SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                   Annual Report under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                   For the Fiscal Year Ended December 31, 2001

                         Commission File Number 1-13752
                                     -------



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


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

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


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

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

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

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

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

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

                    Redeemable Common Stock Purchase Warrants
                                (Title of Class)
<PAGE>
         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
                           Yes  X    No
                               ---      ------

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

         The Issuer's revenues for its most recent fiscal year were $26,855,190.

The   aggregate   market  value  of  the  shares  of  Common   Stock,   held  by
non-affiliates,  based upon the closing  price for such stock on March 22, 2002,
was $4,294,533.

As of March 22, 2002,  the Company had  outstanding  3,313,831  shares of Common
Stock, $.01 par value per share.

                       Documents Incorporated By Reference
                                      None.

                                       2
<PAGE>

                                     PART I


                           FORWARD-LOOKING STATEMENTS


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

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


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


                                       3
<PAGE>

Item 1.  Description of Business

         General

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

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

         Market

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

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

                                       4
<PAGE>

         Products

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

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

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

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

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

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

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



                                       5
<PAGE>

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

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

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

         The  Easi-Set  J-J  Hooks(TM)  highway  safety  barrier (the "J-J Hooks
Barrier") is a crash tested and patented,  positively connected,  safety barrier
that the Company  sells,  rents,  delivers,  installs  and  licenses  for use on
roadways to separate lanes of traffic,  either temporarily for construction work
zone  purposes or  permanently  for traffic  control.  Barriers are deemed to be
positively connected when the connectors on each end of the barrier sections are
interlocked with one another.  The J-J Hooks Barriers  interlock without the use
of a separate locking device. The primary advantage of a positive  connection is
that a barrier with such a connection  can withstand  vehicle  crashes at higher
speeds without separating.  The Federal Highway  Administration (the "FHWA") now
requires that states use only positively connected barriers which meet NCHRP-350
test level 3 crash test requirements. J-J Hooks Barrier met the requirements and
received NCHRP-350 approval in March 1999.

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

         The Company  believes that the J-J Hooks Barrier  connection  design is
superior  to those of  earlier  highway  safety  barriers  that were  positively
connected  through  the "eye and pin"  technique.  Barriers  incorporating  this
technique have eyes or rings protruding from each end of the barrier, which must
be aligned during the setting process. Once set, a crew inserts pins through the


                                       6
<PAGE>

eyes and bolts the barrier sections  together.  Compared to this technique,  the
J-J Hooks  Barrier is easier  and  faster to  install,  and  remove,  requires a
smaller crew and eliminates the need for loose hardware to make the connection.

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

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

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

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

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

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


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

                                       7
<PAGE>


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

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


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

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


         Sources of Supply

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


         Licensing

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



                                       8
<PAGE>

         The Company  has entered  into 30  licensing  agreements  in the United
States,  and has  established  at least one  licensee  in each of  Puerto  Rico,
Canada, Belgium, New Zealand, and Spain and sub-licensees in Canada and Chile.

         The Company is currently  negotiating several new license  arrangements
and,  although no  assurance  can be given,  expects to increase  its  licensing
activities.  The  Company  completed  its first  licensing  arrangement  for its
SlenderwallTM  exterior  cladding  system in 2001 which  resulted in  additional
start-up fees and royalties of $83,727.


         Marketing and Sales

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

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

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


         Competition

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



                                       9
<PAGE>

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


         Patents and Proprietary Information

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

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


         Government Regulation

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



                                       10
<PAGE>

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

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

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

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


         Employees

         As of March 22,  2002,  the Company had 149  full-time  and 5 part-time
employees, 129 of which are located at the Company's Midland facility, and 25 of
which are  located  at the  Company's  facility  located  in  Reidsville,  North
Carolina.  Of the 154  employees,  9 are executive  officers or managers,  6 are
responsible  for  sales  and  marketing,  111 are in  manufacturing,  and 28 are
administrative  personnel.  None of the Company's  employees are  represented by
labor  organizations and the Company is not aware of any activities seeking such
organization.  The Company considers its relationships  with its employees to be
satisfactory.


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

         Facilities

         The  Company  operates  two  manufacturing   facilities.   The  primary
manufacturing  operations  are conducted in a 44,000  square foot  manufacturing
plant  on  approximately  22  acres  of  land in  Midland,  Virginia,  of  which
approximately  19 acres are owned by the Company and three acres are leased from
Rodney I. Smith,  the Company's  President,  at an annual rental rate of $6,000.
The manufacturing  facility houses two concrete mixers and one concrete blender.
The plant also includes two environmentally  controlled casting areas, two batch
plants, a form fabrication  shop, a welding and metal  fabrication  facility,  a
carpentry  shop, and a quality control center.  The Company's  Midland  facility
also includes a large storage yard for inventory and stored materials.



                                       11
<PAGE>

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

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

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

         The Company  believes that its present  facilities are adequate for its
current needs and that they are adequately  covered by insurance.  Substantially
all of the Company's  facilities  and  equipment  are used as  collateral  for a
long-term  note,  which as of December 31,  2001,  had a balance of $3.8 million
(see "Liquidity and Capital Resources").

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

         In 1998,  the Company  began work on a contract to renovate the Bradley
Hall building (the "Bradley Hall  project") at Rutgers  University  ("Rutgers").
The Bradley Hall  project,  which was  completed in October  1999,  involved the
design,  production,  and installation of Slenderwall(TM) panels by the Company.
While executing the Bradley Hall project, the original structure was found to be
not structurally  sufficient to support the installation of the  Slenderwall(TM)
panels as originally designed.  This lead to cost overruns relating to re-design
of the panels,  production of the panels with additional  steel and reinforcing,
and installation  costs. In that the Company was suffering losses on the project
and was unable to fund its  commitments,  in January 1999,  the Company  entered
into an agreement with Seacoast  Builders  Corporation  ("Seacoast"),  the prime
contractor  for the  project.  Pursuant  to the  agreement,  Seacoast  agreed to
finance the cost of labor and small  tools for the  balance of the  installation
phase of the project  commencing  January 13,  1999,  (ii) the Company  remained
responsible  for the other  services  and  materials  required  for the project,
including  provision  of the  Slenderwall(TM)  system,  (iii)  the  Company  was
required to reimburse  Seacoast  out of payments due the Company for  Seacoast's
expenses plus 10% for overhead,  and (iv) the Company  remained  liable for cost
overruns for which the Company was  originally  responsible  for (the  "Seacoast
Agreement").  The cost  overruns over the course of the entire  project  totaled
approximately  $1.6 million and the total loss to the Company on the job, before
recovery on any claims by the  Company,  totaled  approximately  $1.45  million,


                                       12
<PAGE>

which was  recognized  in fiscal 1999.  Seacoast has filed claims in 1999 on the
Company's  behalf,  in the  amount of $1.1  million.  All  conditions  for claim
recognition  have been satisfied and as of December 31, 2001 and 2000,  $497,000
of the contract claim was included in accounts receivable.  The Company believes
that,  based on the specific  facts and  circumstances  and prior  experience in
claims settlement, it will ultimately collect the recorded claim receivable.

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

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

         In June 2000, the Company  received notice of a personal injury lawsuit
filed by Kenneth R. Hughes and Braunya P. Hughes in the United  States  District
Court for the District of Columbia.  Mr. Hughes was a road  construction  worker
engaged in the  transportation  and relocation of pre-cast  concrete  barrier to
create  temporary  concrete walls at road  construction  sites for a third party
construction  company.  On or about June 20, 1997, Mr. Hughes suffered  injuries
when a barrier  section-coupling  device apparatus failed. The suit alleges that
the Company sold the  section-coupling  device to the third party contractor and
was  negligent in the design and  manufacture  of said barrier  section-coupling
device.  The suit seeks  $10,000,000 in compensatory  damages and $10,000,000 in
punitive damages.  Management  believes the suit to be without merit as there is
no evidence that  indicates  that the Company  either sold or  manufactured  the
section-coupling  device in question.  The suit is still pending and the Company
plans to vigorously defend its position,  and believes that any settlement would
be covered under the Company's  general  liability  insurance and therefore will
not adversely affect the financial statements.



                                       13
<PAGE>

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

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

                                       14
<PAGE>

Item 4.  Submission of Matters to Vote of Security Holders - None.
         --------------------------------------------------------

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

         The  Company's  Common  Stock has traded on the Boston  Stock  Exchange
("BSE") under the symbol "SMC" from December 13, 1995 to March 3, 2002. On March
4, 2002 the BSE amended the symbol to "SMID".  The  Company's  Common Stock also
trades on the OTC Bulletin Board System under the symbol "SMID".

          As of March 22, 2002,  there were  approximately  48 record holders of
the  Company's  Common  Stock.  Management  believes  there  are  at  least  288
beneficial owners of the Company's Common Stock.


                                       15
<PAGE>

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


                                          High             Low
                                          ----             ---
2001
First Quarter                            $   .88          $  .56
Second Quarter                           $  1.15          $  .62
Third Quarter                            $   .95          $  .67
Fourth Quarter                           $  1.48          $  .70

2000
First Quarter                            $   .81          $  .56
Second Quarter                           $  1.00          $  .44
Third Quarter                            $   .94          $  .41
Fourth Quarter                           $   .88          $  .38

         In 1999, the  stockholders of the Company  approved an amendment of the
Company's  Certificate of Incorporation to affect a one-for-three,  one-for-two,
three-for-five,  two-for-three  or  three-for-four  reverse  stock  split of the
Common  Stock of the Company,  but as of the date of this  report,  the Board of
Directors  has taken no action in this regard.  The reverse stock split was then
contemplated  as a means  of  retaining  the  Company's  listing  on the  Nasdaq
SmallCap Market.

         Dividends

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


Item 6.  Management's Discussion and Analysis or Plan of Operations
         ----------------------------------------------------------

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


         General

         The  Company  generates  revenues  primarily  from the sale,  shipping,
licensing,  leasing  and  installation  of  precast  concrete  products  for the
construction,  utility and farming industries.  The Company's operating strategy
has  involved   producing   innovative  and  proprietary   products,   including


                                       16
<PAGE>

Slenderwall(TM),  a patent-pending,  lightweight,  energy efficient concrete and
steel  exterior  wall  panel for use in  building  construction;  J-J  Hooks(TM)
Highway Safety Barrier, a patented,  positive-connected  highway safety barrier;
Sierra Wall, a sound  barrier  primarily  for  roadside  use; and  transportable
concrete  buildings.  In addition,  the Company  produces  utility vaults,  farm
products  such as  cattleguards,  and water and food  troughs,  and custom order
precast concrete products with various architectural surfaces.


         Results of Operations

         Year ended  December 31, 2001  compared to the year ended  December 31,
2000

         For the year ended  December 31, 2001, the Company had total revenue of
$26,855,190 compared to total revenue of $16,157,629 for the year ended December
31, 2000, an increase of $10,697,561, or 66%. Royalty revenue and barrier rental
revenue has been  reclassified  from other income to operating income to reflect
the  more  significant  nature  of these  activities  in the  Company's  current
operations. Total product sales were $20,470,542 for the year ended December 31,
2001,  compared  to  $13,152,570  for the same  period in 2000,  an  increase of
$7,317,972,  or 56%. All major product  categories  incurred  significant  sales
increases in the current year with Easi-Set  Precast  Buildings,  SlenderwallTM,
architectural  precast  panels,  highway  safety  barrier and  utility  manholes
displaying  particularly  strong  product  demand in the Company's  major market
areas.  Barrier  rental  revenue  increased  to  $1,722,696  for the year  ended
December  31, 2001 from  $121,976  for the year ended  December  31,  2000.  The
majority of this increase came from two large contracts for special events which
totaled  $1,446,588.  Shipping and  installation  revenue was $3,815,341 for the
year ended  December  31, 2001 and  $2,543,267  for the same period in 2000,  an
increase of  $1,272,074,  or 50%.  The  increase is  attributable  to  increased
installation   revenue  related  to  SlenderwallTM  and  architectural   precast
contracts in the 2001 period,  as compared to the 2000 period, as well as higher
shipping revenues due to the higher overall sales volume. Royalty income totaled
$846,611 for the year ended December 31, 2001, compared to $339,816 for the same
period in 2000. The increase of $506,795, or 149%, was due to increased start-up
license fees and increased barrier  royalties and SlenderwallTM  royalties based
on increased  sales  activity by the  Company's  licensees in the 2001 period as
compared to the 2000 period.  The start-up fees and  royalties  from the barrier
licensees  increased  from  $183,728  for the year ended  December  31,  2000 to
$617,667 for the year ended  December 31, 2001, an increase of $433,939 or 236%,
and the new  SlenderwallTM  licensee  resulted in a $83,727 increase in revenue.
The  Company  believes  the  increase  in barrier  royalties  is a result of the
superior product design over competing  products,  and the change in the Federal
Highway   Administration   crash  test  requirements   which  will  require  the
replacement of significant amounts of existing barrier.

     Construction  activity has remained strong in the Company's primary markets
allowing  the Company to  accumulate  an unfilled  order  backlog for  products,
excluding  installation and delivery,  of approximately $7.1 million as of March
31, 2002, versus  approximately $8.5 million as of March 31, 2001. The Company's
bid activity has remained high, but due to the higher levels of production,  the
Company's overall backlog has declined slightly.



                                       17
<PAGE>

     Total  cost of  goods  sold  for the  year  ended  December  31,  2001  was
$20,465,604,  an increase of $8,428,458,  or 70%, from  $12,037,146 for the year
ended  December  31,  2000.  The  majority of the increase was the result of the
higher  volume of sales  however,  total cost of goods sold,  as a percentage of
total revenue,  also increased to 76% for the year ended December 31, 2001, from
75% for the year ended December 31, 2000 as the Company incurred slightly higher
production  costs relative to the revenue and higher  shipping and  installation
expenses.

     For  the  year  ended  December  31,  2001,   the  Company's   general  and
administrative  expenses  increased  $731,789,  or  31%,  to  $3,077,383,   from
$2,345,594 during the same period in 2000. The increase was primarily attributed
to increased  costs for  personnel and personnel  recruitment,  legal  services,
insurance,  additions to the reserves for bad debts, as well as year-end bonuses
based on Company performance, partially offset by lower consulting fees.

     Selling  expenses for the year ended December 31, 2001 increased  $336,947,
or 69%, to $826,457  from  $489,510 for the year ended  December  31, 2000.  The
increase  was due to  increased  staffing  levels and higher  sales  commissions
incurred during the 2001 period as compared to the 2000 period.

     The  Company's  operating  income for the year ended  December 31, 2001 was
$2,485,745,  compared  to  operating  income of  $1,285,378  for the year  ended
December  31, 2000,  an increase of  $1,200,367,  or 93%.  The higher  operating
income for the current year resulted from the increased  sales volume  partially
offset by a slightly lower gross margin and higher operating expenses.

Interest expense was $459,250 for the year ended December 31, 2001,  compared to
$554,638 for the year ended December 31, 2000. The decrease of $95,388,  or 17%,
was due to slightly  lower  levels of debt  outstanding  in the 2001 period with
significantly lower average interest rates.

         Other expense,  net of other income,  totaled $51,234 in the year ended
December 31, 2001 versus other  expense of $202,243 for the year ended  December
31, 2000. The decrease of $151,009 or 75% was a result of higher levels of other
income in the current period which reduced the overall expense.

     Net income was $1,993,993 for the year ended December 31, 2001, compared to
net income of $593,373  for the same period in 2000.  Basic net income per share
for the current year was $.65 compared to basic net income per share of $.19 for
the year  ended  December  31,  2000  with  3,090,465  weighted  average  shares
outstanding in the 2001 period versus 3,050,190 in the 2000 period.

         Liquidity and Capital Resources

         The  Company  has   financed   its  capital   expenditures,   operating
requirements  and  growth  to date  primarily  with  proceeds  from  operations,
supplemented  by  bank  and  other  borrowings.The  Company  had  $4,671,774  of
indebtedness  at December 31, 2001,  of which  $604,135 was  scheduled to mature
within twelve months.

         The  Company  has a  $3,806,428  note  with  First  International  Bank
("FIB"),  formerly  the First  National  Bank of New England,  headquartered  in
Hartford,  Connecticut.  The note had an  original  term of twenty  three  years
beginning on June 25, 1998 with an interest rate of 1.5% above prime, secured by


                                       18
<PAGE>

equipment and real estate. The loan is guaranteed in part by the U.S. Department
of Agriculture Rural  Business-Cooperative  Service's loan guarantee.  Under the
terms of the note, the Company's unfinanced fixed asset expenditures are limited
to  $300,000  per year for a five year  period.  In  addition,  FIB will  permit
chattel  mortgages on purchased  equipment  not to exceed  $200,000 on an annual
basis so long as the  Company  is not in  default.  The  Company  has a $500,000
operating  line of credit by FIB. This  commercial  revolving  promissory  note,
which  carries a variable  interest  rate of 1% above  prime was  renewed in May
2001,  and now has a maturity  date of May 1,  2002.  The  Company  has a verbal
commitment  from FIB to  increase  the line of  credit  to  $750,000  pending  a
collateral  audit,  with an  additional  increase  possible  after the Company's
annual audit is complete.  The Company has agreed  orally with the FIB to extend
the line of credit upon its maturity date.

         At December 31, 2001, the Company had cash totaling  $942,131  compared
to cash totaling  $218,264,  at December 31, 2000. During 2001, the Company used
$178,821 (net) in cash to reduce debt in its financing activities,  and $260,138
in its investing  activities,  primarily for the funding of new  equipment.  The
Company's operating activities provided cash of $1,162,827 (net) after deducting
the resources required to fund the Company's growth.

         Capital spending  decreased to $332,556 in 2001, from $437,613 in 2000.
No significant cash commitments,  other than routine equipment replacements, are
anticipated in 2002 and  expenditures  are limited,  as stated above, by the FIB
loan agreement.

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

         The  Company's  cash flow from  operations  is affected  by  production
schedules set by contractors,  which generally provide for payment 45 to 75 days
after the products are produced. This payment schedule has resulted in liquidity
problems  for the Company  because it must bear the cost of  production  for its
products  before it receives  payment.  Although no assurance can be given,  the
Company  believes  that  anticipated  cash flow from  operations  with  adequate
project management on jobs, and existing credit facilities will be sufficient to
finance the Company's  operations for at least the next 12 months.  In the event
cash flow from  operations  and existing  credit  facilities are not adequate to
support operations,  the Company is currently investigating  alternative sources
of financing, for which there can be no assurance of obtaining.

         Significant Accounting Policies and Estimates

         The Company's significant  accounting policies are more fully described
in it's Summary of Accounting Policies to the Company's  consolidated  financial
statements.   The  preparation  of  financial   statements  in  conformity  with
accounting  principles  generally  accepted  within the United  States  requires
management  to make  estimates and  assumptions  in certain  circumstances  that
affect amounts  reported in the  accompanying  financial  statements and related
notes.  In preparing these  financial  statements,  management has made its best
estimates and judgments of certain amounts included in the financial statements,
giving due consideration to materiality. The Company does not believe there is a
great likelihood that materially  different amounts would be reported related to
the  accounting  policies  described  below,   however,   application  of  these
accounting policies involves the exercise of judgment and the use of assumptions
as to future  uncertainties  and as a result,  actual  results could differ from
these estimates.

         The Company  evaluates  the  adequacy  of its  allowance  for  doubtful
accounts at the end of each quarter. In performing this evaluation,  the Company
analyzes the payment  history of its significant  past due accounts,  subsequent
cash  collections on these accounts and comparative  accounts  receivable  aging
statistics.  Based on this information,  along with consideration of the general
strength  of the  economy,  the  Company  develops  what  it  considers  to be a
reasonable   estimate  of  the   uncollectible   amounts  included  in  accounts
receivable. This estimate involves significant judgment by the management of the
Company. Actual uncollectible amounts may differ from the Company's estimate.


                                       19
<PAGE>

         The Company estimates inventory markdowns based on customer orders sold
below cost, to be shipped in the  following  period and on the amount of similar
unsold  inventory  at period end.  The Company  analyzes  recent sales and gross
margins on unsold inventory in further  estimating  inventory  markdowns.  These
specific  markdowns  are  reflected  in the cost of sales and the related  gross
margins  at the  conclusion  of the  appropriate  sales  period.  This  estimate
involves  significant  judgment by the  management of the Company.  Actual gross
margins on sales of excess inventory may differ from the Company's estimate.

         Seasonality

         The Company  services the construction  industry  primarily in areas of
the United States where  construction  activity is inhibited by adverse  weather
during the winter. As a result, the Company may experience reduced revenues from
December  through  February  and realize the  substantial  part of its  revenues
during the other months of the year. The Company may experiences  lower profits,
or losses,  during the winter months,  and as such, must have sufficient working
capital to fund its operations at a reduced level until the spring  construction
season.  The failure to generate or obtain sufficient working capital during the
winter may have a material adverse effect on the Company.

         Inflation

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

         Recent Accounting Pronouncements

         In July 2001, the FASB issued SFAS 141, "Business Combinations",  which
became  effective  July 1,  2001.  SFAS 141  requires  the  purchase  method  of
accounting  for  business  combinations  initiated  after  June  30,  2001,  and
eliminates the pooling-of-interests method. The adoption of SFAS 141 has not had
an effect on the Company's financial statements.

         In July 2001, the FASB issued SFAS 142,  "Goodwill and Other Intangible
Assets".  This statement is effective for fiscal years  beginning after December
15, 2001. SFAS 142 requires,  among other things, the discontinuance of goodwill
amortization.   In  addition,   the  standard   includes   provisions   for  the
reclassification  of  certain  existing,  recognized  intangibles  as  goodwill,
reassessment   of  the  useful  lives  of  existing,   recognized   intangibles,
reclassification  of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairment  of  goodwill.   SFAS  142  also  requires  a  transitional  goodwill
impairment  test six months  from the date of adoption  and further  requires an
evaluation of the carrying value of goodwill for impairment annually thereafter.
The  Company  believes  the  adoption of SFAS 142 will not have an effect on the
Company's financial statements.

         In  October  2001,  the  FASB  issued  SFAS  144,  "Accounting  for the
Impairment or Disposal of Long-Lived Assets". This statement addresses financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
This statement supersedes SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for  Long-Lived  Assets to Be Disposed  Of", and the  accounting  and
reporting  provisions of Accounting  Principles Board Opinion No. 30, "Reporting
the Results of  Operations - Reporting the Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual and  Infrequently  Occurring  Events and
Transactions".  This statement also amends Accounting  Research Bulletin No. 51,
"Consolidated Financial Statements", to eliminate the exception to consolidation
for a  subsidiary  where  control  is likely  to be  temporary.  This  statement
requires that one accounting model be used for long-lived  assets to be disposed
of by sale, whether  previously held and used or newly acquired.  This statement
also  broadens  the  presentation  of  discontinued  operations  to include more
disposal  transactions.  SFAS 144 is effective for fiscal years  beginning after
December 15, 2001, and interim  periods  within those fiscal years.  The Company
believes  the  adoption  of SFAS  144 will not  have a  material  effect  on the
Company's financial statements.


                                       20
<PAGE>

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

         The following financial statements, which appear at the back portion of
the report, are filed as part of this report:
<TABLE>
                                                                                                 Page
                                                                                                 ----
<S> <C>
Report of Independent Certified Public Accountants....................................            F-3

Consolidated Balance Sheets as of December 31, 2001 and 2000..........................            F-4

Consolidated Statements of Operations for the years ended December 31,
2001 and 2000   .........    .........................................................            F-5

Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2001 and 2000 ...........................................................            F-6

Consolidated Statements of Cash Flows for the years ended December 31,
2001 and 2000     ....................................................................            F-7

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

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


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

         Not Applicable.


                                       21
<PAGE>

                                    PART III

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

<TABLE>
                                       Director Or
                                        Executive
Name                       Age        Officer Since                Position
----                       ---        -------------                --------
<S> <C>
Rodney I. Smith            63              1970          Chief Executive Officer, President
                                                         and  Chairman  of the  Board of
                                                         Directors

Ashley B. Smith            39              1994          Vice President of Sales and
                                                         Marketing and Director

Wesley A. Taylor           54              1994          Vice President of Administration
                                                         and Director

Andrew G. Kavounis         76              1995          Director

Guy M. Schuch              53              2001          Chief Operating Officer
                                                         Smith Midland Corp. (Virginia)

James W. Dean              64              2000          Vice President of Engineering
                                                         Smith-Midland Corp. (Virginia)

Robert E. Albrecht, Jr.    51              2000          Chief Financial Officer

Michel Catteau             33              2001          Vice President of Operations
                                                         Smith-Midland Corp. (Virginia)
</TABLE>


Background

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

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

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



                                       22
<PAGE>

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

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

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

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

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

Michel  Catteau.  Vice President of  Operations.  Mr. Catteau has served as Vice
President of Operations  since February 2001.  Prior to joining the Company from
1997 to 2000 Mr.  Catteau  worked as a Plant  Manager  and  Project  Manager for
Precast  Manufacturing Company in Saudi Arabia. From 1990 to 1997 he worked as a
Manager at  Catteau  Precast in Lier,  Belgium.  He holds a Bachelor  of Science
degree in  Construction  Engineering  from Louvain  University,  Belgium,  and a
Bachelor of Arts degree as  translator  English - Russian  from the  Hogeschool,
Antwerp, Belgium.

                                       23
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) ("Section 16(a)") of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"),  requires  executive officers and Directors and
persons who beneficially own more than ten percent (10%) of the Company's Common
Stock to file  initial  reports of ownership on Form 3 and reports of changes in
ownership  on  Form  4  with  the  Securities  and  Exchange   Commission   (the
"Commission")  and any national  securities  exchange on which the Corporation's
securities are registered.

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

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

         The following table sets forth the compensation paid by the Company for
services  rendered for the last three  completed  fiscal years to the  executive
officers of the Company and its subsidiaries  (the "named  executive officers"),
whose cash compensation exceeded $100,000 during 2001:

<TABLE>

                                       Annual Compensation                          Long Term Compensation
                           --------------------------------------------- ---------------------------------------------
                                                                                Awards                 Payouts
                                                                         ---------------------- ----------------------

                                                                                     Securities
                                                               Other                  Under-                   All
        Name and                                               Annual    Restricted    Lying                  Other
        Principal                                             Compen-      Stock     Options/      LTIP      Compen-
        Position             Year       Salary      Bonus      sation      Awards      SARs      Payouts     Sation
                                          $           $          $           $          (#)         $           $
-------------------------- ---------- ----------- ---------- ----------- ----------- ---------- ----------- ----------

<S>                          <C>       <C>         <C>                                <C>
     Rodney I. Smith         2001      175,000     189,081       -           -        120,000       -           -
    President, Chief         2000      175,000     54,500        -           -           -          -           -
    Executive Officer        1999      156,825     54,500        -           -        20,000        -           -
   and Chairman of the
         Board.

      Guy M. Schuch          2001      111,250        -          -           -        30,000        -           -
 Chief Operating Officer     2000      108,745        -          -           -           -          -           -
 Smith-Midland Corp (VA)     1999       61,730        -          -           -        15,000        -           -

-------------------------- ---------- ----------- ---------- ----------- ----------- ---------- ----------- ----------
</TABLE>

                                       24
<PAGE>

Compensation of Directors

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


                                       25
<PAGE>
<TABLE>

Option Grants in Last Fiscal Year


         The following table summarizes option grants during 2001 to the named executive officers

                                      Number of                 % of Total
                                       Securities                 Options
                                      Underlying                Granted to            Exercise
                                        Options               Employees in             or Base       Expiration
         Name                         Granted (#)               Fiscal Year         Price  ($/Sh)        Date
         ----                       ----------------          ----------------      -------------    -------------

<S>                                     <C>                         <C>                  <C>            <C>  <C>
Rodney I. Smith                         20,000                      5.9%                 0.80           4/23/11
Rodney I. Smith                         80,000                     23.6%                 0.81           5/04/11
Rodney I. Smith                         20,000                      5.9%                 1.39          12/26/11

Guy M. Schuch                           15,000                      4.4%                 0.80           4/23/11
Guy M. Schuch                           15,000                      4.4%                 1.39          12/26/01

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

                              Shares                          Number of
                            Acquired                       Shares Underlying          Value of Unexercised
                               on          Value          Unexercised Options         In-the-Money Options
                            Exercise     Realized        at Fiscal Year End (#)     at Fiscal Year-End ($)(1)
        Name                   (#)          ($)       Exercisable    Unexercisable  Exercisable    Unexercisable
        ----                --------     --------     -----------    -------------  -----------    -------------

Rodney I. Smith........        ---          ---         33,333          126,667        20,884          65,400
Guy M. Schuch..........        ---          ---         10,000           35,000         8,875          15,087
--------
</TABLE>
(1) Value is based on the closing sales price of the  Company's  Common Stock on
December  31,  2001  ($1.45),  the last  trading  day of 2001,  less the  option
exercise price.


Employment Agreement

         The Company has entered into an employment agreement with Mr. Rodney I.
Smith, which provides for an annual base salary of $175,000. The present term of
the agreement continues until December 31, 2001, and is thereafter automatically
renewed for  successive  one-year  periods unless Mr. Smith or the Company gives
the other party three months prior  written  notice of  non-renewal.  In that no
notice was given in 2001, the  employment  agreement was  automatically  renewed
until  December 31,  2002.  Bonuses and salary  increases  may be granted by the
Compensation Committee of the Board of Directors,  as it so determines from time
to time. Mr. Smith also is entitled to receive benefits offered to the Company's
employees  generally.  If  terminated  without  cause,  Mr. Smith is entitled to
receive as severance pay an amount equal to twenty-four  (24) months of his base
salary,  less taxes,  other  required  withholdings  and any amounts owed to the


                                       26
<PAGE>

Company,  payable in accordance with the Company's standard payroll  procedures.
In addition,  the employment  agreement  precludes Mr. Smith from competing with
the Company during his employment and for at least one year thereafter, and from
disclosing  confidential  information.  The  Company  is the  owner  of and  the
beneficiary  of three key person life  insurance  policies on Mr. Smith totaling
$1,400,000.



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

         The  following  table  sets  forth,  as  of  March  22,  2002,  certain
information  concerning  ownership  of the  Company's  Common  Stock by (i) each
person known by the Company to own of record or be the beneficial  owner of more
than five percent  (5%) of the  Company's  Common  Stock,  (ii) named  Executive
Officers and  Directors,  and (iii) all Directors  and  Executive  Officers as a
group. Except as otherwise indicated,  the Stockholders listed in the table have
sole voting and investment powers with respect to the shares indicated.

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

Rodney I. Smith (1)(3)(4)(5)             682,466                        20.2

Fred E. Kassner Estate (1)               589,172                        17.8

Carl W. Grover(1)                        203,050                         6.1

Ashley B. Smith(1)(3)                    116,735                         3.5

Wesley A. Taylor(1)(6)                    24,584                          *

Andrew Kavounis(1)(7)                      3,000                          *

Guy M. Schuch (1)(8)                      15,000                          *



All directors, executive officers
and key employees as a group
(8 persons)(2)(9)                        864,122                         24.9
-------------------------------
 *     Less than 1%

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

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

(3)  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. Includes options to purchase 27,118 shares.



                                       27
<PAGE>

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

(5)  Includes  100,000  shares of Common Stock that have been  deposited into an
     irrevocable  trust (the "Trust") for the benefit of Hazel Smith, the income
     beneficiary of the Trust and former wife of Rodney I. Smith,  and mother of
     Mr. Smith's  children.  Mr. Smith is the trustee of the Trust and, as such,
     may vote the shares,  as he deems fit.  Includes options to purchase 66,668
     shares.

(6)  Includes options to purchase 24,584 shares.

(7)  Includes options to purchase 3,000 shares.

(8)  Includes options to purchase 15,000 shares.

(9)  Includes options to purchase 153,038 shares.


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

         At  December  31,  2001,  the  Company  owned  an  unsecured  note  for
approximately  $558,282  receivable  from Mr.  Rodney I.  Smith,  the  Company's
President and majority shareholder, accruing interest at a rate of 6% per annum.
Unless extended,  the note matures on December 31, 2002.  Principal  payments on
the note were  $72,418 for the year ended  December  31, 2001 and $7,647 for the
year ended December 31, 2000. Total interest paid on this note was approximately
$37,800  and  $38,000  for  the  years  ended   December   31,  2001  and  2000,
respectively.


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

(a)      Exhibits.

(1)           The following exhibits are filed herewith:

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


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



                                       28
<PAGE>

Exhibit
  No.
------

  1       Continuation of Exclusive License Agreement between DuriSol Resources,
          Inc. and Smith-Midland Corporation,  with an effective date of January
          1, 1999, dated May 3, 1999.

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

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


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

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

  1       First National Bank of New England Loan Agreement

  2       First National Bank of New England Loan Note

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

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

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

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

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

 21       List of Subsidiaries of the Company.

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


                                       29
<PAGE>

Exhibit
  No.                  Title
-------                -----
  3a      Certificate of Incorporation, as amended.

  3b      Bylaws, as amended.

  4b      Specimen Common Stock Certificate.

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

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

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

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

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

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

 10w      1994 Stock Option Plan.

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


                                       29
<PAGE>

                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                   SMITH-MIDLAND CORPORATION


Date:    April 2, 2002             By:  /s/ Rodney I. Smith
                                        ---------------------------------------
                                            Rodney I. Smith, President
                                            (principal executive officer)

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


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

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


/s/ Rodney I. Smith                             Director         April 2, 2002
-------------------------------------------
Rodney I. Smith



/s/ Wesley A. Taylor                            Director         April 2, 2002
-------------------------------------------
Wesley A. Taylor


/s/ Ashley Smith                                Director         April 2, 2002
--------------------------------------------
Ashley Smith



/s/ Andrew Kavounis                             Director         April 2, 2002
-----------------------------------------
Andrew Kavounis


                                       30
<PAGE>

Report of Independent Certified Public Accountants



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

We have audited the  accompanying  consolidated  balance sheets of Smith-Midland
Corporation  and  subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the years then ended.  These financial  statements are the responsibility of the
Corporation's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of  Smith-Midland
Corporation  and  subsidiaries at December 31, 2001 and 2000, and the results of
their  operations  and their cash  flows for the years then ended in  conformity
with accounting principles generally accepted in the United States of America.


                                                                BDO Seidman, LLP


Richmond, Virginia
March 30, 2002


                                      F-3
<PAGE>
<TABLE>

 December 31,                                                                         2001                  2000
--------------------------------------------------------------------------------------------------------------------

     Assets (Note 2)

Current assets
<S>                                                                           <C>                   <C>
   Cash                                                                       $    942,131          $    218,264
   Accounts receivable (Note 7)
     Trade - billed, (less allowance for doubtful
       accounts of $371,895 and $258,542)                                        5,934,359             4,122,118
     Trade - unbilled                                                              458,281                 2,405
   Inventories
     Raw materials                                                                 585,736               576,995
     Finished goods                                                              1,042,660             1,475,383
   Prepaid expenses and other assets                                               188,836                62,811
--------------------------------------------------------------------------------------------------------------------

Total current assets                                                             9,152,003             6,457,976
--------------------------------------------------------------------------------------------------------------------

Property and equipment, net (Note 1)                                             2,672,665             2,684,918
--------------------------------------------------------------------------------------------------------------------

Other assets
   Notes receivable, officer (Note 3)                                              558,282               630,700
   Claims and accounts receivable (Note 7)                                       1,020,183               960,254
   Other (Note 3)                                                                  237,036               309,374
--------------------------------------------------------------------------------------------------------------------

Total other assets                                                               1,815,501             1,900,328
--------------------------------------------------------------------------------------------------------------------










                                                                               $13,640,169           $11,043,222
====================================================================================================================
</TABLE>

<PAGE>
<TABLE>
                                                                                          Smith-Midland Corporation
                                                                                                    and Subsidiaries

                                                                                         Consolidated Balance Sheets



December 31,                                                                          2001                  2000
--------------------------------------------------------------------------------------------------------------------

     Liabilities and Stockholders' Equity

Current liabilities
<S>                                                                            <C>                   <C>
   Current maturities of notes payable (Note 2)                                $   604,135           $   524,305
   Accounts payable - trade                                                      2,999,367             2,482,238
   Accrued expenses and other liabilities                                          732,710               347,674
   Customer deposits                                                               266,716               416,816
--------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                        4,602,928             3,771,033

Reserve for contract loss                                                        1,025,556               995,845

Notes payable - less current maturities (Note 2)                                 3,998,862             4,281,528

Notes payable - related parties (Note 3)                                            68,777                87,188
--------------------------------------------------------------------------------------------------------------------

Total liabilities                                                                9,696,123             9,135,594
--------------------------------------------------------------------------------------------------------------------

Commitments and contingencies (Notes 5 and 7)

Stockholders' equity (Note 6)
   Preferred stock, $.01 par value; authorized 1,000,000
     shares, none outstanding                                                            -                     -
   Common stock, $.01 par value; authorized 8,000,000
     shares; 3,171,051 and 3,091,718 issued and outstanding                         31,710                30,917
   Additional paid-in capital                                                    3,494,854             3,453,222
   Retained earnings (deficit)                                                     519,782            (1,474,211)
--------------------------------------------------------------------------------------------------------------------

                                                                                 4,046,346             2,009,928
Treasury stock, at cost, 40,920 shares                                            (102,300)             (102,300)
--------------------------------------------------------------------------------------------------------------------

Total stockholders' equity                                                       3,944,046             1,907,628
--------------------------------------------------------------------------------------------------------------------

                                                                               $13,640,169           $11,043,222
====================================================================================================================
                                                                     See accompanying summary of accounting policies
                                                                     and notes to consolidated financial statements.
</TABLE>



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

                                                                               Consolidated Statements of Operations



Year Ended December 31,                                                               2001                  2000
--------------------------------------------------------------------------------------------------------------------

Revenue
<S>                                                                            <C>                   <C>
   Products sales and leasing                                                  $26,008,579           $15,817,813
   Royalties                                                                       846,611               339,816
--------------------------------------------------------------------------------------------------------------------

Total revenue                                                                   26,855,190            16,157,629

Cost of goods sold                                                              20,465,604            12,037,146
--------------------------------------------------------------------------------------------------------------------

Gross profit                                                                     6,389,586             4,120,483
--------------------------------------------------------------------------------------------------------------------

Operating expenses
   General and administrative expenses                                           3,077,383             2,345,595
   Selling expenses                                                                826,457               489,510
--------------------------------------------------------------------------------------------------------------------

Total operating expenses                                                         3,903,840             2,835,105
--------------------------------------------------------------------------------------------------------------------

Operating income                                                                 2,485,746             1,285,378
--------------------------------------------------------------------------------------------------------------------

Other income (expense)
   Interest expense and loan fees                                                 (459,250)             (554,638)
   Interest income (Note 3)                                                         47,344                64,877
   Other, net                                                                      (51,234)             (202,244)
--------------------------------------------------------------------------------------------------------------------

Total other income (expense)                                                      (463,140)             (692,005)
--------------------------------------------------------------------------------------------------------------------

Income before income tax                                                         2,022,606               593,373
Income taxes (Note 4)                                                               28,613                     -
--------------------------------------------------------------------------------------------------------------------

Net income                                                                     $ 1,993,993          $    593,373
====================================================================================================================

Basic earnings per share (Note 8)                                              $       .65          $        .19
====================================================================================================================

Diluted earnings per share (Note 8)                                            $       .58          $        .19
====================================================================================================================
                                                                     See accompanying summary of accounting policies
                                                                     and notes to consolidated financial statements.
</TABLE>




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

                                                                     Consolidated Statements of Stockholders' Equity



                                                     Additional        Retained
                                        Common         Paid-In         Earnings        Treasury
                                         Stock         Capital        (Deficit)         Stock           Total
---------------------------------------------------------------------------------------------------------------------

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

Warrants exercised                             60            3,137               -               -           3,197

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

Balance, December 31, 2000                 30,917        3,453,222      (1,474,211)       (102,300)      1,907,628

Warrants exercised                            793           41,632               -               -          42,425

Net income                                      -                -       1,993,993               -       1,993,993
---------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001                $31,710       $3,494,854        $519,782       $(102,300)     $3,944,046
---------------------------------------------------------------------------------------------------------------------
                                                                     See accompanying summary of accounting policies
                                                                     and notes to consolidated financial statements.
</TABLE>


                                                        F-6
<PAGE>
<TABLE>
                                                                                           Smith-Midland Corporation
                                                                                                    and Subsidiaries

                                                                               Consolidated Statements of Cash Flows



Year Ended December 31,                                                               2001                  2000
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Operating Activities
<S>                                                                            <C>                   <C>
   Cash received from customers                                                $24,436,973           $14,998,024
   Cash paid to suppliers and employees                                        (22,782,393)          (14,252,653)
   Income taxes paid, net                                                          (28,613)                    -
   Interest paid                                                                  (459,250)             (554,638)
   Other                                                                            (3,890)             (137,367)
--------------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                        1,162,827                53,366
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Investing Activities
   Purchases of property and equipment                                            (403,528)             (437,613)
   Proceeds from sale of fixed assets                                               70,972                     -
   Repayments (advances) on officer note receivable                                 72,418                 7,647
--------------------------------------------------------------------------------------------------------------------

Net cash absorbed by investing activities                                         (260,138)             (429,966)
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities
   Proceeds from borrowings                                                        234,285               799,181
   Repayments of borrowings                                                       (437,121)             (572,017)
   Repayments on borrowings - related parties, net                                 (18,411)               (9,687)
   Proceeds from warrants exercised                                                 42,425                 3,197
--------------------------------------------------------------------------------------------------------------------

Net cash provided (absorbed) by financing activities                              (178,822)              220,674
--------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash                                                    723,867              (155,926)

Cash, beginning of year                                                            218,264               374,190
--------------------------------------------------------------------------------------------------------------------

Cash, end of year                                                           $      942,131        $      218,264
====================================================================================================================
                                                                     See accompanying summary of accounting policies
                                                                     and notes to consolidated financial statements.

                                                                                                        continued...
</TABLE>

                                                        F-7
<PAGE>
<TABLE>
                                                                                           Smith-Midland Corporation
                                                                                                    and Subsidiaries

                                                                               Consolidated Statements of Cash Flows
                                                                                                         (continued)


Year Ended December 31,                                                               2001                  2000
--------------------------------------------------------------------------------------------------------------------

Reconciliation of net income to net cash
   Provided by operating activities
<S>                                                                             <C>                  <C>
Net income                                                                      $1,993,993           $   593,373
Adjustments to reconcile net income to net cash
   Provided by operating activities
     Depreciation and amortization                                                 363,732               360,840
     Gain on sale of fixed assets                                                  (18,923)                    -
     (Increase) decrease in
       Accounts receivable - billed                                             (1,812,241)           (1,524,434)
       Accounts receivable - unbilled                                             (455,876)              120,927
       Inventories                                                                 423,982              (544,441)
       Prepaid expenses and other assets                                          (113,616)               (7,684)
     Increase (decrease) in
       Accounts payable - trade                                                    517,129               791,385
       Accrued expenses and other liabilities                                      414,747                19,498
       Customer deposits                                                          (150,100)              243,902
--------------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                       $1,162,827          $     53,366
====================================================================================================================
                                                                     See accompanying summary of accounting policies
                                                                     and notes to consolidated financial statements.
</TABLE>

                                                        F-8
<PAGE>
                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies


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

Nature of Business      Smith-Midland    Corporation   and   its    wholly-owned
                        subsidiaries  (the  "Company")   develop,   manufacture,
                        license,  sell and install precast concrete products for
                        the   construction,    transportation    and   utilities
                        industries primarily in the Mid-Atlantic region.

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

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

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

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

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

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

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


                                      F-9
<PAGE>

                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies
                                                                     (continued)

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

Revenue Recognition     The  Company  recognizes  revenue  on  the  sale  of its
                        standard  precast  concrete  products at shipment  date,
                        including  revenue  derived  from  any  projects  to  be
                        completed  under  short-term   contracts.   Installation
                        services  for  precast  concrete  products,  leasing and
                        royalties  are  recognized as revenue as they are earned
                        on an accrual basis. Licensing fees are recognized under
                        the accrual method unless collectibility is in doubt, in
                        which event revenue is recognized as cash is received.

                        Certain  sales of  Soundwall  and  Slenderwall  concrete
                        products  are  recognized   upon   completion  of  units
                        produced  under  long-term  contracts.  When  necessary,
                        provisions for estimated  losses on these  contracts are
                        made in the period in which such losses are  determined.
                        Changes  in job  performance,  conditions  and  contract
                        settlements  which affect  profit are  recognized in the
                        period  in  which  the  changes  occur.  Unbilled  trade
                        accounts  receivable  represents revenue earned on units
                        produced and not yet billed.

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

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

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

Fair Value of           The  estimated  fair  value  of  financial   instruments
Financial  Instruments  approximates  their carrying  amounts as of December 31,
                        2001 and 2000.  The  estimated  fair value of  long-term
                        debt is based on current  rates  offered to the  Company
                        for debt of the same maturities.

Estimates               The  preparation  of financial  statements in conformity
                        with generally accepted  accounting  principles requires
                        management to make estimates and assumptions that affect
                        the reported  amounts of assets and  liabilities  at the
                        date  of  the  financial  statements  and  the  reported
                        amounts of revenues  and expenses  during the  reporting
                        period.   Actual   results   could   differ  from  those
                        estimates.

                                      F-10
<PAGE>
                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Summary of Significant Accounting Policies
                                                                     (continued)

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


Earnings 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.  As of December
                        31, 2001,  the Company has  determined no impairment has
                        occurred.  When any such impairment  exists, the related
                        assets will be written down to fair value. No impairment
                        losses have been recorded through December 31, 2001.

Recent Accounting       In July  2001,  the  FASB  issued  SFAS  141,  "Business
Pronouncements          Combinations", which became effective July 1, 2001. SFAS
                        141  requires  the  purchase  method of  accounting  for
                        business combinations initiated after June 30, 2001, and
                        eliminates the pooling-of-interests method. The adoption
                        of  SFAS  141 has not  had an  effect  on the  Company's
                        financial statements.

                        In July 2001,  the FASB issued SFAS 142,  "Goodwill  and
                        Other  Intangible  Assets".  This statement is effective
                        for fiscal years beginning after December 15, 2001. SFAS
                        142 requires,  among other things, the discontinuance of
                        goodwill   amortization.   In  addition,   the  standard
                        includes provisions for the  reclassification of certain
                        existing,    recognized    intangibles    as   goodwill,
                        reassessment of the useful lives of existing, recognized
                        intangibles, reclassification of certain intangibles out
                        of previously  reported goodwill and the  identification
                        of reporting  units for purposes of assessing  potential
                        future impairment of goodwill.  SFAS 142 also requires a
                        transitional  goodwill  impairment  test six months from
                        the date of adoption and further  requires an evaluation
                        of  the  carrying   value  of  goodwill  for  impairment
                        annually  thereafter.  The Company believes the adoption
                        of SFAS 142 will not  have an  effect  on the  Company's
                        financial statements.

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

                                      Summary of Significant Accounting Policies
                                                                     (continued)

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

Recent Accounting       In October 2001,  the FASB issued SFAS 144,  "Accounting
Pronouncements          for the  Impairment or Disposal of  Long-Lived  Assets".
(continued)             This  statement  addresses   financial   accounting  and
                        reporting  for the  impairment or disposal of long-lived
                        assets. This statement  supersedes SFAS 121, "Accounting
                        for  the   Impairment  of  Long-Lived   Assets  and  for
                        Long-Lived Assets to Be Disposed Of", and the accounting
                        and reporting provisions of Accounting  Principles Board
                        Opinion No. 30,  "Reporting  the Results of Operations -
                        Reporting  the  Effects  of  Disposal  of a Segment of a
                        Business,  and  Extraordinary,  Unusual and Infrequently
                        Occurring Events and Transactions".  This statement also
                        amends    Accounting    Research    Bulletin   No.   51,
                        "Consolidated  Financial  Statements",  to eliminate the
                        exception  to  consolidation   for  a  subsidiary  where
                        control  is  likely  to  be  temporary.  This  statement
                        requires   that  one   accounting   model  be  used  for
                        long-lived  assets to be  disposed  of by sale,  whether
                        previously  held  and  used  or  newly  acquired.   This
                        statement also broadens the presentation of discontinued
                        operations to include more disposal  transactions.  SFAS
                        144  is  effective  for  fiscal  years  beginning  after
                        December  15,  2001,  and interim  periods  within those
                        fiscal years.  The Company believes the adoption of SFAS
                        144 will not have a  material  effect  on the  Company's
                        financial statements.

Reclassifications       Certain  reclassifications  have  been made in the prior
                        year  consolidated  financial  statements  and  notes to
                        conform to the December 31, 2001 presentation.


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

                                      Notes to Consolidated Financial Statements

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

1.      Property and              Property and equipment consist of the following:
        Equipment
                                   December 31,                                          2001                 2000
                                  --------------------------------------------------------------------------------------------

 <S>                                                                                      <C>                  <C>
                                  Land and land improvements                             $   649,575          $   607,421
                                  Buildings                                                2,333,311            1,960,359
                                  Machinery and equipment                                  5,311,048            5,473,860
                                  Rental equipment                                           143,296               92,818
                                  --------------------------------------------------------------------------------------------

                                                                                           8,437,230            8,134,458
                                  Less:  accumulated depreciation                          5,764,565            5,449,540
                                  --------------------------------------------------------------------------------------------

                                                                                         $ 2,672,665          $ 2,684,918
                                  ============================================================================================

2.      Notes Payable             Notes payable consist of the following:

                                  December 31,                                            2001                2000
                                 ---------------------------------------------------------------------------------------------

                                  Note  payable  to  First  International  Bank,
                                  maturing June 2021;  with monthly  payments of
                                  $37,087 of principal and interest, interest at
                                  prime plus 1.5% (7.5% at December  31,  2001);
                                  collateralized by principally all assets of
                                  the Company.                                                $3,806,428         $3,864,383

                                 Note  payable  to  First   International  Bank,
                                   maturing   January  1,  2005;   with  monthly
                                   payments of $10,961 of principal and interest
                                   at prime plus  1.75%  (6.8% at  December  31,
                                   2001); collateralized by blanket lien on
                                   Company assets.                                               337,610            420,956

                                 Line of credit with First  International  Bank,
                                   maturing  May  1,  2002;   interest   payable
                                   monthly  at prime  plus 1% (5.8% at  December
                                   31, 2001); collateralized by
                                   accounts receivable and inventory.                            300,000            349,615


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

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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

2.      Notes Payable              December 31,                                                     2001               2000
        (continued)              -------------------------------------------------------------------------------------------

                                 Installment   notes  and   capitalized   leases
                                   collateralized   by  certain   machinery  and
                                   equipment    maturing   at   various   dates,
                                   primarily August 2001 through January
                                   2005,  with interest at 7.25% through 8.25%.              $   152,967        $   149,408

                                 Note  payable  to  individual,  maturing  March
                                   2003;  with  monthly   payments  of  $432  of
                                   principal and interest, interest at 12%;
                                   collateralized by a drop-deck trailer.                          5,992             10,177

                                 Note payable to individual,  maturing  December
                                   2001;  with  monthly  payments  of  $1,003 of
                                   principal and interest, interest
                                   at 12%; collateralized by certain  vehicles.                   -                  11,294
                                 ---------------------------------------------------------------------------------------------

                                                                                               4,602,997          4,805,833
                                 Less current maturities                                         604,135            524,305
                                 ---------------------------------------------------------------------------------------------

                                                                                              $3,998,862         $4,281,528
                                 =============================================================================================
</TABLE>
                        The Company has a mortgage loan,  which is guaranteed in
                        part  by  the  U.S.   Department  of  Agriculture  Rural
                        Business -  Cooperative  Services.  The Company was also
                        granted  a  $500,000  line of credit  and an  additional
                        $500,000  term note.  There was $300,000 in  outstanding
                        borrowings  on the line of credit at December  31, 2001.
                        The  loan   agreement   includes   certain   restrictive
                        covenants, which require the Company to maintain minimum
                        levels  of   tangible   net  worth  and   limits   total
                        outstanding indebtedness.  The Company was in compliance
                        with these restrictive covenants at December 31, 2001.




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

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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


2.      Notes Payable   The aggregate  amounts of notes payable maturing in each
        (continued)     of the next five years and thereafter are as follows:

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

                                      2002                      $  604,135
                                      2003                         253,707
                                      2004                         254,363
                                      2005                         136,860
                                      2006                         131,771
                                   Thereafter                    3,222,161
                        -----------------------------------------------------

                                                                $4,602,997
                        -----------------------------------------------------

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

                        Notes payable - related  parties are unsecured,  with no
                        specified  maturity date (but no earlier than January 1,
                        2003) and bear interest at 10%. Total  interest  expense
                        related  to these  notes was  $1,589  and $7,162 for the
                        years ended December 31, 2001 and 2000, respectively.

                        On December  31,  2001,  the Company  owned an unsecured
                        note  for  approximately  $558,282  receivable  from its
                        president and majority  stockholder accruing interest at
                        6%. Principal  payments on the note were $72,481 for the
                        year  ended  December  31,  2001 and $7,657 for the year
                        ended  December 31, 2000.  Total  interest  paid on this
                        note was approximately $37,800 and $38,000 for the years
                        ended December 31, 2001 and 2000, respectively.

                        As of December  31,  2001 and 2000,  the Company was the
                        beneficiary of individual life insurance policies on the
                        life of the President with a total cash surrender  value
                        of  approximately  $183,000 and $162,000,  respectively.
                        Borrowings  of  approximately   $153,000  and  $134,000,
                        respectively were outstanding against the cash surrender
                        value at December 31, 2001 and 2000.



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

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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

4.      Income Taxes    The  provision  for income taxes differs from the amount
                        determined by applying the federal statutory tax rate to
                        pre-tax income as a result of the following:
<TABLE>

                        Year Ended December 31,                          2001                         2000
                        ----------------------------------------------------------------------------------------------

                                                                  Amount       Percent         Amount       Percent
                        ----------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>           <C>            <C>
                        Income taxes at statutory rate             $688,000       34%           $202,000       34%
                        Increase (decrease) in taxes
                           resulting from:
                             Reduction in valuation
                               allowance                           (785,000)     (39)           (238,000)     (40)
                             State income taxes
                               net of federal benefit                81,000        4              24,000        4
                             Other                                   44,613        2              12,000        2
                        ----------------------------------------------------------------------------------------------

                                                                 $   28,613        1%         $        -        -%
                        ==============================================================================================

                          Deferred  tax  assets  (liabilities)  are  as follows:

                         December 31,                                           2001                 2000
                        ---------------------------------------------------------------------------------------------

                        Depreciation                                            $ (89,000)           $ (83,000)
                        Provision for doubtful accounts                           141,000              103,000
                        Vacation accrued                                           46,000               42,000
                        Deferred income                                            21,000                9,000
                        Operating loss carryforwards                              104,000              889,000
                        ---------------------------------------------------------------------------------------------

                        Net deferred tax asset                                    223,000              960,000
                        Deferred tax asset valuation allowance                   (223,000)            (960,000)
                        ---------------------------------------------------------------------------------------------

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

                        At December  31,  2001,  the  Company had  approximately
                        $275,000  of  net  operating  loss   carryforwards  with
                        expiration dates through December 31, 2018.

                        The  Company  has offset the  deferred  tax asset with a
                        valuation allowance since the Company cannot predict the
                        timing of generation of taxable income.


                                      F-16
<PAGE>
                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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

5.    Employee Benefit  The Company has a 401(k)  retirement  plan (the  "Plan")
      Plans             covering  substantially all employees.  Participants may
                        contribute up to 10% of their  compensation to the Plan.
                        The  Company   contributes  25%  of  the   participant's
                        contribution,    up   to   4%   of   the   participant's
                        compensation,   as  a   matching   contribution.   Total
                        contributions  for the years ended December 31, 2001 and
                        2000   were   approximately   $110,000   and   $104,000,
                        respectively.

6.    Stock Options     On  August  5,  1994,   the  Board  of   Directors   and
                        Stockholders  of the  Company  adopted  the  1994  Stock
                        Option Plan (the "1994  Plan")  which allows the Company
                        to grant options to employees,  officers,  directors and
                        consultants to purchase  shares of the Company's  Common
                        Stock.  Options  granted  under  the plan may be  either
                        Incentive Stock Options or Non-Qualified  Stock Options.
                        Incentive Stock Options may be granted only to employees
                        of  the  Company,  while  Non-qualified  options  may be
                        issued  to  non-employee  directors,   consultants,  and
                        others,  as  well as to  employees  of the  Company.  On
                        November   21,  2000,   the  Board  of   Directors   and
                        Stockholders  of  the  Company   increased  the  maximum
                        aggregate  number of shares  which may be granted  under
                        the 1994 Plan to 575,000 of the Company's  Common Stock.
                        The following tables summarize  activity of the Plan and
                        the stock options outstanding at December 31, 2001:
<TABLE>
                                                           Weighted
                                                            Average                      Vested
                                                           Exercise       Options          and
                                                             Price      Outstanding    Exercisable
                          --------------------------------------------------------------------------

<S>                                                          <C>         <C>             <C>
                        Balance, December 31, 1999           $1.07       186,275         63,520
                        Granted                               -                -              -
                        Forfeited                             1.00       (11,300)        (5,132)
                        Vested                                -                -         43,867
                        ----------------------------------------------------------------------------

                        Balance, December 31, 2000            1.07       174,975        102,255
                        Granted                               1.02       343,000              -
                        Forfeited                             1.00       (11,550)          (366)
                        Vested                                -                -         43,202
                        ----------------------------------------------------------------------------

                        Balance, December 31, 2001           $1.04       506,425        145,091
                        ============================================================================
</TABLE>

                                      F-17
<PAGE>
<TABLE>
                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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

6.   Stock Options                                    Options Outstanding                  Options Exercisible
                                         ----------------------------------------------  ------------------------
     (continued)                                                 Weighted Average
                                             Number of        Remaining Contractual              Number
                       Exercise Prices         Shares              Life (Years)                 of Shares
                       ------------------------------------------------------------------------------------------
<S>                        <C>                <C>                        <C>                        <C>
                              $.56            88,000                     6.0                        58,666
                            .80 - .81        206,000                     9.3                             -
                           1.00 - 1.39       192,425                     4.7                        66,425
                              3.50            20,000                     4.5                        20,000
                       ------------------------------------------------------------------------------------------

                                             506,425                                               145,091
                       ------------------------------------------------------------------------------------------
</TABLE>
                        The  weighted  average  fair  value of  options  granted
                        during the year ended December 31, 2001 was $.85.

                        The fair  value of each  option  on the date of grant is
                        estimated using the  Black-Scholes  option pricing model
                        with  the  following  assumptions:  no  dividend  yield,
                        expected  volatility of 88%,  risk-free interest rate of
                        5.07%  and  expected  lives  of  seven  to  nine  years.
                        Substantially  all options become vested and exercisable
                        ratably over a five year period. No options were granted
                        during the year ended December 31, 2000.

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

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

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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

6.  Stock Options       If the  provisions  of SFAS  123 had been  adopted,  the
    (continued)         effect  on 2001 and 2000  earnings  would  have  been as
                        follows:
<TABLE>

                                                               2001               2000
                          ------------------------------------------------------------------------
<S>                                                              <C>             <C>
                          Net earnings:
                             Reported                            $1,993,993      $593,373
                             Proforma                             1,806,997       593,373
                          Basic earnings per share:
                             Reported                                  $.65          $.19
                             Proforma                                   .62           .19
                          Diluted earnings per share:
                             Reported                                  $.58          $.19
                             Proforma                                   .56           .19
</TABLE>
                        At December 31, 2001, the Company had 1,421,052 warrants
                        outstanding  with exercise  prices  ranging from $.60 to
                        $1.00 and expire in 2002.

7.   Commitments      a)In 1999,  the Company,  through the general  contractor,
     and Contingencies  filed claims, in the amount of approximately  $1,100,000
                        for  damages and cost  overruns  incurred as a result of
                        engineering  and design flaws on a project to renovate a
                        building    at    Rutgers    University     ("Rutgers").
                        Specifically,  after the Company  commenced  the Rutgers
                        project,  the Company found that the original  structure
                        was not structurally sufficient to support the panels as
                        originally   designed.   The  cost  overruns  relate  to
                        re-designing  panels,  producing  panels with additional
                        steel  reinforcement,  and erection of the panels on the
                        structure. The general contractor filed suit against the
                        Company,  Rutgers, and the architect on the project, for
                        damages.  While the actual  damages were not  specified,
                        based upon the  pleadings,  the  general  contractor  is
                        seeking  in  excess  of  $700,000  in  damages  from the
                        Company.  The Company  filed a  countersuit  against the
                        general  contractor for damages in excess of $1,100,000.
                        The Company also filed suit against Skylift Corporation,
                        the Company's  subcontractor,  initially responsible for
                        installation of construction  panels,  for approximately
                        $1,000,000.  The Company has approximately  $950,000 due
                        to  the  general  contractor  included  in  reserve  for
                        contract loss at December 31, 2001 and 2000.


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

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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


7.  Commitments         The Company's  outside  counsel has provided the Company
    and Contingencies   with an opinion  that a legal  basis  exists for a claim
    (continued)         against  the  general   contractor   and  Rutgers.   All
                        conditions for claim  recognition  have been  satisfied,
                        and as of  December  31,  2001 and  2000,  approximately
                        $497,000 of the potential  $1,100,000  contract claim is
                        included  in  claims  receivable,  as such  amounts  are
                        probable    (subject   to    negotiations    and   legal
                        proceedings).  The Company believes that, based on prior
                        experience  in  claims  settlement,  it will  ultimately
                        collect the recorded claim receivable.

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

                    c)  In June 2000, the Company  received notice of a personal
                        injury lawsuit filed by Kenneth R. Hughes and Braunya P.
                        Hughes  in the  United  States  District  Court  for the
                        District of Columbia. Mr. Hughes was a road construction
                        worker engaged in the  transportation  and relocation of
                        pre-cast  concrete barrier to create temporary  concrete
                        walls  at road  construction  sites  for a  third  party
                        construction  company.  On or about June 20,  1997,  Mr.
                        Hughes suffered injuries when a barrier section-coupling
                        device  apparatus  failed.  The  suit  alleges  that the
                        Company  sold the  section-coupling  device to the third
                        party  contractor  and was  negligent  in the design and
                        manufacture of said barrier section-coupling device. The
                        suit  seeks  $10,000,000  in  compensatory  damages  and
                        $10,000,000 in punitive damages. Management believes the
                        suit to be without  merit as there is no  evidence  that
                        indicates that the Company  either sold or  manufactured
                        the  section-coupling  device in  question.  The Company
                        plans to vigorously  defend its  position,  and believes
                        that any settlement would be covered under the Company's
                        general  liability   insurance  and  therfore  will  not
                        adversely affect the financial statements.

                                      F-20
<PAGE>
                                                       Smith-Midland Corporation
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
                                                                     (continued)

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

8.  Earnings Per Share  Earnings per share is calculated as follows:
<TABLE>

                        Year ended December 31,                                 2001              2000
                        --------------------------------------------------------------------------------------

                        Basic earnings
<S>                                                                         <C>               <C>
                           Income available to common shareholder           $1,993,993        $   593,373
                        --------------------------------------------------------------------------------------

                           Weighted average shares outstanding               3,090,465          3,050,190
                        --------------------------------------------------------------------------------------

                           Basic earnings per share                               $.65               $.19
                        --------------------------------------------------------------------------------------

                        Diluted earnings per share

                           Income available to common shareholder           $1,993,993        $   593,373
                        --------------------------------------------------------------------------------------

                           Weighted average shares outstanding              3,090,465           3,050,190
                             Dilutive effect of stock options                  32,948                  -
                             Dilutive effect of warrants                      338,364                  -
                        --------------------------------------------------------------------------------------

                           Total weighted average shares outstanding        3,461,777           3,050,190
                        --------------------------------------------------------------------------------------

                           Diluted earnings per share                            $.58                $.19
                        --------------------------------------------------------------------------------------
</TABLE>


                                      F-21