,251
                                                                               -----------       -----------

Other income (expense):
     Royalties                                                                      84,420            79,927
     Interest expense                                                              (74,843)         (114,365)
     Interest income                                                                10,610            16,446
     Other                                                                           5,314             8,753
                                                                               -----------       -----------

         Total other income (expense)                                               25,501            (9,239)

Income before income taxes                                                         138,566           212,012
Income tax expense (benefit)                                                            --                --
                                                                               -----------       -----------

         Net income                                                             $  138,566        $  212,012
                                                                               ===========       ===========

Net income per share                                                            $      .05        $      .07
                                                                               ===========       ===========

Weighted average common shares outstanding                                        3,044,798        3,085,718
                                                                               ===========       ===========


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



<PAGE>


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

                                                                                     Nine Months Ended
                                                                                        September 30,
                                                                                     1997            1996
                                                                                ----------        ----------
Revenue:
     Net sales                                                                  $7,685,982        $7,625,417
     Shipping and installation income                                            1,396,415           946,820
                                                                                ----------        ----------

         Total revenue                                                           9,082,397         8,572,237
                                                                                ----------        ----------

Cost of goods sold:
     Cost of goods sold -- sales                                                 5,906,958         5,994,103
     Shipping and installation expense                                             889,750           789,306
                                                                                ----------        ----------

         Total cost of goods sold                                                6,796,708         6,783,409
                                                                               -----------       -----------

Gross profit                                                                     2,285,689         1,788,828
                                                                                ----------        ----------

Operating expenses:
     General and administrative expenses                                         1,547,899         1,608,670
     Selling expenses                                                              502,218           513,290
                                                                                ----------        ----------

     Total operating expenses                                                    2,050,117         2,121,960
                                                                                ----------        ----------

Operating income (loss)                                                            235,572          (333,132)
                                                                                ----------        ----------

Other income (expense):
     Royalties                                                                     164,584           211,572
     Interest expense                                                             (272,076)         (357,807)
     Interest income                                                                37,063            53,005
     Other                                                                          16,458             7,324
                                                                                ----------        ----------
         Total other income (expense)                                              (53,971)          (85,906)

Income (loss) before income taxes                                                  181,601          (419,038)
Income tax expense (benefit)                                                            --                --
                                                                                ----------        ----------
         Net income (loss)                                                      $  181,601        $ (419,038)
                                                                                ==========        ========== 

Net income (loss) per share                                                     $      .06        $    ( .14)
                                                                                ==========        ========== 

Weighted average common shares outstanding                                       3,044,798         3,076,411
                                                                                ==========        ========== 


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


<PAGE>



                             SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                               Consolidated Statements of Cash Flows
                                            (Unaudited)
<CAPTION>
<S> <C>

                                                                        Nine Months Ended
                                                                           September 30,
                                                                  1997                     1996
                                                              -----------              -----------
Cash flows from operating activities:
     Cash received from customers                             $ 8,490,347              $ 8,649,223
     Cash paid to suppliers and employees                      (7,915,408)              (8,696,514)
     Interest paid                                               (272,076)                (357,807)
     Other                                                         21,461                   32,931
                                                              -----------              -----------
       Net cash provided (absorbed) by operating activities       324,324                 (372,167)
                                                              -----------              -----------
Cash flows from investing activities:
     Purchases of property and equipment                         (412,459)                (239,989)
     (Increase) decrease in officer note receivable                 4,500                    5,474
                                                              -----------              -----------
       Net cash absorbed by investing activities                 (407,959)                (234,515)
                                                              -----------              -----------

Cash flows from financing activities:
     Proceeds from bank borrowings                                177,359                1,104,442
     Repayments of bank borrowings                               (266,983)              (1,054,042)
     Proceeds from issuance of common stock                          --                    396,333
                                                              -----------              -----------
       Net cash provided by financing activities                  (89,624)                 446,733
                                                              -----------              -----------

Net increase (decrease) in cash and cash equivalents             (173,259)                (159,949)

Cash and cash equivalents at beginning of period                  438,079                  938,089
                                                              -----------              -----------

Cash and cash equivalents at end of period                    $   264,820              $   778,140
                                                              ===========              ===========

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

Net income (loss)                                             $   181,601              $  (419,038)
Adjustments to reconcile net income (loss) to net cash
     provided  (absorbed) by operating activities:
       Depreciation and amortization                              305,665                  201,456
       Decrease (increase) in other assets                        (25,896)                 (35,381)
       Decrease (increase) in:
         Accounts receivable - billed                            (615,907)                (195,135)
         Accounts receivable - unbilled                          (455,654)                (151,239)
         Inventories                                              218,659                  136,743
         Prepaid expenses and other assets                         44,520                  127,748
       Increase (decrease) in:
         Accounts payable - trade                                 260,092                 (290,503)
         Accrued expenses and other liabilities                    96,317                   41,394
         Customer deposits                                        314,927                  211,788
                                                              -----------              -----------
Net cash provided (absorbed) by operating activities          $   324,324              $  (372,167)
                                                              ===========              ===========


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


<PAGE>




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

                               September 30, 1997

Basis of Presentation

     As permitted by the rules of the  Securities and Exchange  Commission  (the
"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, 1996.

     In the opinion of management of Smith-Midland  Corporation (the "Company"),
the accompanying  financial  statements  reflect all adjustments which were of a
normal  recurring  nature  necessary  for a fair  presentation  of the Company's
results of operations for the three-month and nine-month periods ended September
30, 1997 and 1996.

     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
intercompany 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 1997 presentation.

Inventories

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


<PAGE>


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.

     Effective  January 1, 1993, the Company  adopted SFAS 109  "Accounting  for
Income  Taxes." The  adoption of SFAS 109 did not have a material  effect on the
consolidated  financial  statements  as the  deferred  tax asset  related to the
Company's net operating loss carry forward has been reserved in its entirety. No
provision  for income  taxes has been made for the  three-month  and  nine-month
periods  ended  September  30, 1997 and 1996,  as the Company does not expect to
incur  income  tax  expense  for fiscal  year 1997 and did not incur  income tax
expense in fiscal year 1996.

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 sound wall 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.


<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.

Income Per Share

     Income per share is calculated based on net income and the weighted average
number of shares of common stock outstanding during the period.

Common Stock Offering

     In December 1995, the Company  completed an initial public offering ("IPO")
of  1,000,000  shares of common  stock,  $.01 par value per share  (the  "Common
Stock"),   and  1,000,000   Redeemable   Common  Stock  Purchase  Warrants  (the
"Warrants"),  at a purchase price of $3.60 per share of Common Stock and Warrant
sold together.  The Company  realized net proceeds from the IPO of approximately
$2,618,000.  In January  1996,  the Company  completed  an  overallotment  of an
additional  150,000 shares of Common Stock and 150,000 Warrants for net proceeds
of approximately $396,000.



<PAGE>

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

General

     The  Company  generates  revenues   primarily  from  the  sale,   shipping,
licensing,  leasing  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
Slenderwall(TM),  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 sound  barrier  primarily  for  roadside  use; and  transportable
concrete  buildings.  In addition,  the Company  produces  utility vaults,  farm
products  such as  cattleguards,  and water and feed  troughs,  and custom order
precast concrete products with various architectural surfaces.

     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
nine months  ended  September  30, 1997 are not  necessarily  indicative  of the
results for the  Company's  operations  for the year ending  December  31, 1997.
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 Companies  accounting policies and other risks detailed in the
Company's  Annual Report,  Form 10-KSB and other filings with the Securities and
Exchange Commission.


Results of Operations

     Three months ended  September  30, 1997  compared to the three months ended
September 30, 1996

     For the three  months  ended  September  30,  1997,  the  Company had total
revenue of  $3,464,094  compared to total  revenue of  $3,301,456  for the three
months ended  September  30, 1996,  an increase of $162,638 or 5%. Total product
sales were  $2,735,079 for the three months ended September 30, 1997 compared to
$2,914,155  for the same  period in 1996,  a  decrease  of  $179,076  or 6%. The
decrease for the three  months was  primarily  the result of decreased  sales of
highway  safety  barrier  and  architectural  products  during the 1997  period,
partially  offset by increases  in highway  sound  barrier and utility  building
sales. Shipping and installation revenue was $729,015 for the three months ended
September  30, 1997 and  $387,301  for the same  period in 1996,  an increase of
$341,714 or 88%. The increase is  attributable  to an increase in highway  sound
barrier installment contracts.


<PAGE>


     Total cost of goods sold for the three months ended  September 30, 1997 was
$2,646,871,  an increase of $286,415 or 12% from $2,360,456 for the three months
ended  September  30, 1996.  The increase was  primarily the result of increased
revenue  and  unfavorable  adjustments  resulting  from  a  physical  count  and
valuation of inventories in the current three month period.  Total cost of goods
sold,  as a percentage of total  revenue,  increased to 76% for the three months
ended  September  30, 1997,  from 71% for the three months ended  September  30,
1996.

     For the three months ended  September 30, 1997,  the Company's  general and
administrative  expenses  decreased $44,331 to $493,812 from $538,143 during the
same period in 1996.  The decrease was attributed to  profitability  initiatives
begun in 1996 to lower overall expense.

     Selling  expenses for the three months ended  September 30, 1997  increased
$28,740 to $210,346 from $181,606 for the three months ended  September 30, 1996
resulting  from  increases  in  advertising  and  marketing  efforts for new and
existing products.

     The  Company's  operating  income for the three months ended  September 30,
1997 was $113,065, compared to operating income of $221,251 for the three months
ended September 30, 1996, a decrease of $108,186.

     Interest expense was $74,843 for the three months ended September 30, 1997,
compared to $114,365 for the three months ended September 30, 1996. The decrease
of $39,522,  or 35%, was primarily  due to an improved  overall rate of interest
paid on outstanding debt and the retirement of debt.

     Net income was  $138,566  for the three  months  ended  September  30, 1997
compared to $212,012 for the same period of the prior year. Net income per share
for the current  three month period was $.05 compared to net income per share of
$.07 achieved in the quarter ended September 30, 1996.

     Nine months ended September 30, 1997 compared to the nine months ended
September 30, 1996

     For the nine months ended September 30, 1997, the Company had total revenue
of $9,082,397  compared to total revenue of $8,572,237 for the nine months ended
September  30, 1996,  an increase of $510,160,  or 6%. Total  product sales were
$7,685,982  for the current  nine months  compared  to  $7,625,417  for the same
period in 1996,  an  increase  of $60,565.  The  increase  in product  sales was
primarily the result of increased highway soundwall sales during 1997.  Shipping
and  installation  revenue  increased  to  $1,396,415  for the nine months ended
September 30, 1997 compared to $946,820 for the same period in 1996, an increase
of $449,595.  The increase  was  attributed  primarily to an increase in highway
soundwall installation contracts.



<PAGE>


     Total cost of goods  sold for the nine  months  ended  September  30,  1997
remained  relatively  flat at $6,796,708  compared to $6,783,409  for the period
ended  September  30, 1996.  Total cost of goods sold as a  percentage  of total
revenue  decreased to 75% for the nine months ended September 30, 1997, from 79%
during the same period of the prior year. Rewards from profitability initiatives
begun in 1996 to reduce costs more than offset  unfavorable  adjustments made to
inventories in the third quarter of the current year.

     General and  administrative  expenses  for the nine month  period  declined
$60,771,  down from $1,608,670  during 1996 to $1,547,899 in 1997. The reduction
was attributed to profitability efforts begun in 1996 to reduce costs.

     Selling  expenses for the nine months ended  September  30, 1997  decreased
slightly to $502,218, down from $513,290 for the nine months ended September 30,
1996. Decreases in employee  compensation expenses for the period were partially
offset by  increased  advertising  and  marketing  efforts for new and  existing
products.

     The Company's operating income for the nine months ended September 30, 1997
was $235,572  compared to an operating loss of $(333,132) for the same period in
the prior year.

     Royalty  income  decreased to $164,584 for the nine months ended  September
30,  1997 from  $211,572  during the first nine  months of the prior  year.  The
decrease in the current year was  attributed to the completion in the prior year
of a major contract held by one of the Company's licensees for JJ Hook Barrier.

     Interest expense was $272,076 for the nine months ended September 30, 1997,
compared to $357,807 for the nine months ended September 30, 1996. This decrease
of $85,731,  or 24%, was primarily  due to an improved  overall rate of interest
paid on outstanding debt and the retirement of debt.  Interest income of $37,063
for the nine months ended September 30, 1997  represented a decrease of $15,942,
or 30% over  interest  income of $53,005 for the 1996 period.  This decrease was
attributed  to interest  earned on higher  investment  balances  during the 1996
period,  offset  somewhat by the  recognition of interest  income on the officer
note receivable during the 1997 period.  The Company incurred other income,  net
of other  expense,  of $16,458 for the nine months  ended  September  30,  1997,
compared to other income, net of other expense, of $7,324 for the same period in
1996.

     The Company  experienced net income for the nine months ended September 30,
1997 of  $181,601  compared to a net loss of  $(419,038)  for the same period in
1996, an increase of $600,639. Net income per share increased $.20 to net income
of $.06 per share for the nine months ended September 30, 1997 compared to a net
loss of $(.14) per share during the same period of the prior year.



<PAGE>


     Liquidity and Capital Resources

     The Company has financed its capital expenditures,  operating  requirements
and growth to date  primarily  with  proceeds from its initial  public  offering
("IPO") and subsequent overallotment, bank and other borrowings, and the sale of
stock to and loans from its principal stockholders.

     The Company had $3,044,753 of  indebtedness at September 30, 1997, of which
$2,307,333  was  scheduled  to mature  within  twelve  months.  Included  in the
indebtedness were two notes totaling approximately $1,112,000, secured by assets
of the Company,  that matured in July 1997 and were not paid by the Company. For
one of the two notes,  management has successfully negotiated an extension until
alternative  financing can be found. For the other note payable,  management has
received an extension through November 30, 1997 and is currently  negotiating an
extension  on this note  through  February  28,  1998.  All  original  terms and
conditions  are   applicable  for  both  notes  during  the  extension   periods
successfully  negotiated.  The Company's debt is generally secured by the assets
of the  Company  and a  significant  portion  is  personally  guaranteed  by the
Company's  President.  Management is confident  that the Company will be able to
extend or refinance  this debt as it becomes due.  However,  no assurance can be
given that the Company will be  successful in its efforts to extend or refinance
its current  indebtedness,  or that if it is successful in those  efforts,  that
such extension or refinancing will be on terms favorable to the Company.  In the
event that the Company was not able to extend or refinance the indebtedness, the
Company may be subject to having its assets foreclosed upon by certain lenders.

     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.

     Other Comments

     The Company performs a portion of its concrete pouring and curing processes
on uncovered,  outdoor  manufacturing  areas.  During the winter months, cold or
adverse  weather  causes a slowdown or  cessation  of these  outdoor  production
activities, thereby reducing the Company's production capacity. In addition, 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
December  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 the spring

<PAGE>


construction  season.  However,  as of the date of this  filing,  the  Company's
backlog is  approximately  $6.9 million,  of which $2.6 million  represents firm
contracts for Slenderwall and  architectural  pre-cast  concrete  products.  The
majority  of  the  projects  relating  to  this  backlog  are  contracted  to be
constructed in the fourth quarter of 1997 and the first quarter of 1998.

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

     Mr. Robert McElhinney joined the Company as the new Chief Financial Officer
in July 1997.  Mr.  McElhinney  was  formerly  the Director of Finance and Chief
Financial Officer for ABC Photo Imaging in Manassas,  Virginia and for Ten Hoeve
Brothers, Inc. headquartered in New Jersey. Mr. Charles Adams joined the Company
as Controller in September  1997. Mr. Adams was formerly the General  Accounting
Manager for American Woodmark Corporation in Winchester, Virginia.



<PAGE>



                           PART II - Other Information


Item 1.  Legal Proceedings.  None


Item 2.  Changes in Securities.  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.

                  A. The following Exhibits are filed herewith:

                      Exhibit No.                             Title
                      -----------                             -----

                           27                         Financial Data Schedule

                  B. Report on Form 8-K. None.





<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 12, 1997                   By:/s/ Rodney I. Smith
                                          ----------------------
                                          Rodney I. Smith
                                          Chairman of the Board,
                                          Chief Executive Officer and President
                                          (principal executive officer)


Date: November 12, 1997                   By:/s/ Robert V. McElhinney
                                          ---------------------------
                                          Robert V. McElhinney
                                          Vice President of Finance,
                                          Chief Financial Officer
                                          (principal financial officer)






<TABLE> <S> <C>

<ARTICLE>                     5
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                              Dec-31-1997
<PERIOD-END>                                   Sep-30-1997
<CASH>                                         264,820       
<SECURITIES>                                   0             
<RECEIVABLES>                                  4,111,649     
<ALLOWANCES>                                   221,464       
<INVENTORY>                                    1,312,381     
<CURRENT-ASSETS>                               5,515,249     
<PP&E>                                         6,138,320     
<DEPRECIATION>                                 4,650,655     
<TOTAL-ASSETS>                                 7,958,187     
<CURRENT-LIABILITIES>                          5,250,303     
<BONDS>                                        737,420       
                          0             
                                    0             
<COMMON>                                       30,857        
<OTHER-SE>                                     1,939,607     
<TOTAL-LIABILITY-AND-EQUITY>                   7,958,187     
<SALES>                                        7,685,982     
<TOTAL-REVENUES>                               9,300,502     
<CGS>                                          6,796,708     
<TOTAL-COSTS>                                  8,846,825     
<OTHER-EXPENSES>                               0             
<LOSS-PROVISION>                               0             
<INTEREST-EXPENSE>                             272,076       
<INCOME-PRETAX>                                181,601       
<INCOME-TAX>                                   0             
<INCOME-CONTINUING>                            181,601       
<DISCONTINUED>                                 0             
<EXTRAORDINARY>                                0             
<CHANGES>                                      0             
<NET-INCOME>                                   181,601       
<EPS-PRIMARY>                                  .06           
<EPS-DILUTED>                                  .06           
                                               

</TABLE>



© 2019 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission