SMITH MIDLAND CORP
10QSB, 2000-08-18
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
        June 30, 2000                                        1-13752
------------------------------                        ----------------------



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



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


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

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



     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                           Yes  X           No
                              -----             -----


     As of August 10,  2000,  the Company had  outstanding  3,050,798  shares of
Common Stock, $.01 par value per share.


<PAGE>

                            SMITH-MIDLAND CORPORATION

                                      INDEX


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

     Item 1.   Financial Statements

               Consolidated Balance Sheets (Unaudited);                   3
               June 30, 2000 and December 31, 1999

               Consolidated Statements of Operations                      4
               (Unaudited); Three months ended
               June 30, 2000  and 1999

               Consolidated Statements of Operations                      5
               (Unaudited); Six months ended
               June 30, 2000  and 1999

               Consolidated Statements of Cash Flows                      6
               (Unaudited); Six months ended
               June 30, 2000 and 1999

               Notes to Consolidated Financial Statements (Unaudited)     7

     Item 2. Management's Discussion and Analysis of Financial            10
          Condition and Results of Operations

PART II.  OTHER INFORMATION

     Item 1.   Legal Proceedings                                          15

     Item 2.   Changes in Securities and Use of Proceeds                  15

     Item 3.   Defaults Upon Senior Securities                            15

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

     Item 5. Other Information                                            15

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

     Signatures                                                           16

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                  JUNE 30,              DECEMBER 31,
       ASSETS                                                       2000                   1999
       ------                                                   -----------             ------------

<S>                                                             <C>                      <C>
Current assets:
  Cash and cash equivalents                                     $ 1,025,811              $  374,190
  Accounts receivable:
  Trade - billed, less allowances for doubtful accounts of
    $280,019 and $323,474                                         3,847,169               3,557,938
  Trade - unbilled                                                  (62,642)                123,332

Inventories:
  Raw materials                                                     524,554                 493,979
  Finished goods                                                  1,260,443               1,013,958
Prepaid expenses and other assets                                    99,438                  46,656
                                                                ------------             -----------
Total current assets                                              6,694,773               5,610,053
                                                                ------------             -----------
Property and equipment, net                                       2,629,420               2,608,145
                                                                ------------             -----------

Other assets:
  Note receivable, officer                                          638,347                 638,347
  Other                                                             324,057                 317,845
                                                                ------------             -----------
Total other assets                                              $   962,404              $  956,192
                                                                ------------             -----------
 TOTAL ASSETS                                                   $10,286,597              $9,174,390
                                                                ============             ===========

  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
Current liabilities:
  Current maturities of notes payable                           $   760,256              $  228,025
  Accounts payable - trade                                        1,533,002               1,690,853
  Accrued expenses and other liabilities                          1,592,203               1,324,021
  Customer deposits                                                 657,216                 172,914
                                                                ------------             -----------
Total current liabilities                                         4,542,677               3,415,813
Notes payable - less current maturities                           4,277,934               4,350,644
Notes payable - related parties                                      92,126                  96,875
                                                                ------------             -----------
  TOTAL LIABILITIES                                               8,912,737               7,863,332
                                                                ------------             -----------

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 3,091,718 and 3,085,718 shares,
    outstanding, 3,050,798 and 3,044,798 shares                      30,917                  30,857
  Additional capital                                              3,453,222               3,450,085
  Treasury Stock                                                   (102,300)               (102,300)
  Retained earnings (deficit)                                    (2,007,979)             (2,067,584)
                                                                ------------             -----------
TOTAL STOCKHOLDERS' EQUITY                                        1,373,860               1,311,058
                                                                ------------             -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $10,286,597              $9,174,390
                                                                ============             ===========
</TABLE>

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

                                       3
<PAGE>


                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED
                                                                      JUNE 30,
                                                            2000                     1999
                                                        ------------             ------------

<S>                                                     <C>                      <C>
Revenue                                                 $3,780,164               $4,322,912

Cost of goods sold                                       2,916,570                3,460,733
                                                        -----------              -----------

Gross profit                                               863,594                  862,179
                                                        -----------              -----------
Operating expenses:
  General and administrative expenses                      619,315                  533,022
  Selling expenses                                          93,185                  120,950
                                                        -----------              -----------

  Total operating expenses                                 712,500                  653,972
                                                        -----------              -----------

Operating income                                           151,094                  208,207
                                                        -----------              -----------

Other income (expense):
  Royalties                                                102,404                  57,920
  Interest expense                                        (140,987)               (134,817)
  Interest income                                           21,223                   4,541
  Other                                                     75,277                  43,788
                                                        -----------              ----------

     Total other income (expense)                           57,917                 (28,568)
                                                        -----------              ----------

Income (loss) before income taxes                          209,011                 179,639
Income tax expense (benefit)                                 --                       --
                                                        -----------              ----------

     Net income (loss)                                  $  209,011               $ 179,639
                                                        ===========              ==========

Basic and diluted earnings per share                    $      .07               $     .06
                                                        ===========              ==========

Weighted average common shares outstanding               3,050,798                3,044,798
                                                        ===========              ===========
</TABLE>

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

                                       4
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                  SIX MONTHS ENDED
                                                                      JUNE 30,
                                                            2000                     1999
                                                        ------------             ------------

<S>                                                     <C>                      <C>
Revenue                                                 $6,254,612               $7,781,436

Cost of goods sold                                       4,830,207                6,196,159
                                                        -----------              -----------

Gross profit                                             1,424,405                1,585,277
                                                        -----------              -----------

Operating expenses:
  General and administrative expenses                    1,221,409                1,015,180
  Selling expenses                                         190,221                  280,725
                                                        -----------              -----------

  Total operating expenses                               1,411,630                1,295,905
                                                        -----------              -----------

Operating income                                            12,775                  289,372
                                                        -----------              -----------

Other income (expense):
  Royalties                                                182,292                  108,489
  Interest expense                                        (277,112)                (253,389)
  Interest income                                           35,376                   24,066
  Other                                                    106,276                   39,222
                                                        -----------              -----------

     Total other income (expense)                           46,832                  (81,612)
                                                        -----------              -----------

Income before income taxes                                  59,607                  207,760

Income tax expense (benefit)                                    --                       --
                                                        -----------              -----------

     Net income                                         $   59,607               $  207,760
                                                        ===========              ===========

Basic and diluted earnings per share                    $      .02               $      .07
                                                        ===========              ===========

Weighted average common shares outstanding               3,049,578                3,044,798
                                                        ===========              ===========
</TABLE>

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

                                       5
<PAGE>
                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  SIX MONTHS ENDED
                                                                      JUNE 30,
                                                            2000                     1999
                                                        ------------             ------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash flows from operating activities:
  Cash received from customers                          $ 6,817,949               $ 7,358,116
  Cash paid to suppliers and employees                   (6,285,218)               (7,019,557)
  Interest paid                                            (277,112)                 (253,389)
  Other                                                     141,653                    42,512
                                                        ------------              ------------
Net cash provided (absorbed) by operating activities        397,272                   127,682
                                                        ------------              ------------

Cash flows from investing activities:
  Purchases of property and equipment                      (204,013)                 (403,948)
  Decrease (increase) in officer note receivable               --                        --
  Increase in related party receivables                        --                      (3,258)
                                                        ------------              ------------
Net cash absorbed by investing activities                  (204,013)                 (407,206)
                                                        ------------              ------------

Cash flows from financing activities:
  Proceeds from bank borrowings                             551,900                    75,000
  Repayments of bank borrowings-related party                (4,749)                      --
  Repayments of bank borrowings                             (92,379)                  (38,151)
  Proceeds from issuance of common stock, net                 3,590                       --
                                                        ------------              ------------
Net cash provided by financing activities                   458,362                    36,849
                                                        ------------              ------------

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

Net increase (decrease) in cash and cash equivalents        651,621                   144,787

Cash and cash equivalents at beginning of period            374,190                   207,661
                                                        ------------              ------------
Cash and cash equivalents at end of period              $ 1,025,811               $   352,448
                                                        ============              ============

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

Net income                                              $    59,607               $   207,760
Adjustments to reconcile net income to net cash
  provided  (absorbed) by operating activities:
   Depreciation and amortization                            184,657                   160,467
   Increase in other assets                                  (8,527)                 (162,350)
   Decrease (increase) in:
     Accounts receivable - billed                          (289,231)                 (258,034)
     Accounts receivable - unbilled                         185,974                  (220,933)
     Inventories                                           (277,060)                   13,308
     Prepaid expenses and other assets                      (52,782)                   (2,045)
   Increase (decrease) in:
     Accounts payable trade                                (157,851)                  149,989
     Accrued expenses and other liabilities                 268,183                   292,362
     Customer deposits                                      484,302                   (52,842)
                                                        ------------              ------------
Net cash provided (absorbed) by operating activities    $   397,272               $   127,682
                                                        ============              ============
</TABLE>

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

                                       6
<PAGE>

                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                                   (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, 1999.

     In  the  opinion  of  the  management  of  Smith-Midland  Corporation  (the
"Company"),  the accompanying  financial statements reflect all adjustments of a
normal  recurring  nature which were  necessary for a fair  presentation  of the
Company's  results of operations for the three- and six-month periods ended June
30, 2000 and 1999.

     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 2000 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  six-month
periods  ended June 30, 2000 and 1999,  as the Company  does not expect to incur
income tax expense for 2000 and did not incur income tax expense during 1999.

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

                                       8
<PAGE>


                   SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


ESTIMATES

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

EARNINGS (LOSS) PER SHARE

     Basic earnings (loss) per share is computed by dividing income available to
common  stockholders by the weighted average number of common shares outstanding
for the period.  Diluted  earnings  per share  reflects the  potential  dilutive
effect of securities that could share in earnings of an entity. At June 30, 2000
there was no material dilutive effect on earnings (loss) per share.


                                       9

<PAGE>

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

GENERAL

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


     In 1998,  the Company began work on a contract to renovate the Bradley Hall
building at Rutgers University (the "Bradley Hall project"). This 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 lead 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 to the Company  for the project are  approximately  $1.6
million  and  estimates  that the total loss on the job before  recovery  on any
claims by the Company is approximately  $1.45 million,  which has been booked in
its entirety as of December  31, 1999.  In 1999,  the general  contractor  filed
claims on the  Company's  behalf in the amount of $1.1  million.  As of June 30,
2000,  $497,000 of the contract claim has been included in accounts  receivable.
The Company is currently  involved in litigation over this matter, and 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. The Company believes that,
based on prior experience in claims  settlement,  it will ultimately collect the
recorded claim receivable.

     This Form 10-QSB contains  forward-looking  statements  which involve risks
and  uncertainties.  The Company's actual results may differ  significantly from
the results discussed in the forward-looking  statements and the results for the
three and six months ended June 30, 2000 are not  necessarily  indicative of the
results for the  Company's  operations  for the year ending  December  31, 2000.
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 JUNE 30, 2000  COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 2000

     For the three months ended June 30, 2000,  the Company had total revenue of
$3,780,164  compared to total revenue of  $4,322,912  for the three months ended
June 30,  1999, a decrease of  $542,748,  or 13%. The Company had lower  product
sales of  $2,843,961  for the three  months  ended  June 30,  2000  compared  to
$3,419,718 for the same period in 1999, a decrease of $575,757, or 17%. Sales of
Easi-Set Precast  Buildings,  Slenderwall and particularly  soundwall were lower
for the second three  months of 2000 while  architectural  precast  products and
manhole sales increased. Slenderwall sales declined because of the completion of
the Bradley Hall Project in 1999,  while the decrease in building and  soundwall
sales  reflect  a  shift  in  the  Company's   marketing   focus  toward  custom
architectural  precast  products  used  in  commercial  building   construction.
Shipping and  installation  revenue was $936,203 for the three months ended June
30, 2000 and $903,194 for the same period in 1999,  an increase of $ 33,009,  or
4%. The increase  was  attributable  to higher  installation  revenue  which was
partially  offset by lower shipping  revenue in the 2000 period  compared to the
same period in 1999.

     Total  cost of goods  sold for the three  months  ended  June 30,  2000 was
$2,916,570, a decrease of $544,163, or 16%, from $3,460,733 for the three months
ended June 30, 1999.  The decrease was  primarily  the result of the lower sales
volume and cost of  production,  offset,  in part, by a significant  increase in
sales of products requiring installation, and a decrease in the profitability of
shipping services in the 2000 period.  Total cost of goods sold was 77% of total
revenue for the three months ended June 30, 2000 versus 80% for the three months
ended June 30, 1999,  which  earlier  period was impacted by higher costs due to
the Bradley Hall Project.

     For the three  months  ended  June 30,  2000,  the  Company's  general  and
administrative  expenses  increased $86,293 to $619,315 from $533,022 during the
same  period  in 1999.  The 16%  increase  was  mainly  attributable  to  higher
personnel  costs,  as the Company  filled  vacant  positions,  higher  personnel
recruitment costs,  higher  professional  fees  from the use of consultants, and
higher use taxes due on Company installed product.

     Selling  expenses  for the  three  months  ended  June 30,  2000  decreased
$27,765,  or 23%, to $93,185  from  $120,950 for the three months ended June 30,
1999,  resulting from reduced staffing and salary expenses and lower advertising
costs.

     The Company's operating income for the three months ended June 30, 2000 was
$151,094,  compared to  operating  income of $208,207 for the three months ended
June 30,  1999,  a  decrease  of  $57,113,  or 27%.  The gross  margin  remained
relatively constant, but higher general and administrative  expenses, which were
partially  offset by reduced  selling  expenses,  caused a reduction  in overall
operating income.

     Royalty income  totaled  $102,404 for the three months ended June 30, 2000,
compared to $57,920 for the same three months in 1999.  The increase of $44,484,
or 77%, was due to increased  start-up  license fees and increased  building and
barrier  royalties based on increased sales activity by the Company's  licensees
in the 2000 period as compared to the 1999 period.

                                       11
<PAGE>

     Interest  expense was  $140,987  for the three  months ended June 30, 2000,
compared to $134,817 for the three  months ended June 30, 1999.  The increase of
$6,170, or 5%, was primarily due to higher average levels of debt outstanding in
the 2000 period.

     Other income was $75,277 for the three months ended June 30, 2000  compared
to $43,788 for the three months ended June 30, 1999, an increase of $31,489. The
increase is  attributable  to the net  effects of  increases  in barrier  rental
income and an increase in income from miscellaneous sources.

     The net profit  was  $209,011  for the three  months  ended June 30,  2000,
compared to a net profit of $179,639 for the same period in 1999.  The basic and
diluted  net  profit  per share for the  current  three  month  period  was $.07
compared to basic and diluted net profit per share of $.06 for the three  months
ended June 30, 1999.


SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1999

     For the six months  ended June 30, 2000,  the Company had total  revenue of
$6,254,612 compared to total revenue of $7,781,436 for the six months ended June
30, 1999, a decrease of  $1,526,824, or 20%. The Company had lower product sales
of $5,055,127 for the six months ended June 30, 2000, compared to $6,089,207 for
the same period in 1999,  a decrease  of  $1,034,080, or 17%.  Sales of Easi-Set
Precast  Buildings,  Slenderwall and  particularly  soundwall were lower for the
first six months of 2000 while architectural  precast products and manhole sales
increased.  Slenderwall  sales declined because of the completion of the Bradley
Hall Project in 1999, while the decrease in building and soundwall sales reflect
a shift in the Company's  marketing  focus toward custom  architectural  precast
products  used in  commercial  building  construction.  Although  the lead  time
required  to secure  and  produce  contracts  for custom  architectural  precast
products is much greater, the Company's has been able to substantially  increase
its work  backlog  with the new focus.  Shipping  and  installation  revenue was
$1,199,485  for the six months ended June 30, 2000 and  $1,692,229  for the same
period in 1999, a decrease of $492,744, or 29%. The decrease was attributable to
lower overall sales of products requiring  installation and shipping in the 2000
period, as compared to the 1999 period.

     Total  cost of  goods  sold for the six  months  ended  June  30,  2000 was
$4,830,207, a decrease of $1,365,952, or 22%, from $6,196,159 for the six months
ended June 30,  1999.  The  majority of the decrease was the result of the lower
volume  of  sales.  Product  costs  also  decreased in 2000 from the 1999 levels
due to the impact of the higher costs of the Bradley Hall Project in the earlier
period.  Total  cost  of  goods  sold,  as  a  percentage  of   total   revenue,
decreased  to 77% for the six months ended June 30,  2000,  from 80% for the six
months  ended June 30, 1999 as lower product costs were only partially offset by
higher shipping expenses.

     For the  six  months  ended  June  30,  2000,  the  Company's  general  and
administrative expenses increased $206,229, or 20%, from $1,015,180 for the same
period in 1999.  The increase  occurred  primarily in  personnel  costs,  as the
Company filled vacant  positions, and  had higher personnel  recruitment  costs,
higher professional  fees from the  use  of  consultants,  and higher use  taxes
due on  Company installed product.

                                       12

<PAGE>

     Selling expenses for the six months ended June 30, 2000 decreased  $90,504,
or 32%, to $190,221 from  $280,725 for the six months ended June 30, 1999.  This
decrease was  primarily  the result of staffing reductions   with  the decreased
salary   and   commissions   expenses,  and a reduction in advertising costs for
the period.

     The Company's  operating  income for the six months ended June 30, 2000 was
$12,775,  compared to operating income of $289,372 for the six months ended June
30, 1999, a decrease of $276,597.  The reduction in operating  income was due to
the relatively low overall volume of sales combined with the increase in general
and administrative expenses.

     Royalty  income  totaled  $182,292  for the six months ended June 30, 2000,
compared to $108,489  for the same six months in 1999.  The  increase of $73,803
resulted  from higher  volume of royalty fees earned and licensee  start-up fees
from new licensees.

     Interest  expense  was  $277,112  for the six months  ended June 30,  2000,
compared to $253,389  for the six months  ended June 30,  1999.  The increase of
$23,723,  or 9%, was primarily  from higher  levels of average debt  outstanding
during the 2000 period.

     Other income was  $106,277 for the six months ended June 30, 2000  compared
to $39,222 for the six months ended June 30, 1999,  an increase of $67,055.  The
increase is  attributable  to the net  effects of  increases  in barrier  rental
income and an increase in income from miscellaneous sources.

     Net income was $59,607 for the six months ended June 30, 2000,  compared to
net  income  of  $207,760  for the same  period in 1999.  The basic and  diluted
earnings  per share for the current six month  period was $.02  compared to $.07
per share for the six months ended June 30, 1999.


LIQUIDITY AND CAPITAL RESOURCES

     The Company has financed its capital expenditures,  operating  requirements
and growth to date  primarily  with  proceeds  from  operations,  bank and other
borrowings,  and equity financing. The Company had $5,038,190 of indebtedness at
June 30, 2000, of which $760,256 was scheduled to mature within twelve months.

     In June 1998, the Company  successfully  restructured  substantially all of
its debt  into one  $4,000,000  note  with  First  International  Bank  ("FIB"),
formerly  the First  National  Bank of New England,  headquartered  in Hartford,
Connecticut.  The  Company  closed on this loan on June 25,  1998.  The  Company
obtained a twenty three year term on this note at 1.5% above  prime,  secured by
equipment  and  real  estate.  The term of the note  dramatically  improved  the
Company's current debt ratio and debt service. The loan is guaranteed in part by
the U.S.  Department of Agriculture  Rural  Business-Cooperative  Service's loan
guarantee.  Under the terms of the note,  the Company's  unfinanced  fixed asset
expenditures  are  limited  to  $300,000  per year for a five  year  period.  In
addition, FIB will permit chattel mortgages on purchased equipment not to exceed
$200,000  on an  annual  basis so long as the  Company  is not in  default.  The
Company  was also  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  extended  in May  2000,  and now has a  maturity  date of
September 1, 2000. On December 20, 1999, the Company  secured an

                                       13

<PAGE>

additional  term  loan of $500,000 from FIB. The term loan is payable in monthly
installments over a five year period and carries an interest rate of 1.75% above
prime.

     Capital  spending  totaled  $204,013 in the six month period ended June 30,
2000, which was a decrease of 49% from $403,948 in the comparable  period of the
prior year,  primarily  from the  completion,  in 1999,  of a 16,000 square foot
plant  addition  to the  Company's  facility in  Midland,  Virginia.  This plant
addition  was financed  with  restricted  funds  received in 1998 as part of the
$4,000,000 FIB loan as mentioned  above.  Planned capital  expenditures for 2000
are limited as stated above by the FIB loan agreement. No other significant cash
commitments for capital expenditures are planned in 2000.

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

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

OTHER COMMENTS

     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. As of June 30, 2000 the Company's backlog was approximately $5.5 million
versus a backlog of approximately $2.9 million as of June 30, 1999. As of August
14, 2000,  the  Company's  backlog had increased to  approximately  $6.6 million
versus a backlog of $2.9 for the comparable  period in 1999. The majority of the
projects  relating  to the backlog as of August 14,  2000 are  contracted  to be
constructed in 2000.

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

                                       14

<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.
         -----------------
     In June 2000,  the Company  received  notice of a personal  injury  lawsuit
filed by Kenneth R. Hughes and Braunya P. Hughes in the United  States  District
Court for the District of Columbia.  Mr. Hughes was a road  construction  worker
engaged in the  transportation  and relocation of pre-cast  concrete  barrier to
create  temporary  concrete walls at road  construction  sites for a third party
construction  company.  On or about June 20, 1997, Mr. Hughes suffered  injuries
when a barrier  section-coupling  device apparatus failed. The suit alleges that
the Company sold the  section-coupling  device to the third party contractor and
was  negligent in the design and  manufacture  of said barrier  section-coupling
device.  The suit seeks  $10,000,000 in compensatory  damages and $10,000,000 in
punitive damages.

     At this time,  Management believes the suit to be without merit however, as
the suit is in the pre- discovery  stage,  Management is attempting to determine
the facts surrounding the incident.

     Reference is made to Item 3 of the  Company's  Annual Report on Form 10-KSB
for the year ended December 31, 1999 for  information as to other reported legal
proceedings.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS.  NONE.
          -----------------------------------------

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.  NONE
          -------------------------------

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  NONE
          ---------------------------------------------------

ITEM 5.   OTHER INFORMATION.  NONE.
          -----------------

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.
          --------------------------------

          A. The following Exhibit is filed herewith:

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

                 27        Financial Data Schedule

          B. Reports on Form 8-K.   None.

                                       15

<PAGE>


                                   SIGNATURES


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

                            SMITH-MIDLAND CORPORATION




Date: August 18, 2000              By: /s/ Rodney I. Smith
                                   Rodney I. Smith
                                   Chairman of the Board,
                                   Chief Executive Officer and President
                                   (principal executive officer)


Date: August 18, 2000              By: /s/ Robert E. Albrecht, Jr.
                                   Robert E. Albrecht, Jr.
                                   Chief Financial Officer
                                   (principal financial officer)

                                       16



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