**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-K**

**SMITH-MIDLAND      CORPORATION**

|                  Delaware                                                      |        |                   54-1727060                                |
|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|
|  (State                or Other Jurisdiction of Incorporation or Organization) |   |   (I.R.S.                Employer  Identification No.) |
|                                                                                |   |                                                                  |
| P.O.                Box 300, 5119 Catlett Road,                                     |   |                                                                  |
| Midland,                Virginia                      |        | 22728                                                                 |
| (Address                of Principal Executive Offices)                             |   |  (Zip                Code)                                       |

|                                                                                                    |   | Name                of Each Exchange on |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------------------|
|                    Title                  of Each Class                                  |   | Which                Registered         |
| Common                Stock, $.01 par value per share                                              |   | Boston                Stock Exchange    |
|                                                                                               |   |                                    |
| Securities                Registered Pursuant to Section 12(g) of the Exchange                Act: |
|                                                                                               |   |                                    |
| Common                Stock, $.01 par value per share                                              |
| (Title                of Class)                                                                    |
|                                                                                               |
| Preferred                Stock Purchase Rights                                                     |
| (Title                of Class)                                                                    |

| Large                  Accelerated Filer o |   | Accelerated                  filer o         |
|--------------------------------------------|--------|----------------------------------------------|
|                                       |   |                                         |
| Non-accelerated                  Filer o   |   | Smaller                  reporting company x |

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**FORWARD-LOOKING      STATEMENTS**

| ·   | our                high level of indebtedness and ability to satisfy the                same,                                                                                                                                                                |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                                                                                                                                         |
| ·   | the                continued availability of financing in the amounts, at the times,                and on                the terms required, to support our future business and capital                projects,                                            |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                extent to which we are successful in developing, acquiring, licensing                or                securing patents for proprietary products,                                                                                         |
|               |                                                                                                                                                                                                                                                         |
| ·   | changes                in economic conditions specific to any one or more of our markets                (including the availability of public funds and grants for                construction),                                                             |
|               |                                                                                                                                                                                                                                                         |
| ·   | changes                in general economic conditions,                                                                                                                                                                                                       |
|               |                                                                                                                                                                                                                                                         |
| ·   | adverse                weather which inhibits the demand for our products,                                                                                                                                                                                   |
|               |                                                                                                                                                                                                                                                         |
| ·   | our                compliance with governmental regulations,                                                                                                                                                                                                 |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                outcome of future litigation,                                                                                                                                                                                                             |
|               |                                                                                                                                                                                                                                                         |
| ·   | on                material construction projects, our ability to produce and install                product                that conforms to contract specifications and in a time frame that                meets                the contract requirements , |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                cyclical nature of the construction industry,                                                                                                                                                                                             |
|               |                                                                                                                                                                                                                                                         |
| ·   | our                exposure to increased interest expense payments should interest rates                change                                                                                                                                               |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                Board of Directors, which is composed of four members, has only one                outside, independent director,                                                                                                                         |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                Company does not have an audit committee; the Board of Directors                functions                in that role,                                                                                                                    |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                Company’s Board of Directors does not have a member that qualifies as an                audit committee financial expert as defined in the                regulations,                                                              |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                Company has experienced a high degree of employee turnover,                and                                                                                                                                                            |
|               |                                                                                                                                                                                                                                                         |
| ·   | the                other factors and information disclosed and discussed in other sections                of                this report.                                                                                                                     |

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**PART      I**

| **Item                1.** | **Business** |
|----------------------------|--------------|

**General**

**Market**

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**Products**

*Easi-Set      Slenderwall*
*Ô*
*Lightweight      Construction Panels*

*Easi-Set      Sierra Wall*

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*Easi-Set      J-J Hooks*
*Ô*
*Highway      Safety Barrier*

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*Easi-Set      Precast Building and Easi-Span*
*Ô      *
*Expandable      Precast Building*

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

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

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

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

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*Easi-Set      Utility Vault*

*Beach      Prisms*
*TM*

*H2Out*
*TM*

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**Sources      of Supply**

**Licensing**

**Marketing      and Sales**

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**Competition**

**Patents      and Proprietary Information **

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**Government      Regulation**

**Employees**

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| **Item                2.** | **Property** |
|----------------------------|--------------|

**Facilities**

| **Item                3.** | **Legal                Proceedings** |
|----------------------------|--------------------------------------|

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

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**PART      II**

| **Item                5.** | **Market                for Registrant’s Common Equity, Related Stockholder Matters and Small                Business Issuer Purchases of Equity                Securities.** |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **2007**                        |   |   | High     |   |   | Low      |   |
|---------------------------------|--------|--------|----------|--------|--------|----------|--------|
| First                  Quarter  |   | **$**  | **2.10** |   | **$**  | **1.65** |   |
| Second                  Quarter |   | **$**  | **2.35** |   | **$**  | **1.40** |   |
| Third                  Quarter  |   | **$**  | **2.48** |   | **$**  | **1.80** |   |
| Fourth                  Quarter |   | **$**  | **2.35** |   | **$**  | **1.60** |   |
|                            |   |   |          |   |   |          |   |
| **2006**                        |   |   |          |   |   |          |   |
| First                  Quarter  |   | $      | 3.40     |   | $      | 2.50     |   |
| Second                  Quarter |   | $      | 3.20     |   | $      | 2.22     |   |
| Third                  Quarter  |   | $      | 2.92     |   | $      | 1.21     |   |
| Fourth                  Quarter |   | $      | 2.45     |   | $      | 1.36     |   |

**Dividends**

**Shareholder      Rights Plan**

----

| **Item                6** | **Selected              Financial Data** |
|---------------------------|------------------------------------------|

| **Item                7** | **Management's                Discussion and Analysis of Financial Condition and Results of                Operations** |
|---------------------------|-------------------------------------------------------------------------------------------------------------------------|

**Overview**

**Results      of Operations**

**Year      ended December 31, 2007 compared to the year ended December 31,      2006**

----

----

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**Liquidity      and Capital Resources**

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**Significant      Accounting Policies and Estimates**

**Seasonality**

**Inflation**

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**Other      Comments**

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**Recent      Accounting Pronouncements**

*Accounting      for Uncertainty in Income Taxes*
*Accounting      for Income Taxes*

| **Item                  7A.** | **Quantitative                    and Qualitative Disclosures about Market                    Risk** |
|-------------------------------|------------------------------------------------------------------------------------------------------|

----

| **Item                8.** | **Financial                Statements and Supplementary                Data** |
|----------------------------|-------------------------------------------------------------------------------|

|                                                                                                                                                         |   |      Page |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
| Report                  of Independent Registered Public Accountants                                                                                         |   |                               | F-3     |   |
|                                                                                                                                                         |   |                               |         |   |
| Consolidated                  Balance Sheets as of December 31, 2007 and 2006                                                                                |   |                               | F-4-5   |   |
|                                                                                                                                                         |   |                               |         |   |
| Consolidated                  Statements of Operations for the years ended December 31, 2007                  and                  2006                      |   |                               | F-6     |   |
|                                                                                                                                                         |   |                               |         |   |
| Consolidated                  Statements of Changes in Stockholders' Equity for the years ended                  December                  31, 2007 and 2006 |   |                               | F-7     |   |
|                                                                                                                                                         |   |                               |         |   |
| Consolidated                  Statements of Cash Flows for the years ended December 31, 2007                  and                  2006                      |   |                               | F-8-9   |   |
|                                                                                                                                                         |   |                               |         |   |
| Summary                  of Significant Accounting Policies                                                                                                  |   |                               | F-10-14 |   |
|                                                                                                                                                         |   |                               |         |   |
| Notes                  to Consolidated Financial Statements                                                                                                  |   |                               | F-15-21 |   |

| **Item                9.** | **Changes                In and Disagreements With Accountants on Accounting and Financial                Disclosure** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------|

| **Item                9A(T).** |   | **Controls                and Procedures.** |
|--------------------------------|--------|---------------------------------------------|

**Management’s      Report on Internal Control over Financial Reporting**

----

**Disclosure      controls and procedures**

**Changes      in Internal Control over Financial Reporting **

| **Item                9B.** | **Other                Information.** |
|-----------------------------|---------------------------------------|

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**PART      III**

| **Item                10.** | **Directors,                Executive Officers, Promoters and Control Persons; Compliance with                Section                16(a) of the Exchange                Act** |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Name**                          |   | **Age** |   | **Director                  Or Executive****Officer                Since** |   | **Position**                                       |
|-----------------------------------|--------|---------|--------|----------------------------------------------------------------------------|--------|----------------------------------------------------|
| Rodney                I. Smith    |   | 69      |   | 1970                                                                       |   | Chief                Executive Officer, President, |
|                              |   |    |   |                                                                       |   | and                Chairman of the Board of        |
|                              |   |    |   |                                                                       |   | Directors                                          |
|                              |   |    |   |                                                                       |   |                                               |
| Ashley                B. Smith    |   | 45      |   | 1994                                                                       |   | Vice                President of Sales and         |
|                              |   |    |   |                                                                       |   | Marketing                and Director              |
|                              |   |    |   |                                                                       |   |                                               |
| Wesley                A. Taylor   |   | 60      |   | 1994                                                                       |   | Vice                President of Administration,   |
|                              |   |    |   |                                                                       |   | Secretary,                Treasurer, and Director  |
|                              |   |    |   |                                                                       |   |                                               |
| Andrew                G. Kavounis |   | 82      |   | 1995                                                                       |   | Director                                           |
|                              |   |    |   |                                                                       |   |                                               |
| Steve                Ott          |   | 41      |   | 2005                                                                       |   | Vice                President of Engineering       |
|                              |   |    |   |                                                                       |   | Smith-Midland                Corp. (Virginia)      |

**Background**

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

**Ashley      B. Smith.**
*Vice      President of Sales and Marketing and Director*

**Wesley      A. Taylor.**
*Vice      President of Administration, Secretary, Treasurer, and      Director*
***.***
** **

----

**Andrew      Kavounis.**
*Director*

**Steve      Ott.**
*Vice      President of Engineering, Smith Midland Corp.(Virginia).*

**Section      16(a) Beneficial Ownership Reporting Compliance**

**Code      of Ethics**

**Audit      Committee**

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| **Item                11.** | **Executive                Compensation.** |
|-----------------------------|--------------------------------------------|

**Summary      Compensation Table**

| Name                  and Principal Position |   |   | Year |   |   | Salary ($)(1) |   |   | Bonus($)(2) |   |   | Stock                  Awards ($) |   |   | OptionAwards($)(3) |   |   | Non-EquityIncentive                  Plan Compensation ($) |   |   | NonqualifiedDeferred                  Compensation Earnings($) |   |   | All                  Other Compensation ($) |   |   | Total($) |   |
|----------------------------------------------|--------|--------|------|--------|--------|--------------------|--------|--------|-------------|--------|--------|-----------------------------------|--------|--------|--------------------|--------|--------|-----------------------------------------------------------------|--------|--------|----------------------------------------------------------------|--------|--------|--------------------------------------------------|--------|--------|----------|--------|
| Rodney                  I. Smith             |   |   | 2007 |   |   | 99,000             |   |   | —     |   |   | —                           |   |   | 29,000             |   |   | —                                                         |   |   | —                                                        |   |   | 104,400                                          | (4)    |   | 232,400  |   |
| President,                  Chief            |   |   | 2006 |   |   | 99,750             |   |   | 16,000      |   |   | —                           |   |   | 30,400             |   |   | —                                                         |   |   | —                                                        |   |   | 347,563                                          | (4)    |   | 493,713  |   |
| Executive                  Officer           |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
| and                  Chairman of the         |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
| Board.                                       |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
|                                         |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
| Ashley                  B. Smith             |   |   | 2007 |   |   | 117,389            |   |   | —     |   |   | —                           |   |   | 10,150             |   |   | —                                                         |   |   | —                                                        |   |   | 4,923                                            |   |   | 132,462  |   |
| VP                  of Sales and             |   |   | 2006 |   |   | 104,683            |   |   | 2,508       |   |   | —                           |   |   | 10,640             |   |   | —                                                         |   |   | —                                                        |   |   | 5,804                                            |   |   | 123,635  |   |
| Marketing                  and Director      |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
|                                         |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
| Wesley                  A. Taylor            |   |   | 2007 |   |   | 95,200             |   |   | —     |   |   | —                           |   |   | 10,150             |   |   | —                                                         |   |   | —                                                        |   |   | 4,970                                            |   |   | 110,320  |   |
| VP                  of Administration,       |   |   | 2006 |   |   | 100,630            |   |   | 3,320       |   |   | —                           |   |   | 10,640             |   |   | —                                                         |   |   | —                                                        |   |   | 5,390                                            |   |   | 119,980  |   |
| Secretary,                  Treasurer,       |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |          |   |
| and                  Director                |   |   |      |   |   |                    |   |   |             |   |   |                                   |   |   |                    |   |   |                                                                 |   |   |                                                                |   |   |                                                  |   |   |     |   |

| Dividend                  Yield (per share) |   | $      | 0.00                     |   |
|---------------------------------------------|--------|--------|--------------------------|--------|
| Volatility                                  |   |   | 73                       | %      |
| Risk-free                  Interest Rate    |   |   | 4.42                     | %      |
| Expected                  Life              |   |   | 6                  years |   |

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**Executive      Officer Outstanding Equity Awards At Fiscal Year-End**

| Name                                 |   |   | Number                  ofSecuritiesUnderlyingUnexercised Options                  (#)Exercisable |   |   | Number                  of Securities Underlying Unexercised Options                  (#)Unexercisable |   |   | Option                   ExercisePrice($/Sh) |   |   | OptionExpiration                  Date |   |
|--------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|----------------------------------------|--------|
| Rodney                  I. Smith     |   |   | 10,000                                                                                                 |   |   | —                                                                                                |   |   | 1.00                                              |   |   | 7/30/08                                |   |
|                                 |   |   | 10,000                                                                                                 |   |   | —                                                                                                |   |   | 1.00                                              |   |   | 8/3/08                                 |   |
|                                 |   |   | 20,000                                                                                                 |   |   | —                                                                                                |   |   | 0.5625                                            |   |   | 12/28/09                               |   |
|                                 |   |   | 20,000                                                                                                 |   |   | —                                                                                                |   |   | 0.8000                                            |   |   | 4/22/11                                |   |
|                                 |   |   | 80,000                                                                                                 |   |   | —                                                                                                |   |   | 0.8100                                            |   |   | 5/3/11                                 |   |
|                                 |   |   | 20,000                                                                                                 |   |   | —                                                                                                |   |   | 1.3900                                            |   |   | 12/25/11                               |   |
|                                 |   |   | 20,000                                                                                                 |   |   | —                                                                                                |   |   | 0.8300                                            |   |   | 12/16/13                               |   |
|                                 |   |   | 13,333                                                                                                 |   |   | 6,667                                                                                                  |   |   | 2.52                                              |   |   | 9/29/15                                |   |
|                                 |   |   | 6,667                                                                                                  |   |   | 13,333                                                                                                 |   |   | 2.25                                              |   |   | 5/21/16                                |   |
|                                      |   |   |     —                                                                        |   |   | 20,000                                                                                                 |   |   | 2.15                                              |   |   | 5/21/17                                |   |
|                                 |   |   |                                                                                                   |   |   |                                                                                                   |   |   |                                              |   |   |                                   |   |
| TOTAL                                |   |   | 200,000                                                                                                |   |   | 40,000                                                                                                 |   |   |                                                   |   |   |                                        |   |
|                                 |   |   |                                                                                                        |   |   |                                                                                                        |   |   |                                                   |   |   |                                        |   |
| Ashley                  B. Smith     |   |   | 4,800                                                                                                  |   |   | —                                                                                                |   |   | 1.00                                              |   |   | 8/3/08                                 |   |
|                                 |   |   | 7,000                                                                                                  |   |   | —                                                                                                |   |   | 0.5625                                            |   |   | 12/28/09                               |   |
|                                 |   |   | 10,000                                                                                                 |   |   | —                                                                                                |   |   | 0.8000                                            |   |   | 4/22/11                                |   |
|                                 |   |   | 10,000                                                                                                 |   |   | —                                                                                                |   |   | 1.3900                                            |   |   | 12/25/11                               |   |
|                                 |   |   | 10,000                                                                                                 |   |   | —                                                                                                |   |   | 0.8300                                            |   |   | 12/16/13                               |   |
|                                 |   |   | 6,667                                                                                                  |   |   | 3,333                                                                                                  |   |   | 2.52                                              |   |   | 9/29/15                                |   |
|                                 |   |   | 2,333                                                                                                  |   |   | 4,667                                                                                                  |   |   | 2.25                                              |   |   | 5/21/16                                |   |
|        |   |   | —                                                                                                |   |   | 7,000                                                                                                  |   |   | 2.15                                              |   |   | 5/21/17                                |   |
|        |   |   |                                                                                                        |   |   |                                                                                                        |   |   |                                                   |   |   |                                        |   |
| TOTAL                                |   |   | 50,800                                                                                                 |   |   | 15,000                                                                                                 |   |   |                                                   |   |   |                                        |   |
|                                 |   |   |                                                                                                        |   |   |                                                                                                        |   |   |                                                   |   |   |                                        |   |
| Wesley                  A. Taylor    |   |   | 6,667                                                                                                  |   |   | —                                                                                                |   |   | 0.8300                                            |   |   | 12/16/13                               |   |
|                                 |   |   | 6,667                                                                                                  |   |   | 3,333                                                                                                  |   |   | 2.52                                              |   |   | 9/29/15                                |   |
|                                 |   |   | 2,333                                                                                                  |   |   | 4,667                                                                                                  |   |   | 2.25                                              |   |   | 5/21/16                                |   |
|                                      |   |   |     —                                                                        |   |   | 7,000                                                                                                  |   |   | 2.15                                              |   |   | 5/21/17                                |   |
|                                 |   |   |                                                                                                   |   |   |                                                                                                   |   |   |                                              |   |   |                                   |   |
| TOTAL                                |   |   | 15,667                                                                                                 |   |   | 15,000                                                                                                 |   |   |                                                   |   |   |                                        |   |
|                                 |   |   |                                                                                                        |   |   |                                                                                                        |   |   |                                                   |   |   |                                        |   |
| TOTAL                                |   |   | 266,467                                                                                                |   |   | 70,000                                                                                                 |   |   |                                                   |   |   |                                   |   |

----

**Compensation      of Directors**

**Director      Compensation Table**

| Name                                    |   |   | Fees                  Earned or Paid in Cash ($) |   |   | Stock                  Awards ($) |   |   | Option                  Awards ($)(1) |   |   | Non-Equity                  Incentive Plan Compensation |   |   | Nonqualified                  Deferred Compensation Earnings |   |   | All                  Other Compensation ($) |   |   | Total                  ($) |   |
|-----------------------------------------|--------|--------|--------------------------------------------------|--------|--------|-----------------------------------|--------|--------|---------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|--------------------------------------------------------------|--------|--------|---------------------------------------------|--------|--------|----------------------------|--------|
| Rodney                  I. Smith (2)    |   |   | —                                          |   |   | —                           |   |   | 29,000                                |   |   | —                                                 |   |   | —                                                      |   |   | —                                     |   |   | 29,000                     |   |
| Andrew                  G. Kavounis (3) |   |   | 4,500                                            |   |   | —                           |   |   | —                               |   |   | —                                                 |   |   | —                                                      |   |   | —                                     |   |   | 4,500                      |   |
| Ashley                  B. Smith (4)    |   |   | 750                                              |   |   | —                           |   |   | 10,150                                |   |   | —                                                 |   |   | —                                                      |   |   | —                                     |   |   | 10,900                     |   |
| Wesley                  A. Taylor (5)   |   |   | 750                                              |   |   | —                           |   |   | 10,150                                |   |   | —                                                 |   |   | —                                                      |   |   | —                                     |   |   | 10,900                     |   |

| (1)   | Also                disclosed in the “Summary Compensation Table” above.                                                                                           |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                           |
| (2)   | 240,000                options were outstanding as of December 31, 2007, of which 200,000                were                exercisable as of December 31, 2007.              |
|            |                                                                                                                                                                           |
| (3)   | 4,000                options were outstanding as of December 31, 2007, of which 3,000                were                exercisable as of December 31, 2007.                  |
|            |                                                                                                                                                                           |
| (4)   | 65,800                options were outstanding as of December 31, 2007, of which 50,800                were                exercisable as of December 31, 2007.                |
|            |                                                                                                                                                                           |
| (5)   | 30,667                options were outstanding as of December 31, 2007, of which 15,667                were                exercisable as of December 31,                2007. |

**Employment      Contracts and Termination of Employment and Change in Control      Arrangements.**

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| **Item                12.** | **Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder Matters.** |
|-----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| **Name              and Address of****Beneficial                Owner(1)** |   |   | **Number                of Shares****Beneficially****Owned(2)** |   |   | **Percentage                of****of Class** |   |
|----------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|
| Rodney                I. Smith (1)(3)(4)(5)                                |   |   | 715,798                                                         |   |   | 14.7                                              |   |
|                                                                       |   |   |                                                                 |   |   |                                                   |   |
| Ashley                B. Smith (1)(3)(4)(6)                                |   |   | 148,417                                                         |   |   | 3.1                                               |   |
|                                                                       |   |   |                                                                 |   |   |                                                   |   |
| Wesley                A. Taylor (1)(7)                                     |   |   | 40,750                                                          |   |   | *                                                 |   |
|                                                                       |   |   |                                                                 |   |   |                                                   |   |
| Andrew                G. Kavounis (1)(8)                                   |   |   | 3,000                                                           |   |   | *                                                 |   |
|                                                                       |   |   |                                                                 |   |   |                                                   |   |
| AL                Frank Asset Management, Inc. (9)                         |   |   | 684,814                                                         |   |   | 14.7                                              |   |
|                                                                       |   |   |                                                                 |   |   |                                                   |   |
| All                directors and executive officers                        |   |   |                                                                 |   |   |                                                   |   |
| as                a group (4 persons)(2)(10)                               |   |   | 907,965                                                         |   |   | 18.4                                              |   |

----

| (1) | The                address for each of Messrs. Rodney I. Smith, Ashley B. Smith, Wesley                A.                Taylor, and Andrew G. Kavounis 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) | Ashley                B. Smith is the son of Rodney I. Smith. Each of Rodney I. Smith and                Ashley                B. Smith disclaims beneficial ownership of the other’s shares of Common                Stock. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Does                not include options to purchase 5,000 shares held by Matthew Smith                and an                aggregate of 86,489 shares of Common Stock held by Matthew Smith                and                Roderick Smith. Matthew Smith and Roderick Smith are sons of Rodney                I.                Smith, and brothers of Ashley B. Smith. Also, does not include 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                50,000 shares of Common Stock held by Hazel Bowling, former wife                of Rodney                I. Smith, and mother of Mr. Smith’s children. Mr. Smith disclaims                beneficial ownership of the shares held by Hazel Bowling. Includes                options                to purchase 200,000 shares. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Includes                options to purchase 50,800 shares. |
|-----|------------------------------------------------------------|

| (7) | Includes                options to purchase 15,667 shares. |
|-----|------------------------------------------------------------|

----

| (8) | Includes                  options to purchase 3,000                  shares. |
|-----|------------------------------------------------------------------------------|

| (9) | Address                of holder is 32392 Coast Highway, Suite 260, Laguna Beach, CA                92651 |
|-----|-----------------------------------------------------------------------------------------------------------|

| (10) | Includes                    options to purchase 269,467 shares for all directors, executive                    officers                    and key employees as a                    group. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                      |   |   | Number                of securities tobe                issued upon exerciseof                outstanding options, warrants                and rights |   |   | Weighted                averageexercise                price ofoutstanding                options, warrants                and rights |   |   | Number                of securitiesremaining                available for                future issuance under                equitycompensationplans |   |
|---------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity                compensation plans approved by security holders     |   |   | 542,157                                                                                                                                                    |   | $      | 1.26                                                                                                                                       |   |   | 380,430                                                                                                                                                         |   |
| Equity                compensation plans not approved by security holders |   |   | 0                                                                                                                                                          |   | $      | 0                                                                                                                                          |   |   | 0                                                                                                                                                               |   |
| Total                                                                     |   |   | 542,157                                                                                                                                                    |   | $      | 1.26                                                                                                                                       |   |   | 380,430                                                                                                                                                         |   |

| **Item                13.** | **Certain                Relationships and Related Transactions, and Director                Independence.** |
|-----------------------------|--------------------------------------------------------------------------------------------------------------|

| **Item                14.** | **Principal                Accountant Fees and                Services** |
|-----------------------------|--------------------------------------------------------------------------|

|                        |   |   | 2007    |   |   | 2006    |   |
|-----------------------------|--------|--------|---------|--------|--------|---------|--------|
| Audit                  Fees |   | $      | 141,578 |   | $      | 114,886 |   |
| Tax                  Fees   |   |   | 25,840  |   |   | 26,425  |   |
| Total                       |   |   | 167,418 |   |   | 141,311 |   |

----

| **Item                15.** | **Exhibits                and Financial Statement                Schedules** |
|-----------------------------|------------------------------------------------------------------------------|

| (1) | The                following exhibits are filed                herewith: |
|-----|--------------------------------------------------------------------------|

| ExhibitNumber |   | Description                                                                                                                                                                                                                                                                            |
|---------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1           |   | Certificate                of Incorporation, as amended (Incorporated by reference to the Company’s                Registration Statement on Form SB-2 (No. 33-89312) declared effective                by                the Commission on December 13, 1995).                  |
|          |   |                                                                                                                                                                                                                                                                                   |
| 3.2           |   | Bylaws                of the Company adopted on January 21, 2003 (Incorporated by reference                to                the Company’s Registration Statement on Form 8-A (No. 000-25964)                filed with                the Commission on January 24, 2003). |
|          |   |                                                                                                                                                                                                                                                                                   |
| 4.1           |   | Specimen                Common Stock Certificate (Incorporated by reference to the Company’s                Registration Statement on Form SB-2 (No. 33-89312) declared effective                by                the Commission on December 13,                1995).          |

----

| 4.2    |   | Rights                Agreement, dated as of January 21, 2003, between the Company and                 Computershare Trust Company, Inc., as rights agent, including the                Form                of Certificate of Designations, the Form of Rights Certificate and                the Summary of  Rights to Purchase Preferred Shares attached thereto                as Exhibits A, B, and C, respectively                (Incorporated by reference to the Company’s Registration Statement on Form                8-A (No. 000-25964) filed with the Commission on January 24,                2003). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.1   |   | Lease                Agreement, dated January 1, 1995, between the Company and Rodney                I.                 Smith (Incorporated by reference to the Company’s Registration Statement                on Form                SB-2 (No. 33-89312) declared effective by the Commission on December                 13, 1995).                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.2   |   | Collateral                Assignment of Letters Patent, dated between the Company and Rodney                 I. Smith (Incorporated by reference to the Company’s                Registration Form SB-2 (No. 33-89312) declared effective by the                Commission on December 13, 1995).                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.3   |   | Form                of License Agreement between the Company and its Licensee (Incorporated                by                reference to the Company’s Registration Statement on Form SB-2 (No. 33-                89312) declared effective by the Commission on December 13,                1995).                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.4   |   | Promissory                Note from Rodney I. Smith to the Company, dated as of December 31,                1997                (Incorporated by reference to the Company’s Annual Report on                Form 10-KSB                for the year ended December 31, 1997).                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.5   |   | First                National Bank of New England Loan Agreement, assumed by UPS Capital,                dated                June 25, 1998 (Incorporated by reference to the Company’s                Quarterly Report                on Form 10-QSB for the quarter ended June 30, 1998).                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.6   |   | First                National Bank of New England Loan Note, dated June 25, 1998 (Incorporated                by reference to the Company’s Quarterly Report on Form 10-QSB for the                quarter ended June 30, 1998).                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.8   |   | First                National Bank of New England Commercial Loan Agreement dated December                20,                1999 (Incorporated by reference to the Company’s Annual Report on Form                10-KSB for the year ended December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.9   |   | First                National Bank of New England Commercial Term Promissory Note dated                December 20, 1999 (Incorporated by reference to the Company’s Annual                Reporton Form 10-KSB for the year ended December 31,                1999).                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.10  |   | Employment                Agreement, dated September 30, 2002, between the Company and Rodney                I.                Smith. (Incorporated by reference to the Company’s Annual Report on Form                10-KSB for the year ended December 31, 2003).                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.11  |   | 1994                Stock Option Plan (as amended through October 1, 2002) (Incorporated                by                reference to the Company’s Registration Statement on Form S-8 (No.:                333-102892) filed with the Commission on January 31,                2003).                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.12  |   | 2004                Stock Option Plan (Incorporated by reference to the Company’s Annual                Report on Form 10-KSB for the year ended December 31,                2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.13  |   | UPS                Capital Business Credit Loan Note dated December 16, 2004 (Incorporated                by                reference to the Company’s Annual Report on Form 10-KSB for the                year ended                December 31, 2004).                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.14  |   | Commercial                Loan Agreement, dated June 15, 2006, by and between Smith- Midland                Corporation, a Virginia corporation and a subsidiary of the Company                (the                “Borrower”) and Greater Atlantic Bank (the “Lender”) contemplating a                single advance term loan in the amount of $365,000 and addendum thereto                (                Incorporated by reference to the Company’s Current Report on Form 8-K                filed with the Securities and Exchange Commission on June 21,                2006).                         |

----

| 10.15  |   | Promissory                Note, dated June 15, 2006, in the amount of $365,000 issued by the                Borrower to the Lender (Incorporated by reference to the Company’s Current                Report on Form 8-K filed with the Securities and Exchange Commission                on                June 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.16  |   | Commercial                Loan Agreement, dated June 15, 2006, by and between the Borrower                and the                Lender contemplating a multiple advance draw loan up to the aggregate                amount of $500,000 and addendum thereto (Incorporated by reference                to the                Company’s Current Report on Form 8-K filed with the Securities and                Exchange Commission on June 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.17  |   | Commercial                Loan Agreement, dated June 15, 2006, by and between the Borrower                and the                Lender contemplating a revolving multiple advance draw loan up to                the                aggregate amount of $1,500,000 and addendum thereto (Incorporated                by                reference to the Company’s Current Report on Form 8-K filed with the                Securities and Exchange Commission on June 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.18  |   | Promissory                Note, dated June 15, 2006, in the amount of $1,500,000 issued by                the                Borrower to the Lender (Incorporated by reference to the Company’s Current                Report on Form 8-K filed with the Securities and Exchange Commission                on                June 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.19  |   | Security                Agreement, dated June 15, 2006, by and between the Borrower and the                Lender                securing the Promissory Note in the amount of $365,000 (Incorporated                by                reference to the Company’s Current Report on Form 8-K filed with the                Securities and Exchange Commission on June 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.20  |   | Security                Agreement, dated June 15, 2006, by and between the Borrower and the                Lender                securing any promissory note(s) the Borrower may issue to evidence                any                advance(s) under the Commercial Loan Agreement by and between Borrower                and                the Lender contemplating a multiple advance draw loan up to the aggregate                amount of $500,000 (Incorporated by reference to the Company’s Current                Report on Form 8-K filed with the Securities and Exchange Commission                on                June 21, 2006).                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.21  |   | Security                Agreement, dated June 15, 2006, by and between the Borrower and the                Lender                securing the Promissory Note in the amount of $1,500,000 (Incorporated                by                reference to the Company’s Current Report on Form 8-K filed with the                Securities and Exchange Commission on June 21, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.22  |   | Form                of Guaranty, dated June 15, 2006, given by the Company and subsidiaries                (except the Borrower) with respect to each of (i) the Promissory                Note in                the amount of $365,000; (ii) any promissory note(s) that the Borrower                may                issue to evidence any advance(s) under the Commercial Loan Agreement                by                and between the Borrower and the Lender contemplating a multiple                advance                draw loan up to the aggregate amount of $500,000; and (iii) the Promissory                Note in the amount of $1,500,000 issued by the Borrower to the Lender                (Incorporated by reference to the Company’s Current Report on Form 8-K                filed with the Securities and Exchange Commission on June 21,                2006). |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.23  |   | Omnibus                Modification of Lender Loan Documents Agreement, dated June 15, 2006                (Incorporated by reference to the Company’s Current Report on Form 8-K                filed with the Securities and Exchange Commission on June 21,                2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.24  |   | Omnibus                Modification of UPS Capital Loan Documents Agreement, dated June                15, 2006                (Incorporated by reference to the Company’s Current Report on Form 8-K                filed with the Securities and Exchange Commission on June 21,                2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| 10.25  |   | Commercial                  Loan Agreement, dated August 7, 2007, by and between the Borrower                  and the                  Lender contemplating a multiple advance draw loan up to the aggregate                  amount of $700,000 and addendum thereto (incorporated by reference                  to the                  Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30,                  2007).                                                                                                                                                                                                                                                 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.26  |   | Commercial                  Debt Modification Agreement, dated August 7, 2007, by and between                  the                  Borrower and the Lender to extend the maturity date of the Working                  Capital                  Line of Credit to June 15, 2008, (incorporated by reference to                  the                  Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30,                  2007).                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.27  |   | Commercial                  Security Agreement, dated August 7, 2007 by and between the Borrower                  and                  the Lender securing any promissory note(s) the Borrower may issue                  to                  evidence any advance(s) under the Commercial Loan Agreement by                  and between                  Borrower and Lender contemplating a multiple advance draw loan                  up to the                  aggregate amount of $700,000, (incorporated by reference to the                  Company’s                  Quarterly Report on Form 10-QSB for the quarter ended June 30,                  2007).                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.28  |   | Form                  of Guaranty, dated August 7, 2007 given by the Company and each                  of its                  subsidiaries (except the Borrower) with respect to any promissory                  note(s)                  that the Borrower may issue to evidence any advance(s) under the                  Commercial Loan Agreement by and between the Borrower and the Lender                  contemplating a multiple advance draw loan up to the aggregate                  amount of                  $700,000, (incorporated by reference to the Company’s Quarterly Report on                  Form 10-QSB for the quarter ended June 30,                  2007). |

| 14 |   | Code                of Professional Conduct (Incorporated by reference to the Company’s Annual                Report on Form 10-KSB for the year ended December 31,                2003). |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 21     |   | List                of Subsidiaries of the Company (Incorporated by reference to the                Company’s                Annual Report on Form 10-KSB for the year ended December 31,                1995). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                  |
| 23     |   | Consent                of BDO Seidman, LLP.                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                  |
| 31.1   |   | Certification                of Chief Executive Officer.                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                  |
| 31.2   |   | Certification                of Principal Financial Officer.                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                  |
| 32     |   | Certification                pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906                of the                Sarbanes-Oxley Act of 2002.                                                      |

----

**SIGNATURES**

|                                                                          |                                         |                                                           |
|-------------------------------------------------------------------------------|----------------------------------------------|----------------------------------------------------------------|
|                                                                          | SMITH-MIDLAND                CORPORATION     |
|                                                                     |                                    |                                                      |
| Date:                April 14, 2008             | By:                                | /s/ Rodney              I.              Smith   |
|                                                                          | Rodney                I. Smith, President    |
|                                                                          | (principal                executive officer) |

|                                        |                                                      |                                       |
|---------------------------------------------|-----------------------------------------------------------|--------------------------------------------|
| Date:                  April 14, 2008  | By:                                             | /s/                Wesley A. Taylor   |
|                                        |  Wesley                A. Taylor                     |
|                                        | (principal financial                  officer)  |

| Name                                                                               |   | Capacity |   | Date                              |
|------------------------------------------------------------------------------------|--------|----------|--------|-----------------------------------|
|                                                                               |   |     |   |                              |
| /s/                    Rodney I. Smith  Rodney                  I. Smith |   | Director |   | April                    14, 2008 |
|                                                                               |   |     |   |                              |
|                                                                               |   |     |   |                              |
| /s/                    Wesley A. Taylor Wesley                    A. Taylor        |   | Director |   | April                    14, 2008 |
|                                                                               |   |     |   |                              |
|                                                                               |   |     |   |                              |
| /s/                    Ashley B. Smith Ashley                    B. Smith          |   | Director |   | April                    14, 2008 |
|                                                                               |   |     |   |                              |
|                                                                               |   |     |   |                              |
| /s/                    Andrew G. Kavounis Andrew G. Kavounis                       |   | Director |   | April                    14, 2008 |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Financial Statements**

**Years      Ended December 31, 2007 and 2006**

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Contents**

| **Report                of Independent Registered Public Accountants** |   | F-3     |
|------------------------------------------------------------------------|--------|---------|
|                                                                   |   |    |
| **Consolidated                Financial Statements**                   |   |    |
|                                                                   |   |    |
| Balance                Sheets                                          |   | F-4-5   |
|                                                                   |   |    |
| Statements                of Operations                                |   | F-6     |
|                                                                   |   |    |
| Statements                of Stockholders' Equity                      |   | F-7     |
|                                                                   |   |    |
| Statements                of Cash Flows                                |   | F-8-9   |
|                                                                   |   |    |
| **Summary                of Significant Accounting Policies**          |   | F-10-14 |
|                                                                   |   |    |
| **Notes                to Consolidated Financial Statements**          |   | F-15-21 |

----

**Report      of Independent Registered Public Accountants**

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Balance Sheets**

| ***December                  31,***                                        |   |   | **2007**       |   |   | 2006       |   |
|----------------------------------------------------------------------------|--------|--------|----------------|--------|--------|------------|--------|
| **Assets**                (Note 2)                                         |   |   |           |   |   |       |   |
|                                                                       |   |   |           |   |   |       |   |
| **Current                assets**                                          |   |   |           |   |   |       |   |
| Cash                  and cash equivalents                                 |   | **$**  | **282,440**    |   | $      | 482,690    |   |
| Accounts                  receivable                                       |   |   |                |   |   |            |   |
| Trade                  - billed, (less allowance for doubtful              |   |   |                |   |   |            |   |
| accounts                  of **$243,318**                  and $208,108)   |   |   | **5,900,684**  |   |   | 5,417,475  |   |
| Trade                  - unbilled                                          |   |   | **316,059**    |   |   | 825,524    |   |
| Inventories                                                                |   |   |                |   |   |            |   |
| Raw                  materials                                             |   |   | **825,328**    |   |   | 903,674    |   |
| Finished                  goods                                            |   |   | **1,968,978**  |   |   | 2,213,798  |   |
| Prepaid                  expenses and other assets                         |   |   | **152,289**    |   |   | 123,710    |   |
| Refundable                  income taxes (Note 4)                          |   |   | **322,835**    |   |   | 392,732    |   |
| Deferred                  taxes (Note 4)                                   |   |   | **367,000**    |   |   | 351,000    |   |
|                                                                       |   |   |                |   |   |            |   |
| Total                  current assets                                      |   |   | **10,135,613** |   |   | 10,710,603 |   |
|                                                                       |   |   |                |   |   |            |   |
| **Property                  and equipment, net**                  (Note 1) |   |   | **4,102,181**  |   |   | 3,729,537  |   |
|                                                                       |   |   |                |   |   |            |   |
| **Total                  other assets**                                    |   |   | **200,090**    |   |   | 214,703    |   |
| **Total                    assets**                                        |   | **$**  | **14,437,884** |   | $      | 14,654,843 |   |

*See      accompanying summary of accounting policies*

*and      notes to consolidated financial statements.*

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Balance Sheets**

**(continued)**

| ***December                  31*** *,*                                            |   | **2007** |           | 2006   |   |
|----------------------------------------------------------------------------------------|--------|----------|----------------|--------|--------|
|  **Liabilities                  and Stockholders’ Equity**                  |   |     |           |   |   |
|                                                                                   |   |     |           |   |   |
| **Current                  liabilities**                                               |   |     |           |   |   |
| Accounts                  payable - trade                                              |   | **$**    | **1,776,594**  |   | $      | 2,733,974 |   |
| Accrued                  income taxes payable (Note 4)                                 |   |     | **656,370**    |   |   | - |   |
| Accrued                  expenses and other liabilities                                |   |     | **587,399**    |   |   | 1,884,386 |   |
| Current                  maturities of notes payable (Note 2)                          |   |     | **605,376**    |   |   | 677,022 |   |
| Customer                  deposits                                                     |   |     | **643,509**    |   |   | 614,127 |   |
|                                                                                   |   |     |                |   |   |  |   |
| Total                  current liabilities                                             |   |     | **4,269,248**  |   |   | 5,909,509 |   |
|                                                                                   |   |     |                |   |   |  |   |
| **Notes                  payable - less current maturities**                  (Note 2) |   |     | **3,991,036**  |   |   | 3,918,041 |   |
| Deferred                  tax liability (Note 4)                                       |   |     | **175,000**    |   |   | 221,000 |   |
|                                                                                   |   |     |                |   |   |  |   |
| Total                  liabilities                                                     |   |     | **8,435,284**  |   |   | 10,048,550 |   |
|                                                                                   |   |     |                |   |   |  |   |
| **Commitments                  and contingencies**                  (Notes 3, 5 and 7) |   |     |                |   |   |  |   |
|                                                                                   |   |     |                |   |   |  |   |
| **Stockholders’                  equity**                  (Note 6)              |   |     |                |   |   |  |   |
| Preferred                  stock, $.01 par value; authorized 1,000,000                 |   |     |                |   |   |  |   |
| shares,                  none outstanding                                              |   |     | **-**          |   |   | - |   |
| Common                  stock, $.01 par value; authorized 8,000,000                    |   |     |                |   |   |  |   |
| shares;                  4,670,882 and 4,635,282 issued and outstanding                |   |     | **46,709**     |   |   | 46,346 |   |
| Additional                  paid-in capital                                            |   |     | **4,558,947**  |   |   | 4,415,363 |   |
| Retained                  earnings                                                     |   |     | **1,499,244**  |   |   | 246,884 |   |
|                                                                                   |   |     |                |   |   |  |   |
|                                                                                   |   |     | **6,104,900**  |   |   | 4,708,593 |   |
| Treasury                  stock, at cost, 40,920 shares                                |   |     | **(102,300**   | **)**  |   | (102,300 | ) |
|                                                                                   |   |     |                |   |   |  |   |
| Total                  stockholders’ equity                                      |   |     | **6,002,600**  |   |   | 4,606,293 |   |
|                                                                                   |   |     |                |   |   |  |   |
| Total                    liabilities and stockholders’ equity                    |   | **$**    | **14,437,884** |   | $      | 14,654,843 |   |

*See      accompanying summary of accounting policies*

*and      notes to consolidated financial statements.*

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Statements of Operations**

| ***Year                  Ended December 31,***                                   |   | **2007** |           | 2006   |   |
|----------------------------------------------------------------------------------|--------|----------|----------------|--------|--------|
| **Revenue**                                                                      |   |     |           |   |   |
| Products                  sales and leasing                                      |   | **$**    | **24,567,148** |   | $      | 22,729,310 |   |
| Shipping                  and installation revenue                               |   |     | **5,198,166**  |   |   | 5,505,814 |   |
| Royalties                                                                        |   |     | **1,755,323**  |   |   | 1,127,121 |   |
|                                                                             |   |     |                |   |   |  |   |
| Total                  revenue                                                   |   |     | **31,520,637** |   |   | 29,362,245 |   |
|                                                                             |   |     |                |   |   |  |   |
| **Cost                  of goods sold**                                          |   |     | **23,861,906** |   |   | 24,750,514 |   |
|                                                                             |   |     |                |   |   |  |   |
| Gross                  profit                                                    |   |     | **7,658,731**  |   |   | 4,611,731 |   |
|                                                                             |   |     |                |   |   |  |   |
| **Operating                  expenses**                                          |   |     |                |   |   |  |   |
| General                  and administrative expenses                             |   |     | **3,167,593**  |   |   | 3,500,544 |   |
| Selling                  expenses                                                |   |     | **1,942,685**  |   |   | 1,989,636 |   |
|                                                                             |   |     |                |   |   |  |   |
| Total                  operating expenses                                        |   |     | **5,110,278**  |   |   | 5,490,180 |   |
|                                                                             |   |     |                |   |   |  |   |
| Operating                  income (loss)                                         |   |     | **2,548,453**  |   |   | (878,449 | **)** |
|                                                                             |   |     |                |   |   |  |   |
| **Other                  income (expense)**                                      |   |     |                |   |   |  |   |
| Interest                  expense                                                |   |     | **(430,048**   | **)**  |   | (396,509 | ) |
| Interest                  income (Note 3)                                        |   |     | **22,858**     |   |   | 29,200 |   |
| Loss                  on sale of assets                                          |   |     | **(13,892**    | **)**  |   | (10,418 | ) |
| Other,                  net                                                      |   |     | **989**        |   |   | (3,636 | ) |
|                                                                             |   |     |                |   |   |  |   |
| Total                  other income (expense)                                    |   |     | **(420,093**   | **)**  |   | (381,363 | ) |
|                                                                             |   |     |                |   |   |  |   |
| **Income                  (loss) before income tax expense (benefit)**           |   |     | **2,128,360**  |   |   | (1,259,812 | ) |
| Income                  tax expense (benefit) (Note 4)                           |   |     | **876,000**    |   |   | (444,000 | ) |
|                                                                             |   |     |                |   |   |  |   |
| **Net                  income (loss)**                                           |   | **$**    | **1,252,360**  |   | $      | (815,812 | ) |
|                                                                             |   |     |                |   |   |  |   |
| **Basic                  earnings (loss) per share**                  (Note 8)   |   | **$**    | **.27**        |   | $      | (.18 | ) |
| **Diluted                  earnings (loss) per share**                  (Note 8) |   | **$**    | **.26**        |   | $      | (.18 | ) |

*See      accompanying summary of accounting policies*

*and      notes to consolidated financial statements.*

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Statements of Stockholders' Equity**

|                                            |   |     |       | *Additional* |   |               |   |       |          |    |   |
|-------------------------------------------------|--------|----------|------------|--------------|--------|---------------|--------|------------|---------------|---------|--------|
|                                            |   | *Common* |       | *Paid-In*    |   | *Retained*    |   | *Treasury* |          |    |   |
|                                            |   | *Stock*  |       | *Capital*    |   | *Earnings*    |   | *Stock*    |          | *Total* |   |
| **Balance,**                  December 31, 2005 |   | $        | 46,102     |         | $      | 4,326,548     |   | $          | 1,062,696     |    | $      | (102,300 | ) | $ | 5,333,046 |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| Stock                  options exercised        |   |     | 244        |         |   | 23,180        |   |       | -             |    |   | - |   |   | 23,424 |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| Stock                  option compensation      |   |     |            |         |   | 65,635        |   |       |               |    |   |  |   |   | 65,635 |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| Net                  loss                       |   |     | -          |         |   | -             |   |       | (815,812      | )       |   | - |   |   | (815,812 | ) |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| **Balance,**                  December 31, 2006 |   |     | **46,346** |         |   | **4,415,363** |   |       | **246,884**   |    |   | **(102,300** | **)** |   | **4,606,293** |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| Stock                  options exercised        |   |     | 363        |         |   | 37,691        |   |       | -             |    |   | - |   |   | 38,054 |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| Stock                  option compensation      |   |     | -          |         |   | 105,893       |   |       | -             |    |   | - |   |   | 105,893 |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| Net                  income                     |   |     | -          |         |   | -             |   |       | 1,252,360     |    |   | - |   |   | 1,252,360 |   |
|                                            |   |     |            |         |   |               |   |       |               |    |   |  |   |   |  |   |
| **Balance,**                  December 31, 2007 |   | **$**    | **46,709** |         | **$**  | **4,558,947** |   | **$**      | **1,499,244** |    | **$**  | **(102,300** | **)** | **$** | **6,002,600** |   |

*See      accompanying summary of accounting policies*

*and      notes to consolidated financial statements.*

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Statements of Cash Flows**

| ***Year                  Ended December 31,***                                                                                      |   | **2007** |       | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|--------|--------|
| **Reconciliation                  of net income (loss) to net cash provided                  (absorbed)**                           |   |     |       |   |   |
| **by                  operating activities**                                                                                        |   |     |       |   |   |
|                                                                                                                                |   |     |       |   |   |
| Net                  income (loss)                                                                                                  |   | **$**    | 1,252,360  |   | $      | (815,812 | ) |
| Adjustments                  to reconcile net income                  (loss) to net cash provided (absorbed) by operatingactivities |   |     |            |   |   |  |   |
| Depreciation                  and amortization                                                                                      |   |     | 735,218    |   |   | 600,639 |   |
| Deferred                  taxes                                                                                                     |   |     | 62,000     |   |   | (150,000 | ) |
| Stock                  option compensation expense                                                                                  |   |     | 105,893    |   |   | 65,635 |   |
| Loss                  on sale of fixed assets                                                                                       |   |     | 13,892     |   |   | 10,418 |   |
| Expenses                  (net) related to pay down on officer note receivable                                                      |   |     | -          |   |   | 143,730 |   |
| (Increase)                  decrease in                                                                                             |   |     |            |   |   |  |   |
| Accounts                  receivable - billed                                                                                       |   |     | (483,209   | )      |   | (655,757 | ) |
| Accounts                  receivable - unbilled                                                                                     |   |     | 509,465    |   |   | (691,449 | ) |
| Inventories                                                                                                                         |   |     | 323,166    |   |   | (500,212 | ) |
| Prepaid                  expenses and other assets                                                                                  |   |     | (42,066    | )      |   | 72,925 |   |
| Refundable                  income taxes                                                                                            |   |     | (69,897    | )      |   | (392,732 | ) |
| Increase                  (decrease) in                                                                                             |   |     |            |   |   |  |   |
| Accounts                  payable - trade                                                                                           |   |     | (957,380   | )      |   | 1,485,223 |   |
| Accrued                  expenses and other liabilities                                                                             |   |     | (1,296,987 | )      |   | 1,005,829 |   |
| Accrued                  income taxes payable                                                                                       |   |     | 656,370    |   |   | (327,825 | ) |
| Customer                  deposits                                                                                                  |   |     | 29,382     |   |   | 137,649 |   |
| Net                  cash provided (absorbed) by operating activities                                                               |   | **$**    | 838,207    |   | $      | (11,739 | ) |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Consolidated      Statements of Cash Flows**

**(continued)**

| ***Year                  Ended December 31,***                                          |   | **2007**                       |     | 2006                           |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------------|----------|--------------------------------|--------|
| **Cash                  Flows From Investing Activities**                               |   |       |     |       |   |
| Purchases                  of property and equipment                                    |   |                           | (579,571 | )                              |   | (901,142 | ) |
| Proceeds                  from sale of fixed assets                                     |   |                           | 19,961   |                           |   | 14,142 |   |
|                                                                                    |   |                           |          |                           |   |  |   |
| Net                  cash absorbed by investing activities                              |   |                           | (559,610 | )                              |   | (887,000 | ) |
|                                                                                    |   |                           |          |                           |   |  |   |
| **Cash                  Flows From Financing Activities**                               |   |                           |          |                           |   |  |   |
| Proceeds                  (repayments) on Line of Credit, net                           |   |                           | (50,000  | )                              |   | 250,000 |   |
| Proceeds                  from long-term borrowings                                     |   |                           | 46,126   |                           |   | 763,851 |   |
| Repayments                  of long-term borrowings and capital leases                  |   |                           | (513,027 | )                              |   | (659,636 | ) |
| Proceeds                  from options exercised                                        |   |                           | 38,054   |                           |   | 23,424 |   |
|                                                                                    |   |                           |          |                           |   |  |   |
| Net                  cash provided (absorbed) by financing activities              |   |                           | (478,847 | )                              |   | 377,639 |   |
|                                                                                    |   |                           |          |                           |   |  |   |
| **Net decrease                  in cash**                                          |   |                           | (200,250 | )                              |   | (521,100 | ) |
|                                                                                    |   |                           |          |                           |   |  |   |
| **Cash                  and cash equivalents,**                  beginning of year      |   |                           | 482,690  |                           |   | 1,003,790 |   |
|                                                                                    |   |                           |          |                           |   |  |   |
| **Cash                  and cash equivalents,**                  end of year            |   | **$**                          | 282,440  |                           | $      | 482,690 |   |
|                                                                                    |   |                           |          |                           |   |  |   |
| **Supplemental                  Disclosure of Cash Flow information**                   |   |                           |          |                           |   |  |   |
| Noncash                  Bonus to repay officer note receivable                         |   | **$**                          | -        |                           | $      | 143,730 |   |
| Noncash                investing                and financing - capital lease additions |   | $                              | 518,250  |                           | $      | - |   |
| Cash                payments for                interest                                |   | $                              | 430,048  |                           | $      | 396,059 |   |
| Cash                payments for                income taxes                            |   | $                              | 211,733  |                           | $      | 427,157 |   |

*See      accompanying summary of accounting policies*

*and      notes to consolidated financial statements.*

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Summary      of Significant Accounting Policies**

| **Nature                of Business**             |   | Smith-Midland                Corporation and its wholly owned subsidiaries (the “Company”) develop,                manufacture, license, sell and install precast concrete products                for the                construction, transportation and utilities industries in the Mid-Atlantic,                Northeastern, and Midwestern regions of the United                States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Principles                of****Consolidation** |   | The                accompanying consolidated financial statements include the accounts                of                Smith-Midland Corporation and its wholly owned subsidiaries. The                Company’s                wholly owned subsidiaries consist of Smith-Midland Corporation, a                Virginia                corporation, Smith-Carolina Corporation, a North Carolina corporation,                Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety                Systems, Inc., a Virginia corporation, Midland Advertising and Design,                Inc., doing business as Ad Ventures, a Virginia corporation, and                Smith-Columbia Corporation, a South Carolina corporation. All material                intercompany accounts and transactions have been eliminated in                consolidation. |
|                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Cash                and Cash Equivalents**      |   | The                Company considers all unrestricted cash and money market accounts                purchased with an original maturity of three months or less as cash                and                cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Inventories**                                   |   | Inventories                are stated at the lower of cost, using the first-in, first-out (FIFO)                method, or market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Property                and****Equipment**      |   | Property                and equipment is stated at cost. Expenditures for ordinary maintenance                and                repairs are charged to income as incurred. Costs of betterments,                renewals,                and major replacements are capitalized. At the time properties are                retired                or otherwise disposed of, the related cost and allowance for depreciation                are eliminated from the accounts and any gain or loss on disposition                is                reflected in income.                                                                                                                                                                                                                                                                                                           |
|                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                              |   | Depreciation                is computed using the straight-line method over the following estimated                useful lives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

|                                             |   | **Years** |   |
|--------------------------------------------------|--------|-----------|--------|
| Buildings                                        |   |      | 10-33  |   |
| Trucks                  and automotive equipment |   |      | 3-10   |   |
| Shop                  machinery and equipment    |   |      | 3-10   |   |
| Land                  improvements               |   |      | 10-15  |   |
| Office                  equipment                |   |      | 3-10   |   |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Summary      of Significant Accounting Policies**

**(continued)**

| **Income                Taxes** |   | 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. |
|---------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Stock                Options** |   | Effective                January 1, 2006, the Company adopted the fair value recognition provisions                of SFAS No. 123(R) (“SFAS 123R”), “*Share-Based                Payment,*”                using the modified prospective method. SFAS 123R requires stock based                compensation to be measured based on the fair value of the award                on the                date of grant and the corresponding expense to be recognized over                the                period during which an employee is required to provide services in                exchange for the award. The fair value of each stock option award                is                estimated using a Black-Scholes option pricing model based on certain                assumptions including expected term, risk-free interest rate, stock                price                volatility, and dividend yield. The assumption for expected term                is based                on evaluations of historical and expected future employee exercise                behavior. The risk-free interest rate is based on the U.S. Treasury                rates                at the date of grant with maturity dates approximately equal to the                expected term at the grant date. The historical volatility of the                Company’s stock is used as the basis for the volatility assumption. The                Company has never paid cash dividends, and does not currently intend                to                pay cash dividends, and thus assumed a 0% dividend yield. The fair                value                of restricted stock unit grants is based on the closing share price                for                our common stock as quoted on the OTC Bulletin Board Market on the                date of                grant. See Note 6 of Notes to the Consolidated Financial Statements                for                additional information related to stock based compensation. The adoption                of SFAS 123R was not material to the financial                statements. |
|----------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                             |   | The                Company granted 92,500 and 108,000 stock options during the years                ended December 31, 2007 and 2006, respectively. The fair value of                each                option on the date of grant was estimated using the Black-Scholes                option                pricing model with the following assumptions: no dividend yield,                expected                volatility of 73%, risk-free interest rate of 4.42% and expected                lives of                six years. The weighted average per share fair value of options granted                during the years ended December 31, 2007 and 2006 were $1.45 and                $1.52,                respectively. Substantially all options become vested and exercisable                ratably over a three-year period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

**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 architectural, soundwall, Slenderwall Ô                and barrier 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. Unbilled trade accounts receivable represents                revenue                earned on units produced and not yet billed. Billings in advance                of units                produced are included in customer deposits.                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Shipping                and Handling**   |   | Amounts                billed to customers are recorded in sales and the costs associated                with                the shipping and handling are recorded as cost of goods                sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Risks                and Uncertainties** |   | The                Company sells products to highway contractors operating under government                funded highway programs and other customers and extends credit based                on an                evaluation of the customer's financial condition, generally without                requiring collateral. Exposure to losses on receivables is principally                dependent on each customer's financial condition. The Company monitors                its                exposure to credit losses and maintains allowances for anticipated                losses.                Management reviews accounts receivable on a monthly basis to determine                the                probability of collection. Any accounts receivable that are deemed                to be                uncollectible along with a general reserve, which is calculated based                upon                the aging category of the receivable, is included in the overall                allowance                for doubtful accounts. Management believes the allowance for doubtful                accounts at December 31, 2007 is adequate. However, actual write-offs                may                exceed the recorded allowance. |
|                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                       |   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Summary      of Significant Accounting Policies**

**(continued)**

| **Fair                Value of****Financial                Instruments** |   | The                carrying value for each of the Company’s financial instruments (consisting                of cash, accounts receivable and accounts payable and notes payable)                approximates fair value because of the short-term nature of those                instruments. The estimated fair value of the long-term debt approximates                carrying value based on current rates offered to the Company for                debt of                the same maturities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| **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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Advertising                Costs**                                     |   | The                Company expenses all advertising costs as incurred. Advertising expense                was approximately $264,000 and $314,000 in 2007 and 2006,                respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Earnings                (Loss) Per Share**                             |   | Earnings                (loss) per share is based on the weighted average number of shares                of                common stock and dilutive common stock equivalents outstanding. Basic                (loss) 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 (loss) per share reflects                the                potential dilution of securities that could share in earnings of                an                entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Long-Lived                Assets**                                     |   | 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.                When any such impairment exists, the related assets will be written                down                to fair value. No impairment losses have been recorded through December                31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Recent                Accounting****Pronouncements**                   |   | In                February 2006, FASB issued SFAS No. 155, Accounting for Certain Hybrid                Financial Instruments, which amends SFAS No. 133 and SFAS No. 140,                and                improves the financial reporting of certain hybrid financial instruments                by requiring more consistent accounting that eliminates exemptions                and                simplifies the accounting for those instruments. SFAS No. 155 allows                financial instruments that have embedded derivatives to be accounted                for                as a whole (eliminating the need to bifurcate the derivative from                its                host) if the holder elects to account for the whole instrument on                a fair                value basis. SFAS No. 155 is effective for all financial instruments                acquired or issued after the beginning of an entity’s first fiscal year                that begins after September 15, 2006. The adoption of this standard                in                2007 did not have a material impact on our financial condition or                results                of operations. In                June 2006, the Financial Accounting Standards Board (“FASB”) issued                Interpretation No. 48 (“FIN 48”), *Accounting                for Uncertainty in Income Taxes*                .                FIN 48 prescribes detailed guidance for the financial statement                recognition, measurement and disclosure of uncertain tax positions                recognized in an enterprise’s financial statements in accordance with FASB                Statement No. 109, *Accounting                for Income Taxes*                .                Tax positions must meet a more-likely-than-not recognition threshold                at                the effective date to be recognized upon the adoption of FIN 48 and                in                subsequent periods. FIN 48 will be effective for fiscal years beginning                after December 15, 2006 and the provisions of FIN 48 will be applied                to                all tax positions under Statement No. 109 upon initial adoption.                The                cumulative effect of applying the provisions of this interpretation                will                be reported as an adjustment to the opening balance of retained earnings                for that fiscal year. The adoption of this standard in 2007 did not                have a                material impact on our financial condition or results of                operations. In                September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” (SFAS                157). This statement establishes a framework for measuring fair value                in                generally accepted accounting principles (“GAAP”), and expands disclosures                about fair value measurements. While the Statement applies under                other                accounting pronouncements that require or permit fair value measurements,                it does not require any new fair value measurements. SFAS 157 defines                fair                value as the price that would be received to sell an asset or paid                to                transfer a liability (an exit price) in an orderly transaction between                market participants at the measurement date. In addition, the Statement                establishes a fair value hierarchy, which prioritizes the inputs                to the                valuation techniques used to measure fair value into three broad                levels.                Lastly, SFAS 157 requires additional disclosures for each interim                and                annual period separately for each major category of assets and                liabilities. This Statement is effective for financial statements                issued                for fiscal years beginning after November 15, 2007, and interim periods                within those fiscal years. In February 2008, FASB                Staff Position (FSP)FAS 157-2 was issued, which defers the effective                date                of SFAS 157 until January 1, 2009 for nonfinancial assets and liabilities                except those items recognized or disclosed at fair value on an annual                or                more frequently recurring basis. Management                does not expect the adoption of this Statement to have a material                impact                on the Company’s financial statements. |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Summary      of Significant Accounting Policies**

**(continued)**

| **Recent                Accounting****Pronouncements****(continued)** |   | In                February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for                Financial Assets and Financial Liabilities - including an amendment                of                FASB Statement 115”. SFAS No. 159 permits entities to choose to measure                many financial instruments and certain other items at fair value.                The                objective is to improve financial reporting by providing entities                with the                opportunity to mitigate volatility in reported earnings caused by                measuring related assets and liabilities differently without having                to                apply complex hedge accounting provisions. This Statement is expected                to                expand the use of fair value measurement, which is consistent with                the                Board’s long-term measurement objectives for accounting for financial                instruments. This Statement is effective as of the beginning of an                entity’s first fiscal year that begins after November 15, 2007. Early                adoption is permitted as of the beginning of a fiscal year that begins                on                or before November 15, 2007, provided the entity also elects to apply                the                provisions of FASB Statement 157, Fair Value Measurements. Management                does                not believe the adoption of this Statement will have a material effect                on                the Company’s financial statements.                                                                                                   |
|-----------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                  |   | In                December 2007, the FASB issued SFAS 141 (R), “Business Combinations”, to                create greater consistency in the accounting and financial reporting                of                business combinations. SFAS 141 (R) requires a company to recognize                the                assets acquired, the liabilities assumed, and any noncontrolling                interest                in the acquired entity to be measured at their fair values as of                the                acquisition date. SFAS 141 (R) also requires companies to recognize                and                measure goodwill acquired in a business combination or a gain from                a                bargain purchase and how to evaluate the nature and financial effects                of                the business combination. SFAS 141 (R) applies to fiscal years beginning                after December 15, 2008 and is adopted prospectively. Earlier adoption                is                prohibited. Management has not determined the effect, if any, the                adoption                of this statement will have on the Company’s results of operations or                financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                  |   | In                December 2007, the FASB issued FAS 160, “Noncontrolling Interests in                Consolidated Financial Statements - an Amendment of ARB 51”, to establish                accounting and reporting standards for the noncontrolling interest                in a                subsidiary and for the deconsolidation of a subsidiary. SFAS 160                requires                the company to clearly identify and present ownership interests in                subsidiaries held by parties other than the company in the consolidated                financial statements within the equity section but separate from                the                company’s equity. It also requires the amount of consolidated net income                attributable to the parent and to the noncontrolling interest be                clearly                identified and presented on the face of the consolidated statement                of                income; changes in ownership interest be accounted for similarly,                as                equity transactions; and when a subsidiary is deconsolidated, any                retained                noncontrolling equity investment in the former subsidiary and the                gain or                loss on the deconsolidation of the subsidiary be measured at fair                value.                SFAS160 applies to fiscal years beginning after December 15, 2008.                Earlier                adoption is prohibited. Management has not determined the effect,                if any,                the adoption of this Statement wil have on the Company’s results of                operations or financial position. |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|  **Reclassifications**                                           |   | Certain                immaterial reclassifications have been made in the prior year consolidated                financial statements and notes to conform to the December 31, 2007                presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

| **1.** | **Property                and** **Equipment** |
|--------|----------------------------------------------------|

| ***December                  31,***             |   |                    **2007** |           | 2006   |   |
|-------------------------------------------------|--------|----------------------------------|----------------|--------|--------|
| Land                  and land improvements     |   | **$**                            | **514,601**    |   | $      | 421,833 |   |
| Buildings                                       |   |                             | **2,739,460**  |   |   | 2,699,724 |   |
| Machinery                  and equipment        |   |                             | **7,189,672**  |   |   | 6,404,932 |   |
| Rental                  equipment               |   |                             | **711,368**    |   |   | 634,777 |   |
|                                            |   |                             |                |   |   |  |   |
|                                            |   |                             | **11,155,101** |   |   | 10,161,266 |   |
| Less:                  accumulated depreciation |   |                             | **7,052,920**  |   |   | 6,431,729 |   |
|                                            |   |                             |                |   |   |  |   |
|                                            |   | **$**                            | **4,102,181**  |   | $      | 3,729,537 |   |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

**(continued)**

| **2.** | **Notes                Payable** |
|--------|----------------------------------|

| ***December                  31,***                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | **2007**      |   |   | 2006      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|--------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |          |   |   |      |   |
| Note                  payable to Greater Atlantic Bank, maturing June 2021; with monthly                  payments of approximately $36,000 of principal and interest at                  prime plus                  .5% (7.75% at December 31, 2007); collateralized by principally                  all assets                  of the Company. This note was assigned on June 15, 2006 from a                  note                  previously held by UPS Capital. |   | **$**  | **3,168,126** |   | $      | 3,275,333 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |          |   |   |      |   |
| Note                  payable to Greater Atlantic Bank, maturing on October 15, 2010;                  with                  monthly payments of approximately $8,400 of principal and interest                  at                  5-year treasury plus 3.25% (9.00% at December 31, 2007); collateralized                  by                  a second priority lien on Company assets.                                                                              |   |   | **253,317**   |   |   | 323,229   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |               |   |   |           |   |
| The                  Company also has a $1,500,000 line of credit with Greater Atlantic                  Bank.                  The line matures June 15, 2008 and bears interest at the prime                  rate (7.25%                  at December 31, 2007); collateralized by a second priority lien                  on all                  accounts receivable, inventory, and certain other assets of the                  Company.                          |   |   | **200,000**   |   |   | 250,000   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |               |   |   |           |   |
| Capital                  Lease obligations, for machinery and equipment maturing                  through 2012, with interest at 7% through 10%.                                                                                                                                                                                                                                                                                                                         |   |   | **505,354**   |   |   | 33,475    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |          |   |   |      |   |
| Installment                  notes, collateralized by certain machinery and equipment maturing                  at                  various dates, primarily through 2010, with interest at 7.25% through                  11.07%.                                                                                                                                                                                                                                       |   |   | **469,615**   |   |   | 713,026   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |               |   |   |           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | **4,596,412** |   |   | 4,595,063 |   |
| Less                  current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | **605,376**   |   |   | 677,022   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **$**  | **3,991,036** |   | $      | 3,918,041 |   |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

**(continued)**

| **2.** | **Notes                Payable** **(continued)** |
|--------|-------------------------------------------------------|

| ***Year                  Ending December 31,*** |   |                    **Amount** |          |
|-------------------------------------------------|--------|------------------------------------|---------------|
|                                            |   |                |          |
| 2008                                            |   | $                                  | 605,376       |   |
| 2009                                            |   |                               | 416,129       |   |
| 2010                                            |   |                               | 411,628       |   |
| 2011                                            |   |                               | 310,302       |   |
| 2012                                            |   |                               | 278,904       |   |
| Thereafter                                      |   |                               | 2,574,073     |   |
|                                            |   | **$**                              | **4,596,412** |   |

| ***Year                  Ending December 31,***     |   |                    **Amount**   |        |
|-----------------------------------------------------|--------|------------------------------------------------|-------------|
|                                                |   |                            |        |
| 2008                                                |   | $                                              | 128,124     |   |
| 2009                                                |   |                                           | 128,124     |   |
| 2010                                                |   |                                           | 122,724     |   |
| 2011                                                |   |                                           | 122,724     |   |
| 2012                                                |   |                                           | 113,184     |   |
| Total                  payments                     |   |                                           | 614,880     |   |
| Less                  amounts representing interest |   |                                           | 109,526     |   |
|                                                |   | **$**                                          | **505,354** |   |

| **3.** | **Related                Party** **Transactions** |
|--------|--------------------------------------------------------|

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

**(continued)**

| **4.** | **Income                Taxes** |
|--------|---------------------------------|

| ***Year                  Ended December 31,*** |   |   **2007**   |        | 2006   |   |
|------------------------------------------------|--------|----------------------------------|-------------|------------------|--------|
| Current                                        |   | **$**                            | **938,000** |             | $      | (294,000 | ) |
|                                           |   |                             |             |             |   |  |   |
| Deferred                                       |   |                             | **(62,000** | )                |   | (150,000 | ) |
|                                           |   |                             |             |             |   |  |   |
|                                           |   | **$**                            | **876,000** |             | $      | (444,000 | **)** |

| ***Year                  Ended December 31,***                |   | **2007** |                         | 2006   |   |
|---------------------------------------------------------------|--------|----------|------------------------------|--------|--------|
|                                                          |   |     |  **Amount**   |   |   | **Percent** |   |   | Amount |   |   | Percent |   |
| Income                  taxes at statutory rate               |   | **$**    | **724,000**                  |   |   | **34** | **%** | $ | (428,000 | ) |   | (34 | %) |
| Increase                  (decrease) in taxes resulting from: |   |     |                              |   |   |  |   |   |  |   |   |  |   |
|                                                          |   |     |                              |   |   |  |   |   |  |   |   |  |   |
| State                  income taxes,                          |   |     |                              |   |   |  |   |   |  |   |   |  |   |
| net                  of federal benefit                       |   |     | **77,000**                   |   |   | **4** | **%** |   | (50,000 | ) |   | (4 | ) |
| Other                                                         |   |     | **75,000**                   |   |   | **3** | **%** |   | 34,000 |   |   | 2 |   |
|                                                          |   | **$**    | **876,000**                  |   |   | **41** | **%** | $ | (444,000 | ) |   | (36 | %) |

| ***December                  31,***                       |   | **2007** |     | 2006   |   |
|-----------------------------------------------------------|--------|----------|----------|--------|--------|
| Net                  operating loss and AMT carryforwards |   | $        | 66,000   |   | $      | 40,000 |   |
| Depreciation                                              |   |     | (241,000 | )      |   | (221,000 | ) |
| Provision                  for doubtful accounts          |   |     | 95,000   |   |   | 81,000 |   |
| Vacation                  accrued                         |   |     | 84,000   |   |   | 59,000 |   |
| Deferred                  income                          |   |     | 120,000  |   |   | 82,000 |   |
| Other                                                     |   |     | 68,000   |   |   | 89,000 |   |
|                                                      |   |     |          |   |   |  |   |
| Net                  deferred tax asset (liability)       |   |     | 192,000  |   |   | 130,000 |   |
|                                                      |   |     |          |   |   |  |   |
| Current                  portion, net                     |   |     | 367,000  |   |   | 351,000 |   |
| Long-term                  portion, net                   |   |     | (175,000 | )      |   | (221,000 | ) |
|                                                      |   | $        | 192,000  |   | $      | 130,000 |   |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

**(continued)**

| **5.** | **Employee                Benefit** **Plans** |
|--------|----------------------------------------------------|

| **6.** | **Stock                Options** |
|--------|----------------------------------|

|                                        |   |   Weighted Average                  Exercise Price |   | Options Outstanding |   | Vested                  and Exercisable |   |
|---------------------------------------------|--------|-------------------------------------------------------------------|--------|--------------------------|--------|-----------------------------------------|--------|
| Balance,                  December 31, 2005 |   | $                                                                 | 1.37   |                     |   | 473,153                                 |   |   | 313,852 |   |
| Granted                                     |   |                                                              | 2.25   |                     |   | 108,000                                 |   |   | - |   |
| Forfeited                                   |   |                                                              | 2.33   |                     |   | (45,305                                 | )      |   | (5,828 | ) |
| Exercised                                   |   |                                                              | .96    |                     |   | (24,424                                 | )      |   | (24,424 | ) |
| Vested                                      |   |                                                              | 2.24   |                     |   | -                                       |   |   | 70,549 |   |
|                                        |   |                                                              |        |                     |   |                                         |   |   |  |   |
| Balance,                  December 31, 2006 |   |                                                              | 1.49   |                     |   | 511,424                                 |   |   | 354,149 |   |
| Granted                                     |   |                                                              | 2.15   |                     |   | 92,500                                  |   |   | - |   |
| Forfeited                                   |   |                                                              | 2.25   |                     |   | (25,500                                 | )      |   | (10,500 | ) |
| Exercised                                   |   |                                                              | 1.05   |                     |   | (36,267                                 | )      |   | (36,267 | ) |
| Vested                                      |   |                                                              | 2.40   |                     |   | -                                       |   |   | 65,231 |   |
| Balance,                  December 31, 2007 |   | $                                                                 | 1.26   |                     |   | 542,157                                 |   |   | 372,613 |   |

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

**(continued)**

|                                          |   | Options                  Outstanding               |    | Options                  Exercisable               |   |
|-----------------------------------------------|--------|----------------------------------------------------|---------|----------------------------------------------------|--------|
|                                          |   |                           |    | Weighted                  Average        |   |     |   |
|                                          |   |   Number                  of   |    | Remaining                  Contractual   |   | Number   |   |
| Exercise                  Prices              |   |  Shares                                       |    | Life                  (Years)                      |   | of                  Shares |   |
| $.5625                                        |   |                                               | 27,000  |                                               |   | 1.99 |   |   | 27,000 |   |
| .80                  -                  .83   |   |                                               | 174,666 |                                               |   | 4.73 |   |   | 174,666 |   |
| 1.00                  -                  1.39 |   |                                               | 76,325  |                                               |   | 2.76 |   |   | 76,325 |   |
| 2.25                                          |   |                                               | 73,500  |                                               |   | 8.39 |   |   | 24,476 |   |
| 2.33                                          |   |                                               | 8,000   |                                               |   | 7.87 |   |   | 5,336 |   |
| 2.52                                          |   |                                               | 97,166  |                                               |   | 7.75 |   |   | 64,810 |   |
| 2.15                                          |   |                                               | 85,500  |                                               |   | 9.39 |   |   | - |   |
|                                          |   |                                               | 542,157 |                                               |   |   |   |   | 372,613 |   |

| **7.** | **Commitments** **and                Contingencies** |
|--------|-----------------------------------------------------------|

----

**Smith-Midland      Corporation**

**and      Subsidiaries**

**Notes      to Consolidated Financial Statements**

**(continued)**

| **8.** | **Earnings                (Loss) Per Share** |
|--------|----------------------------------------------|

| ***Year                  ended December 31,***                 |   |   **2007**   |          | 2006     |   |
|----------------------------------------------------------------|--------|----------------------------------|---------------|--------------------|--------|
| **Basic                  earnings (loss)**                     |   |         |          |     |   |
|                                                           |   |         |          |     |   |
| Income                  (loss) available to common shareholder |   | **$**                            | **1,252,360** |               | $      | (815,812 | ) |
|                                                           |   |                             |               |               |   |  |   |
| Weighted                  average shares outstanding           |   |                             | **4,646,733** |               |   | 4,621,513 |   |
|                                                           |   |                             |               |               |   |  |   |
| Basic                  earnings (loss) per share               |   | **$**                            | **.27**       |               | $      | (.18 | ) |
|                                                           |   |                             |               |               |   |  |   |
| **Diluted                  earnings per share**                |   |                             |               |               |   |  |   |
|                                                           |   |                             |               |               |   |  |   |
| Income                  (loss) available to common shareholder |   | **$**                            | **1,252,360** |               | $      | (815,812 | ) |
|                                                           |   |                             |               |               |   |  |   |
| Weighted                  average shares outstanding           |   |                             | **4,646,733** |               |   | 4,621,513 |   |
| Dilutive                  effect of stock options              |   |                             | **146,982**   |               |   | — |   |
|                                                           |   |                             |               |               |   |  |   |
| Total                  weighted average shares outstanding     |   |                             | **4,793,715** |               |   | 4,621,513 |   |
|                                                           |   |                             |               |               |   |  |   |
| Diluted                  earnings per share                    |   | **$**                            | **.26**       |               | $      | (.18 | ) |

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