SMITH MIDLAND CORP
10QSB, 1999-11-15
CONCRETE PRODUCTS, EXCEPT BLOCK & BRICK
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                    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, 1999                                           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, 1999, the Company had outstanding  3,044,798  shares
of Common Stock, $.01 par value per share.


<PAGE>
<TABLE>
                                    SMITH-MIDLAND CORPORATION

                                              INDEX


PART I.  FINANCIAL INFORMATION                                                      PAGE NUMBER
                                                                                    -----------
<S> <C>
         Item 1.  Financial Statements

                           Consolidated Balance Sheets (Unaudited);                      3
                           September 30, 1999 and December 31, 1998

                           Consolidated Statements of Operations                         4
                           (Unaudited); Three months ended
                           September 30, 1999  and 1998

                           Consolidated Statements of Operations                         5
                           (Unaudited); Nine months ended
                           September 30, 1999  and 1998

                           Consolidated Statements of Cash Flows                         6
                           (Unaudited); Nine months ended
                           September 30, 1999 and 1998

                           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                                                     16

         Item 2.  Changes in Securities and Use of Proceeds                             16

         Item 3.  Defaults Upon Senior Securities                                       16

         Item 4.  Submission of Matters to a Vote of Security Holders                   16

         Item 5.  Other Information                                                     17

         Item 6.  Exhibits and Reports on Form 8-K                                      17

         Signatures                                                                     18
</TABLE>



                                               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                                                                     1999                1998
         ------                                                                  -----------         -----------
Current assets:
<S>                                                                              <C>                 <C>
   Cash and cash equivalents                                                     $   556,430         $   207,661
   Accounts receivable:
     Trade - billed, less allowances for doubtful accounts of
       $295,222 and $262,056                                                       3,590,352           3,824,012
     Trade - unbilled                                                                205,258             199,108
   Inventories:
     Raw materials                                                                   530,061             522,468
     Finished goods                                                                1,056,664             989,745
   Prepaid expenses and other assets                                                 143,788             116,034
                                                                                 -----------         -----------
        Total current assets                                                       6,082,553           5,859,028
                                                                                 -----------         -----------

Property and equipment, net                                                        2,694,708           2,449,566
                                                                                 -----------         -----------

Other assets:
   Cash - restricted                                                                     - -             387,462
   Note receivable, officer                                                          645,163             624,387
   Other                                                                             294,050             246,058
                                                                                 -----------         -----------
     Total other assets                                                              939,213           1,257,907
                                                                                 -----------         -----------
       Total Assets                                                             $  9,716,474         $ 9,566,501
                                                                                 ===========         ===========

         Liabilities and Stockholders' Equity
         ------------------------------------
Current liabilities:
   Current maturities of notes payable                                          $    628,959         $   573,104
   Accounts payable - trade                                                        1,899,474           2,177,884
   Accrued expenses and other liabilities                                          1,385,791           1,115,118
   Customer deposits                                                                 164,724             306,255
                                                                                 ------------        -----------
     Total current liabilities                                                     4,078,948           4,172,361
Notes payable - less current maturities                                            3,917,742           4,020,661
Notes payable - related parties                                                       99,179             104,696
                                                                                 -----------         -----------
       Total Liabilities                                                           8,095,869           8,297,718
                                                                                 -----------         -----------

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 3,085,718 shares,  outstanding 3,044,798 shares                           30,857              30,857
   Additional capital                                                              3,450,085           3,450,085
   Treasury stock                                                                   (102,300)           (102,300)
   Retained earnings (deficit)                                                    (1,758,037)         (2,109,859)
     Total Stockholders' Equity                                                    1,620,605           1,268,783
                                                                                 -----------          ----------
       Total Liabilities and Stockholders'  Equity                              $  9,716,474         $ 9,566,501
                                                                                 ===========          ==========

     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,
                                                                    1999                     1998
                                                                -----------              -----------
<S>                                                             <C>                      <C>
Revenue                                                         $ 3,690,595              $ 3,968,174

Cost of goods sold                                                2,748,836                2,880,029
                                                                -----------              -----------

Gross profit                                                        941,759                1,088,145
                                                                -----------              -----------

Operating expenses:
     General and administrative expenses                            540,131                  663,181
     Selling expenses                                               126,855                  176,490
                                                                -----------              -----------

     Total operating expenses                                       666,986                  839,671
                                                                -----------              -----------

Operating income                                                    274,773                  248,474
                                                                -----------              -----------

Other income (expense):
     Royalties                                                       76,960                   78,691
     Interest expense                                              (154,597)                (135,056)
     Interest income                                                 28,565                   27,504
     Other                                                          (81,638)                 (54,871)
                                                                -----------              -----------

         Total other income (expense)                              (130,710)                 (83,732)
                                                                -----------              -----------

Income (loss) before income taxes                                   144,063                  164,742
Income tax expense (benefit)                                           --                       --
                                                                -----------              -----------

         Net income (loss)                                      $   144,063              $   164,742
                                                                ===========              ===========

Basic and diluted earnings per share                            $       .05              $       .05
                                                                ===========              ===========

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


       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,
                                                                    1999                     1998
                                                                -----------              -----------
<S>                                                             <C>                      <C>
Revenue                                                         $ 11,472,031             $ 10,552,785

Cost of goods sold                                                 8,944,995                7,928,331
                                                                ------------             ------------

Gross profit                                                       2,527,036                2,624,454
                                                                ------------             ------------

Operating expenses:
     General and administrative expenses                           1,555,311                1,631,230
     Selling expenses                                                407,580                  497,774
                                                                ------------             ------------


     Total operating expenses                                      1,962,891                2,129,004
                                                                ------------             ------------

Operating income                                                     564,145                  495,450
                                                                ------------             ------------

Other income (expense):
     Royalties                                                       185,449                  141,136
     Interest expense                                               (407,986)                (429,420)
     Interest income                                                  52,631                   54,502
     Other                                                           (42,416)                 (50,940)
                                                                ------------             ------------

         Total other income (expense)                               (212,322)                (284,722)
                                                                ------------             ------------

Income before income taxes                                           351,823                  210,728
Income tax expense (benefit)                                            --                       --
                                                                ------------             ------------

         Net income                                             $    351,823             $    210,728
                                                                ============             ============

Basic and diluted earnings per share                            $        .12             $        .07
                                                                ============             ============

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


       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,
                                                                            1999                  1998
                                                                       ------------           ------------
Cash flows from operating activities:
<S>                                                                    <C>                    <C>
     Cash received from customers                                      $ 11,743,459           $ 10,346,641
     Cash paid to suppliers and employees                               (10,797,333)           (10,367,663)
     Interest paid                                                         (407,986)              (429,420)
     Other                                                                  (28,569)               (20,314)
                                                                       ------------           ------------
       Net cash provided (absorbed) by operating activities                 509,571               (470,756)
                                                                       ------------           ------------


Cash flows from investing activities:
     Purchases of property and equipment                                   (495,683)              (707,156)
     Decrease (increase) in officer note receivable                            --                     --
     Decrease (increase) in notes payable - related parties                  (5,517)               (10,912)
                                                                       ------------           ------------
       Net cash absorbed by investing activities                           (501,200)              (718,068)
                                                                       ------------           ------------

Cash flows from financing activities:
     Proceeds from borrowings                                               105,969              4,094,392
     Repayments of  borrowings                                             (153,033)            (2,487,371)
                                                                       ------------           ------------
       Net cash provided (absorbed) by financing activities                 (47,064)             1,607,021
                                                                       ------------           ------------

Decrease (increase) in cash - restricted                                    387,462               (418,289)
                                                                       ------------           ------------

Net increase (decrease) in cash and cash equivalents                        348,769                    (92)

Cash and cash equivalents at beginning of period                            207,661                288,310
                                                                       ------------           ------------

Cash and cash equivalents at end of period                             $    556,430           $    288,218
                                                                       ============           ============


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

Net income                                                             $    351,823           $    210,728
Adjustments to reconcile net income to net cash
     provided  (absorbed) by operating activities:
       Depreciation and amortization                                        250,541                239,471
       Increase in other assets                                             (68,769)              (163,529)
       Decrease (increase) in:
         Accounts receivable - billed                                       233,660               (356,240)
         Accounts receivable - unbilled                                      (6,150)                32,017
         Inventories                                                        (74,512)              (103,991)
         Prepaid expenses and other assets                                  (27,754)               (30,354)
       Increase (decrease) in:
         Accounts payable - trade                                          (278,410)               (40,512)
         Accrued expenses and other liabilities                            (235,289)                96,317
         Accrued expenses and other liabilities                             270,673               (235,289)
         Customer deposits                                                 (141,531)               (23,057)
                                                                       ------------           ------------
Net cash provided (absorbed) by operating activities                   $    509,571           $   (470,756)
                                                                       ============           ============


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

</TABLE>

                                                  6
<PAGE>
                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                               September 30, 1999
                                   (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, 1998.

     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, 1999 and 1998.

     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 1999 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, 1999 and 1998,  as the Company does not expect to
incur federal  income tax expense for 1999 and did not incur federal  income tax
expense during 1998.

Revenue Recognition

The Company  primarily  recognizes  revenue on the sale of its standard  precast
concrete products at shipment date,  including revenue derived from any projects
to be completed under short-term  contracts.  Installation  services for precast
concrete  products,  leasing and royalties are recognized as revenue as they are
earned on an accrual  basis.  Licensing  fees are  recognized  under the accrual
method unless  collectibility  is in doubt, in which event revenue is recognized
as cash is received.  Certain  sales of soundwall and  Slenderwall(TM)  concrete
products  are  recognized  upon  completion  of  production  and  customer  site
inspections. Provisions for estimated losses on contracts are 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,  1999 and 1998 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  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.

     In 1998,  the Company began work on a contract to renovate the Bradley Hall
Building at Rutgers  University (the "Bradley Hall  project").  The Bradley Hall
project,  which was completed in October 1999,  involved the design,  production
and  installation  of  Slenderwall  panels by the Company.  While  executing the
Bradley Hall project,  the original  structure was found to be not  structurally
sufficient to support the  installation of the Slenderwall  panels as originally
designed.  This  led to cost  overruns  relating  to  re-design  of the  panels,
production of the panels with additional steel and reinforcing, and installation
costs. Management estimates that the cost overruns over the course of the entire
project will total approximately $1.55 million and estimates that the total loss
on the job before  recovery of any claims by the Company  will be  approximately
$1.45 million including approximately  $1,088,000 of estimated losses accrued in
the fourth  quarter  of 1998 and  approximately  $362,000  of  estimated  losses
accrued in the first nine months of 1999.  Approximately $83,000 of these losses
occurred in the three months ended  September 30, 1999.  The general  contractor
has filed claims in 1999 on the Company's  behalf,  for which  notification  has
been  made to the  general  contractor  in the  amount of $1.49  million.  As of
December 31, 1998, $400,000 of the contract claim had been included in sales and
accounts  receivable.  During the quarter  ended June 30,  1999,  an  additional
$97,000 of the contract  claim was  included in sales and  accounts  receivable.
There can be no  assurance  that the loss  will not  exceed  the  $1.45  million
estimate or that the Company will be able to collect any of its claim.

     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, 1999 are not necessarily indicative of
the results for the Company's  operations for the year ending December 31, 1999.
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.


                                       10
<PAGE>

Results of Operations

     Three months ended  September  30, 1999  compared to the three months ended
September 30, 1998

     For the three  months  ended  September  30,  1999,  the  Company had total
revenue of  $3,690,595  compared to total  revenue of  $3,968,174  for the three
months ended  September  30, 1998, a decrease of $277,579,  or 7%. Total product
sales were  $3,052,211 for the three months ended September 30, 1999 compared to
$3,365,303  for the same  period in 1998,  a decrease  of  $313,092,  or 9%. The
decrease was primarily due to fewer successful Slenderwall(TM) bids resulting in
decreased  Slenderwall sales during the 1999 period compared to the 1998 period.
Shipping  and  installation  revenue was  $638,384  for the three  months  ended
September  30, 1999 and  $602,871  for the same  period in 1998,  an increase of
$35,513,  or 6%. The increase was attributable  primarily to higher installation
activity during the three-month  period in 1999,  compared to the same period in
1998.

     Total cost of goods sold for the three months ended  September 30, 1999 was
$2,748,836,  a decrease of $131,193, or 5%, from $2,880,029 for the three months
ended  September  30, 1998.  Total cost of goods sold,  as a percentage of total
revenue,  increased to 74.5% for the three months ended September 30, 1999, from
72.6% for the three  months ended  September  30, 1998  primarily  due to normal
year-to-year variations in the Company's operations and product mix.

     For the three months ended  September 30, 1999,  the Company's  general and
administrative  expenses decreased $123,050 to $540,131 from $663,181 during the
same period in 1998.  The 19%  decrease  is  primarily  attributed  to a smaller
accrual for the allowance for doubtful  accounts and lower moving and relocation
expenses.

     Selling  expenses for the three months ended  September 30, 1999  decreased
$49,635,  or 28%, to $126,855 from $176,490 for the three months ended September
30, 1998, resulting primarily from decreased engineering fees and reduced salary
expenses due to staff vacancies during the 1999 period.

     The  Company's  operating  income for the three months ended  September 30,
1999 was $274,773  compared to operating income of $248,474 for the three months
ended  September  30,  1998,  an  increase  of $26,299,  or 11%.  The  increased
operating   income   resulted   primarily  from  reduced   sales,   general  and
administrative expenses, which was offset to some extent by reduced gross profit
margins.

     Royalty  income  totaled  $76,960 for the three months ended  September 30,
1999,  compared to $78,691 for the same three  months in 1998.  The  decrease of
$1,731, or 2%, was primarily due to a decrease in product sales by the Company's
licensees.

                                       11
<PAGE>

     Interest  expense was $154,597 for the three  months  ended  September  30,
1999,  compared to $135,056 for the three months ended  September 30, 1998.  The
increase of $19,541, or 14%, was primarily due to an increase of nearly $300,000
in the average total debt outstanding during the 1999 period offset, in part, by
slightly lower interest rates.

     Net income was  $144,063 for the three  months  ended  September  30, 1999,
compared  to net income of $164,742  for the same period in 1998.  The basic and
diluted  net  income  per share for the  current  three  month  period  was $.05
compared $.05 per share for the three months ended September 30, 1998.


     Nine months ended September 30, 1999 compared to the nine months ended
September 30, 1998

     For the nine months ended September 30, 1999, the Company had total revenue
of  $11,472,031  compared to total  revenue of  $10,552,785  for the nine months
ended  September 30, 1998,  an increase of $919,246,  or 9%. Total product sales
were  $9,141,418  for the nine months  ended  September  30,  1999,  compared to
$9,076,218  for the same period in 1998,  an  increase  of  $65,200,  or 1%. The
increase resulted primarily from increased Slenderwall(TM),  architectural,  and
transportable  building  sales during the 1999 period,  offset to some extent by
decreased  soundwall  product  sales.  Shipping  and  installation  revenue  was
$2,330,613  for the nine months ended  September 30, 1999 and $1,476,567 for the
same  period  in  1998,  an  increase  of  $854,046,  or 58%.  The  increase  is
attributable to increased  installation revenue related to Slenderwall contracts
in the 1999  period,  as compared to the 1998  period,  offset to some extent by
lower shipping revenues.

     Total cost of goods sold for the nine months ended  September  30, 1999 was
$8,944,995,  an increase of  $1,016,664,  or 13%, from  $7,928,331  for the nine
months ended  September  30, 1998.  Total cost of goods sold, as a percentage of
total revenue,  increased to 78.0% for the nine months ended September 30, 1999,
from  75.1%  for  the  nine  months  ended  September  30,  1998  due in part to
recognition  of $362,000 of Bradley Hall project costs for which only $97,000 of
revenues were recorded.

     For the nine months ended  September 30, 1999,  the  Company's  general and
administrative expenses decreased $75,919, or 5%, to $1,555,311, from $1,631,230
during the same period in 1998.  The decrease was  attributed to reduced  moving
and  relocation  expenses and a smaller  accrual for the  allowance for doubtful
accounts, offset somewhat by increased legal fees.

     Selling  expenses for the nine months ended  September  30, 1999  decreased
$90,194,  or 18%, to $407,580 from $497,774 for the nine months ended  September
30, 1998.  The decrease was due to reduced  engineering  fees and reduced salary
expenses due to staff  vacancies  during the 1999 period as compared to the 1998
period.

                                       12
<PAGE>

     The Company's operating income for the nine months ended September 30, 1999
was $564,145, compared to operating income of $495,450 for the nine months ended
September  30, 1998,  an increase of $68,695,  or 14%.  The  improved  operating
income resulted  primarily from the reductions in operating  expenses  discussed
above offset, in part, by a reduction in gross profit.

     Royalty  income  totaled  $185,449 for the nine months ended  September 30,
1999,  compared to $141,136  for the same nine months in 1998.  The  increase of
$44,313,  or 31%,  was largely due to a credit  given in 1998 for a reduction in
the scope of a licensing  contract  and the  resulting  reversal  of  previously
recognized royalty income.

       Interest  expense was $407,986 for the nine months  ended  September  30,
1999,  compared to $429,420 for the nine months ended  September  30, 1998.  The
decrease of $21,434,  or 5%, was  primarily due to high  interest  rates,  lease
buyout amounts and miscellaneous fees which were recognized during the first six
months  of  1998  and  which  were  associated  with  the  early  retirement  of
approximately  27 notes and capital leases in June 1998 as part of the Company's
debt restructuring (see "Liquidity and Capital Resources").

     Net income was  $351,823  for the nine months  ended  September  30,  1999,
compared to net income of $210,728  for the same period in 1998.  Net income per
share for the  current  nine month  period was $.12  compared  to net income per
share  of $.07  for the nine  months  ended  September  30,  1998  with the same
weighted average number of shares outstanding in both periods.


     Liquidity and Capital Resources

The Company has financed its capital  expenditures,  operating  requirements and
growth to date  primarily  with proceeds  from  operations,  its initial  public
offering  ("IPO") and bank and other  borrowings.  The Company had $4,645,880 of
indebtedness  at September 30, 1999,  of which  $628,959 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.  In addition to
paying off current debt of  approximately  $3.0  million,  the Company  received
approximately  $832,000 in restricted funds, to be used only for plant expansion
and new equipment.  Such funds were fully expended by June 30, 1999. 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 recently  renewed and is now scheduled to
terminate on May 1, 2000.


                                       13
<PAGE>

     Capital spending totaled $495,683 in the nine-month  period ended September
30, 1999,  which included  $389,421 in restricted  funds resulting from the June
1998 FIB debt restructuring. Capital spending decreased 30% from $707,156 in the
comparable period of the prior year, which included $242,016 in restricted funds
from the June 1998 FIB debt restructuring.  The reduction in capital spending in
the 1999  period  was due to the  completion  in the first  quarter of 1999 of a
16,000  square  foot  plant  addition  to the  Company's  facility  in  Midland,
Virginia.  This plant  addition was financed  primarily  with  restricted  funds
received in 1998 as part of the $4,000,000 FIB loan as mentioned above.  Planned
capital  expenditures  for 1999 and 2000 are limited as stated  above by the FIB
loan agreement.  The only significant  cash commitment for capital  expenditures
planned  for the  balance  of 1999  and  early  2000 is a  project  to  complete
construction of an engineering  building at a estimated cost of $90,000 which is
contingent  upon  successful   completion  of  additional  equity  financing  or
additional debt financing through FIB.

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

     The Company's cash flow from operations is affected by production schedules
set by contractors,  which generally provide for payment 45 to 75 days after the
products are produced.  This payment schedule has resulted in liquidity problems
for the Company  because it must bear the cost of  production  for its  products
long before it receives  payment.  In addition the Company's  cash flow has been
significantly  effected  by the loss on the  Bradley  Hall  project.  Due to the
significant  costs  required to continue  the Bradley  Hall  project and to fund
ongoing  commitments,  the Company  entered  into a working  agreement  with the
general contractor of the Bradley Hall project to finance certain costs, at cost
plus 10%,  through  completion  of the  project.  During the nine  months  ended
September 30, 1999 and through  completion  of the project in October 1999,  the
general  contractor for the project assumed  responsibility for installation and
incurred installation and other expenses in connection with the project totaling
$1,155,495,  including  the 10%  surcharge,  for  which the  general  contractor
invoiced the Company  upon  completion  of the project.  The Company had accrued
$660,000  of  these  expenses  in the  fourth  quarter  1998 and  recognized  an
additional  $290,000 of these  expenses in the nine months ended  September  30,
1999.  The entire  $1,155,495 of  installation  and other  expenses is currently
under  review  and  certain  expenses  are in  dispute.  The extent to which the
Company is responsible for these  installation  and other costs and the schedule
for  payment  by  the  Company  to the  general  contractor  has  not  yet  been
determined.  In the event cash flow from operations,  collection of claims,  and
existing credit facilities are not adequate to support  operations,  the Company
is currently investigating  alternative sources of both short-term and long-term
financing, for which there can be no assurance of obtaining.

                                       14
<PAGE>

Other Comments

       The Company  expects that the costs incurred in the  preparation  for the
year  2000 will not have a  significant  impact  on the  Company's  cash flow or
results of operations.  The Company is in the process of replacing nearly all of
its purchasing,  manufacturing,  inventory and accounting systems and expects to
activate the new systems prior to January 1, 2000.  The new systems are expected
to improve the accuracy and timeliness of internal reporting and the Company has
taken the  necessary  steps to ensure that all systems are year 2000  compliant.
The  Company  is  using  standard  off-the-shelf  software  which  is year  2000
compliant.  The Company is working with key  suppliers  and  customers to ensure
that they are taking steps to be year 2000  compliant.  However,  if the Company
and third  parties  on which it relies  are  unable to  address  this issue in a
timely manner, it could result in a material  financial risk to the Company.  In
order to assure this does not occur,  the Company  plans to devote all resources
required to resolve any significant year 2000 issues in a timely manner.

     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  construction
season.

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



                                       15
<PAGE>
                           PART II - Other Information



Item 1.       Legal Proceedings.  None.


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.

              On  September  17,  1999 the  Company  held its Annual  Meeting of
              Stockholders.   The   Stockholders   voted  on  and  approved  the
              following:

              1.  The  election  of  the  following   individuals  to  serve  as
                  directors  until  the next  annual  meeting  and  until  their
                  successors are duly elected and qualified:

                                                             Shares Voted to
                     Name                 Shares Voted For   Withhold Authority

                     Rodney I. Smith      2,473,470          12,100
                     Ashley B. Smith      2,462,470          23,100
                     Wesley A. Taylor     2,476,570           9,000
                     Andrew Kavounis      2,477,570           8,000
                     Barry R. Schimel     2,477,570           8,000

              2.  An amendment of the Company's  Certificate of Incorporation to
                  affect   a   one-for-three,    one-for-two,    three-for-five,
                  two-for-three  or  three-for-four  reverse  stock split of the
                  Common Stock of the  Company.  In this  connection,  2,399,437
                  shares voted for the  amendment,  37,765  shares voted against
                  the amendment and 48,368 shares abstained.

              3.  The ratification  and approval of additional  financing of the
                  Company  through  sale of an  aggregate  of 471,428  shares of
                  Common  Stock of the Company to the  President  of the Company
                  and the Chief Operating  Officer of a wholly-owned  subsidiary
                  of the  Company,  at a  price  of  $.70  per  share.  In  this
                  connection,  857,547  shares  voted for  ratification,  62,860
                  shares voted against  ratification,  127,068 shares  abstained
                  and 1,438,095 shares were not voted by brokers.

                                       16
<PAGE>

              4.  The ratification of the selection by the Board of Directors of
                  BDO Seidman LLP as  independent  auditors  for the year ending
                  December 31, 1999. In this connection,  2,458,822 shares voted
                  for ratification, 3,250 shares voted against ratification, and
                  23,498 shares abstained.


Item 5.       Other Information.

     Trading of the publicly held securities of the Company was transferred from
the Nasdaq SmallCap Market to the OTC-Bulletin Board in October 1999 because the
Company  was no longer in  compliance  with  Nasdaq's  $1.00  minimum  bid price
requirement.  The Company was also not in compliance  with Nasdaq's net tangible
asset requirement (minimum of $2,000,000).  The Company's securities continue to
be listed on the OTC-Bulletin Board.

     The Stockholders of the Company have approved an amendment of the Company's
Certificate   of   Incorporation   to  affect  a   one-for-three,   one-for-two,
three-for-five,  two-for-three  or  three-for-four  reverse  stock  split of the
Common  Stock of the Company,  but as of the date of this  report,  the Board of
Directors  have taken no action in this  regard.  The  reverse  stock  split was
contemplated  as a means  of  retaining  the  Company's  listing  on the  Nasdaq
SmallCap Market.

     The  Stockholders  of the Company have  ratified  and  approved  additional
financing  of the Company  through  sale of an  aggregate  of 471,428  shares of
Common  Stock of the  Company  to the  President  of the  Company  and the Chief
Operating  Officer of a  wholly-owned  subsidiary of the Company,  at a price of
$.70 per share, but as of the date of this report,  these Officers have taken no
action  in this  regard.  The  purchase  agreements  with  theses  officers  was
contingent  upon the  Company  maintaining  its  listing on the Nasdaq  SmallCap
Market, which condition was not met.


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

                  A. The following Exhibit is filed herewith:

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

                            27                       Financial Data Schedule

                  B. Report on Form 8-K.   None.




                                       17
<PAGE>
                                   SIGNATURES


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

                                           SMITH-MIDLAND CORPORATION




Date: November 15, 1999                    By: /s/ Rodney I. Smith
                                           ---------------------------------
                                           Rodney I. Smith
                                           Chairman of the Board,
                                           Chief Executive Officer and President
                                           (principal executive officer)


Date: November 15, 1999                     By: /s/ Theodore D. Pennington
                                           ---------------------------------
                                            Theodore D. Pennington
                                            Vice President, Finance and
                                            Chief Financial Officer
                                            (principal financial officer)




                                       18

<TABLE> <S> <C>

<ARTICLE>                     5

<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                              DEC-31-1999
<PERIOD-END>                                   SEP-30-1999
<CASH>                                         556,430
<SECURITIES>                                   0
<RECEIVABLES>                                  4,090,832
<ALLOWANCES>                                   295,222
<INVENTORY>                                    1,586,725
<CURRENT-ASSETS>                               6,082,553
<PP&E>                                         8,004,432
<DEPRECIATION>                                 5,309,724
<TOTAL-ASSETS>                                 9,716,474
<CURRENT-LIABILITIES>                          4,078,948
<BONDS>                                        0
                          0
                                    0
<COMMON>                                       30,857
<OTHER-SE>                                     1,589,748
<TOTAL-LIABILITY-AND-EQUITY>                   9,716,474
<SALES>                                        11,472,031
<TOTAL-REVENUES>                               11,667,695
<CGS>                                          8,944,995
<TOTAL-COSTS>                                  10,907,886
<OTHER-EXPENSES>                               0
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             407,986
<INCOME-PRETAX>                                351,823
<INCOME-TAX>                                   0
<INCOME-CONTINUING>                            351,823
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   351,823
<EPS-BASIC>                                  .12
<EPS-DILUTED>                                  .12


</TABLE>
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