----

----

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

|                                                                       |   |
|----------------------------------------------------------------------------|--------|
| 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 |

----

----

|   | · | our      high level of indebtedness and ability to satisfy the  same, |
|--------|--------|-----------------------------------------------------------------------|

|   | · | Our      revenues and net income decreased in 2008 as compared to 2007, due in part      to current economic conditions, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 proprietaryproducts, |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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, such as the expected weakening in      construction activity in 2009in the Company’s primary service      area, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | adverse      weather which inhibits the demand for our  products, |
|--------|--------|-------------------------------------------------------------------|

|   | · | our      compliance with governmentalregulations, |
|--------|--------|---------------------------------------------------|

----

|   | · | 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 constructionindustry, |
|--------|--------|-------------------------------------------------------|

|   | · | 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 a separate  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. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

----

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

----

----

|   |  | 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. |
|--------|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Easi-SetUtility Vault

----

Competition

----

----

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

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

| Item      4. | Submission      of Matters to Vote of SecurityHolders. |
|--------------|--------------------------------------------------------|

----

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

|                |   | High   |   |   | Low    |   |
|---------------------|--------|--------|--------|--------|--------|--------|
| 2008                |   |   |   |   |   |   |
| First      Quarter  |   | $      | 1.79   |   |   | $      | 1.25 |   |
| Second      Quarter |   |   | 1.75   |   |   |   | 1.13 |   |
| Third      Quarter  |   |   | 1.24   |   |   |   | 0.88 |   |
| Fourth      Quarter |   |   | 1.02   |   |   |   | 0.43 |   |
|                |   |   |   |   |   |   |   |   |
| 2007                |   |   |   |   |   |   |   |   |
| First      Quarter  |   | $      | 2.10   |   |   | $      | 1.65 |   |
| Second      Quarter |   |   | 2.35   |   |   |   | 1.40 |   |
| Third      Quarter  |   |   | 2.48   |   |   |   | 1.80 |   |
| Fourth      Quarter |   |   | 2.35   |   |   |   | 1.60 |   |
|                |   |   |   |   |   |   |   |   |

----

| Item      6. | Selected      Financial Data |
|--------------|------------------------------|

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

Results of Operations

              Overall,the Company’s performance decreased significantly in 2008 with net income of$420,993 as compared to net income of $1,252,360 for 2007, or a decrease of$831,367.  Approximately $418,000 (net of applicable federal and stateincome taxes), or 50% of the decrease in net income was attributable to thesettlement of a lawsuit with JPI Construction Services, GP LLC(“JPIC”).  The settlement required the Company to forgive outstandingretainage receivables from JPIC of approximately $199,000, make a $426,000 cashpayment to JPIC and to pay attorney’s fees in the amount of$160,000.

----

----

----

  As the economy began to slow down, especially in theconstruction industry, in the second half of the 2008, raw material prices beganto moderate.

----

----

|   | · | Disclosure      of the objectives for using derivative instruments be disclosed in terms      of underlying risk and accountingdesignation; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Disclosure      of the fair values of derivative instruments and their gains and losses in      a tabular format; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | Disclosure      of information about credit-risk-related contingent features;      and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | Cross-reference      from the derivative footnote to other footnotes in which      derivative-related information isdisclosed. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

| Item      7A | Quantitative      and Qualitative Disclosures about MarketRisk |
|--------------|----------------------------------------------------------------|

----

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

| Report      of Independent Registered Public Accountants                                                                 | F-3     |
|--------------------------------------------------------------------------------------------------------------------------|---------|
|                                                                                                                     |    |
| Consolidated      Balance Sheets as of December 31, 2008 and 2007                                                        | F-4-5   |
|                                                                                                                     |    |
| Consolidated      Statements of Operations for the years ended December 31, 2008 and      2007                           | F-6     |
|                                                                                                                     |    |
| Consolidated      Statements of Changes in Stockholders' Equity for the years ended      December      31, 2008 and 2007 | F-7     |
|                                                                                                                     |    |
| Consolidated      Statements of Cash Flows for the years ended December 31, 2008 and      2007                           | F-8-9   |
|                                                                                                                     |    |
| Summary      of Significant Accounting Policies                                                                          | F-10-13 |
|                                                                                                                     |    |
| Notes      to Consolidated Financial Statements                                                                          | F-14-20 |

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

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

----

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

----

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

| Rodney      I. Smith    | 70     | 1970   | Chief      Executive Officer, President and |
|-------------------------|--------|--------|---------------------------------------------|
|                    |   |   | Chairman      of the Board of Directors     |
|                    |   |   |                                        |
| Ashley      B. Smith    | 46     | 1994   | Vice      President                         |
|                    |   |   | Director                                    |
|                    |   |   |                                        |
| Wesley      A. Taylor   | 61     | 1994   | Vice      President of Administration,      |
|                    |   |   | Secretary      and Director                 |
|                    |   |   |                                        |
| Andrew      G. Kavounis | 83     | 1995   | Director                                    |
|                    |   |   |                                        |
| William      A. Kenter  | 62     | 2008   | Chief      Financial Officer                |
|                    |   |   |                                        |
| Steve      Ott          | 42     | 2005   | Vice      President of Engineering          |
|                    |   |   | Smith-Midland      - Virginia               |

----

| Section      16(a). | Beneficial      Ownership Reporting Compliance |
|---------------------|------------------------------------------------|

----

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

| Name      and Principal Position |   | Year   |   | Salary      ($)(1) |    |   | Bonus      ($)(2) |   |    | Stock      Awards ($) |   |   | Option      Awards ($) |   |   | Non-Equity      Incentive Compen-sation Plan($) |   |   | Non-qualified      Deferred Compen-sation Earning ($) |   |    | All      Other Compen-sation ($)(3) |   |   | Total ($) |   |
|----------------------------------|--------|--------|--------|--------------------|---------|--------|-------------------|--------|---------|-----------------------|--------|--------|------------------------|--------|--------|-------------------------------------------------|--------|--------|-------------------------------------------------------|--------|---------|-------------------------------------|--------|--------|----------------|--------|
| Rodney      I. Smith (3)         |   | 2008   |   |               | 120,154 |   |              |   | 8,420   |                  |   |   | —                |   |   |                                            | 32,000 |   |                                                  |   | — |                                |   |   | —        |   |   |   | 102,137 |   |   |   | 262,711 |   |
| President,      Chief            |   | 2007   |   |               | 99,000  |   |              |   | — |                  |   |   | —                |   |   |                                            | 29,000 |   |                                                  |   | — |                                |   |   | —        |   |   |   | 104,400 |   |   |   | 232,400 |   |
| Executive      Officer           |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |
| and      Chairman of the         |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |
| Board.                           |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |
|                             |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |
| Ashley      B. Smith             |   | 2008   |   |               | 125,955 |   |              |   | 4,723   |                  |   |   | —                |   |   |                                            | 11,840 |   |                                                  |   | — |                                |   |   | —        |   |   |   | 1,261 |   |   |   | 143,779 |   |
| VP      of Sales and             |   | 2007   |   |               | 117,389 |   |              |   | — |                  |   |   | —                |   |   |                                            | 10,150 |   |                                                  |   | — |                                |   |   | —        |   |   |   | 4,923 |   |   |   | 132,462 |   |
| Marketing      and Director      |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |
|                             |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |
| Wesley      A. Taylor            |   | 2008   |   |               | 120,224 |   |              |   | 4,308   |                  |   |   | —                |   |   |                                            | 5,600  |   |                                                  |   | — |                                |   |   | —        |   |   |   | 1,000 |   |   |   | 131,132 |   |
| VP      of Administration,       |   | 2007   |   |               | 95,200  |   |              |   | — |                  |   |   | —                |   |   |                                            | 10,150 |   |                                                  |   | — |                                |   |   | —        |   |   |   | 4,970 |   |   |   | 110,320 |   |
| Secretary,      Treasurer,       |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |
| and      Director                |   |   |   |               |    |   |              |   |    |                  |   |   |                   |   |   |                                            |   |   |                                                  |   |    |                                |   |   |           |   |   |   |   |   |   |   |   |   |

----

Executive Officer OutstandingEquity Awards At Fiscal Year-End

| Name                  |   | Number      of Securities Underlying Unexercised Options (#)    Exercisable |    |   | Number      of Securities Underlying Unexercised Options (#)    Unexercisable |   |    | Option      Exercise Price ($/Sh) |   | Option      Expiration Date |
|-----------------------|--------|-----------------------------------------------------------------------------|---------|--------|-------------------------------------------------------------------------------|--------|---------|-----------------------------------|--------|-----------------------------|
| Rodney      I. Smith  |   |                                                                        | 20,000  |   |                                                                          |   | — |                              |   |                        | 0.5625 |   | 12/28/2009 |
|                  |   |                                                                        | 20,000  |   |                                                                          |   | — |                              |   |                        | 0.80 |   | 4/22/2011 |
|                  |   |                                                                        | 80,000  |   |                                                                          |   | — |                              |   |                        | 0.81 |   | 5/3/2011 |
|                  |   |                                                                        | 20,000  |   |                                                                          |   | — |                              |   |                        | 1.39 |   | 12/25/2011 |
|                  |   |                                                                        | 20,000  |   |                                                                          |   | — |                              |   |                        | 0.83 |   | 12/16/2013 |
|                  |   |                                                                        | 20,000  |   |                                                                          |   | — |                              |   |                        | 2.52 |   | 9/29/2015 |
|                  |   |                                                                        | 13,333  |   |                                                                          |   | 6,667   |                              |   |                        | 2.25 |   | 5/21/2016 |
|                  |   |                                                                        | 6,667   |   |                                                                          |   | 13,333  |                              |   |                        | 2.15 |   | 5/21/2017 |
|                  |   |                                                                        | — |   |                                                                          |   | 40,000  |                              |   |                        | 1.21 |   | 6/29/2018 |
|                  |   |                                                                        | 200,000 |   |                                                                          |   | 60,000  |                              |   |                        |   |   |   |
|                  |   |                                                                        |    |   |                                                                          |   |    |                              |   |                        |   |   |   |
| TOTAL                 |   |                                                                        |    |   |                                                                          |   |    |                              |   |                        |   |   |   |
|                  |   |                                                                        |    |   |                                                                          |   |    |                              |   |                        |   |   |   |
| Ashley      B. Smith  |   |                                                                        | 7,000   |   |                                                                          |   | — |                              |   |                        | 0.5625 |   | 12/28/2009 |
|                  |   |                                                                        | 10,000  |   |                                                                          |   | — |                              |   |                        | 0.80 |   | 4/22/2011 |
|                  |   |                                                                        | 10,000  |   |                                                                          |   | — |                              |   |                        | 1.39 |   | 12/25/2011 |
|                  |   |                                                                        | 10,000  |   |                                                                          |   | — |                              |   |                        | 0.83 |   | 12/16/2013 |
|                  |   |                                                                        | 10,000  |   |                                                                          |   | — |                              |   |                        | 2.52 |   | 9/29/2015 |
|                  |   |                                                                        | 4,667   |   |                                                                          |   | 2,333   |                              |   |                        | 2.25 |   | 5/21/2016 |
|                  |   |                                                                        | 2,333   |   |                                                                          |   | 4,667   |                              |   |                        | 2.15 |   | 5/21/2017 |
|                  |   |                                                                        | — |   |                                                                          |   | 14,800  |                              |   |                        | 1.21 |   | 6/29/2018 |
| TOTAL                 |   |                                                                        | 54,000  |   |                                                                          |   | 21,800  |                              |   |                        |   |   |   |
|                  |   |                                                                        |    |   |                                                                          |   |    |                              |   |                        |   |   |   |
| Wesley      A. Taylor |   |                                                                        | 6,667   |   |                                                                          |   | — |                              |   |                        | 0.83 |   | 12/16/2013 |
|                  |   |                                                                        | 10,000  |   |                                                                          |   | — |                              |   |                        | 2.52 |   | 9/29/2015 |
|                  |   |                                                                        | 4,667   |   |                                                                          |   | 2,333   |                              |   |                        | 2.25 |   | 5/21/2016 |
|                  |   |                                                                        | 2,333   |   |                                                                          |   | 4,667   |                              |   |                        | 2.15 |   | 5/21/2017 |
|                  |   |                                                                        | — |   |                                                                          |   | 7,000   |                              |   |                        | 1.21 |   | 6/29/2018 |
| TOTAL                 |   |                                                                        | 23,667  |   |                                                                          |   | 14,000  |                              |   |                        |   |   |   |
|                  |   |                                                                        |    |   |                                                                          |   |    |                              |   |                        |   |   |   |
| TOTAL                 |   |                                                                        | 277,667 |   |                                                                          |   | 95,800  |                              |   |                        |   |   |   |

----

Compensation of Directors

| Name                        |   | Fees      Earned or Paid in Cash ($) |   |   | Stock      Awards ($) |   |    | Option      Awards ($)(1) |   |   | Non-Equity      Incentive Plan Compen-sation |   |   | Non-Qualified      Deferred Compen-sation Earnings |    |   | All      Other Compen-sation |   |    | Total      ($) |   |
|-----------------------------|--------|--------------------------------------|--------|--------|-----------------------|--------|---------|---------------------------|--------|--------|----------------------------------------------|--------|--------|----------------------------------------------------|---------|--------|------------------------------|--------|---------|----------------|--------|
| Rodney      I. Smith        |   |                                 | 1,000  |   |                  |   | — |                      |   |   | 32,000                                       |   |   |                                               | — |   |                         |   | — |           |   |   | — |   |   |   | 33,000 |   |
| Andrew      G. Kavounis (2) |   |                                 | 2,000  |   |                  |   | — |                      |   |   | —                                      |   |   |                                               | — |   |                         |   | — |           |   |   | — |   |   |   | 2,000 |   |
| Ashley      B. Smith        |   |                                 | 1,000  |   |                  |   | — |                      |   |   | 11,840                                       |   |   |                                               | — |   |                         |   | — |           |   |   | — |   |   |   | 12,840 |   |
| Wesley      A. Taylor       |   |                                 | 1,000  |   |                  |   | — |                      |   |   | 5,600                                        |   |   |                                               | — |   |                         |   | — |           |   |   | — |   |   |   | 6,600 |   |
|                        |   |                                 |   |   |                  |   |    |                      |   |   |                                         |   |   |                                               |    |   |                         |   |    |           |   |   |   |   |   |   |   |   |

| (1)    | Option      awards for Messrs. R. Smith, A. Smith and Taylor disclosed in the “Summary      Compensation Table” disclosed above. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                         |
| (2)    | 3,000      options were outstanding as of December 31, 2008, of which 3,000 were      exercisable as of December 31,2008.                    |

----

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

| Name      and Adress of Beneficial Owner (1) |   | Number      of Shares Beneficially Owned (2) |    |   | Percentage      of Class |   |
|----------------------------------------------|--------|----------------------------------------------|---------|--------|--------------------------|--------|
|                                         |   |                                         |    |   |                     |   |
| Rodney      I. Smith (1)(3)(4)(5)            |   |                                         | 733,398 |   |                     |   | 15.2 | % |
|                                         |   |                                         |    |   |                     |   |   |   |
| Ashley      B. Smith (1)(3)(4)(6)            |   |                                         | 143,617 |   |                     |   | 3.1 | % |
|                                         |   |                                         |    |   |                     |   |   |   |
| Wesley      A. Taylor (1)(7)                 |   |                                         | 38,750  |   |                     |   | * |   |
|                                         |   |                                         |    |   |                     |   |   |   |
| Andrew      G. Kavounis (1)(8)               |   |                                         | 4,000   |   |                     |   | * |   |
|                                         |   |                                         |    |   |                     |   |   |   |
| AL      Frank Asset Management, Inc. (9)     |   |                                         | 630,547 |   |                     |   | 13.6 | % |
|                                         |   |                                         |    |   |                     |   |   |   |
| All      directors and executive officers    |   |                                         |    |   |                     |   |   |   |
| as      a group (5 persons)(2)(10)           |   |                                         | 919,765 |   |                     |   | 18.8 | % |

| (1) | The address for each of Messrs.      Rodney I. Smith, Ashley B. Smith, Taylor, and 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 beneficialownership. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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      54,000 shares. |
|-----|--------------------------------------------------|

| (7) | Includes      options to purchase 13,667 shares. |
|-----|--------------------------------------------------|

| (8) | Includes options to purchase      4,000 shares. |
|-----|-------------------------------------------------|

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

| (10) | Includes options to purchase      271,667 shares for all directors, executive officers as a      group. |
|------|---------------------------------------------------------------------------------------------------------|

----

EQUITYCOMPENSATION PLAN INFORMATION

| Plan      Category                                              |   | Number      of securities to be issued upon exercise of outstanding options, warrants      and rights |    |   | Weighted      average exercise price of outstanding options, warrants and      rights |   |    | Number      of securities remaining available for future issuance under equity      compensation plans |   |
|-----------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------------|--------|---------|--------------------------------------------------------------------------------------------------------|--------|
| Equity      compensation plans approved by security holders     |   |                                                                                                  | 542,157 |   |                                                                                  |   | 1.52    |                                                                                                   |   |   | 432,999 |   |
| Equity      compensation plans not approved by security holders |   |                                                                                                  | — |   |                                                                                  |   | — |                                                                                                   |   |   | — |   |
| Total                                                           |   |                                                                                                  | 542,157 |   |                                                                                  |   | 1.52    |                                                                                                   |   |   | 432,999 |   |

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

           Thesole independent director of the Company is Andrew G. Kavounis.  Thetest utilized for the determination of independence is that of the New YorkStock Exchange.

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

|            |   | 2008   |    |   | 2007   |   |
|-----------------|--------|--------|---------|--------|--------|--------|
| Audit      Fees |   | $      | 171,489 |   |   | $      | 141,578 |   |
| Tax      Fees   |   |   | 23,696  |   |   |   | 25,840 |   |
| Total      Fees |   | $      | 195,185 |   |   | $      | 167,418 |   |
|            |   |   |    |   |   |   |   |   |

----

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

| (2) | The      following exhibits are filedherewith: |
|-----|------------------------------------------------|

| 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 | 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). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | 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). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | 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). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | First      National Bank of New England Commercial Term Promissory Note dated      December 20, 1999 (Incorporated by reference to the Company’s Annual      Report on Form 10-KSB for the year ended December 31,    1999). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | 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). |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Amendment      No. 1 to Employment Agreement, dated as of December 31, 2008, between the      Company and Rodney I. Smith. |
|------|----------------------------------------------------------------------------------------------------------------------------|

| 10.10 | 2004      Stock Option Plan (Incorporated by reference to the Company’s Annual      Report on Form 10-KSB for the year ended December 31,    2004). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.11 | 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). |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | 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). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | 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). |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | 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). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | 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). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | 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). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | 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). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | 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). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | 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). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20 | 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). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | 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). |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22 | 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). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | Commercial      Loan Agreement, dated August 7, 2007, by and between the Borrower and the      Lender contemplating a multiple advance 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). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | 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). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | 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). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26 | 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). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27 | 2008      Stock Option Plan (Incorporated by reference to the Company’s Registration      Statement on Form S-8 (No. 333-155920) filed on December 4,      2008). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.1 | Code      of Professional Conduct (Incorporated by reference to the Company’s Annual      Report on Form 10-KSB for the year ended December 31,    2003). |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.1 | 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). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23.1 | Consent      of BDO Seidman, LLP. |
|------|-----------------------------------|

| 31.1 | Certification      of Chief Executive Officer. |
|------|------------------------------------------------|

| 31.2 | Certification      of Principal Financial Officer. |
|------|----------------------------------------------------|

| 32.1 | Certification      pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002. |
|------|-------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   |   |
|--------|--------|

----

----

----

| Name                    |   | Capacity |   | Date                |
|-------------------------|--------|----------|--------|---------------------|
|                    |   |     |   |                |
| /s/ Rodney I. Smith     |   | Director |   | March      31, 2009 |
| Rodney      I. Smith    |   |     |   |                |
|                    |   |     |   |                |
| /s/ Wesley A. Taylor    |   | Director |   | March      31, 2009 |
| Wesley      A. Taylor   |   |     |   |                |
|                    |   |     |   |                |
| /s/ Ashley B. Smith     |   | Director |   | March      31, 2009 |
| Ashley      B. Smith    |   |     |   |                |
|                    |   |     |   |                |
| /s/ Andrew G. Kavounis  |   | Director |   | March      31, 2009 |
| Andrew      G. Kavounis |   |     |   |                |

----

----

| 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-10-13 |
|                                                     |    |
| Notes      to Consolidated Financial Statements          | F-14-20 |

----

Reportof Independent Registered Public Accountants

----

|                                                          |   | December      31, |       |
|---------------------------------------------------------------|--------|-------------------|------------|
| ASSETS      (Note 2)                                          |   | 2008              |       |   | 2007 |   |
| Current      assets                                           |   |              |       |   |   |   |
|  Cash      and cash equivalents                          |   | $                 | 1,363,284  |   |   | $ | 282,440 |   |
|  Accounts      receivable                                |   |              |       |   |   |   |   |   |
|   Trade      - billed, (less allowance for doubtful |   |              |       |   |   |   |   |   |
|    accounts      of $396,665 and $243,318)     |   |              | 5,831,182  |   |   |   | 5,900,684 |   |
|   Trade      - unbilled                             |   |              | 660,165    |   |   |   | 316,059 |   |
|  Inventories                                             |   |              |       |   |   |   |   |   |
|   Raw      materials                                |   |              | 851,394    |   |   |   | 825,328 |   |
|   Finished      goods                               |   |              | 1,572,830  |   |   |   | 1,968,978 |   |
|  Prepaid      expenses and other assets                  |   |              | 155,772    |   |   |   | 152,289 |   |
|  Prepaid      income taxes (Note 4)                      |   |              | 258,150    |   |   |   | 322,835 |   |
|  Deferred      taxes (Note 4)                            |   |              | 471,000    |   |   |   | 367,000 |   |
|                                                          |   |              |       |   |   |   |   |   |
| Total      current assets                                     |   |              | 11,163,777 |   |   |   | 10,135,613 |   |
|                                                          |   |              |       |   |   |   |   |   |
| Property      and equipment, net (Note 1)                     |   |              | 4,223,555  |   |   |   | 4,102,181 |   |
|                                                          |   |              |       |   |   |   |   |   |
| Total      other assets                                       |   |              | 163,735    |   |   |   | 200,090 |   |
|                                                          |   |              |       |   |   |   |   |   |
| Total      assets                                             |   | $                 | 15,551,067 |   |   | $ | 14,437,884 |   |
|                                                          |   |              |       |   |   |   |   |   |

----

|                                                       |   | December      31, |       |
|------------------------------------------------------------|--------|-------------------|------------|
| LIABILITIES      AND STOCKHOLDERS' EQUITY                  |   | 2008              |       |   | 2007 |   |
| Current      liabilities                                   |   |              |       |   |   |   |
|  Accounts      payable - trade                        |   | $                 | 2,142,478  |   |   | $ | 1,776,594 |   |
|  Accrued      income taxes payable                    |   |              | —    |   |   |   | 656,370 |   |
|  Accrued      expenses and other liabilities          |   |              | 1,074,889  |   |   |   | 587,399 |   |
|  Current      maturities of notes payable (Note 2)    |   |              | 1,022,476  |   |   |   | 605,376 |   |
|  Customer      deposits                               |   |              | 858,437    |   |   |   | 643,509 |   |
|                                                       |   |              |       |   |   |   |   |   |
| Total      current liabilities                             |   |              | 5,098,280  |   |   |   | 4,269,248 |   |
|                                                       |   |              |       |   |   |   |   |   |
| Notes      payable - less current maturities (Note 2)      |   |              | 3,569,321  |   |   |   | 3,991,036 |   |
| Deferred      tax liability (Note 4)                       |   |              | 317,000    |   |   |   | 175,000 |   |
|                                                       |   |              |       |   |   |   |   |   |
| Total      liabilities                                     |   |              | 8,984,601  |   |   |   | 8,435,284 |   |
|                                                       |   |              |       |   |   |   |   |   |
| Commitments      and contingencies (Note 5)                |   |              |       |   |   |   |   |   |
|                                                       |   |              |       |   |   |   |   |   |
| 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 issued and outstanding  |   |              | 46,709     |   |   |   | 46,709 |   |
|  Additional      paid-in capital                      |   |              | 4,701,820  |   |   |   | 4,558,947 |   |
|  Retained      earnings                               |   |              | 1,920,237  |   |   |   | 1,499,244 |   |
|                                                       |   |              |       |   |   |   |   |   |
|                                                       |   |              | 6,668,766  |   |   |   | 6,104,900 |   |
| Treasury      stock, at cost, 40,920 shares                |   |              | (102,300   | ) |   |   | (102,300 | ) |
|                                                       |   |              |       |   |   |   |   |   |
| Total      stockholders’ equity                      |   |              | 6,566,466  |   |   |   | 6,002,600 |   |
|                                                       |   |              |       |   |   |   |   |   |
| Total      liabilities and stockholders' equity            |   | $                 | 15,551,067 |   |   | $ | 14,437,884 |   |

----

|                                            |   | December      31, |       |
|-------------------------------------------------|--------|-------------------|------------|
|                                            |   | 2008              |       |   | 2007 |   |
| Revenue                                         |   |              |       |   |   |   |
|  Products      sales and leasing           |   | $                 | 24,312,888 |   |   | $ | 24,567,148 |   |
|  Shipping      and installation revenue    |   |              | 4,063,202  |   |   |   | 5,198,166 |   |
|  Royalties                                 |   |              | 1,479,689  |   |   |   | 1,755,323 |   |
|                                            |   |              |       |   |   |   |   |   |
| Total      revenue                              |   |              | 29,855,779 |   |   |   | 31,520,637 |   |
|                                            |   |              |       |   |   |   |   |   |
| Cost      of goods sold                         |   |              | 23,177,596 |   |   |   | 23,743,906 |   |
|                                            |   |              |       |   |   |   |   |   |
| Gross      profit                               |   |              | 6,678,183  |   |   |   | 7,776,731 |   |
|                                            |   |              |       |   |   |   |   |   |
| Operating      expenses                         |   |              |       |   |   |   |   |   |
|  General      and administrative expenses  |   |              | 3,324,845  |   |   |   | 3,285,593 |   |
|  Selling      expenses                     |   |              | 2,392,766  |   |   |   | 1,942,685 |   |
|                                            |   |              |       |   |   |   |   |   |
| Total      operating expenses                   |   |              | 5,717,611  |   |   |   | 5,228,278 |   |
|                                            |   |              |       |   |   |   |   |   |
| Operating      income                           |   |              | 960,572    |   |   |   | 2,548,453 |   |
|                                            |   |              |       |   |   |   |   |   |
| Other      income (expense)                     |   |              |       |   |   |   |   |   |
|  Interest      expense                     |   |              | (343,107   | ) |   |   | (430,048 | ) |
|  Interest      income                      |   |              | 28,040     |   |   |   | 22,858 |   |
|  Gain      (loss) on sale of assets        |   |              | 44,581     |   |   |   | (13,892 | ) |
|  Other,      net                           |   |              | (1,093     | ) |   |   | 989 |   |
|                                            |   |              |       |   |   |   |   |   |
| Total      other income (expense)               |   |              | (271,579   | ) |   |   | (420,093 | ) |
|                                            |   |              |       |   |   |   |   |   |
| Income      before income tax expense           |   |              | 688,993    |   |   |   | 2,128,360 |   |
|                                            |   |              |       |   |   |   |   |   |
| Income      tax expense (Note 4)                |   |              | 268,000    |   |   |   | 876,000 |   |
|                                            |   |              |       |   |   |   |   |   |
| Net      income                                 |   | $                 | 420,993    |   |   | $ | 1,252,360 |   |
|                                            |   |              |       |   |   |   |   |   |
| Basic earnings (loss) per      share (Note 8)   |   |              | 0.27       |   |   |   | (0.18 | ) |
| Diluted earnings (loss) per      share (Note 8) |   |              | 0.26       |   |   |   | (0.18 | ) |
|                                            |   |              |       |   |   |   |   |   |

----

Smith-MidlandCorporation

|                            |   | CommonStock |    |   | AdditionalPaid-in      Capital |   |      | RetainedEarnings |   |   | TreasuryStock |   |   | Total  |     |
|---------------------------------|--------|-------------|---------|--------|--------------------------------|--------|-----------|------------------|--------|--------|---------------|--------|--------|--------|----------|
|                            |   |        |    |   |                           |   |      |             |   |   |          |   |   |   |     |
| 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 |   |
|                            |   |        |    |   |                           |   |      |             |   |   |          |   |   |   |     |   |   |   |   |   |
| Stock      option compensation  |   |        | — |   |                           |   | 142,873   |             |   |   | —       |   |   |   | —  |   |   |   | 142,873 |   |
|                            |   |        |    |   |                           |   |      |             |   |   |          |   |   |   |     |   |   |   |   |   |
| Net      income                 |   |        | — |   |                           |   | —   |             |   |   | 420,993       |   |   |   | —  |   |   |   | 420,993 |   |
|                            |   |        |    |   |                           |   |      |             |   |   |          |   |   |   |     |   |   |   |   |   |
| Balance, December 31,      2008 |   | $           | 46,709  |   |                           | $      | 4,701,820 |             |   | $      | 1,920,237     |   |   | $      | (102,300 | ) |   | $ | 6,566,466 |   |

----

Smith-Midland Corporation

|                                                          |   | December      31, |      |
|---------------------------------------------------------------|--------|-------------------|-----------|
|                                                          |   | 2008              |      |   | 2007 |   |
| Reconciliation      of net  income to net cash      |   |              |      |   |   |   |
|  provided by operating      activities                   |   |              |      |   |   |   |
|                                                          |   |              |      |   |   |   |
| Net      income                                               |   | $                 | 420,993   |   |   | $ | 1,252,360 |   |
| Adjustments      to reconcile net                             |   |              |      |   |   |   |   |   |
|  income      to net cash provided by operating           |   |              |      |   |   |   |   |   |
| activities                                                    |   |              |      |   |   |   |   |   |
|   Depreciation      and amortization                |   |              | 642,805   |   |   |   | 735,218 |   |
|   Deferred      taxes                               |   |              | 38,000    |   |   |   | 62,000 |   |
|   Stock      option compensation expense            |   |              | 142,873   |   |   |   | 105,893 |   |
|   Gain      (loss) on sale of fixed assets          |   |              | (44,581   | ) |   |   | 13,892 |   |
|   (Increase)      decrease in                       |   |              |      |   |   |   |   |   |
|    Accounts      receivable - billed           |   |              | 69,502    |   |   |   | (483,209 | ) |
|    Accounts      receivable - unbilled         |   |              | (344,106  | ) |   |   | 509,465 |   |
|    Inventories                                 |   |              | 199,382   |   |   |   | 323,166 |   |
|   Prepaid      expenses and other assets            |   |              | 60,839    |   |   |   | (42,066 | ) |
|    Prepaid      income taxes                   |   |              | 64,685    |   |   |   | (69,897 | ) |
|   Increase      (decrease) in                       |   |              |      |   |   |   |   |   |
|    Accounts      payable - trade               |   |              | 365,884   |   |   |   | (957,380 | ) |
|    Accrued      expenses and other liabilities |   |              | 487,490   |   |   |   | (1,296,987 | ) |
|    Accrued      income taxes                   |   |              | (656,370  | ) |   |   | 656,370 |   |
|    Customer      deposits                      |   |              | 214,928   |   |   |   | 29,382 |   |
|                                                          |   |              |      |   |   |   |   |   |
| Net      cash provided by operating activities                |   | $                 | 1,662,324 |   |   | $ | 838,207 |   |
|                                                          |   |              |      |   |   |   |   |   |

----

|                                                                 |   | December      31, |      |
|----------------------------------------------------------------------|--------|-------------------|-----------|
|                                                                 |   | 2008              |      |   | 2007 |   |
| Cash      Flows From Investing Activities                            |   |              |      |   |   |   |
|  Purchases      of property and equipment                       |   | $                 | (654,740  | ) |   | $ | (579,571 | ) |
|  Proceeds      from sale of fixed assets                        |   |              | 77,878    |   |   |   | 19,961 |   |
|                                                                 |   |              |      |   |   |   |   |   |
| Net      cash absorbed by investing activities                       |   |              | (576,862  | ) |   |   | (559,610 | ) |
|                                                                 |   |              |      |   |   |   |   |   |
| Cash      Flows From Financing Activities                            |   |              |      |   |   |   |   |   |
|  Proceeds      from borrowings on Line of Credit, net           |   |              | 500,000   |   |   |   | (50,000 | ) |
| Proceeds      from long-term borrowings                              |   |              | 171,022   |   |   |   | 46,126 |   |
|  Repayments      of long-term borrowings                        |   |              | (675,640  | ) |   |   | (513,027 | ) |
|  Proceeds      from options exercised                           |   |              | —   |   |   |   | 38,054 |   |
|                                                                 |   |              |      |   |   |   |   |   |
| Net      cash absorbed by financing activities                       |   |              | (4,618    | ) |   |   | (478,847 | ) |
|                                                                 |   |              |      |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents            |   |              | 1,080,844 |   |   |   | (200,250 | ) |
|                                                                 |   |              |      |   |   |   |   |   |
| Cash and cash      equivalents, beginning of year                    |   |              | 282,440   |   |   |   | 482,690 |   |
|                                                                 |   |              |      |   |   |   |   |   |
| Cash and cash      equivalents, end of year                          |   | $                 | 1,363,284 |   |   | $ | 282,440 |   |
|                                                                 |   |              |      |   |   |   |   |   |
| Supplemental      schedule of non-cash investing activities          |   |              |      |   |   |   |   |   |
| Noncash      investing and financing – capital lease additions |   |              | —   |   |   |   | 518,250 |   |
| Cash      Payments for interest                                      |   |              | 343,107   |   |   |   | 430,048 |   |
| Cash      Payments for income taxes                                  |   |              | 1,144,424 |   |   |   | 211,733 |   |
|                                                                 |   |              |      |   |   |   |   |   |

----

Smith-MidlandCorporation

| 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      ofConsolidation | 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.  All material intercompany      accounts and transactions have been eliminated in      consolidation. |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Reclassifications               | Certain      immaterial reclassifications have been made between prior year amounts for      cost of goods sold and general and administrative expenses to conform to      current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 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      andEquipment      | 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   |   |

| 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      Company granted 127,825 and 92,500 stock options during the years ended      December 31, 2008 and 2007, 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 72% and a risk-free interest rate of 3.34 for 2008      and expected volatility of 73% and a risk-free interest rate of 4.42% for      2007, with expected lives of six years for both 2008 and      2007.  The weighted average per share fair value of options      granted during the years ended December 31, 2008 and 2007 were $.80 and      $1.45, respectively. Substantially all options become vested and      exercisable ratably over a three-year period.                                                                      |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Revenue      Recognition | The      Company primarily recognizes revenue on the sale of its standard precast      concrete products at shipment date, including revenue derived from any      projects to be completed under short-term      contracts.  Installation of the Company’s standard products is      typically performed by the customer; however, in some circumstances, the      Company will install certain products which are accomplished at the time      of delivery.  The installation activities are usually completed      the day of delivery or the following day.  In utility building      sales, the majority of the buildings are erected on the Company’s site and      delivered completely installed. Leasing      fees are paid at the beginning of the lease agreement and recorded to a      deferred revenue account.  As the revenue is earned each month      during the contract, the amount earned is recorded as lease income and an      equivalent amount is debited to deferred revenue. Royalties      are recognized as revenue as they are earned.  The Company      licenses certain other precast companies to produce its licensed products      to our engineering specifications under licensing      agreements.  The agreements are typically for five year terms      and require royalty payments from 4% to 6% which are paid on a monthly      basis.  The revenue from licensing agreements are recognized in      the month earned. Certain      sales of Soundwall, architectural precast panels and SlenderwallTM concrete      products revenue is recognized using the percentage of completion method      for recording revenues on long term contracts under ARB 45 and SOP      81-1.  The contracts are executed by both parties and clearly      stipulate the requirements for progress payments and a schedule of      delivery dates.  Provisions for estimated losses on contracts      are made in the period in which such losses are determined. Shipping      revenues are recognized in the period the shipping services are provided      to the customer. Smith-Midland      products are typically sold pursuant to an implicit warranty as to      merchantability only.  Warranty claims are reviewed and resolved      on a case by case method.  Although the Company does incur costs      for these types of expense, historically the amount of expense is      immaterial. |
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Sales      and Use Taxes                     | Use      taxes on construction materials are reported gross in general and      administrative expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 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, 2008 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Fair      Value ofFinancial      Instruments | The      carrying value for each of the Company’s financial instruments (consisting      of cash, accounts receivable and accounts payable and short-term line of      credit) 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 similar maturities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Estimates                                    | The      preparation of financial statements in conformity with generally accepted      accounting principles requires management to make estimates and      assumptions that affect the reported amounts of assets and liabilities at      the date of the financial statements and the reported amounts of revenues      and expenses during the reporting period. Actual results could differ from      those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Advertising      Costs                       | The      Company expenses all advertising costs as incurred. Advertising expense      was approximately $333,000 and $314,000 in 2008 and 2007,      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Earnings      Per Share                      | Earnings      per share is based on the weighted average number of shares of common      stock and dilutive common stock equivalents outstanding. Basic earnings      per share is computed by dividing income available to common shareholders      by the weighted average number of common shares outstanding for the      period. Diluted earnings per share reflects the potential dilution of      securities that could share in earnings of an entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 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, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Recent      Accounting Pronouncements        | 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.  The adoption of this Statement has not, and is not      expected to have a material impact on the Company’s financial      statements. |

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|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Recent AccountingPronouncements(continued) | 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 will have on the Company’s results of      operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                             |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                       | 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 does not expect the adoption      of this statement will have a material effect on the Company’s results of      operations or financial position, but it is dependent on future      acquisition activities, if any. In      March, 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative      Instruments and Hedging Activities - an Amendment of FASB Statement      133. Statement 161 enhances required disclosures regarding      derivatives and hedging activities, including enhanced disclosures      regarding how: (a) an entity uses      derivative instruments; (b) derivative      instruments and related hedged items are accounted for under FASB      Statement No. 133, Accounting for Derivative      Instruments and Hedging Activities; and (c) derivative      instruments and related hedged items affect an entity's financial      position, financial performance, and cash flows. Specifically, Statement      161 requires: |
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                            | ·       Disclosure of the      objectives for using derivative instruments be disclosed in terms of      underlying risk and accounting designation; ·       Disclosure of the      fair values of derivative instruments and their gains and losses in a      tabular format;·       Disclosure of      information about credit-risk-related contingent features;      and·       Cross-reference from      the derivative footnote to other footnotes in which derivative-related      information is disclosed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

Smith-Midland Corporation

| 1. | Property andEquipment |
|----|-----------------------|

| Property      and equipment consists of the following: |   |              |       |   |   |   |
|--------------------------------------------------------|--------|-------------------|------------|--------|--------|--------|
|                                                   |   | December      31, |       |
|                                                   |   | 2008              |       |   | 2007   |   |
|                                                   |   |              |       |   |   |   |
| Land      and land improvements                        |   | $                 | 514,601    |   |   | $      | 514,601 |   |
| Buildings                                              |   |              | 2,826,380  |   |   |   | 2,739,460 |   |
| Machinery      and equipment                           |   |              | 7,694,488  |   |   |   | 7,189,672 |   |
| Rental      equipment                                  |   |              | 764,710    |   |   |   | 711,368 |   |
|                                                   |   |              |       |   |   |   |   |   |
|                                                   |   |              | 11,800,179 |   |   |   | 11,155,101 |   |
| Less:      accumulated depreciation                    |   |              | 7,576,624  |   |   |   | 7,052,920 |   |
|                                                   |   |              |       |   |   |   |   |   |
|                                                   |   | $                 | 4,223,555  |   |   | $      | 4,102,181 |   |

Depreciationexpense was approximately $643,000 and $707,000 for the years ended December 31,2008 and 2007, respectively.

----

Smith-Midland Corporation

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

|                                                                                                                                                                                                                                                                                                                             |   | December      31, |      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|
|                                                                                                                                                                                                                                                                                                                             |   | 2008              |      |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |
| Note      payable to Greater Atlantic Bank, maturing June 2021; with monthly      payments of approximately $36,000 of principal and interest at prime plus      .5% (3.75% at December 31, 2008); collateralized by principally all assets      of the Company.                                                                 |   | $                 | 3,003,810 |   |   | $ | 3,168,126 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |
| 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% (4.8% at December 31, 2008); collateralized by      a second priority lien on Company assets.                                          |   |              | 177,496   |   |   |   | 253,317 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |
| The      Company also has a $1,500,000 line of credit with Greater Atlantic Bank.      The line matures June 15, 2009 and bears interest at the prime rate (3.25%      at December 31, 2008); collateralized by a second priority lien on all      accounts receivable, inventory, and certain other assets of the      Company. |   |              | 500,000   |   |   |   | 200,000 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |
| Capital      Lease obligations, for machinery and equipment maturing through 2013, with      interest at 7% through 10%.                                                                                                                                                                                                         |   |              | 449,637   |   |   |   | 505,354 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |
| Installment      notes and capitalized leases, collateralized by certain machinery and      equipment maturing at various dates, primarily through 2013, with interest      at 7.25% through 11.07%.                                                                                                                             |   |              | 460,854   |   |   |   | 469,615 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                             |   |              | 4,591,797 |   |   |   | 4,596,412 |   |
| Less      current maturities                                                                                                                                                                                                                                                                                                     |   |              | 1,022,476 |   |   |   | 605,376 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                             |   | $                 | 3,569,321 |   |   | $ | 3,991,036 |   |
|                                                                                                                                                                                                                                                                                                                             |   |              |      |   |   |   |   |   |

----

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

| Year      Ending December 31, |   |   |      |
|-------------------------------|--------|--------|-----------|
|                          |   |   |      |
| 2009                          |   | $      | 1,022,476 |   |
| 2010                          |   |   | 583,776   |   |
| 2011                          |   |   | 438,855   |   |
| 2012                          |   |   | 385,350   |   |
| 2013                          |   |   | 313,781   |   |
| Thereafter                    |   |   | 1,847,559 |   |
|                          |   | $      | 4,591,797 |   |

| Year      ending December 31,                                 |   |   |    |
|---------------------------------------------------------------|--------|--------|---------|
|                                                          |   |   |    |
| 2009                                                          |   | $      | 141,714 |   |
| 2010                                                          |   |   | 137,022 |   |
| 2011                                                          |   |   | 137,021 |   |
| 2012                                                          |   |   | 91,090  |   |
| 2013                                                          |   |   | 3,561   |   |
| Total      payments                                           |   |   | 510,408 |   |
| Less      amounts representing interest (at approximately 7%) |   |   | 60,771  |   |
|                                                          |   |   |    |   |
|                                                          |   | $      | 449,637 |   |

----

| 3. | Related PartyTransactions |
|----|---------------------------|

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

|                             |   | December      31, |    |
|----------------------------------|--------|-------------------|---------|
|                             |   | 2008              |    |   | 2007 |   |
| Federal:                         |   |              |    |   |   |   |
|     Current  |   | $                 | 168,000 |   |   | $ | 815,000 |   |
|     Deferred |   |              | 31,000  |   |   |   | (51,000 | ) |
|                             |   |              | 199,000 |   |   |   | 764,000 |   |
| State:                           |   |              |    |   |   |   |   |   |
|     Current  |   |              | 62,000  |   |   |   | 123,000 |   |
|     Deferred |   |              | 7,000   |   |   |   | (11,000 | ) |
|                             |   |              | 69,000  |   |   |   | 112,000 |   |
|                             |   | $                 | 268,000 |   |   | $ | 876,000 |   |
|                             |   |              |    |   |   |   |   |   |

Theprovision for income taxes differs from the amount determined by applying thefederal statutory tax rate to pre-tax income as a result of thefollowing:

|                                              |   | December      31, |    |
|---------------------------------------------------|--------|-------------------|---------|
|                                              |   | 2008              |    |   | 2007 |   |
| Income      taxes at statutory rate               |   | $                 | 234,000 |   |   |   | 34 | % |   | $ | 724,000 |   |   |   | 34 | % |
| Increase      (decrease) in taxes resulting from: |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| State      income taxes,                          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net      of federal benefit                       |   |              | 34,000  |   |   |   | 5 | % |   |   | 77,000 |   |   |   | 4 | % |
| Other                                             |   |              | — |   |   |   | — |   |   |   | 75,000 |   |   |   | 3 | % |
|                                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   | $                 | 268,000 |   |   |   | 39 | % |   | $ | 876,000 |   |   |   | 41 | % |

Prepaidincome taxes at December 31, 2008 relate to amounts due from federal and statetax authorities for overpayment of 2008 estimated taxes.  Overpaymentsat December 31, 2008 will be used to offset estimated taxes due in2009.

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| 4. | Income      Taxes (continued) |
|----|-------------------------------|

|                                       |   | December      31, |     |
|--------------------------------------------|--------|-------------------|----------|
|                                       |   | 2008              |     |   | 2007 |   |
| Net      operating loss and AMT carrybacks |   | $                 | 63,000   |   |   | $ | 66,000 |   |
| Depreciation                               |   |              | (317,000 | ) |   |   | (241,000 | ) |
| Provision      for doubtful accounts       |   |              | 155,000  |   |   |   | 95,000 |   |
| Vacation      accrued                      |   |              | 77,000   |   |   |   | 84,000 |   |
| Deferred      income                       |   |              | 108,000  |   |   |   | 120,000 |   |
| Other                                      |   |              | 68,000   |   |   |   | 68,000 |   |
|                                       |   |              |     |   |   |   |   |   |
| Net      deferred tax asset                |   |              | 154,000  |   |   |   | 192,000 |   |
|                                       |   |              |     |   |   |   |   |   |
| Current      portion, net                  |   |              | 471,000  |   |   |   | 367,000 |   |
| Long-term      portion, net                |   |              | (317,000 | ) |   |   | (175,000 | ) |
|                                       |   |              |     |   |   |   |   |   |
|                                       |   | $                 | 154,000  |   |   | $ | 192,000 |   |

| 5. | Employee BenefitPlans |
|----|-----------------------|

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

----

|                            |   | Weighted      Average Exercise Price |    |   | OptionsOutstanding |   |    | Vested      and Exercisable |   |
|---------------------------------|--------|--------------------------------------|---------|--------|--------------------|--------|---------|-----------------------------|--------|
| 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 |   |
| Granted                         |   |                                 | 1.21    |   |               |   | 127,825 |                        |   |   | — |   |
| Forfeited                       |   |                                 | 1.00    |   |               |   | (27,825 | )                           |   |   | (27,825 | ) |
| Exercised                       |   |                                 | — |   |               |   | — |                        |   |   | — |   |
| Vested                          |   |                                 | 2.30    |   |               |   | — |                        |   |   | 88,211 |   |
|                            |   |                                 |    |   |               |   |    |                        |   |   |   |   |
| Balance,      December 31, 2008 |   |                                 | 1.52    |   |               |   | 642,157 |                        |   |   | 432,999 |   |

| 7. | Commitmentsand      Contingencies |
|----|-----------------------------------|

|   | 1. | The      Company was required to forgive outstanding retainage receivables from      JPIC of approximately $199,000, of which the Company had previously      reserved for in the amount of$100,000. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The      Company was required to make a $426,000 cash payment to JPIC, which has      been made. |
|--------|----|--------------------------------------------------------------------------------------------------|

|   | 3. | Both      parties agreed to release each other from any and all other claims arising      out of this dispute. |
|--------|----|----------------------------------------------------------------------------------------------------------------|

----

Smith-MidlandCorporation

| 9. | Earnings      Per Share |
|----|-------------------------|

|                                                 |   | December      31, |      |
|------------------------------------------------------|--------|-------------------|-----------|
|                                                 |   | 2008              |      |   | 2007 |   |
| Basic      earnings per share                        |   |              |      |   |   |   |
|                                                 |   |              |      |   |   |   |
|  Income      available to common shareholder    |   | $                 | 420,993   |   |   | $ | 1,252,360 |   |
|                                                 |   |              |      |   |   |   |   |   |
|  Weighted      average shares outstanding       |   |              | 4,670,882 |   |   |   | 4,646,733 |   |
|                                                 |   |              |      |   |   |   |   |   |
|  Basic      earnings per share                  |   | $                 | 0.09      |   |   | $ | 0.27 |   |
|                                                 |   |              |      |   |   |   |   |   |
| Diluted      earnings per share                      |   |              |      |   |   |   |   |   |
|                                                 |   |              |      |   |   |   |   |   |
|  Income      available to common shareholder    |   | $                 | 420,993   |   |   | $ | 1,252,360 |   |
|                                                 |   |              |      |   |   |   |   |   |
|  Weighted      average shares outstanding       |   |              | 4,670,882 |   |   |   | 4,646,733 |   |
|   Dilutive      effect of stock options    |   |              | 67,119    |   |   |   | 146,982 |   |
|                                                 |   |              |      |   |   |   |   |   |
|  Total      weighted average shares outstanding |   |              | 4,738,001 |   |   |   | 4,793,715 |   |
|                                                 |   |              |      |   |   |   |   |   |
|  Diluted      earnings per share                |   | $                 | 0.09      |   |   | $ | 0.26 |   |
|                                                 |   |              |      |   |   |   |   |   |

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