<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-KSB

                  Annual Report under Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
                  For the Fiscal Year Ended December 31, 2000
                        Commission File Number 1-13752

                               _________________


                           SMITH-MIDLAND CORPORATION
                           -------------------------
                (Name of Small Business Issuer in its Charter)


                Delaware                                        54-1727060
-------------------------------                            ---------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                             Identification No.)

P.O. Box 300, 5119 Catlett Road,
--------------------------------
 Midland, Virginia                                               22728
------------------                                             ------------
(Address of Principal Executive Offices)                       (Zip Code)


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

     Securities Registered Pursuant to Section 12(b) of the Exchange Act:

                                                       Name of Each Exchange on
Title of Each Class                                        Which Registered
-------------------                                    ------------------------

Common Stock, $.01 par value per share                 Boston Stock Exchange
Redeemable Common Stock Purchase Warrants              Boston Stock Exchange

     Securities Registered Pursuant to Section 12(g) of the Exchange Act:

                    Common Stock, $.01 par value per share
                    --------------------------------------
                               (Title of Class)

                   Redeemable Common Stock Purchase Warrants
                   -----------------------------------------
                               (Title of Class)
<PAGE>

     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 ___
                               ---

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  X
                                      ---

     The Issuer's revenues for its most recent fiscal year were $15,695,837.

The aggregate market value of the shares of Common Stock, held by non-
affiliates, based upon the average of the closing bid and asked prices for such
stock on March 20, 2001, was $2,049,437.

As of March 20, 2001, the Company had outstanding 3,050,798 shares of Common
Stock, $.01 par value per share.

                      Documents Incorporated By Reference
                      -----------------------------------
                                     None.

                                       2
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                                    PART I

                          FORWARD-LOOKING STATEMENTS


     This Annual Report and related documents include "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which could cause the Company's actual
results, performance (financial or operating) or achievements expressed or
implied by such forward looking statements not to occur or be realized. Such
forward looking statements generally are based upon the Company's best estimates
of future results, performance or achievement, based upon current conditions and
the most recent results of operations. Forward-looking statements may be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "believe," "estimate," "anticipate," "continue," or similar terms,
variations of those terms or the negative of those terms. Potential risks and
uncertainties include, among other things, such factors as:

     .    our high level of indebtedness and ability to satisfy the same,
     .    our significant loss in 1998 under a material contract, and the
          litigation arising out of that contract,
     .    our limited recent history of profitable operations,
     .    the continued availability of financing in the amounts, at the times
          and on the terms required, to support our future business and capital
          projects,
     .    the extent to which we are successful in developing, acquiring,
          licensing or securing patents for proprietary products,
     .    changes in economic conditions specific to any one or more of our
          markets (such as the availability of public funds and grants for
          construction),
     .    changes in general economic conditions (such as interest rate
          changes),
     .    adverse weather which inhibits the demand for our products,
     .    our compliance with governmental regulations,
     .    the outcome of pending and future litigation,
     .    on material construction projects, our ability to produce and install
          product that conforms to contract specifications and in a time frame
          that meets the contract requirements,
     .    the other factors and information disclosed and discussed in other
          sections of this report.

     Investors and shareholders should carefully consider such risks,
uncertainties and other information, disclosures and discussions which contain
cautionary statements identifying important factors that could cause actual
results to differ materially from those provided in the forward-looking
statements. We undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events or
otherwise.

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Item 1.  Description of Business
         -----------------------

         General

         Smith-Midland Corporation (the "Company") invents, develops,
manufactures, markets, leases, licenses, sells, and installs a broad array of
precast concrete products for use primarily in the construction, transportation
and utilities industries. The Company's customers are primarily general
contractors and federal, state and local transportation authorities located in
the Mid-Atlantic and Northeastern regions of the United States. The Company's
operating strategy has involved producing innovative and proprietary products,
including Slenderwall(TM), a patented, 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 Easi-Set(R)
transportable concrete buildings, also patented. In addition, the Company
produces generic highway sound barriers, utility vaults, farm products such as
cattleguards and water and feed troughs, and custom order precast concrete
products with various architectural surfaces.

         The Company was incorporated in Delaware on August 2, 1994. Prior to a
corporate reorganization completed in October 1994, the Company conducted its
business primarily through Smith-Midland Virginia, which was incorporated in
1960 as Smith Cattleguard Company, a Virginia corporation, and which
subsequently changed its name to Smith-Midland Corporation in 1985. The
Company's principal offices are located at 5119 Catlett Road, Midland, Virginia
22728 and its telephone number is (540) 439-3266. As used in this report, unless
the context otherwise requires, the term the "Company" refers to Smith-Midland
Corporation and its subsidiaries.

         Market

         The Company's market primarily consists of general contractors
performing public and private construction contracts, including the construction
of commercial buildings; public and private roads and highways; airports;
municipal utilities; and federal, state, and local transportation authorities,
primarily located in the Mid-Atlantic and Northeastern states. The Company also
licenses its proprietary products to precast concrete manufacturers nationwide
and in Puerto Rico, Canada, Belgium, New Zealand, and Spain. The Company, in
conjunction with the establishment of its Slenderwall(TM) exterior cladding
system, intends to expand the market in which it currently competes. The Company
believes that the annual market for exterior cladding in the Mid-Atlantic and
Northeast region is approximately $500 million and that the nationwide annual
market for exterior cladding products exceeds $2 billion based upon information
obtained by an independent third party.

         The precast concrete products market is affected by the cyclical nature
of the construction industry. In addition, the demand for construction varies
depending upon weather conditions, the availability of financing at reasonable
interest rates, overall fluctuations in the national and regional economies,
past overbuilding, labor relations in the construction industry, and the
availability of material and energy supplies. A substantial portion of the
Company's business is derived from local, state, and federal building projects,
which are further dependent upon budgets and, in many cases, voter-approved
bonds.

                                       4
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         Products

         Precast concrete products are cast at a manufacturing facility and
delivered to a site for installation, as contrasted to ready-mix concrete, which
is produced in a "batch plant," put into a mixer truck where it is mixed
thoroughly and delivered to a construction site to be poured and set at the
site. Precast concrete products are used primarily as parts of buildings or
highway structures, and may be used architecturally, as in a decorative wall of
a building, or structurally. Structural uses include building walls, frames,
floors, or roofs. The Company currently manufactures and sells a wide variety of
products for use in the construction, transportation and utility industries.

         Slenderwall(TM) Lightweight Construction Panels
         -----------------------------------------------

         Each Slenderwall(TM) system is a prefabricated, energy-efficient,
lightweight exterior cladding system that is offered as a cost-effective
alternative to the traditional, piecemeal construction of the exterior walls of
buildings. The Company's Slenderwall system combines the essential components of
a wall system into a single unit ready for interior dry wall mounting
immediately upon installation. The base design of each Slenderwall panel
consists of a galvanized or stainless steel stud frame with an exterior sheath
of approximately two-inch thick, steel-reinforced, high-density, precast
concrete, with various available architectural surfaces. The exterior concrete
sheath is attached to the interior frame by strategically placed epoxy coated
steel connectors that suspend the exterior concrete approximately one-half inch
away from the steel frame.

         Slenderwall panels are approximately one-half the weight of brick walls
of equivalent size, permanence and durability. This lighter weight translates
into reduced construction costs resulting from less onerous structural and
foundation requirements as well as lower shipping costs. Additional savings
result from Slenderwall's reduced installation time and ease of erection, and
from the use of smaller cranes for installation.

         The Company custom designs and manufactures each Slenderwall exterior
cladding system. The exterior of the Slenderwall systems can be produced in a
variety of attractive architectural finishes, such as concrete, exposed stone,
granite or thin brick.

         Easi-Set Sierra Wall(TM)
         ------------------------

         The Easi-Set Sierra Wall(TM)(the "Sierra Wall") combines the strength
and durability of precast concrete with a variety of finishes to provide an
effective and attractive sound and sight barrier for use around residential,
industrial, and commercial properties and alongside highways. With additional
reinforcement, the Sierra Wall can also be used as a retaining wall to retain
earth in both highway and residential construction. The Sierra Wall is typically
constructed of four-inch thick, steel-reinforced concrete panels that are
securely joined at an integral column by a tongue and groove connection system.
This tongue and groove connection system makes the Sierra Wall easy to install
and move if boundaries change or highways are relocated after the completion of
a project.

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         The Company custom designs and manufactures each Sierra Wall to conform
to the specifications provided by the contractor. The width, height, strength,
and exterior finish of each wall varies depending on the terrain and
application. In addition, the Company offers increased noise abatement benefits
through the use of DuriSol(R), an optional, durable and patented
sound-absorbing, material that can be cast onto the exterior of the Sierra Wall.
In January 1996, the Company entered into a licensing agreement with DuriSol,
Inc. of Ontario, Canada, ("DuriSol") permitting the Company to utilize the
DuriSol(R) sound-absorbing technology until January 20, 1999. Under the
Company's licensing agreement with DuriSol, the Company has an exclusive license
to use DuriSol in Virginia and a right of first refusal for any new proprietary
products developed by DuriSol. The Company pays a royalty to DuriSol equal to
$.25 per square foot of product manufactured using DuriSol. Effective January 1,
1999, this agreement was extended for five years ending December 31, 2003.

         The Sierra Wall is used primarily for highway projects as a noise
barrier as well as for residential purposes, such as privacy walls between
homes, security walls or windbreaks, and for industrial or commercial purposes,
such as to screen and protect shopping centers, industrial operations,
institutions or highways. The variety of available finishes enables the Company
to blend the Sierra Wall with local architecture, creating an attractive, as
well as functional, barrier.

         Easi-Set J-J Hooks(TM) Highway Safety Barrier
         ---------------------------------------------

         The Easi-Set J-J Hooks(TM) highway safety barrier (the "J-J Hooks
Barrier") is a crash tested and patented, positively connected, safety barrier
that the Company sells, rents, delivers, installs and licenses for use on
roadways to separate lanes of traffic, either temporarily for construction work
zone purposes or permanently for traffic control. Barriers are deemed to be
positively connected when the connectors on each end of the barrier sections are
interlocked with one another. The J-J Hooks Barriers interlock without the use
of a separate locking device. The primary advantage of a positive connection is
that a barrier with such a connection can withstand vehicle crashes at higher
speeds without separating. The Federal Highway Administration (the "FHWA") now
requires that states use only positively connected barriers which meet NCHRP350
crash test requirements. J-J Hooks Barrier met the requirements and received
NCHRP350 approval in March 1999.

         The proprietary feature of the J-J Hooks Barrier is the design of its
positive connection. Protruding from each end of a J-J Hooks Barrier section is
a fabricated bent steel connector, rolled in toward the end of the barrier (it
resembles the letter "J" when viewed from directly above). The connector
protruding from each end of the barrier is rolled identically so that when one
end of a barrier faces the end of another, the resulting "hooks" face each
other. To connect one section of a J-J Hooks Barrier to another, a contractor
merely positions the hook of an elevated section of the barrier above the hook
of a set section and lowers the elevated section into place. The positive
connection is automatically engaged.

         The Company believes that the J-J Hooks Barrier connection design is
superior to those of earlier highway safety barriers that were positively
connected through the "eye and pin" technique. Barriers incorporating this
technique have eyes or rings protruding from each end of

                                       6
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the barrier, which must be aligned during the setting process. Once set, a crew
inserts pins through the eyes and bolts the barrier sections together. Compared
to this technique, the J-J Hooks Barrier is easier and faster to install, and
remove, requires a smaller crew and eliminates the need for loose hardware to
make the connection.

         In November 1990, the FHWA approved the J-J Hooks Barrier for use on
federally-aided highway projects following the successful completion of crash
testing based on National Cooperative Highway Research Program criteria. The J-J
Hooks Barrier has also been approved for use in state funded projects by 39
states, plus Washington, D.C. and Puerto Rico. The Company is in various stages
of the application process in 11 states and believes that approval in some of
the states will be granted; however no assurance can be given that approval will
be received from any or all of the remaining states or that such approval will
result in the J-J Hooks Barrier being used in such states. In addition, the J-J
Hooks Barrier has been approved by the appropriate authorities for use in the
countries of Spain, Belgium, Germany, New Zealand and Chile.

         Easi-Set Precast Building and Easi-Span(TM)
         -------------------------------------------

         The Easi-Set Precast Building is a transportable, prefabricated,
single-story, concrete utility building designed to be adaptable to a variety of
uses ranging from housing communications operations, traffic control systems,
mechanical and electrical stations, to inventory or supply storage, restroom
facilities or kiosks. The Easi-Set Precast Building is available in a variety of
exterior finishes and in five standard sizes, or it can be custom sized. The
roof and floor of each Easi-Set Precast Building are manufactured using the
Company's patented post-tensioned system, which helps seal the buildings against
moisture. As a freestanding unit, the Easi-Set Precast Building requires no
poured foundations or footings and can be easily installed within a few hours.
After installation the building can be moved, if desired, and reinstalled in a
new location.

         The Company also offers Easi-Span(TM), a line of expandable precast
concrete buildings. Easi-Span(TM) is identical to and incorporates the
technology of the Easi-Set Precast Building, but is available in larger sizes
and, through its modular construction, can be combined in varied configurations
to permit expansion capabilities.

         The Company has sold its Easi-Set and Easi-Span Precast Buildings for
the following uses:

         .     Communications Operations -- to house fiber optics regenerators,
               switching stations and microwave transmission shelters, cellular
               phone sites, and cable television repeater stations.

         .     Government Applications -- to federal, state and local
               authorities for uses such as weather and pollution monitoring
               stations; military storage, housing and operations; park vending
               enclosures; rest rooms; kiosks; traffic control systems; school
               maintenance and athletic storage; airport lighting control and
               transmitter

                                       7
<PAGE>

               housing; and law enforcement evidence and ammunition storage.

         .     Utilities Installations -- for electrical switching stations and
               transformer housing, gas control shelters and valve enclosures,
               water and sewage pumping stations, and storage of contaminated
               substances or flammable materials which require spill
               containment.

         .     Commercial and Industrial Locations -- for electrical and
               mechanical housing, cemetery maintenance storage, golf course
               vending enclosures, mechanical rooms, rest rooms, emergency
               generator shelters, gate houses, automobile garages, hazardous
               materials storage, food or bottle storage, animal shelters, and
               range houses.

         Easi-Set Utility Vault
         ----------------------

         The Company produces a line of precast concrete underground utility
vaults ranging in size from 36 to 702 cubic feet. Each Easi-Set utility vault
normally comes with a manhole opening on the top for ingress and egress and
openings around the perimeter, in accordance with the customer's specifications,
to access water and gas pipes, electrical power lines, telecommunications
cables, or other such media of transfer. The utility vaults may be used to house
equipment such as cable, telephone or traffic signal equipment, and for
underground storage. The Company also manufactures custom-built utility vaults
for special needs.

         Sources of Supply

         All of the raw materials necessary for the manufacture of the Company's
products are available from multiple sources. To date, the Company has not
experienced significant delays in obtaining materials and believes that it will
continue to be able to obtain required materials from a number of suppliers at
commercially reasonable prices.

         Licensing

         The Company presently grants licenses, through it's wholly-owned
subsidiary Easi-Set Industries, for the manufacturing and distribution rights of
certain proprietary products, such as the J-J Hooks Barrier, Easi-Set and Easi-
Span Precast Buildings and Slenderwall(TM), as well as certain non-proprietary
products, such as the Company's cattleguards, and water and feed troughs.
Generally, licenses are granted for defined geographic regions, and depending on
the size, character and location of the territory granted, the Company receives
an initial one-time license acquisition and training fee ranging from
approximately $20,000 to $50,000. License royalties vary depending on the
product licensed, but the range is typically between 4% to 6% of the sales of
the licensed product. In addition, Easi-Set Precast Building and Slenderwall(TM)
licensees pay the Company a flat monthly fee for co-op advertising and promotion
programs through which the Company produces and distributes advertising
materials and promotes the licensed products.

                                       8
<PAGE>

         The Company has entered into 26 licensing agreements in the United
States, and has established at least one licensee in each of Puerto Rico,
Canada, Belgium, New Zealand, and Spain and sub-licensees in Canada and Chile.

         The Company is currently negotiating several new license arrangements
and, although no assurance can be given, expects to increase its licensing
activities. The Company recently completed its first licensing arrangement for
its Slenderwall(TM) exterior cladding system.

         Marketing and Sales

         The Company uses an in-house sales force and, to a lesser extent,
independent sales representatives to market its precast concrete products
through trade show attendance, sales presentations, advertisements in trade
publications, and direct mail to end users.

         The Company has also established a cooperative advertising program in
which the Company and its Easi-Set and Easi-Span licensees combine resources to
promote certain precast concrete products. Licensees pay a flat monthly fee and
the Company pays any additional amounts required to advertise the products
across the country. Although the Company advertises nationally, the Company's
marketing efforts are concentrated on the region within a 250-mile radius from
its facilities, which includes most of Virginia, Delaware, the District of
Columbia, Maryland, North Carolina, South Carolina, and parts of Pennsylvania,
New York, New Jersey and West Virginia.

         The Company's sales result primarily from the submission of estimates
or proposals to general contractors who then include the estimates in their
overall bids to various government agencies and other end users that solicit
construction contracts through a competitive bidding process. In general, these
contractors solicit and obtain their construction contracts by submitting the
most attractive bid to the party desiring the construction. The Company's role
in the bidding process is to provide estimates to the contractors desiring to
include the Company's products or services in the contractor's bid. If a
contractor who accepts the Company's bid is selected to perform the
construction, the Company provides the agreed upon products or services. In many
instances, the Company provides estimates to more than one of the contractors
bidding on a single project. The Company occasionally negotiates with and sells
directly to end-users.

         Competition

         The precast concrete industry is highly competitive and consists of a
few large companies and many small to mid-size companies, several of which have
substantially greater financial and other resources than the Company.
Nationally, the precast concrete market is dominated by several large companies.
However, due to the weight and costs of delivery of precast concrete products,
competition in the industry tends to be limited by geographical location and
distance from the construction site and is fragmented with numerous
manufacturers in a large local area.

                                       9
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         The Company believes that the principal competitive factors for its
products are price, durability, ease of use and installation, speed of
manufacture and delivery time, ability to customize, FHWA and state approval,
and customer service. The Company believes that its plants in both Midland,
Virginia and Reidsville, North Carolina compete favorably with respect to each
of these factors in the Northeast and Mid-Atlantic regions of the United States.
Finally, the Company believes it offers a broad range of products that are
unique and technologically superior to competing products.


         Patents and Proprietary Information

         The Company holds U.S. and Canadian patents for the J-J Hooks Barrier
and the Easi-Set Precast Building, and a U.S. patent for the Slenderwall
exterior cladding system. The European patent for J-J Hooks Barrier was allowed
in December 1997 and has been registered in eleven European countries. The
earliest of the issued patents considered material to the Company's business
expires in 2001 and a new patent, with respect to this product, was allowed
March 2, 1999 which expires in 2017. The Company also owns three U.S. registered
trademarks (Easi-Set(R), Smith Cattleguard(R), and Smith-Midland Excellence in
Precast Concrete(R)), one Canadian registered trademark (Easi-Set(R)) and
licenses the rights to another (DuriSol(R)). The Company licenses the technology
used in DuriSol(R) products pursuant to an agreement that expires on December
31, 2003.

         While the Company intends to vigorously enforce its patent rights
against infringement by third parties, no assurance can be given that the
patents or the Company's patent rights will be enforceable or provide the
Company with meaningful protection from competitors or that its patent
applications will be allowed. Even if a competitor's products were to infringe
patents held by the Company, enforcing the patent rights in an enforcement
action would be very costly, and assuming the Company has sufficient resources,
would divert funds and resources that otherwise could be used in the Company's
operations. No assurance can be given that the Company would be successful in
enforcing such rights, that the Company's products or processes do not infringe
the patent or intellectual property rights of a third party, or that if the
Company is not successful in a suit involving patents or other intellectual
property rights of a third party, that a license for such technology would be
available on commercially reasonable terms, if at all.

         Government Regulation

         The Company frequently supplies products and services pursuant to
agreements with general contractors who have entered into contracts with federal
or state governmental agencies. The successful completion of the Company's
obligations under such contracts is often subject to the satisfactory inspection
or approval of such products and services by a representative of the contracting
agency. Although the Company endeavors to satisfy the requirements of each such
contract to which it is a party, no assurance can be given that the necessary
approval of its products and services will be granted on a timely basis or at
all and that the Company will receive any payments due to it. Any failure to
obtain such approval and payment may have a material adverse effect on the
Company's business.

                                       10
<PAGE>

         The Company's operations are subject to extensive and stringent
governmental regulations including regulations related to the Occupational
Safety and Health Act (OSHA) and environmental protection. The Company believes
that it is substantially in compliance with all applicable regulations. The cost
of maintaining such compliance is not considered by the Company to be
significant.

         The Company's employees in its manufacturing division operate
complicated machinery that may cause substantial injury or death upon
malfunction or improper operation. The Company's manufacturing facilities are
subject to the workplace safety rules and regulations of OSHA. The Company
believes that it is in compliance with the requirements of OSHA.

         During the normal course of its operations, the Company uses and
disposes of materials, such as solvents and lubricants used in equipment
maintenance, that are classified as hazardous by government agencies that
regulate environmental quality. The Company attempts to minimize the generation
of such waste as much as possible, and to recycle such waste where possible.
Remaining wastes are disposed of in permitted disposal sites in accordance with
applicable regulations.

         A Phase I Environmental Site Assessment of the Company's Midland
facility was completed in January, 1997. Only two minor recommendations were
made as a result of the survey. These were addressed and corrected.

         In the event that the Company is unable to comply with the OSHA or
environmental requirements, the Company could be subject to substantial
sanctions, including restrictions on its business operations, monetary liability
and criminal sanctions, any of which could have a material adverse effect upon
the Company's business.

         Employees

         As of March 23, 2001, the Company had 140 full-time and 2 part-time
employees, 116 of which are located at the Company's Midland facility, and 26 of
which are located at the Company's facility located in Reidsville, North
Carolina. Of the 142 employees, 11 are executive officers or managers, 4 are
responsible for sales and marketing, 113 are in manufacturing, and 14 are
administrative personnel. None of the Company's employees are represented by
labor organizations and the Company is not aware of any activities seeking such
organization. The Company considers its relationships with its employees to be
satisfactory.


Item 2.  Description of Property
         -----------------------

         Facilities

         The Company operates two manufacturing facilities. The primary
manufacturing operations are conducted in a 44,000 square foot manufacturing
plant on approximately 22 acres of land in Midland, Virginia, of which
approximately 19 acres are owned by the Company and three acres are leased from
Rodney I. Smith, the Company's President, at an annual rental rate of

                                       11
<PAGE>

$6,000. The manufacturing facility houses two concrete mixers and one concrete
blender. The plant also includes two environmentally controlled casting areas,
two batch plants, a form fabrication shop, a welding and metal fabrication
facility, a carpentry shop, and a quality control center. The Company's Midland
facility also includes a large storage yard for inventory and stored materials.

         The Company completed a 16,000 square foot manufacturing building on
its Midland property during the first quarter of 1999 and, in view of the
additional capacity, discontinued performing a portion of its concrete pouring
and curing processes on uncovered, outdoor manufacturing areas. Such outdoor
processing was adversely affected by wet or cold weather and bringing these
operations under roof significantly increased production capacity and
efficiency.

         In addition, the Company carries out administration, sales and
marketing, and licensing operations in a 4,500 square foot office building
located on its Midland property. In the second quarter of 2000, the Company
completed a new 3,456 square foot office building on its Midland property to
provide additional work space for its engineering department, which occupies
1,728 feet of the building, and its purchasing office and store room, which
occupies the other 1,728 square feet. The Company also owns 19 acres of
undeveloped industrial property in Midland, not adjacent to the manufacturing
facility.

         The Company's second manufacturing facility is located in Reidsville,
North Carolina on five acres of owned land and includes an 8,000 square foot
manufacturing plant and administrative offices.

         The Company believes that its present facilities are adequate for its
current needs and that they are adequately covered by insurance. Substantially
all of the Company's facilities and equipment were used as collateral for a
$4,000,000 twenty three year note which resulted from a restructuring of the
Company's debt in June 1998 (see "Liquidity and Capital Resources").

Item 3.  Legal Proceedings
         -----------------

         In 1998, the Company began work on a contract to renovate the Bradley
Hall building (the "Bradley Hall project") at Rutgers University ("Rutgers").
The Bradley Hall project, which was completed in October 1999, involved the
design, production, and installation of Slenderwall(TM) 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(TM)
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. In that the Company was suffering losses on the project
and was unable to fund its commitments, in January 1999, the Company entered
into an agreement with Seacoast Builders Corporation ("Seacoast"), the prime
contractor for the project. Pursuant to the agreement, Seacoast agreed to
finance the cost of labor and small tools for the balance of the installation
phase of the project commencing January 13, 1999, (ii) the Company remained
responsible for the other services and materials required for the project,
including provision of the Slenderwall(TM) system, (iii) the Company was
required to reimburse Seacoast out of payments due the Company for Seacoast's
expenses plus 10% for overhead, and (iv) the Company remained liable for cost
overruns for which the Company was originally responsible for (the "Seacoast
Agreement"). The cost overruns over the course of the entire project totaled
approximately $1.6 million and the total loss to the Company on the job, before
recovery on any claims by the Company, totaled approximately $1.45 million,
which was recognized in fiscal 1999. Seacoast has filed claims in 1999 on the
Company's behalf, in the amount of $1.1 million. All conditions for claim
recognition have been satisfied and as of December 31, 2000 and 1999, $497,000
of the contract claim was included in accounts receivable. The Company believes
that, based on the specific facts and circumstances and prior experience in
claims settlement, it will ultimately collect the recorded claim receivable.

                                      12
<PAGE>

         On February 15, 2000, Seacoast filed a suit in New Jersey Superior
Court in Monmouth County against Rutgers, Grad Associates, P.A., the architect
for the Bradley Hall project, and the Company. With respect to the Company,
Seacoast alleges, among other things, that the Company failed to pay Seacoast
$1,141,571 invoiced to the Company pursuant to the Seacoast agreement, that the
Company failed to pay sub-contractors and suppliers, and that the Company did
not complete all of the work and obligations required for the project. Seacoast
has indicated that it has withheld $386,753 from the Company to offset the
amount it alleges is due and owing from the Company. Seacoast claims that the
Company is liable to it with respect to all of the matters indicated above, as
well as any liquidated damages that may be assessed against Seacoast by Rutgers.
The actual amount of damages sought by Seacoast against the Company are not
specified. The Company has denied that it has any liability to Seacoast, and
asserts, among other things, it dutifully performed the work required of it
until such time as conditions beyond its control interfered with, frustrated,
and interrupted its performance. Moreover, the Company has asserted that the
conditions under which it was to perform its obligations related to the Bradley
Hall project materially changed. The Company has counterclaimed against Seacoast
in an amount in excess of $1,126,955 for Seacoast's failure to pay the Company
for the additional work performed by it. In addition, the Company has filed a
third party complaint against Sky-Lift Corporation ("Sky-Lift"), the initial
subcontractor responsible for installation of the Slenderwall(TM) panels. The
Company had entered into a sub-subcontract with Sky-Lift for the installation of
hardware required to attach the Slenderwall(TM) building panels and the erection
of the Slenderwall(TM) building panels. The Company has asserted that Sky-Lift
abandoned its work on the project causing the Company to sustain damages in
excess of $1,000,000, for which the Company is seeking damages. The Company also
seeks indemnification from Sky-Lift for any damages that may be found to be
owing by the Company to Seacoast.

         The Company also separately commenced a suit, in October 1999, against
Sky-Lift in the Supreme Court of New York, County of Westchester. The complaint
essentially covers the same matters as described in the third party action
disclosed in the immediately preceding paragraph.

         On June 7, 1999, Construction Services, Inc. ("CSI"), the second
subcontractor responsible for installation of the Slenderwall(TM) panels, filed
a complaint against the Company in the United States District Court for the
District of New Jersey. CSI alleges that it properly performed its work and that
the Company, without cause, terminated CSI. CSI was seeking in excess of
$150,000 for work performed, equipment/materials supplied and lost profits on
the uncompleted portion of the work. In July 2000, the Company and CSI reached
an agreement to settle the suit for $75,000, payable in a combination of cash
and an installment payment arrangement from the Company.

                                       13
<PAGE>

         On March 6, 2000, AmQuip Corporation ("AmQuip"), an equipment leasing
company, brought a suit against Seacoast, the Company, and Safeco Insurance
Company of America, the surety on a payment and performance bond for the Bradley
Hall project. AmQuip alleges that it provided goods and services requested by
the Company with respect to the Bradley Hall project, but was never paid. In
June 2000, AmQuip and the Company reached an agreement to settle their portion
of the suit for $31,000, payable in a combination of cash and an installment
payment arrangement from the Company.

         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. Management believes the suit to be without merit as there is
no evidence that indicates that the Company either sold or manufactured the
section-coupling device in question. The Company plans to vigorously defend its
position, and believes that any settlement will not adversely affect the
financial statements.

         In January 2001, the Company received notice of a wrongful death
lawsuit filed by the Estate of Joy V. Synder and her surviving Children in the
Circuit Court of Prince George's County Maryland. On or about March 12, 1998,
Ms. Synder was involved in an automobile accident whereby the rear of her
vehicle was struck by another vehicle, which caused her to leave the highway and
run into the back of a tractor-trailer owned by the Company, causing her death.
The tractor-trailer was parked on the shoulder to deliver sound abatement panels
to a Maryland State Highway Administration project. The suit names the Company,
the tractor-trailer driver, the general contractor, and the Maryland State
Highway Administration as defendants, alleging negligence as to the truck's
location on the shoulder of the highway and asks for damages in the amount of
$8,000,000 plus interest and costs. The Company believes that it's driver was
parked properly in accordance with instructions received from the general
contractor and that the accident was entirely a result of the negligence by the
driver that hit Ms. Synder, not any of the parties named in the suit. The
Company plans to vigorously defend its position, and believes that any
settlement will not adversely affect the financial statements.

         The Company is not presently involved in any other litigation of a
material nature.

                                       14
<PAGE>

Item 4.  Submission of Matters to Vote of Security Holders
         -------------------------------------------------

         On November 20, 2000 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                    2,916,442              16,650
         Ashley B. Smith                    2,916,442              16,650
         Wesley A. Taylor                   2,916,442              16,650
         Andrew Kavounis                    2,916,442              16,650

2.   An amendment to the Smith-Midland Corporation 1994 Stock Option Plan to
     increase the number of shares authorized to be issued under the plan to
     575,000 shares. In this connection, 1,535,624 shares voted for the
     amendment, 36,393 shares voted against the amendment and 8,550 shares
     abstained. In addition, 1,352,525 shares were subject to broker non-votes.

3.   The ratification of the selection by the Board of Directors of BDO Seidman
     LLP as independent auditors for the year ending December 31, 2000. In this
     connection, 2,918,492 shares voted for ratification, 1,600 shares voted
     against ratification, and 13,000 shares abstained.

                                    PART II

Item 5.  Market for Common Equity and Related Stockholder Matters
         --------------------------------------------------------

         The Company's Common Stock has traded on the Boston Stock Exchange
("BSE") under the symbol "SMC" since December 13, 1995. The Company's Common
Stock also trades on the OTC Bulletin Board System under the symbol "SMID".
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 minimum requirements.

          As of March 30, 2001, there were approximately 46 record holders of
the Company's Common Stock. Management believes there are at least 335
beneficial owners of the Company's Common Stock.

                                       15
<PAGE>

         The following table sets forth the high and low closing prices for the
Company's Common Stock for the periods indicated. Such information was obtained
from Commodity Systems, Inc. (CSI) The quotations represent interdealer
quotations without adjustment for retail markups, markdowns or commissions and
may not represent actual transactions.

                                                 High             Low
1999                                             ----             ---
First Quarter                                  $ 1 1/16         $  9/16
Second Quarter                                 $ 1              $  1/2
Third Quarter                                  $ 1              $ 10/16
Fourth Quarter                                 $ 1              $  3/8

2000
First Quarter                                  $   3/4          $  9/16
Second Quarter                                 $   7/8          $  7/16
Third Quarter                                  $  15/16         $  7/16
Fourth Quarter                                 $   3/4          $  3/8


         In 1999, the stockholders of the Company 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 has 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.

         Dividends

         The Company has not paid dividends on its Common Stock since its
inception and has no intention of paying any dividends to its stockholders in
the foreseeable future. The Company currently intends to reinvest earnings, if
any, in the development and expansion of its business. The declaration of
dividends in the future will be at the election of the Board of Directors and
will depend upon earnings, capital requirements and financial position of the
Company, general economic conditions and other pertinent factors. The Company's
current loan agreement with First International Bank prohibits the payment of
dividends to stockholders without the bank's prior written consent, except for
dividends paid in shares of the Company's Common Stock.

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
of Operations
-------------

         The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company (including the Notes thereto)
included elsewhere in this report.

         General

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

                                      16
<PAGE>

         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 was
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
December 31, 2000, $497,000 of the contract claim was included in accounts
receivable, of which $97,000 was recorded as income in 1999 versus $400,000 in
1998. 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 the specific facts and circumstances and prior
experience in claims settlement, it will ultimately collect the recorded claim
receivable.

         Results of Operations

         Year ended December 31, 2000 compared to the year ended December 31,
1999

         The Company's operations for 2000 resulted in net income of $593,373 or
0.19 per share, representing an increase in net income of $551,098 when compared
to the income in 1999 of $42,275, or $0.01 per share.

         Total revenue for 2000 was $15,695,837 compared to $14,432,749 recorded
in 1999, an increase of 9%. Total product sales increased by $1,309,191, or 11%
to $13,152,570 in 2000, compared to $11,843,379 in 1999. The increase in product
sales was due to higher levels of commercial construction in the Company's
primary markets, resulting in record sales of architectural products which was
partially offset by decreases in Slenderwall(TM), building sales, and soundwall
sales. The Company also recorded increases in the sales of highway barrier and
utility products. Soundwall and highway barrier sales, in particular, are
heavily dependent on Local, State, and Federal highway contracts and can
fluctuate accordingly. Unit prices have not changed significantly. Shipping and
installation revenue decreased slightly $2,543,267 in 2000 from $2,589,370 in
1999, a decrease of $46,103, or 2%, attributable to a slight decrease in the
size of installation contracts.

                                       17
<PAGE>

         Commercial construction activity has remained strong in the Company's
primary markets allowing the Company to accumulate an unfilled order backlog of
approximately $8.5 million as of March 31, 2001, versus approximately $4.3
million as of March 31, 2000.

         Royalty revenue increased from $326,239 in 1999 to $339,816 in 2000, an
increase of $13,577, or 4%. The increase was attributed to an increase in
royalty fees earned on production of Easi-Set(R) barrier and start-up fees from
new licensees.

         Total cost of goods sold for 2000 was $12,025,768 compared to
$11,185,901 in 1999, an increase of $839,867. Although the product mix was
different, the total cost of goods sold as a percentage of total revenue
remained relatively constant at 77% in 2000 versus 78% in 1999. The overall
dollar increase resulted from the higher sales volume in 2000 compared to 1999.

         General and administrative expenses decreased $41,268, or 2%, to
$2,345,594 in 2000 from $2,386,862 in 1999. The decrease was the result of lower
expenses related to telephones, depreciation and lower provision for bad debts,
as the Company sought to control expenses and limit its credit exposure, offset
by increases in dues and subscriptions, insurance, and legal expenses.

         Selling and marketing expenses in 2000 were lower compared to 1999 by
$93,990 or 16%. Total selling and marketing expenses were $489,510 in 2000
compared with $583,500 in 1999. The decrease was due primarily to a temporary
reduction in staff, lower commissions paid to outside sales people, and
reductions in the expenditures for advertising. In 2001, the Company intends to
fill the sales and marketing staff vacancies, as well as increase the
expenditures for advertising in anticipation of a possible slowdown in
commercial construction activity.

         Interest expense and loan fees rose slightly to $554,638 in 2000 from
$543,770 in 1999. Although the Company had higher average levels of debt
outstanding in 2000, the weighted average interest rate on the outstanding debt
remained relatively constant.

         As a result of cumulative net operating loss ("NOL") carryforwards of
approximately $2,618,000 available to the Company as of January 1, 2000, no
income tax expense was recorded for 2000. The Company does not expect to incur
income tax expense for 2001 due to the NOL carryforwards.

         Liquidity and Capital Resources

         The Company has financed its capital expenditures, operating
requirements and growth to date primarily with proceeds from operations, and
bank and other borrowings.The Company had $4,893,021 of indebtedness at December
31, 2000, of which $524,305 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. Current debt decreased from
$2,199,228 at December 31, 1997 to $524,305 at December 31, 2000. In addition to
paying off existing 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. 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 renewed in May
2000, and now has a maturity date of May 1, 2001. The Company has agreed with
the FIB to extend the line of credit upon its extended maturity date. On
December 20, 1999, the Company secured an additional term loan of $500,000 from
FIB. The term loan is payable in monthly installments over a five year period
and carries an interest rate of 1.75% above prime.

                                      18
<PAGE>

         At December 31, 2000, the Company had cash totaling $218,264 compared
to cash totaling $374,190, at December 31, 1999. During 2000, the Company
received $220,674 in cash (net) from its financing activities, and used $429,966
in its investing activities, primarily for the funding of new equipment and the
Engineering Building (see "Item 2. Description of Properties - Facilities"). The
Company's operating activities provided cash of $53,366 (net) after deducting
the resources required to fund the Company's growth. The Company expects more
moderate sales growth in 2001, which would limit the funding required for higher
accounts receivable or inventory.

         Capital spending decreased to $437,613 in 2000, from $537,073 in 1999,
as the Company completed construction on the new production facility in early
1999 and the new engineering building in June 2000. No other significant cash
commitments are anticipated and planned expenditures for 2001 are limited as
stated above, by the FIB loan agreement.

         As a result of the Company's debt burden, the Company is especially
sensitive to changes in the prevailing interest rates. Increases 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.

         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 before it receives payment. Although no assurance can be given, the
Company believes that anticipated cash flow from operations with adequate
project management on jobs, and existing credit facilities will be sufficient to
finance the Company's operations for at least the next 12 months. 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 financing, for which there can be no assurance of obtaining.

                                       19
<PAGE>

         Seasonality

         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 may experience reduced revenues from
December through February and realize the substantial part of its revenues
during the other months of the year. The Company may experiences lower profits,
or losses, during the winter months, and as such, must have sufficient working
capital to fund its operations at a reduced level until the spring construction
season. The failure to generate or obtain sufficient working capital during the
winter may have a material adverse effect on the Company.

         Inflation

         To date, management believes that the Company's operations have not
been materially affected by inflation.

         Recent Accounting Pronouncements

         In June 1998, The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS 133,
which was subsequently amended by SFAS 138 "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Presently the Company does
not use derivative instruments either in hedging activities or as investments.
Accordingly, the adoption of SFAS 133 had no impact on its financial position or
results of operations.

         The Securities and Exchange Commission ("SEC") has issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements ("SAB
101"). SAB 101 is effective in the fourth quarter of fiscal years beginning
after December 15, 1999. SAB 101 summarizes appropriate criteria to be
considered in determining recognition of revenue. Adoption of SAB 101 did not
have a material impact on the Company's financial position or results of
operations.

         In March 2000, the FASB issued interpretation No. 44 ("FIN 44"),
Accounting for Certain Transactions Involving Stock Compensation, an
Interpretation of APB Opinion No. 25. FIN 44 clarifies the application of APB
No. 25 for:
         a) the definition of employees for purposes of applying APB 25,
         b) the criteria for determining whether a plan qualifies as a non-
            compensatory plan,
         c) the accounting consequences of various modifications to the
            previously fixed stock option or award, and,
         d) the accounting for an exchange of stock compensation awards in a
            business combination.
FIN 44 became effective July 2, 2000 but certain conclusions cover specific
events that occur after either December 15, 1998 or January 12, 2000. The
Company believes that adoption of FIN 44 in 2000 did not have a material effect
on the Company's financial statements but may impact the accounting for grants
or awards in future periods.

                                      20
<PAGE>

Item 7.  Financial Statements
         --------------------

         The following financial statements are filed as part of this report:


<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>                                                                                          <C>
Report of Independent Certified Public Accountants.........................................   F-3

Consolidated Balance Sheets as of December 31, 2000 and 1999...............................   F-4

Consolidated Statements of Operations for the years ended December 31, 2000 and 1999.......   F-5

Consolidated Statements of Changes in Stockholders' Equity for the years ended December
31, 2000 and 1999..........................................................................   F-6

Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 1999.......   F-7

Summary of Significant Accounting Policies.................................................   F-9

Notes to Consolidated Financial Statements ................................................  F-13
</TABLE>

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         ---------------------------------------------------------------
         Financial Disclosure
         --------------------

         Not Applicable.

                                       21
<PAGE>

                                   PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         -------------------------------------------------------------
         Compliance with Section 16(a) of the Exchange Act
         -------------------------------------------------


                                  Director Or
                                   Executive
Name                       Age   Officer Since    Position
----                       ---   -------------    --------

Rodney I. Smith             62     1970           Chief Executive Officer,
                                                  President and Chairman of the
                                                  Board of Directors

Ashley B. Smith             38     1994           Vice President of Sales and
                                                  Marketing and Director

Wesley A. Taylor            53     1994           Vice President of
                                                  Administration and Director

Andrew G. Kavounis          75     1995           Director

Guy M. Schuch               52     1999           Chief Operating Officer
                                                  Smith Midland Corp. (Virginia)

James W. Dean               63     2000           Vice President of Engineering
                                                  Smith-Midland Corp. (Virginia)

Robert E. Albrecht, Jr.     50     2000           Chief Financial Officer


Background

         The following is a brief summary of the background of each Director,
executive officer and key employee of the Company:

Rodney I. Smith. Chairman of the Board of Directors, Chief Executive Officer and
President. Rodney I. Smith co-founded the Company in 1960 and became its
President and Chief Executive Officer in 1965. He has served on the Board of
Directors and has been its Chairman since 1970. Mr. Smith is the principal
developer and inventor of the Company's proprietary and patented products. Mr.
Smith is the past President of the National Precast Concrete Association. Mr.
Smith has served on the Board of Trustees of Bridgewater College in Bridgewater,
Virginia since 1986.

Ashley B. Smith. Vice President of Sales and Marketing and Director. Ashley B.
Smith has served as Vice President of Sales and Marketing of the Company since
1990 and as a Director since December 1994. Mr. Smith holds a Bachelor of
Science degree in Business Administration from Bridgewater College. Mr. Ashley
B. Smith is the son of Mr. Rodney I. Smith.

                                       22
<PAGE>

Wesley A. Taylor. Vice President of Administration and Director. Wesley A.
Taylor has served as Vice President of Administration of the Company since 1989
and as a Director since December 1994, and previously held positions as
Controller and Director of Personnel and Administration. Mr. Taylor holds a
Bachelor of Arts degree from Northwestern State University.

Andrew Kavounis. Director. Andrew Kavounis has served as a Director of the
Company since December 1995. Mr. Kavounis was President of Core Development Co.,
Inc., a privately held construction and development concern from 1991 until he
retired in 1995. From 1989 to 1991, Mr. Kavounis was the Executive Vice
President of the Leadership Group, a Maryland based builder and developer. Prior
to that time, Mr. Kavounis spent 37 years as an executive at assorted
construction and development companies, which included a position as the
National Vice President of Ryland Homes, a privately held company, in which
capacity he was directly responsible for the construction of 17,000 homes
annually, nationwide. Mr. Kavounis received a Bachelor of Science degree in
Chemical Engineering from Presbyterian College, a Bachelor of Science degree in
Civil and Mechanical Engineering from Wofford College, and a Master's degree in
Business Administration from the University of South Carolina.

Guy M. Schuch. Chief Operating Officer, Smith Midland Corp.(Virginia). Mr.
Schuch has served as Chief Operating Officer of Smith-Midland (Virginia), the
Company's primary operating subsidiary, since joining the Company in May, 1999.
Mr. Schuch was Production Manager for Southdown Corporation, a manufacturer of
cement, from 1995 to 1998 and was a Plant Manager for LaFarge Corporation, a
manufacturer of cement, from 1979 to 1995. Mr. Schuch holds a Master of Science
degree in Industrial Engineering from Stanford University, and a Bachelor of
Science degree in Mechanical Engineering from the Arts et Metiers School of
Engineering in Paris, France.

James W. Dean. Vice President of Engineering, Smith Midland Corp.(Virginia). Mr.
Dean re-joined the company in November 2000. Prior to re-joining the Company,
from November 1994 to October 2000, Mr. Dean worked for a concrete erector,
Concrete Placement Systems. From December 1984 to October 1994, he served as the
Vice President of Operation for Smith-Midland Corporation (Virginia). Mr. Dean
holds a Bachelor of Science degree in Civil Engineering from Virginia
Polytechnic Institute.

Robert E. Albrecht, Jr. Chief Financial Officer. Mr. Albrecht Joined the Company
as Controller in August 1999 and has served as Chief Financial Officer of the
Company since January 1, 2000. Prior to joining the Company, Mr. Albrecht was
CFO and Controller of Omega World Travel, Inc., a travel agency, from 1996 to
1999. Mr. Albrecht is a Certified Public Accountant and holds a Bachelor of Arts
degree in Accounting from the College of William and Mary.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) ("Section 16(a)") of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires executive officers and Directors and
persons who beneficially own more than ten percent (10%) of the Company's Common
Stock to file initial reports of

                                       23
<PAGE>

ownership on Form 3 and reports of changes in ownership on Form 4 with the
Securities and Exchange Commission (the "Commission") and any national
securities exchange on which the Corporation's securities are registered.

     Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and Directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, Directors and greater than ten per cent (10%) beneficial
owners were satisfied, except for the Form 3 and Form 4 filings due for the
following transactions.

Item 10.  Executive Compensation.
          -----------------------

     The following table sets forth the compensation paid by the Company for
services rendered for the last three completed fiscal years to the executive
officers of the Company and its subsidiaries (the "named executive officer"),
whose cash compensation exceeded $100,000 during 2000:


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                       Annual Compensation                          Long Term Compensation
----------------------------------------------------------------------------------------------------------------------
                                                                                Awards                 Payouts
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
                                                                                     Securities
                                                               Other                  Under-                   All
        Name and                                               Annual    Restricted    Lying                  Other
        Principal                                             Compen-      Stock     Options/      LTIP      Compen-
        Position             Year       Salary      Bonus      sation      Awards      SARs      Payouts     Sation
                                          $           $          $           $          (#)         $           $
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>       <C>         <C>        <C>        <C>         <C>         <C>         <C>
     Rodney I. Smith         2000      175,000     54,500        -           -           -          -           -
    President, Chief         1999      156,825     54,500        -           -        20,000        -           -
    Executive Officer        1998      175,000     54,500        -           -        20,000        -           -
   and Chairman of the
         Board.

      Guy M. Schuch          2000      108,745        -          -           -           -          -           -
 Chief Operating Officer     1999       61,730        -          -           -        15,000        -           -
 Smith-Midland Corp (VA)     1998         -           -          -           -           -          -           -
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Compensation of Directors

     All non-employee Directors receive $500 per meeting as compensation for
their services as Directors and are reimbursed for expenses incurred in
connection with the performance of their duties. All employee Directors, except
Rodney I Smith, receive $250 per meeting as compensation for their services and
are reimbursed for expenses incurred in connection with the performance of their
duties. Rodney I. Smith receives no compensation as a Director, but is
reimbursed for expenses incurred in connection with the performance of his
duties as a Director.

                                       24
<PAGE>

Option Grants in Last Fiscal Year

     None.


Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values


<TABLE>
<CAPTION>
                             Shares                            Number of
                            Acquired                       Shares Underlying                      Value of Unexercised
                              on       Value              Unexercised Options                     In-the-Money Options
                           Exercise   Realized           at Fiscal Year End (#)                 at Fiscal Year-End ($)(1)
                                                      -----------------------------          ------------------------------
    Name                     (#)        ($)           Exercisable     Unexercisable          Exercisable      Unexercisable
    ----                   --------   --------        -----------     -------------          -----------      -------------
<S>                        <C>        <C>             <C>             <C>                    <C>              <C>
Rodney I. Smith........      ---         ---              20,332          19,668                 ---               ---
Guy M. Schuch..........      ---         ---               5,000          10,000                 ---               ---
</TABLE>

_____________
(1) Value is based on the closing sales price of the Company's Common Stock on
December 29, 2000 ($0.5625), the last trading day of 2000, less the option
exercise price. All per share prices of the options held by Mr. Smith equal or
exceed $0.5625 and the per share price of Mr. Schuch's options were $.5625.

Employment Agreement

     The Company has entered into an employment agreement with Mr. Rodney I.
Smith, which provides for an annual base salary of $175,000. The present term of
the agreement continues until December 31, 2001, and is thereafter automatically
renewed for successive one-year periods unless Mr. Smith or the Company gives
the other party three months prior written notice of non-renewal. Bonuses and
salary increases may be granted by the Compensation Committee of the Board of
Directors, as it so determines from time to time. Mr. Smith voluntarily reduced
his annual base salary by 22.5% effective March 8, 1999 through August 23, 1999.
Mr. Smith also is entitled to receive benefits offered to the Company's
employees generally. If terminated without cause, Mr. Smith is entitled to
receive as severance pay an amount equal to twenty-four (24) months of his base
salary, less taxes, other required withholdings and any amounts owed to the
Company, payable in accordance with the Company's standard payroll procedures.
In addition, the employment agreement precludes Mr. Smith from competing with
the Company during his employment and for at least one year thereafter, and from
disclosing confidential information. The Company is the owner of and the
beneficiary of three key person life insurance policies on Mr. Smith totaling
$1,400,000.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.
          --------------------------------------------------------------

     The following table sets forth, as of March 26, 2001, certain information
concerning ownership of the Company's Common Stock by (i) each person known by
the Company to own of record or be the beneficial owner of more than five
percent (5%) of the Company's Common

                                       25
<PAGE>

Stock, (ii) each of the Company's Directors and Executive Officers, and (iii)
all Directors and Executive Officers as a group. Except as otherwise indicated,
the Stockholders listed in the table have sole voting and investment powers with
respect to the shares indicated.


Name and Address of               Number of Shares             Percentage of
Beneficial Owner(1)               Beneficially Owned(2)           of Class
-------------------               ---------------------           --------

Rodney I. Smith (1)(3)(4)(5)(6)          633,630                     20.6

Fred E. Kassner Estate (1)               589,172                     19.3

H. T. Ardinger & Son (1)                 395,000                     12.9

Carl W. Grover(1)                        203,050                      6.7

Ashley B. Smith (1)(3)(4)(7)             106,133                      3.5

Wesley A. Taylor (1)(8)                   14,850                       *

James W. Dean (1)                          5,669                       *

Guy M. Schuch (1)(9)                       5,000                       *

Robert E. Albrecht, Jr. (1)(10)            3,333                       *

Andrew Kavounis (1)(11)                    3,000                       *


All directors, executive officers and key
employees as a group (7 persons)(2)(3)(4)
(5)(6)(7)(8)(9)(10)(11)                  771,615                     24.8

______________
*    Less than 1%

(1)  The address for each of Messrs. Rodney I. Smith, Ashley B. Smith, Taylor,
     Dean, Schuch, Albrecht and Kavounis is c/o Smith-Midland Corporation, P.O.
     Box 300, 5119 Catlett Road, Midland, Virginia 22728. The address for the
     Fred E. Kassner Estate is 69 Spring St., Ramsey , New Jersey 07446. The
     Address for H. T. Ardinger & Son is P.O. Box 569360, Dallas, Texas 75356.
     The address for Mr. Grover is 1010 S Ocean Blvd, Suite 1017, Pompano Beach,
     Florida 33062.

(2)  Pursuant to the rules and regulations of the Securities and Exchange
     Commission, shares of Common Stock that an individual or group has a right
     to acquire within 60 days pursuant to the exercise of options or warrants
     are deemed to be outstanding for the purposes of computing the percentage
     ownership of such individual or group, but are not deemed to be outstanding
     for the purpose of computing the percentage ownership of any other person
     shown in the table.

(3)  Rodney I. Smith and Ashley B. Smith are father and son, respectively. Each
     of Rodney I. Smith and Ashley B. Smith disclaims beneficial ownership of
     the other's shares of Common Stock.

(4)  Does not include an aggregate of 77,972 shares of Common Stock held by
     Matthew Smith and Roderick Smith, sons of Rodney I. Smith, and brothers of
     Ashley B. Smith, and 112,713 shares held by Merry Robin Bachetti, sister of
     Rodney I. Smith and aunt of Ashley B. Smith, for which each of Rodney I.
     Smith and Ashley B. Smith disclaims beneficial ownership.

(5)  Includes 100,000 shares of Common Stock that have been deposited into an
     irrevocable trust (the "Trust") for the benefit of Hazel Smith, the income
     beneficiary of the Trust and former wife of Rodney I. Smith, and mother

                                       26
<PAGE>

     of Mr. Smith's children. Mr. Smith is the trustee of the Trust and, as
     such, may vote the shares, as he deems fit.

(6)  Includes options to purchase 13,666 shares of Common Stock of the Company
     exercisable at $1.00 per share and 6,666 shares exercisable at $.5625 per
     share.

(7)  Includes options to purchase 10,850 shares of Common Stock of the Company
     exercisable at $1.00 per share and 5,666 shares exercisable at $.5625 per
     share.

(8)  Includes options to purchase 9,850 shares of Common Stock of the Company
     exercisable at $1.00 per share and 5,000 shares exercisable at $.5625 per
     share.

(9)  Includes options to purchase 5,000 shares of Common Stock of the Company
     exercisable at $.5625 per share.

(10) Includes options to purchase 3,333 shares of Common Stock of the Company
     exercisable at $.5625 per share.

(11) Includes options to purchase 3,000 shares of Common Stock of the Company
     exercisable at $1.00 per share.


Item 12.  Certain Relationships and Related Transactions.
          ----------------------------------------------

         At December 31, 2000, the Company owned an unsecured note for
approximately $630,700 receivable from Mr. Rodney I. Smith, the Company's
President and majority shareholder, with a seven year term accruing interest at
a rate of 6% per annum. Terms of the note call for annual payments of $45,948
through maturity on December 31, 2002. Payments for the years 1999 and 2000 have
been made. During 1999, the note was increased by $20,776 for additional
borrowings. Total interest income on this note was approximately $38,000 and
$39,000 for the years ended December 31, 2000 and 1999, respectively.

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

(a)      Exhibits.

         (1)   The following exhibits are filed herewith:

Exhibit
  No.
-------
  23     Consent of BDO Seidman, LLP.


         (2)   The following exhibits were filed as part of the Company's Annual
               Report on Form 10-KSB for the year ended December 31, 1999 and
               are incorporated herein by reference:

Exhibit
  No.
-------
   1     Continuation of Exclusive License Agreement between DuriSol Resources,
         Inc. and Smith-Midland Corporation, with an effective date of January
         1, 1999, dated May 3, 1999.

                                       27
<PAGE>

   2     First National Bank of New England Commercial Loan Agreement dated
         December 20, 1999.

   3     First National Bank of New England Commercial Term Promissory Note
         dated December 20, 1999.


         (3)  The following exhibits were filed as part of the Company's
              Quarterly Report on Form 10-QSB for the quarter ended June 30,
              1998 and are incorporated herein by reference:

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

    1         First National Bank of New England Loan Agreement

    2         First National Bank of New England Loan Note

         (3)  The following exhibits were filed as part of the Company's Annual
              Report on Form 10-KSB for the year ended December 31, 1997 and are
              incorporated herein by reference:

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

  10c         Promissory Note from Rodney I. Smith to the Company, dated as of
              December 31, 1997.

         (4)  The following exhibits were filed as part of the Company's Annual
              Report on Form 10-KSB for the year ended December 31, 1995 and are
              incorporated herein by reference.

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

  21          List of Subsidiaries of the Company.

         (5)  The following exhibits were filed as part of the Company's Form
              SB-2 Registration Statement (No. 33-89312) declared effective by
              the Commission on December 13, 1995 and are incorporated herein by
              reference:

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

  3a          Certificate of Incorporation, as amended.

                                       28
<PAGE>

  3b          Bylaws, as amended.

  4b          Specimen Common Stock Certificate.

  4c          Form of Public Warrant Agreement, including Specimen Redeemable
              Common Stock Purchase Warrant.

  4d          Form of Warrant Agreement between the Company, Network 1 Financial
              Securities, Inc. and First Hanover Securities, Inc., including
              Form of Underwriter's Warrant Certificate.

  10a         Employment Agreement between the Company and Rodney I. Smith.

  10r         Lease Agreement between the Company and Rodney I. Smith.

  10t         Collateral Assignment of Letters Patent between the Company and
              Rodney I. Smith.

  10u         Form of License Agreement between the Company and its Licensee.

  10w         1994 Stock Option Plan.

 (b)  Reports on Form 8-K. None.

                                       29
<PAGE>

                                  SIGNATURES

     In accordance with Section 13 or 15(d) 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:  April 9, 2001                     By: /s/ Rodney I. Smith
                                             ------------------------------
                                                 Rodney I. Smith, President
                                                 (principal executive officer)


                                         By: /s/ Robert E. Albrecht, Jr.
                                             ------------------------------
                                                 Robert E. Albrecht, Jr., CFO
                                                 (principal finance and
                                                 accounting officer)


     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant in the capacities and on the
dates indicated.

Name                             Capacity              Date
----                             --------              ----

/s/ Rodney I. Smith              Director              April 9, 2001
-------------------------
Rodney I. Smith


/s/ Wesley A. Taylor             Director              April 9, 2001
-------------------------
Wesley A. Taylor


/s/ Ashley Smith                 Director              April 9, 2001
-------------------------
Ashley Smith



                                       30
<PAGE>

Report of Independent Certified Public Accountants



To the Board of Directors
Smith-Midland Corporation
Midland, Virginia

We have audited the accompanying consolidated balance sheets of Smith-Midland
Corporation and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Smith-Midland
Corporation and subsidiaries at December 31, 2000 and 1999, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.



                                                            BDO Seidman, LLP


Richmond, Virginia
March 20, 2001

                                      F-3
<PAGE>

 December 31,                                             2000           1999
--------------------------------------------------------------------------------

  Assets (Note 2)

Current assets
 Cash                                               $   218,264     $  374,190
 Accounts receivable (Note 6)
  Trade - billed, (less allowance for doubtful
   accounts of $258,542 and $323,474)                 4,122,118      2,597,684
  Trade - unbilled                                        2,405        123,332
 Inventories
  Raw materials                                         576,995        493,979
  Finished goods                                      1,475,383      1,013,958
 Prepaid expenses and other assets                       62,811         46,656
--------------------------------------------------------------------------------

Total current assets                                  6,457,976      4,649,799
--------------------------------------------------------------------------------

Property and equipment, net (Note 1)                  2,684,918      2,608,145
--------------------------------------------------------------------------------

Other assets
 Notes receivable, officer (Note 3)                     630,700        638,347
 Claims and accounts receivable (Note 6)                960,254        960,254
 Other                                                  309,374        317,845
--------------------------------------------------------------------------------

Total other assets                                    1,900,328      1,916,446
--------------------------------------------------------------------------------









                                                    $11,043,222     $9,174,390
--------------------------------------------------------------------------------
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                                     Consolidated Balance Sheets


<TABLE>
<CAPTION>
December 31,                                                        2000              1999
---------------------------------------------------------------------------------------------
<S>                                                           <C>               <C>
     Liabilities and Stockholders' Equity

Current liabilities
   Current maturities of notes payable (Note 2)               $   524,305       $   228,025
   Accounts payable - trade                                     2,482,238         1,690,853
   Accrued expenses and other liabilities (Note 6)                347,674           277,621
   Customer deposits                                              416,816           172,914
-------------------------------------------------------------------------------------------

Total current liabilities                                       3,771,033         2,369,413

Reserve for contract loss                                         995,845         1,046,400

Notes payable - less current maturities (Note 2)                4,281,528         4,350,644

Notes payable - related parties (Note 3)                           87,188            96,875
-------------------------------------------------------------------------------------------

Total liabilities                                               9,135,594         7,863,332
-------------------------------------------------------------------------------------------

Commitments and contingencies (Notes 5 and 6)

Stockholders' equity
   Preferred stock, $.01 par value; authorized 1,000,000
     shares, none outstanding                                           -                 -
   Common stock, $.01 par value; authorized 8,000,000
     shares; 3,091,718 and 3,085,718 issued and outstanding        30,917            30,857
   Additional paid-in capital                                   3,453,222         3,450,085
   Accumulated deficit                                         (1,474,211)       (2,067,584)
-------------------------------------------------------------------------------------------

                                                                2,009,928         1,413,358
Treasury stock, at cost, 40,920 shares                           (102,300)         (102,300)
-------------------------------------------------------------------------------------------

Total stockholders' equity                                      1,907,628         1,311,058
-------------------------------------------------------------------------------------------

                                                              $11,043,222        $9,174,390
===========================================================================================
</TABLE>

                                 See accompanying summary of accounting policies
                                  and notes to consolidated financial statements

                                      F-4
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                           Consolidated Statements of Operations



Year Ended December 31,                                2000              1999
-------------------------------------------------------------------------------

Revenue                                          $15,695,837       $14,432,749

Cost of goods sold                                12,025,768        11,185,901
------------------------------------------------------------------------------

Gross profit                                       3,670,069         3,246,848
------------------------------------------------------------------------------

Operating expenses
   General and administrative expenses             2,345,595         2,386,862
   Selling expenses                                  489,510           583,500
------------------------------------------------------------------------------

Total operating expenses                           2,835,105         2,970,362
------------------------------------------------------------------------------

Operating income                                     834,964           276,486
------------------------------------------------------------------------------

Other income (expense)
   Royalties                                         339,816           326,239
   Interest expense and loan fees                   (554,638)         (543,770)
   Interest income (Note 3)                           64,877            68,603
   Other, net                                        (91,646)          (85,283)
------------------------------------------------------------------------------

Total other income (expense)                        (241,591)         (234,211)
------------------------------------------------------------------------------

Net income                                       $   593,373       $    42,275
==============================================================================

Basic and diluted income (loss) per share        $       .19       $       .01
==============================================================================

Weighted average common shares outstanding         3,050,190         3,044,798
==============================================================================
                                 See accompanying summary of accounting policies
                                  and notes to consolidated financial statements

                                      F-5
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                 Consolidated Statements of Stockholders' Equity


<TABLE>
<CAPTION>
                                                     Additional
                                        Common         Paid-In       Accumulated       Treasury
                                         Stock         Capital         Deficit          Stock           Total
----------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>            <C>               <C>            <C>
Balance, December 31, 1998             $30,857       $3,450,085     $(2,109,859)      $(102,300)     $1,268,783

Net income                                   -                -          42,275               -          42,275
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999              30,857        3,450,085      (2,067,584)       (102,300)      1,311,058

Warrants exercised                          60            3,137               -               -           3,197

Net income                                   -                -         593,373               -         593,373
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000             $30,917       $3,453,222     $(1,474,211)      $(102,300)     $1,907,628
================================================================================================================
</TABLE>

                                 See accompanying summary of accounting policies
                                 and notes to consolidated financial statements.

                                      F-6
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                           Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
Year Ended December 31,                                                               2000                  1999
------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                   <C>
Cash Flows From Operating Activities
   Cash received from customers                                               $ 14,876,048          $ 14,967,497
   Cash paid to suppliers and employees                                        (14,241,275)          (14,052,234)
   Interest paid                                                                  (554,638)             (543,770)
   Other                                                                           (26,769)              (16,680)
------------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                           53,366               354,813
------------------------------------------------------------------------------------------------------------------

Cash Flows From Investing Activities
   Purchases of property and equipment                                            (437,613)             (537,073)
   Repayments (advances) on officer note receivable                                  7,647               (13,960)
------------------------------------------------------------------------------------------------------------------

Net cash absorbed by investing activities                                         (429,966)             (551,033)
------------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities
   Proceeds from borrowings                                                        799,181               677,157
   Repayments of borrowings                                                       (572,017)             (692,253)
   Repayments on borrowings - related parties, net                                  (9,687)               (9,617)
   Proceeds from warrants exercised                                                  3,197                     -
------------------------------------------------------------------------------------------------------------------

Net cash provided (absorbed) by financing activities                               220,674               (24,713)
------------------------------------------------------------------------------------------------------------------

Decrease in cash - restricted                                                            -               387,462
------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash                                                   (155,926)              166,529

Cash, beginning of year                                                            374,190               207,661
------------------------------------------------------------------------------------------------------------------

Cash, end of year                                                             $    218,264          $    374,190
==================================================================================================================
</TABLE>


                                                                    continued...

                                      F-7
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                           Consolidated Statements of Cash Flows
                                                                     (continued)

<TABLE>
<CAPTION>
Year Ended December 31,                                                   2000          1999
------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>
Reconciliation of net income to net cash
   Provided by operating activities

Net income                                                         $   593,373     $  42,275
Adjustments to reconcile net income to net cash
   Provided by operating activities
     Depreciation and amortization                                     360,840       380,290
     (Increase) decrease in
       Accounts receivable - billed                                 (1,524,434)      266,074
       Accounts receivable - unbilled                                  120,927        75,776
       Inventories                                                    (544,441)        4,276
       Prepaid expenses and other assets                                (7,684)       (2,409)
     Increase (decrease) in
       Accounts payable - trade                                        791,385      (487,031)
       Accrued expenses and other liabilities                           19,498       208,903
       Customer deposits                                               243,902      (133,341)
------------------------------------------------------------------------------------------------

Net cash provided by operating activities                          $    53,366     $ 354,813
================================================================================================
</TABLE>

                                 See accompanying summary of accounting policies
                                 and notes to consolidated financial statements.

                                      F-8
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies


Nature of Business       The Company develops, manufactures, licenses, sells and
                         installs precast concrete products for the
                         construction, transportation and utilities industries
                         primarily in the Mid-Atlantic region.

Principles of            The accompanying consolidated financial statements
Consolidation            include the accounts of Smith-Midland Corporation and
                         its wholly-owned subsidiaries (the "Company"). All
                         material intercompany accounts and transactions have
                         been eliminated in consolidation.

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

Property and             Property and equipment is stated at cost. Expenditures
Equipment                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                        10-15
                              Office equipment                          3-10

Income Taxes             The Company utilizes the asset and liability method of
                         accounting for income taxes. Under the asset and
                         liability method, deferred tax assets and liabilities
                         are recognized for the future tax consequences
                         attributable to differences between the financial
                         statement carrying amounts of existing assets and
                         liabilities and their respective tax bases. Deferred
                         tax assets and liabilities are measured using enacted
                         tax rates expected to apply to taxable income in the
                         years in which those temporary differences are expected
                         to be recovered or settled. The effect on deferred tax
                         assets and liabilities of a change in tax rates is
                         recognized in income in the period that includes the
                         enactment date.

                                      F-9
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies
                                                                     (continued)


Revenue Recognition      The Company 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 concrete
                         products are recognized upon completion of units
                         produced under long-term contracts. When necessary,
                         provisions for estimated losses on these contracts are
                         made in the period in which such losses are determined.
                         Changes in job performance, conditions and contract
                         settlements which affect profit are recognized in the
                         period in which the changes occur. An amount equal to
                         contract costs attributable to claims is included in
                         revenues when realization is probable and the amount
                         can be reliably estimated. Unbilled trade accounts
                         receivable represents revenue earned on units produced
                         and not yet billed.

Shipping and Handling    Amounts billed to customers are recorded in sales and
                         the costs associated with the shipping and handling are
                         recorded as cost of goods sold.

Risks and Uncertainties  The Company sells products to highway contractors
                         operating under government funded highway programs and
                         other customers and extends credit based on an
                         evaluation of the customer's financial condition,
                         generally without requiring collateral. Exposure to
                         losses on receivables is principally dependent on each
                         customer's financial condition. The Company monitors
                         its exposure to credit losses and maintains allowances
                         for anticipated losses.

                         Due to inclement weather, the Company may experience
                         reduced revenues from December through February and may
                         realize the substantial part of its revenues during the
                         other months of the year.

Fair Value of            The estimated fair value of financial instruments
Financial Instruments    approximates their carrying amounts as of December 31,
                         2000 and 1999. The estimated fair value of long term
                         debt is based on current rates offered to the Company
                         for debt of the same maturities.

Estimates                The preparation of financial statements in conformity
                         with generally accepted accounting principles 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 during the
                         reporting period. Actual results could differ from
                         those estimates.

                                      F-10
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies
                                                                     (continued)


Earnings (Loss)          Earnings per share is based on the weighted average
Per Share                number of shares of common stock and dilutive common
                         stock equivalents outstanding. Basic earnings per share
                         is computed by dividing income available to common
                         shareholders by the weighted average number of common
                         shares outstanding for the period. Diluted earnings per
                         share reflects the potential dilution of securities
                         that could share in earnings of an entity. The Company
                         had no securities which had a dilutive effect on
                         earnings per share for the years ended December 31,
                         2000 and 1999.

Long-Lived Assets        The Company follows the guidance for accounting for
                         asset impairment set forth in Statement of Financial
                         Accounting Standards No. 121 (SFAS 121), "Accounting
                         for the Impairment of Long-Lived Assets and For Long-
                         Lived Assets to Be Disposed Of." SFAS 121 requires that
                         long-lived assets and certain intangibles to be held
                         and used by an entity be reviewed for impairment when
                         events or changes in circumstances indicate that the
                         carrying amount may not be recoverable. In addition,
                         SFAS 121 requires long-lived assets and certain
                         intangibles to be disposed of to be reported at the
                         lower of carrying amount or fair value less costs to
                         sell. The Company reviews the carrying values of its
                         long-lived and identifiable intangible assets for
                         possible impairment whenever events or changes in
                         circumstances indicate that the carrying amount of
                         assets may not be recoverable based on undiscounted
                         estimated future operating cash flows. As of December
                         31, 2000, the Company has determined no impairment has
                         occurred.

Recent Accounting        In June 1998, the Financial Accounting Standards Board
Pronouncements           issued Statement of Financial Accounting Standards No.
                         133, "Accounting for Derivative Instruments and Hedging
                         Activities" ("SFAS 133"), which establishes accounting
                         and reporting standards for derivative instruments,
                         including certain derivative instruments embedded in
                         other contracts, and for hedging activities. SFAS 133,
                         which was subsequently amended by SFAS 138 "Accounting
                         for Certain Derivative Instruments and Certain Hedging
                         Activities", requires that an entity recognize all
                         derivatives as either assets or liabilities in the
                         statement of financial position and measure those
                         instruments at fair value. Presently the Company does
                         not use derivative instruments either in hedging
                         activities or as investments. Accordingly, the adoption
                         of SFAS 133 had no impact on its financial position or
                         results of operations.

                                      F-11
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies
                                                                     (continued)


Recent Accounting        The Securities and Exchange Commission ("SEC") has
Pronouncements           issued Staff Accounting  Bulletin No. 101, "Revenue
(continued)              Recognition in Financial Statements" ("SAB 101"). SAB
                         101 is effective in the fourth quarter of fiscal years
                         beginning after December 15, 1999. SAB 101 summarizes
                         appropriate criteria to be considered in determining
                         recognition of revenue. Adoption of SAB 101 did not
                         have a material impact on the Company's financial
                         position or results of operations.

                         In March 2000, the FASB issued interpretation No. 44
                         ("FIN 44"), Accounting for Certain Transactions
                         Involving Stock Compensation, an Interpretation of APB
                         Opinion No. 25. FIN 44 clarifies the application of APB
                         No. 25 for (a) the definition of employee for purposes
                         of applying APB 25, (b) the criteria for determining
                         whether a plan qualifies as a noncompensatory plan, (c)
                         the accounting consequences of various modifications to
                         the previously fixed stock option or award, and (d) the
                         accounting for an exchange of stock compensation awards
                         in a business combination. FIN 44 became effective July
                         2, 2000 but certain conclusions cover specific events
                         that occur after either December 15, 1998 or January
                         12, 2000. The adoption of FIN 44 in 2000 did not have
                         any effect on the Company's financial statements but
                         may impact the accounting for grants or awards in
                         future periods.

Reclassifications        Certain reclassifications have been made in the prior
                         year consolidated financial statements and notes to
                         conform to the December 31, 2000 presentation.

                                      F-12
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements


1.   Property and        Property and equipment consist of the following:
     Equipment

<TABLE>
<CAPTION>
                         December 31,                                                      2000             1999
                         ----------------------------------------------------------------------------------------
                         <S>                                                         <C>              <C>
                         Land and land improvements                                  $  607,421       $  589,441
                         Buildings                                                    1,960,359        1,792,197
                         Machinery and equipment                                      5,473,860        5,227,067
                         Rental equipment                                                92,818           73,539
                         Construction in progress                                             -           72,632
                         ----------------------------------------------------------------------------------------

                                                                                      8,134,458        7,754,876
                         Less:  accumulated depreciation                              5,449,540        5,146,731
                         ----------------------------------------------------------------------------------------

                                                                                     $2,684,918       $2,608,145
                         ========================================================================================
</TABLE>

2.   Notes Payable       Notes payable consist of the following:

<TABLE>
<CAPTION>
                         December 31,                                                      2000             1999
                         ----------------------------------------------------------------------------------------
                         <S>                                                         <C>              <C>
                         Note payable to individual, maturing December
                           2001; with monthly payments of $1,003 of
                           principal and interest, interest
                           at 12%; collateralized by certain vehicles.               $   11,294       $   21,317

                         Note payable to individual, maturing March
                           2003; with monthly payments of $432 of
                           principal and interest, interest at 12%;
                           collateralized by a drop-deck trailer.                        10,177                -

                         Note payable to First International Bank,
                           maturing June 2021; with monthly
                           payments of $37,087 of principal and
                           interest, interest at prime plus 1.5% (11%
                           at December 31, 2000); collateralized by
                           principally all assets of the Company.                     3,864,383        3,906,716
</TABLE>

                                      F-13
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

<TABLE>
<CAPTION>
2.   Notes Payable       December 31,                                                       2000              1999
                         -------------------------------------------------------------------------------------------
     (continued)
<S>                      <C>                                                          <C>               <C>
                         Note payable to First International Bank,
                           maturing January 1, 2005; with monthly
                           payments of $10,961 of principal and interest
                           at prime plus 1.75% (11.25% at December 31,
                           2000); collateralized by blanket lien on
                           Company assets.                                            $  420,956        $  500,000

                         Line of credit with First International Bank,
                           maturing May 1, 2001; interest payable
                           monthly at prime plus 1% (10.5% at December
                           31, 2000); collateralized by accounts
                           receivable and inventory.                                     349,615                 -

                         Installment notes and capitalized leases
                           collateralized by certain machinery and
                           equipment maturing at various dates,
                           primarily August 2001 through January 2005,
                           with interest at 7.25% through 8.25%.                         149,408           130,636

                         Unsecured note payable due on demand, with
                           interest at 14%.                                                    -            20,000
                         ------------------------------------------------------------------------------------------

                                                                                       4,805,833         4,578,669
                         Less current maturities                                         524,305           228,025
                         ------------------------------------------------------------------------------------------

                                                                                      $4,281,528        $4,350,644
                         ==========================================================================================
</TABLE>

                                      F-14
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)


2.   Notes Payable       The Company has a mortgage loan, which is guaranteed
     (continued)         in part by the U.S.  Department of Agriculture Rural
                         Business - Cooperative Services. The Company was also
                         granted a $500,000 line of credit and an additional
                         $500,000 term note. The loan agreement includes certain
                         restrictive covenants, which require the Company to
                         maintain minimum levels of tangible net worth and
                         limits total outstanding indebtedness. The Company was
                         in compliance with these restrictive covenants at
                         December 31, 2000.

                         The $500,000 line of credit is due contractually within
                         the next fiscal year. Management has shown the ability
                         to refinance and/or extend its debt in prior years, and
                         has agreed with the bank to extend this debt as it
                         becomes due in May 2001. There was $349,615 in
                         outstanding borrowings on the line of credit at
                         December 31, 2000.

                         The aggregate amounts of notes payable maturing in each
                         of the next five years and thereafter are as follows:

                               Year Ending December 31,              Amount
                              ----------------------------------------------

                                          2001                   $  524,305
                                          2002                      161,713
                                          2003                      168,031
                                          2004                      171,235
                                          2005                       28,265
                                       Thereafter                 3,752,284
                              ----------------------------------------------

                                                                 $4,805,833
                              ==============================================

3.   Related Party       The Company  currently leases three and one half
     Transactions        acres of its Midland, Virginia property from its
                         President, on a month-to-month basis, as additional
                         storage space for the Company's finished work product.
                         The lease agreement calls for annual rent of $6,000.

                         Notes payable - related parties are unsecured, with no
                         specified maturity date (but no earlier than January 1,
                         2001) and bear interest at 10%. Total interest expense
                         related to these notes was $7,162 and $8,500 for the
                         years ended December 31, 2000 and 1999, respectively.

                                      F-15
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)


3.   Related Party       The Company has an unsecured note receivable from its
     Transactions        President and stockholder with as even- year term
     (continued)         bearing interest at 6%. The terms of the note call for
                         annual principal and interest payments of $45,948,
                         beginning on December 31, 1998, and continuing through
                         maturity. During 1999, the note was increased by
                         $20,776 for additional borrowings. Total interest
                         income on this note was approximately $38,000 and
                         $39,000 for the years ended December 31, 2000 and 1999,
                         respectively.

                         As of December 31, 2000 and 1999, the Company was the
                         beneficiary of individual life insurance policies on
                         the life of the President with a total cash surrender
                         value of approximately $162,000. Borrowings of
                         approximately $134,000 were outstanding against the
                         cash surrender value at December 31, 2000 and 1999.

4.   Income Taxes        There was no provision for income taxes in 2000 or 1999
                         due to the existence of net operating losses from prior
                         years.

                         The provision for income taxes differs from the amount
                         determined by applying the federal statutory tax rate
                         to pre-tax income as a result of the following:

<TABLE>
<CAPTION>
                         Year Ended December 31,                             2000                          1999
                         ----------------------------------------------------------------------------------------------

                                                                      Amount       Percent         Amount       Percent
                         ----------------------------------------------------------------------------------------------
                         <S>                                       <C>             <C>           <C>            <C>
                         Income taxes at statutory rate            $ 202,000          34%        $ 14,000         34%
                         Increase (decrease) in taxes
                            resulting from:
                              Reduction in valuation
                                allowance                           (238,000)        (40)         (14,000)       (34)
                              Other                                   36,000           6                -          -
                         ----------------------------------------------------------------------------------------------

                                                                   $       -           -%        $      -          -%
                         ==============================================================================================
</TABLE>

                                      F-16
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)




4.   Income Taxes        Deferred tax assets (liabilities) are as follows:
     (continued)

<TABLE>
<CAPTION>
                         December 31,                                        2000                 1999
                         ---------------------------------------------------------------------------------
                         <S>                                            <C>                <C>
                         Depreciation                                   $ (83,000)         $   (80,000)
                         Provision for doubtful accounts                  103,000              129,000
                         Vacation accrued                                  42,000               34,000
                         Deferred income                                    9,000                9,000
                         Operating loss carryforwards                     889,000            1,106,000
                         -----------------------------------------------------------------------------

                         Net deferred tax asset                           960,000            1,198,000
                         Deferred tax asset valuation allowance          (960,000)          (1,198,000)
                         -----------------------------------------------------------------------------

                                                                        $       -          $         -
                         =============================================================================
</TABLE>

                         At December 31, 2000, the Company had approximately
                         $2,224,000 of net operating loss carryforwards with
                         expiration dates through December 31, 2018.

                         The Company has offset the deferred tax asset with a
                         valuation allowance since recoverability of the asset
                         is not assured.

5.   Employee Benefit    The Company has a 401(k) retirement plan (the "Plan")
     Plans               covering substantially all employees. Participants may
                         contribute up to 10% of their compensation to the Plan.
                         The Company contributes 25% of the participant's
                         contribution, up to 4% of the participant's
                         compensation, as a matching contribution. Total
                         contributions for the years ended December 31, 2000 and
                         1999 were $104,284 and $13,631, respectively.

                         The Company has a profit sharing plan which provides
                         for employee bonuses based upon the Company's results
                         of operations. No payments were made during the years
                         ended December 31, 2000 and 1999.

6.   Commitments         a)   The Company has an employment agreement with its
     and                      President which provides for an annual salary of
     Contingencies            up to $175,000. The term of the agreement expires
                              December 31, 2001, and is thereafter automatically
                              renewed for successive one year periods, unless
                              written notice for non-renewal is given. The
                              President is also entitled to receive benefits
                              offered to the Company's other employees, and
                              certain severance benefits if the Company
                              terminates the employment agreement without cause.
                              In addition, the employment agreement precludes
                              the President from disclosing confidential
                              information and from competing with the Company
                              during each year of his employment and for at
                              least one year thereafter.

                                     F-17
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)


6.   Commitments         b)   On August 5, 1994, the Board of Directors and
     and                      Stockholders of the Company adopted the 1994 Stock
     Contingencies            Option Plan (the "1994 Plan") which allows the
     (continued)              Company to grant options to employees, officers,
                              directors and consultants to purchase shares of
                              the Company's Common Stock. Options granted under
                              the plan may be either Incentive Stock Options or
                              Non-Qualified Stock Options. Incentive Stock
                              Options may be granted only to employees of the
                              Company, while Non-qualified options may be issued
                              to non-employee directors, consultants, and
                              others, as well as to employees of the Company. On
                              November 21, 2000, the Board of Directors and
                              Stockholders of the Company increased the maximum
                              aggregate number of shares which may be granted
                              under the 1994 Plan to 575,000 of the Company's
                              Common Stock. The following tables summarize
                              activity of the Plan and the stock options
                              outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                                                 Weighted
                                                                  Average                      Vested
                                                                 Exercise       Options          and
                                                                   Price      Outstanding    Exercisable
                         -------------------------------------------------------------------------------
                         <S>                                     <C>          <C>            <C>
                         Balance, December 31, 1998                $1.47       111,425         40,299
                         Granted                                     .56        88,000              -
                         Forfeited                                  1.00       (13,150)        (4,182)
                         Vested                                        -             -         27,403
                         ----------------------------------------------------------------------------

                         Balance, December 31, 1999                 1.07       186,275         63,520
                         Granted                                       -             -              -
                         Forfeited                                     -       (11,300)        (5,132)
                         Vested                                        -             -         43,867
                         ----------------------------------------------------------------------------

                         Balance, December 31, 2000                $1.07       174,975        102,255
                         ============================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                     Options Outstanding          Options Exercisible
                                            -----------------------------------  --------------------
                                                            Weighted Average
                                             Number of   Remaining Contractual          Number
                         Exercise Prices       Shares        Life (Years)             of Shares
                         ----------------------------------------------------------------------------
                         <S>                <C>          <C>                     <C>
                         $0.56                88,000            7.0                    29,331
                         $1.00                66,975            5.7                    52,924
                         $3.50                20,000            5.5                    20,000
                         ----------------------------------------------------------------------------

                                             174,975            6.3                   102,255
                         ============================================================================
</TABLE>

                                     F-18
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)


6.   Commitments         The Company has adopted Statement of Financial
     and Contingencies   Accounting Standards No. 123, Accounting for Stock-
     (continued)         Based Compensation ("SFAS 123"). SFAS 123 establishes
                         alternative methods of accounting and disclosure for
                         employee stock-based compensation arrangements. The
                         Company has elected to use the intrinsic value method
                         of accounting as prescribed by Accounting Principles
                         Board Opinion No. 25, Accounting for Stock Issued to
                         Employees, and related Interpretations, for stock
                         options granted to the Company's employees. This method
                         does not result in the recognition of compensation
                         expense when employee stock options are granted if the
                         exercise price of the option equals or exceeds the fair
                         market value of the stock at the date of grant.

                              If the provisions of SFAS 123 had been adopted,
                              the effect on 2000 and 1999 earnings (loss) would
                              have been as follows:

<TABLE>
<CAPTION>
                                                                      2000               1999
                              ---------------------------------------------------------------
                              <S>                                  <C>                <C>
                              Net earnings (loss):
                                Reported                           $593,373           $42,275
                                Proforma                            593,373            10,595
                              Basic and diluted earnings (loss)
                                 per share:
                                Reported                           $    .19           $  .014
                                Proforma                                .19              .003
</TABLE>

                              For purposes of computing the proforma amounts
                              indicated above, the fair value of each option on
                              the date of grant is estimated using the Black-
                              Scholes option pricing model with the following
                              assumptions: no dividend yield, expected
                              volatility of 50%, risk-free interest rate of
                              6.43% and expected lives of five to six years.
                              Substantially all options become vested and
                              exercisable ratably over a five year period. The
                              weighted average fair value of options granted
                              during the year ended December 31, 1999 was $.36.
                              No options were granted during the year ended
                              December 31, 2000.

                                     F-19
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

6.   Commitments         c) In 1999, the Company, through the general
     and Contingencies      contractor, filed claims, in the amount of
     (continued)            approximately $1,100,000 for damages and cost
                            overruns incurred as a result of engineering and
                            design flaws on a project to renovate a building at
                            Rutgers University ("Rutgers"). Specifically, after
                            the Company commenced the Rutgers project, the
                            Company found that the original structure was not
                            structurally sufficient to support the panels as
                            originally designed. The cost overruns relate to re-
                            designing panels, producing panels with additional
                            steel reinforcement, and erection of the panels on
                            the structure. The general contractor filed suit
                            against the Company, Rutgers, and the architect on
                            the project, for damages. While the actual damages
                            were not specified, based upon the pleadings, the
                            general contractor is seeking in excess of $700,000
                            in damages from the Company. The Company filed a
                            countersuit against the general contractor for
                            damages in excess of $1,100,000. The Company also
                            filed suit against Skylift Corporation, the
                            Company's subcontractor, initially responsible for
                            installation of construction panels, for
                            approximately $1,000,000. The Company has
                            approximately $950,000 due to the general contractor
                            included in reserve for contract loss at December
                            31, 2000 and 1999.

                            The Company's outside counsel has provided the
                            Company with an opinion that a legal basis exists
                            for a claim against the general contractor and
                            Rutgers. All conditions for claim recognition have
                            been satisfied, and as of December 31, 2000 and
                            1999, approximately $497,000 of the potential
                            $1,100,000 contract claim is included in claims
                            receivable, as such amounts are probable (subject to
                            negotiations and legal proceedings). The Company
                            believes that, based on prior experience in claims
                            settlement, it will ultimately collect the recorded
                            claim receivable.

                         d) In late 1995, the Company filed four separate
                            informal claims totaling $502,000 for damages and
                            costs incurred as a result of specification, policy
                            and operating changes to contracts primarily
                            instituted by the State of Maryland, including the
                            newly issued "Noise Barrier Acceptance Criteria",
                            which occurred after the award of the contracts and
                            after unit production in accordance with the
                            contracts was virtually complete. These claims were
                            increased to approximately $1,080,500 at December
                            31, 1996.

                                     F-20
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)


6.   Commitments            As of December 31, 2000 all of the claims except one
     and Contingencies      had been settled and the Company has considered
     (continued)            certain counterclaims filed by the State of Maryland
                            in estimating the recoverability of its remaining
                            claim of $76,500 which was fully reserved and
                            certain trade accounts receivable of approximately
                            $149,000 at December 31, 2000.

                         e) In late 1998, the Company filed suit in the circuit
                            court of Lake County, Illinois against Trapani
                            Construction Company ("Trapani") & L. J. Sheridan &
                            Company, as agent for the owner, for the enforcement
                            of a mechanic's lien and the recovery of
                            approximately $120,000 representing the balance due
                            on a contract entered into by the Company to
                            manufacture and install Slenderwall Panels at the
                            Hawthorn Place Medical Center II in Libertyville,
                            Illinois. Work on that building has been completed,
                            approved and accepted by Trapani and the owner.
                            Trapani withheld payment on this project because the
                            Company refused to proceed with a renovation project
                            to reclad Medical Center I, a second building at the
                            same site which was part of the original contract,
                            without a change order to cover incremental costs
                            anticipated as a result of alleged inaccurate
                            specifications supplied by Trapani. The Company
                            believes that it can collect a portion of the
                            balance due, and established a reserve of
                            approximately $80,000 for the remainder.

                        f)  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. Management believes the suit to be without
                            merit as there is no evidence that indicates that
                            the Company either sold or manufactured the section-
                            coupling device in question. The Company plans to
                            vigorously defend its position, and believes that
                            any settlement will not adversely affect the
                            financial statements.

                                     F-21
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)


6.   Commitments          g) In January 2001, the Company received notice of a
     and Contingencies       wrongful death lawsuit filed by the Estate of Joy
     (continued)             V. Snyder and her surviving children. On or about
                             March 12, 1998, Ms. Snyder was involved in an
                             automobile accident whereby the rear of her vehicle
                             was struck by another vehicle, which caused her to
                             leave the highway and run into the back of a
                             tractor-trailer owned by Smith-Midland, causing her
                             death. The tractor-trailer was parked on the
                             shoulder to deliver sound abatement panels to a
                             Maryland State Highway Administration project. The
                             suit names the Company, the tractor-trailer driver,
                             the general contractor, and the Maryland State
                             Highway Administration as defendants alleging
                             negligence as to the truck's location on the
                             shoulder of the highway and asks for damages in the
                             amount of $8,000,000 plus interest and costs. The
                             Company believes that its driver was parked
                             properly in accordance with instructions received
                             from the general contractor and that the accident
                             was entirely a result of the negligence by the
                             driver that hit Ms. Snyder, not any of the parties
                             named in the suit. The Company plans to vigorously
                             defend its position, and believes that any
                             settlement will not adversely affect the financial
                             statements.

                                     F-22