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, 1999
                         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. ___

         The Issuer's revenues for its most recent fiscal year were $14,432,749.

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 31, 2000, was $1,467,427.  As of March 31, 2000, the Company
had outstanding 3,050,798 shares of Common Stock, $.01 par value per share.

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

<PAGE>

                                     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:

          o         our high level of  indebtedness  and  ability to satisfy the
                    same,
          o         our recent significant loss under a material  contract,  and
                    the litigation arising out of that contract,
          o         our limited  recent  history of profitable  operations,  our
                    significant  loss for the three  months  ended  December 31,
                    1998,  resulting  in a loss  for  the  year  1998,  and  our
                    significant  loss for the three  months  ended  December 31,
                    1999,  resulting in a material  reduction in the profits for
                    the year 1999,
          o         the continued  availability of financing in the amounts,  at
                    the times and on the terms  required,  to support our future
                    business and capital projects,
          o         the  extent  to  which  we  are  successful  in  developing,
                    acquiring,  licensing  or securing  patents for  proprietary
                    products,
          o         changes in economic  conditions  specific to any one or more
                    of our markets (such as the availability of public funds and
                    grants for construction),
          o         changes in general  economic  conditions  (such as  interest
                    rate changes),
          o         adverse weather which inhibits the demand for our products,
          o         our compliance with governmental regulations,
          o         the outcome of pending and future litigation,
          o         the  delisting  of our Common  Stock from  NASDAQ in October
                    1999 due to the  continuing  trading  of the stock at prices
                    below $1.00 per share,  and the decrease of our Net Tangible
                    Assets below $2,000,000,
          o         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.

                                       3
<PAGE>

Item 1.  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 other 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,  Portugal,  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
<PAGE>

         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.   Management  has  received  a  positive  reaction  to
Slenderwall  systems  in  the  marketplace  for  use  in  new  construction  and
replacement projects because it is a cost-effective,  efficient,  and attractive
wall  system.  As of March 31, 2000 the  Company  has a backlog for  Slenderwall
systems totaling approximately  $1,070,000 compared to approximately $900,000 at
March 31, 1999.

         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.



                                       5
<PAGE>

         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.

         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 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.



                                       6
<PAGE>

         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 34
states, plus Washington,  D.C. and Puerto Rico. The Company is in various stages
of the  application  process in 15 states and believes  that approval in most 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 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:

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


          o         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  housing;
                    and law enforcement evidence and ammunition storage.


          o         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.



                                       7
<PAGE>

          o         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 and Easi-Set and
Easi-Span Precast Buildings,  and 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  licensees normally 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.

         The Company  has entered  into 23  licensing  agreements  in the United
States,  and has  established  at least one  licensee  in each of  Puerto  Rico,
Canada,  Belgium, New Zealand,  Portugal,  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 plans to develop a licensing program for its Slenderwall
exterior cladding system.


                                       8
<PAGE>

         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.

         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


                                       9
<PAGE>

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.

         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


                                       10
<PAGE>

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 31,  2000,  the Company had 116  full-time  and 4 part-time
employees,  95 of which are located at the Company's Midland facility, and 25 of
which are  located  at the  Company's  facility  located  in  Reidsville,  North
Carolina.  Of the 120  employees,  9 are executive  officers or managers,  5 are
responsible  for  sales  and  marketing,  91  are in  manufacturing,  and 15 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 Properties
         -------------------------

         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 $6,000.
This area 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,  research  and
development,  sales and  marketing,  and licensing  operations in a 4,500 square
foot office building located on its Midland  property.  The Company also owns 19
acres of  undeveloped  industrial  property  in  Midland,  not  adjacent  to the
manufacturing facility.



                                       11
<PAGE>

         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.  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 late 1995, the Company filed four separate  informal claims with the
Maryland State Contractor Board of Appeals.  These claims totaled  approximately
$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 then newly issued "Noise  Barrier  Acceptance  Criteria,"  all of
which were undertaken after the award of the contracts and after unit production
in accordance  with the contracts was virtually  complete.  In 1996, the Company
filed  additional  claims  against  the State of  Maryland  related  to the same
contracts in the amount of $578,500 which brought the amount of the total claims
to $1,080,500.  In early 1996, the Company received several  counterclaims  from
the  State  of  Maryland.  The  Company  has  considered  the  counterclaims  in
estimating  the   recoverability  of  its  claims  and  certain  trade  accounts
receivable and  approximately  $270,100 of the total contract claim was included
in trade accounts  receivable at December 31, 1998.  The Company  settled two of
the claims during 1999 and collected  approximately $186,000. The balance due on
the one remaining claim by the Company of $76,500 was fully reserved at December
31, 1999.

         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 suit is  currently in  discovery.  The
Company  believes  that  it can  collect  a  portion  of the  balance  due,  and
established reserves of approximately $80,000 on this claim.

         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


                                       12
<PAGE>

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 has been booked in its  entirety as of December  31,  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, 1999
and 1998,  $497,000 and $400,000 of the contract  claim was included in accounts
receivable.  The Company  believes  that,  based on prior  experience  in claims
settlement, it will ultimately collect the recorded claim receivable.

         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 is seeking in excess of $150,000
for  work  performed,  equipment/materials  supplied  and  lost  profits  on the
uncompleted  portion of the work.  The Company and CSI have reached an agreement
in principle to settle the suit for $75,000,  payable in a  combination  of cash
and a note 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. AmQuip
is seeking $42,853 from the Company with respect to this claim.

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

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the year ended December 31, 1999,  through the solicitation of
proxies or otherwise.


                                       14
<PAGE>

                                     PART II

Item 5.  Market for Registrant's 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  $1.00  minimum  bid price
requirement.  The Company was also not in compliance  with Nasdaq's net tangible
asset  requirement  (minimum of  $2,000,000).  As of March 31, 2000,  there were
approximately  48 record  holders  of the  Company's  Common  Stock.  Management
believes there are  approximately  500 beneficial owners of the Company's Common
Stock.

         The  following  table  sets  forth the high and low bid  prices for the
Company's  Common Stock for the periods  indicated.  Such  quotations  represent
interdealer  quotations  without  adjustment  for retail  markups,  markdowns or
commissions and may not represent actual transactions.

                                                           Bid
                                                           ---
                                                   High             Low
                                                   ----             ---
1998
First Quarter                                   $ 1 11/16        $   3/4
Second Quarter                                  $ 1 11/16        $   1
Third Quarter                                   $ 1 1/4          $   1 1/16
Fourth Quarter                                  $ 1 1/16         $   5/8

1999
First Quarter                                   $ 1 1/8          $   9/16
Second Quarter                                  $ 1 1/16         $   1/2
Third Quarter                                   $ 1 1/16         $   9/16
Fourth Quarter                                  $ 1              $   3/8


         The  stockholders  of the Company  have  approved an  amendment  of the
Company's  Certificate of Incorporation to affect a one-for-three,  one-for-two,
three-for-five,  two-for-three  or  three-for-four  reverse  stock  split of the
Common  Stock of the Company,  but as of the date of this  report,  the Board of
Directors  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


                                       15
<PAGE>

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.

         In 1998,  the Company  began work on a contract to renovate the Bradley
Hall building at Rutgers University (the "Bradley Hall project").  This project,
which was  completed  in October  1999,  involved  the design,  production,  and
installation of Slenderwall  panels by the Company.  While executing the Bradley
Hall project, the original structure was found to be not structurally sufficient
to support the  installation of the Slenderwall  panels as originally  designed.
This lead to cost  overruns  relating to re-design of the panels,  production of
the panels  with  additional  steel and  reinforcing,  and  installation  costs.
Management  estimates  that the cost overruns to the Company for the project are
approximately  $1.6 million and estimates  that the total loss on the job before
recovery on any claims by the Company is approximately $1.45 million,  which has
been booked in its  entirety  as of  December  31,  1999.  In 1999,  the general
contractor  filed claims on the Company's  behalf in the amount of $1.1 million.
As of December 31, 1999,  $497,000 of the  contract  claim has been  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 prior  experience in claims  settlement,  it
will ultimately collect the recorded claim receivable.


         Results of Operations

         Year ended  December 31, 1999  compared to the year ended  December 31,
1998

         The Company's  operations for 1999 resulted in net income of $42,275 or
$0.01 per  share,  representing  an  increase  in net  income of  $826,158  when
compared to the loss in 1998 of $(783,883), or $(0.26) per share.



                                       16
<PAGE>

         Total revenue for 1999 was comparable to 1998 with $14,432,749 recorded
in 1999, and $14,434,178 in 1998. Total product sales decreased by $571,873,  or
5% to  $11,843,379  in 1999,  compared to  $12,415,252  in 1998. The decrease in
product  sales was due to lower sales  volume of  soundwall  products  which was
partially  offset by  increases  in  Slenderwall,  architectural  products,  and
building  sales.  Unit  prices  have not  changed  significantly.  Shipping  and
installation revenue increased to $2,589,370 in 1999 from $2,018,926 in 1998, an
increase of $570,444, or 28%, attributable to an increase in the number and size
of installation contracts.

         Royalty revenue increased from $264,178 in 1998 to $326,239 in 1999, an
increase of $62,061,  or 23%.  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.  Start-up fees increased from $15,000 in 1998 to $53,123 in 1999,
an increase of $38,123.

         Total  cost  of  goods  sold  for  1999  was  $11,185,901  compared  to
$12,015,760  in 1998,  a  decrease  of  $829,859.  Total cost of goods sold as a
percentage  of total  revenue  decreased  to 78% in 1999  from 83% in 1998.  The
percentage  decrease primarily resulted from the reduction in the current year's
addition to the  Company's  accrued  estimated  total loss on the  Bradley  Hall
project and no new significant 1999 loss jobs. (see "General" in this Section).

         General  and  administrative  expenses  increased  $149,924,  or 7%, to
$2,386,862  in 1999 from  $2,236,938  in 1998.  The  increase  was the result of
higher expenses relating to professional fees and depreciation.

         Selling and marketing  expenses in 1999 were lower  compared to 1998 by
$95,371 or 14%.  Total  selling and  marketing  expenses  were  $583,500 in 1999
compared  with  $678,871 in 1998.  The decrease was due primarily to a temporary
reduction  in  staff,  lower  commissions  paid to  outside  sales  people,  and
reductions in the expenditures for dues and subscriptions.

         Interest expense and loan fees remained relatively constant at $543,770
in 1999 from $541,161 in 1998. Although the Company had higher average levels of
debt  outstanding in 1999, the weighted average interest rate on the outstanding
debt was lower. In addition, in 1998 the Company incurred expense as a result of
the early retirement of several capital leases.

         As a result of cumulative net operating loss ("NOL")  carryforwards  of
approximately  $2,941,000  available  to the  Company as of January 1, 1999,  no
income tax expense was recorded  for 1999.  The Company does not expect to incur
income tax expense for 2000 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  $4,675,544  of  indebtedness  at
December  31, 1999,  of which  $228,025 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


                                       17
<PAGE>

$2,199,228 at December 31, 1997 to $228,025 at December 31, 1999. 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
1999,  and now has a maturity  date of May 1, 2000.  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. The term loan was used to pay
down the line of credit,  which  further  improved  the  Company's  current debt
ratio.

         At December 31, 1999,  the Company had cash  totaling  $374,190 with no
balance  left in  restricted  cash,  compared  to  cash  totaling  $207,661  and
restricted  cash in the amount of $387,462,  at December 31, 1998.  During 1999,
the  Company  used  $24,713  in cash  (net)  to pay down  debt in its  financing
activities, and $551,033 in its investing activities,  primarily for the funding
of the 16,000 square foot plant addition (see "Item 2. Description of Properties
- Facilities"). The Company's operating activities provided $354,813 in cash.

         Capital  spending  decreased to $537,073 in 1999,  from  $1,237,689  in
1998, as the Company completed  construction on the new production facility. The
restricted  funds  were used early in 1999 to  complete  the new  facility.  The
Company  continues  work on a new  engineering  building  and  expects  to incur
additional capital costs in 2000 of approximately  $62,100. No other significant
cash  commitments are anticipated and planned  expenditures for 2000 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.  In addition,  the Company's cash flow has
been significantly affected by the loss on the Bradley Hall project. Although no


                                       18
<PAGE>

assurance can be given,  the Company  believes that  anticipated  cash flow from
operations  with  improved  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 short-term financing,  for which there can
be no assurance of obtaining.

         The  Company  did not  experience  any  interruptions  in  business  or
operations on or around January 1, 2000. In addition,  the costs incurred in the
preparation for the year 2000 did not have a significant impact on the Company's
cash flow or results of operations.


         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  experiences  reduced revenues from
December  through  February and realizes  the  substantial  part of its revenues
during the other months of the year.  The Company  typically  experiences  lower
profits,  or losses,  during the winter months, and must have sufficient working
capital to fund its operations at a reduced level until the spring  construction
season.  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 issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments"  ("SFAS  133").  SFAS 133, as amended,  is effective for all fiscal
quarters of all fiscal years  beginning  after June 15, 2000.  SFAS 133 requires
that an entity  recognize all  derivatives as either assets or  liabilities  and
measure those  instruments at fair market value.  Presently the Company does not
use  derivative  instruments  either in hedging  activities  or as  investments.
Accordingly,  the Company believes that adoption of SFAS 133 will have no impact
on its financial position or results of operations.



                                       19
<PAGE>

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

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

                                                                            Page
                                                                            ----

Report of Independent Certified Public Accountants.......................   F-3

Consolidated Balance Sheets as of December 31, 1999 and 1998.............   F-4

Consolidated Statements of Operations for the years ended December 31,
1999 and 1998   .........    .............................................  F-5

Consolidated Statements of Changes in Stockholders' Equity for the years
ended December 31, 1999 and 1998 .........................................  F-6

Consolidated Statements of Cash Flows for the years ended December 31,
1999 and 1998     ........................................................  F-7

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

Notes to Consolidated Financial Statements ..............................  F-12



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

         Not Applicable.



                                       20
<PAGE>

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         -------------------------------------------------------------
         Compliance with Section 16(a) of the Exchange Act
         -------------------------------------------------
<TABLE>
<CAPTION>
                                       Director Or
                                         Executive
Name                        Age        Officer Since           Position
----                        ---        -------------           --------
<S>                         <C>             <C>                <C>
Rodney I. Smith             61              1970               Chief Executive Officer, President
                                                               And  Chairman  of the  Board of
                                                               Directors

Ashley B. Smith             37              1994               Vice President of Sales and
                                                               Marketing and Director

Wesley A. Taylor            52              1994               Vice President of Administration
                                                               and Director

Andrew G. Kavounis          74              1995               Director

Guy M. Schuch               51              1999               Chief Operating Officer
                                                               Smith Midland Corp. (Virginia)

Robert E. Albrecht, Jr.     49              2000               Chief Financial Officer
</TABLE>


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.

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.



                                       21
<PAGE>

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.

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 1994 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 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, which filings are currently being prepared:

         Form  4  for  Bernard   Patriacca   for  the  Nov.  5,  1997  grant  of
         non-qualified  stock  options,  Form 3 for Thomas J. Deserable due upon
         appointment as Chief Operating  Officer of  Smith-Midland  Virginia and
         for the August 4, 1998 grant of incentive stock options.


                                       22
<PAGE>


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  sole
executive  officer of the Company  and its  subsidiaries  (the "named  executive
officer"), whose cash compensation exceeded $100,000 during 1999:

<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      |  1999    | 156,825   | 54,500   |    -      |    -      | 20,000   |    -      |    -     |
|   President, Chief      |  1998    | 175,000   | 54,500   |    -      |    -      | 20,000   |    -      |    -     |
|   Executive Officer     |  1997    | 170,503   | 81,500   |    -      |    -      |    -     |    -      |    -     |
|  and Chairman of the    |          |           |          |           |           |          |           |          |
|        Board.           |          |           |          |           |           |          |           |          |
|---------------------------------------------------------------------------------------------------------------------|
</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.


                                       23
<PAGE>

Option Grants in Last Fiscal Year


         The following table  summarizes  option grants during 1999 to the named
executive officer:
<TABLE>
<CAPTION>
                                      Number of      % of Total
                                      Securities       Options
                                      Underlying      Granted to        Exercise
                                        Options      Employees in       or Base       Expiration
         Name                         Granted (#)     Fiscal Year     Price  ($/Sh)      Date
         ----                         -----------     -----------     -------------   ----------

<S>                                     <C>              <C>              <C>         <C>
Rodney I. Smith...........              20,000           22.73%           0.5625      12/28/07



Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
<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...       ---           ---             6,833            33,167              ---             ---
</TABLE>
------------
(1) Value is based on the closing sales price of the  Company's  Common Stock on
December  31, 1999  ($0.5625),  the last  trading  day of 1999,  less the option
exercise  price.  All per share prices of the options held by Mr. Smith equal or
exceed $0.5625.


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, 2000, 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.


                                       24
<PAGE>


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

         The  following  table  sets  forth,  as  of  March  26,  2000,  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 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 (3)(4)(5)                     620,131                20.23

Ashley B. Smith (3)(4)(6)                      98,867                 3.23

Wesley A. Taylor (7)                            8,450                   *

Andrew Kavounis (8)                             3,000                   *


All directors, executive officers and
key employees as a group  (6 persons)
(2)(3)(4)(5)(6)(7)(8)                         730,448                23.73

-----------------------
 *     Less than 1%

(1)  The address for each of Messrs.  Rodney I. Smith, Ashley B. Smith,  Taylor,
     Kavounis,  Schuch and Albrecht is c/o Smith-Midland  Corporation,  P.O. Box
     300, 5119 Catlett Road, Midland, Virginia 22728.

(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 of
     Mr. Smith's  children.  Mr. Smith is the trustee of the Trust and, as such,
     may vote the shares,  as he deems fit.  Includes  options to purchase 6,833
     shares of Common Stock of the Company exercisable at $1.00 per share.

(6)  Includes  options to purchase  9,250  shares of Common Stock of the Company
     exercisable at $1.00 per share.

(7)  Includes  options to purchase  8,450  shares of Common Stock of the Company
     exercisable at $1.00 per share.

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

                                       25
<PAGE>

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

         At  December  31,  1999,  the  Company  owned  an  unsecured  note  for
approximately  $638,347  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.  During  1996,  $102,300 of the note was reduced for the
Company's purchase of 40,920 common shares from Mr. Smith. On December 31, 1997,
the  terms of the note were  changed  to call for  annual  payments  of  $45,948
beginning on December 31, 1998 and continuing  through  maturity on December 31,
2002. Payments for the years 1998 and 1999 have been made. During 1999, the note
was increased by $20,776 for additional  borrowings.  Total  interest  income on
this note was approximately $39,000 and $37,600 for the years ended December 31,
1999 and 1998, respectively.

         On July 15, 1999,  the Company  entered Stock  Subscription  Agreements
with each of Rodney I. Smith and Guy M. Schuch,  the Chief Operating  Officer of
Smith-Midland  Virginia,  the  primary  operating  subsidiary  of  the  Company.
Pursuant to these  agreements,  Mr. Smith agreed to purchase  142,857  shares of
common stock and Mr. Schuch agreed to purchase 328,571 shares of common stock of
the Company for $.70 per share, or an aggregate of $330,000. The agreements were
contingent upon the Company maintaining its listing on Nasdaq, a condition which
was not  met.  As of the  date of this  report,  no  action  has  been  taken to
effectuate these purchase transactions.

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

(a)      Exhibits.

         (1)       The following exhibits are filed herewith:

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.

  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.

  27      Financial Data Schedule

          (2)       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:





                                       26
<PAGE>

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.

  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.



                                       27
<PAGE>

  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

         The Company filed a Current Report on Form 8-K to report the de-listing
         of its securities from the Nasdaq Smallcap Market on October 8, 1999.


                                       28
<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 14, 2000               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 14, 2000
----------------------------------
Rodney I. Smith



/s/ Wesley A. Taylor                   Director                   April 14, 2000
----------------------------------
Wesley A. Taylor


/s/ Ashley Smith                       Director                   April 14, 2000
----------------------------------
Ashley Smith



/s/ Andrew Kavounis                    Director                   April 14, 2000
----------------------------------
Andrew Kavounis




                                       29
<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, 1999 and 1998, 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  generally   accepted  auditing
standards.  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, 1999 and 1998, and the results of
their  operations  and their cash  flows for the years then ended in  conformity
with generally accepted accounting principles.





                                                                BDO Seidman, LLP


Richmond, Virginia
April 5, 2000

                                                        F-3
<PAGE>

<TABLE>
<CAPTION>
 December 31,                                                                         1999                  1998
--------------------------------------------------------------------------------------------------------------------

     Assets (Note 2)
<S>                                                                           <C>                   <C>
Current assets
   Cash                                                                        $   374,190          $    207,661
   Accounts receivable (Note 6)
     Trade - billed, (less allowance for doubtful
       accounts of $323,474 and $262,000)                                        3,557,938             3,824,012
     Trade - unbilled                                                              123,332               199,108
   Inventories
     Raw materials                                                                 493,979               522,468
     Finished goods                                                              1,013,958               989,745
   Prepaid expenses and other assets                                                46,656               116,034
--------------------------------------------------------------------------------------------------------------------

Total current assets                                                             5,610,053             5,859,028
--------------------------------------------------------------------------------------------------------------------

Property and equipment, net (Note 1)                                             2,608,145             2,449,566
--------------------------------------------------------------------------------------------------------------------

Other assets
   Cash - restricted                                                                     -               387,462
   Notes receivable, officer (Note 3)                                              638,347               624,387
   Other                                                                           317,845               246,058
--------------------------------------------------------------------------------------------------------------------

Total other assets                                                                 956,192             1,257,907
--------------------------------------------------------------------------------------------------------------------








                                                                               $ 9,174,390          $  9,566,501
====================================================================================================================




<PAGE>
                                                                                    Smith-Midland Corporation
                                                                                             and Subsidiaries

                                                                                  Consolidated Balance Sheets

<CAPTION>

December 31,                                                                          1999                  1998
--------------------------------------------------------------------------------------------------------------------

     Liabilities and Stockholders' Equity

Current liabilities
   Current maturities of notes payable (Note 2)                                $   228,025          $    573,104
   Accounts payable - trade                                                      1,690,853             2,177,884
   Accrued expenses and other liabilities (Note 6)                               1,324,021             1,115,118
   Customer deposits                                                               172,914               306,255
--------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                        3,415,813             4,172,361

Notes payable - less current maturities (Note 2)                                 4,350,644             4,020,661

Notes payable - related parties (Note 3)                                            96,875               104,696
--------------------------------------------------------------------------------------------------------------------

Total liabilities                                                                7,863,332             8,297,718
--------------------------------------------------------------------------------------------------------------------

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; 3,085,718 issued and outstanding                                       30,857                30,857
   Additional paid-in capital                                                    3,450,085             3,450,085
   Accumulated deficit                                                          (2,067,584)           (2,109,859)
--------------------------------------------------------------------------------------------------------------------

                                                                                 1,413,358             1,371,083
Treasury stock, at cost, 40,920 shares                                            (102,300)             (102,300)
--------------------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                       1,311,058             1,268,783
--------------------------------------------------------------------------------------------------------------------

                                                                               $ 9,174,390          $  9,566,501
====================================================================================================================
                                                                     See accompanying summary of accounting policies
                                                                    and notes to consolidated financial statmements.


                                                        F-4
<PAGE>
                                                                                    Smith-Midland Corporation
                                                                                             and Subsidiaries

                                                                        Consolidated Statements of Operations


<CAPTION>
Year Ended December 31,                                                               1999                  1998
--------------------------------------------------------------------------------------------------------------------

Revenue                                                                        $14,432,749          $ 14,434,178

Cost of goods sold                                                              11,185,901            12,015,760
--------------------------------------------------------------------------------------------------------------------

Gross profit                                                                     3,246,848             2,418,418
--------------------------------------------------------------------------------------------------------------------

Operating expenses
   General and administrative expenses                                           2,386,862             2,236,938
   Selling expenses                                                                583,500               678,871
--------------------------------------------------------------------------------------------------------------------

Total operating expenses                                                         2,970,362             2,915,809
--------------------------------------------------------------------------------------------------------------------

Operating income (loss)                                                            276,486              (497,391)
--------------------------------------------------------------------------------------------------------------------

Other income (expense)
   Royalties                                                                       326,239               264,178
   Interest expense and loan fees                                                 (543,770)             (541,161)
   Interest income (Note 3)                                                         68,603                63,616
   Other, net                                                                      (85,283)              (73,125)
--------------------------------------------------------------------------------------------------------------------

Total other income (expense)                                                      (234,211)             (286,492)
--------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                              $    42,275          $   (783,883)
====================================================================================================================

Basic and diluted income (loss) per share                                      $       .01          $       (.26)
====================================================================================================================

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


                                                        F-5
<PAGE>
                                                                                    Smith-Midland Corporation
                                                                                             and Subsidiaries

                                                              Consolidated Statements of Stockholders' Equity


<CAPTION>
                                                     Additional
                                        Common         Paid-In       Accumulated       Treasury
                                         Stock         Capital         Deficit          Stock           Total
---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997                $30,857       $3,450,085     $(1,325,976)      $(102,300)     $2,052,666

Net loss                                        -                -        (783,883)              -        (783,883)
---------------------------------------------------------------------------------------------------------------------

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


                                                        F-6

<PAGE>
                                                                                    Smith-Midland Corporation
                                                                                             and Subsidiaries

                                                                        Consolidated Statements of Cash Flows



Year Ended December 31,                                                               1999                  1998
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Operating Activities
   Cash received from customers                                                $14,967,497          $ 14,203,657
   Cash paid to suppliers and employees                                        (14,052,234)          (13,955,985)
   Interest paid                                                                  (543,770)             (540,695)
   Other                                                                           (16,680)                8,267
--------------------------------------------------------------------------------------------------------------------

Net cash provided (absorbed) by operating activities                               354,813              (284,756)
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Investing Activities
   Purchases of property and equipment                                            (537,073)           (1,237,689)
   Repayments (advances) on officer note receivable                                (13,960)                8,085
--------------------------------------------------------------------------------------------------------------------

Net cash absorbed by investing activities                                         (551,033)           (1,229,604)
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities
   Proceeds from borrowings                                                        677,157             4,642,275
   Repayments of borrowings                                                       (692,253)           (3,007,177)
   Repayments on borrowings - related parties, net                                  (9,617)              (10,902)
--------------------------------------------------------------------------------------------------------------------

Net cash provided (absorbed) by financing activities                               (24,713)            1,624,196
--------------------------------------------------------------------------------------------------------------------

Decrease (increase) in cash - restricted                                           387,462              (190,485)
--------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash                                                    166,529               (80,649)

Cash, beginning of year                                                            207,661               288,310
--------------------------------------------------------------------------------------------------------------------

Cash, end of year                                                              $   374,190          $    207,661
====================================================================================================================

                                                                                                        continued...

                                                        F-7

<PAGE>

                                                                                    Smith-Midland Corporation
                                                                                             and Subsidiaries

                                                                        Consolidated Statements of Cash Flows
                                                                                                  (continued)

<CAPTION>

Year Ended December 31,                                                               1999                  1998
--------------------------------------------------------------------------------------------------------------------

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

Net income (loss)                                                              $    42,275          $   (783,883)
Adjustments to reconcile net income (loss) to net cash
   provided (absorbed) by operating activities
     Depreciation and amortization                                                 380,290               319,185
     (Increase) decrease in
       Accounts receivable - billed                                                266,074              (569,019)
       Accounts receivable - unbilled                                               75,776               211,050
       Inventories                                                                   4,276               (83,203)
       Prepaid expenses and other assets                                            (2,409)             (212,848)
     Increase (decrease) in
       Accounts payable - trade                                                   (487,031)              433,757
       Accrued expenses and other liabilities                                      208,903               544,425
       Customer deposits                                                          (133,341)             (144,220)
--------------------------------------------------------------------------------------------------------------------

Net cash provided (absorbed) by operating activities                           $   354,813          $   (284,756)
====================================================================================================================
                                                                     See accompanying summary of accounting policies
                                                                    and notes to consolidated financial statmements.


</TABLE>


                                                        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
Consolidation                      statements    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.
Equipment                          Expenditures  for  ordinary  maintenance  and
                                   repairs  are  charged to income as  incurred.
                                   Costs of  betterments,  renewals,  and  major
                                   replacements  are  capitalized.  At the  time
                                   properties are retired or otherwise  disposed
                                   of,  the  related  cost  and   allowance  for
                                   depreciation are eliminated from the accounts
                                   and  any  gain  or  loss  on  disposition  is
                                   reflected in income.

                                   Depreciation    is    computed    using   the
                                   straight-line   method  over  the   following
                                   estimated useful lives:

                                                                           Years
                                       -----------------------------------------

                                       Buildings                          10-33
                                       Trucks and automotive equipment     3-10
                                       Shop machinery and equipment        3-10
                                       Land improvements                  10-15
                                       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.

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
Financial  Instruments             instruments   approximates   their   carrying
                                   amounts as of December 31, 1999 and 1998. 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
Per  Share                         average  number of shares of common stock and
                                   dilutive     common     stock     equivalents
                                   outstanding.  Basic  earnings  per  share  is
                                   computed  by  dividing  income  available  to
                                   common  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, 1999 and 1998.

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,  1999,  the  Company  has  determined  no
                                   impairment has occurred.

Recent Accounting                  In  June  1998,   the  Financial   Accounting
Pronouncements                     Standards Board issued Statement of Financial
                                   Accounting Standards No. 133, "Accounting for
                                   Derivative  Instruments"  ("SFAS 133").  SFAS
                                   133, as amended,  is effective for all fiscal
                                   quarters of fiscal years beginning after June
                                   15, 2000. SFAS 133 establishes accounting and
                                   reporting     standards    for     derivative
                                   instruments and for hedging activities.  SFAS
                                   133  requires  that an entity  recognize  all
                                   derivatives  as either assets or  liabilities
                                   and measure those  instruments at fair market
                                   value.  Presently,  the Company  does not use
                                   derivative   instruments  either  in  hedging
                                   activities  or as  investments.  Accordingly,
                                   the Company  believes  that  adoption of SFAS
                                   133  will  have no  impact  on its  financial
                                   position or results of operations.




                                      F-11
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements


--------------------------------------------------------------------------------

<TABLE>
1.      Property and               Property and equipment consist of the following:
        Equipment
<CAPTION>
                                   December 31,                                  1999             1998
                                  -----------------------------------------------------------------------

                                  <S>                                     <C>              <C>
                                  Land and land improvements              $   589,441      $   568,660
                                  Buildings                                 1,792,197        1,012,840
                                  Machinery and equipment                   5,227,067        5,325,917
                                  Rental equipment                             73,539           39,240
                                  Construction in progress                     72,632          562,092
                                  -----------------------------------------------------------------------

                                                                            7,754,876        7,508,749
                                  Less:  accumulated depreciation           5,146,731        5,059,183
                                  -----------------------------------------------------------------------

                                                                          $ 2,608,145      $ 2,449,566
                                  -----------------------------------------------------------------------

                                   At  December  31,  1999,  the  Company had an
                                   engineering  building in  progress,  which is
                                   expected to be completed in 2000. The cost to
                                   complete   the   engineering    building   is
                                   estimated to be $62,100.

2.      Notes Payable              Notes payable consist of the following:
<CAPTION>
                                  December 31,                                                      1999               1998
                                  --------------------------------------------------------------------------------------------

                                  Note payable to individual,  maturing December
                                    2001;  with  monthly  payments  of $1,003 of
                                    principal and interest, interest
                                    at 12%; collateralized by certain  vehicles.             $    21,317       $          -

                                    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%  (10% at  December  31,
                                    1999); collateralized by
                                    principally all assets of the Company.                     3,906,716          3,979,245




                                      F-12
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------

<CAPTION>
2.      Notes Payable              December 31,                                                     1999              1998
        (continued)                -------------------------------------------------------------------------------------------

                                 Note  payable  to  First   International  Bank,
                                   maturing   January  1,  2005;   with  monthly
                                   payments of $10,658 of principal and interest
                                   at prime plus 1.75%  (10.25% at December  31,
                                   1999); collateralized by blanket lien on
                                   company assets.                                           $   500,000    $
                                                                                                                         -

                                 Line of credit with First  International  Bank,
                                   maturing  May  1,  2000;   interest   payable
                                   monthly  at prime  plus 1% (9.5% at  December
                                   31, 1999); collateralized by accounts
                                   receivable and inventory.                                           -           425,000

                                 Installment   notes  and   capitalized   leases
                                   collateralized   by  certain   machinery  and
                                   equipment    maturing   at   various   dates,
                                   primarily August 2001 through October 2003,
                                   with interest at 7.25% through 8.25%.                         130,636           169,520

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

                                                                                               4,578,669         4,593,765
                                 Less current maturities                                         228,025           573,104
                                 ---------------------------------------------------------------------------------------------

                                                                                             $ 4,350,644       $ 4,020,661
                                 =============================================================================================
</TABLE>



                                      F-13
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------


2.      Notes Payable              During   1998,   the   Company   restructured
        (continued)                substantially   all  its  debt   with   First
                                   International  Bank.  The Company  obtained a
                                   $4,000,000  twenty-three  year  term  note at
                                   prime plus 1.5% and paid off existing debt at
                                   that time of  approximately  $3,000,000.  The
                                   remaining  proceeds  are being used for plant
                                   expansion and the purchase of equipment.  The
                                   loan  is  guaranteed  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, 1999.

                                   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 2000.  There were no
                                   outstanding  borrowings on the line of credit
                                   at December 31, 1999.

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

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

                                                 2000                $  228,025
                                                 2001                   207,804
                                                 2002                   197,972
                                                 2003                   214,675
                                                 2004                   219,217
                                              Thereafter              3,510,976
                                   ---------------------------------------------

                                                                     $4,578,669
                                   ---------------------------------------------

3.      Related Party              The Company  currently  leases  three and one
        Transactions               half 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  minimum  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 $8,500 and $10,500
                                   for the years  ended  December  31,  1999 and
                                   1998, respectively.


                                      F-14
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------


3.      Related Party              The Company has an unsecured note  receivable
        Transactions               from its President  and majority  stockholder
        (continued)                with a seven- year term  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  $39,000  and $37,600
                                   for the years  ended  December  31,  1999 and
                                   1998, respectively.

                                   As of December 31, 1999 and 1998, 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  and  $148,000,
                                   respectively.   Borrowings  of  approximately
                                   $134,000   and  $117,000   were   outstanding
                                   against the cash surrender  value at December
                                   31, 1999 and 1998.

4.      Income Taxes               There was no  provision  for income  taxes in
                                   1999  or  1998  due to the  existence  of net
                                   operating losses.

                                   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,                          1999                         1998
                                 ----------------------------------------------------------------------------------------------

                                                                           Amount       Percent         Amount       Percent
                                 ----------------------------------------------------------------------------------------------

                                 <S>                                       <C>             <C>          <C>            <C>
                                 Income taxes at statutory rate            $ 14,000        34%          $(273,000)     (34)%
                                 Increase (decrease) in taxes
                                    resulting from:
                                      Increase in valuation
                                        allowance                                 -         -             261,000       30
                                      Other                                 (14,000)       34              12,000        4
                                 ----------------------------------------------------------------------------------------------

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


                                      F-15
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------

<TABLE>

4.      Income Taxes               Deferred tax assets (liabilities) are as follows:
        (continued)
<CAPTION>
                                   December 31,                                   1999              1998
                                  -------------------------------------------------------------------------

                                  <S>                                      <C>             <C>
                                  Depreciation                             $   (80,000)    $     (44,600)
                                  Provision for doubtful accounts              129,000           102,000
                                  Vacation accrued                              34,000            41,000
                                  Deferred income                                9,000             9,000
                                  Operating loss carryforwards               1,106,000         1,176,000
                                  -------------------------------------------------------------------------

                                  Net deferred tax asset                     1,198,000         1,283,400
                                  Deferred tax asset valuation allowance    (1,198,000)       (1,283,400)
                                  -------------------------------------------------------------------------

                                                                           $         -     $           -
                                  =========================================================================
</TABLE>
                                   At  December  31,   1999,   the  Company  had
                                   approximately  $2,765,000  of  net  operating
                                   loss   carryforwards  with  expiration  dates
                                   through December 31, 2018.

5.      Employee Benefit           The Company has a 401(k) retirement plan (the
        Plans                      "Plan") 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 1% of the  participant's
                                   compensation,  as  a  matching  contribution.
                                   Total   contributions  for  the  years  ended
                                   December  31, 1999 and 1998 were  $13,631 and
                                   $6,465, 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,
                                   1999 and 1998.

6.      Commitments                a)    The Company has an employment agreement
        and                              with its President  which  provides for
        Contingencies                    an annual salary of up to $175,000. The
                                         term of the agreement  expires December
                                         31,    2000,    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-16
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------


6.      Commitments                b)    On  August  5,   1994,   the  Board  of
        and                              Directors  and   Stockholders   of  the
        Contingencies                    Company  adopted the 1994 Stock  Option
        (continued)                      Plan (the "1994 Plan") which allows the
                                         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.   The  maximum  aggregate
                                         number of shares  which may be  granted
                                         shall not exceed  280,000 shares of the
                                         Company's  Common Stock.  The following
                                         tables  summarize  activity of the Plan
                                         and the stock  options  outstanding  at
                                         December 31, 1999:
<TABLE>
<CAPTION>
                                                                                     Weighted
                                                                                      Average                      Vested
                                                                                     Exercise       Options          and
                                                                                       Price      Outstanding    Exercisable
                                   -------------------------------------------------------------------------------------------

                                 <S>                                                   <C>          <C>            <C>
                                 Balance, December 31, 1997                            $1.96        54,450         31,483
                                 Granted                                                1.00        61,975              -
                                 Forfeited                                              1.00        (5,000)        (1,333)
                                 Vested                                                 -                -         10,149
                                 ---------------------------------------------------------------------------------------------

                                 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
                                 =============================================================================================
<CAPTION>
                                                                     Options Outstanding               Options Exercisible
                                                           ----------------------------------------- -------------------------
                                                                             Weighted Average
                                                            Number of      Remaining Contractual              Number
                                 Exercise Prices              Shares           Life (Years)                 of Shares
                                 ---------------------------------------------------------------------------------------------

                                 $0.56                          88,000               8                               -
                                 $1.00                          78,275               6.7                        43,520
                                 $3.50                          20,000               6.5                        20,000
                                 ---------------------------------------------------------------------------------------------

                                                               186,275               7.3                        63,520
                                 =============================================================================================
</TABLE>


                                      F-17
<PAGE>


<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------


6.      Commitments                The   Company  has   adopted   Statement   of
        and Contingencies          Financial   Accounting   Standards  No.  123,
        (continued)                Accounting   for   Stock-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 1999 and 1998
                                         earnings  (loss)  would  have  been  as
                                         follows:
<TABLE>
<CAPTION>
                                                                                              1999           1998
                                        ----------------------------------------------------------------------------
                                        <S>                                                <C>          <C>
                                        Net earnings (loss):
                                           Reported                                        $42,275      $(783,883)
                                           Proforma                                         10,595       (816,010)
                                        Basic and  diluted  earnings  (loss) per share:
                                           Reported                                          $.014          $(.26)
                                           Proforma                                           .003           (.27)
</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% (5.27% for 1998)
                                         and  expected  lives  of  five  to  six
                                         years. Substantially all options become
                                         vested and  exercisable  evenly  over a
                                         five year period.  The weighted average
                                         fair  value of options  granted  during
                                         the years ended  December  31, 1999 and
                                         1998 was $.36 and $.52, respectively.


                                      F-18
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------


6.      Commitments                c)    In  1999,  the  Company,   through  the
        and Contingencies                general  contractor,  filed claims,  in
        (continued)                      the amount of 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  damages  in
                                         excess of  $1,000,000.  The Company has
                                         approximately   $950,000   due  to  the
                                         general contractor  included in accrued
                                         expenses at December 31, 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,   1999  and   1998,
                                         approximately  $497,000 and $400,000 of
                                         the potential $1,200,000 contract claim
                                         is   included    in   trade    accounts
                                         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   totalling
                                         $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  $1,081,000
                                         at December 31, 1996.


                                      F-19
<PAGE>
                                                  Smith-Midland Corporation
                                                           and Subsidiaries

                                 Notes to Consolidated Financial Statements
                                                                (continued)

--------------------------------------------------------------------------------


6.      Commitments                      All  conditions  for claim  recognition
        and Contingencies                were   satisfied,   and   approximately
        (continued)                      $270,000 of the total  contract  claims
                                         were   included   in   trade   accounts
                                         receivable,   as  such   amounts   were
                                         probable,  at December  31,  1998.  The
                                         Company  settled  two of  these  claims
                                         during 1999 and collected approximately
                                         $186,000.   The   balance  due  on  one
                                         remaining   claim  in  the   amount  of
                                         $76,500   is  fully   reserved   as  of
                                         December 31, 1999.

                                   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  suit  is
                                         currently  in  discovery.  The  Company
                                         believes  that it can collect a portion
                                         of the  balance  due,  and  established
                                         reserves  of  approximately  $80,000 on
                                         the claim.

                                   f)    On March 2, 1999, the Company  received
                                         notification  from the NASDAQ  SmallCap
                                         Market  ("NASDAQ") that the Company had
                                         failed to meet certain market criteria,
                                         and might be  subject to  delisting  if
                                         compliance   could  not  be   achieved.
                                         Specifically,   the  Company's   Common
                                         Stock  had  fallen  below  the  minimum
                                         standard of $1.00 per share.  According
                                         to NASDAQ,  the Company's  Common Stock
                                         must trade above $1.00 per share for at
                                         least ten  consecutive  days within the
                                         90 day  period  ended  June 2,  1999 to
                                         comply   with  the  minimum  bid  price
                                         requirement.  In addition,  the Company
                                         was  not in  compliance  with  the  Net
                                         Tangible    Asset     requirement    of
                                         $2,000,000.   Due  to   the   Company's
                                         noncompliance, in October 1999, trading
                                         of  the  Company's   common  stock  was
                                         transferred to the OTC Bulletin Board.


                                      F-20