SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number1-13752

(Exact name of Registrant as specified in its charter)

5119 Catlett Road, P.O. Box 300

(Address, zip code of principal executive offices)

(Registrant’s telephone number, including area code)

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	SMID	OTCQX

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

~~Large accelerated filer~~ o ~~Accelerated filer~~ o ~~Emerging growth company~~ o

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☑
Emerging growth company	☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, ~~$.01~~$0.01 par value, outstanding as of August ~~1, 2018 : 5,080,395~~2, 2019: 5,134,492 shares, net of treasury shares

SMITH-MIDLAND CORPORATION

Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the six months ended June 30, ~~2018~~2019 and June 30, ~~2017~~2018

PART I — FINANCIAL INFORMATION

~~SMITH-MIDLAND~~SMITH-MIDLAND CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

SMITH-MIDLAND CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

2019

(Unaudited)

Total stockholders' equity

SMITH-MIDLAND CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

SMITH-MIDLAND CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(1) Unrealized gains on available-for-sale securities are shown net of income tax expense of $1$3 and $3$1 for June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Six Months Ended June 30,

(1) Unrealized gains (losses) on ~~available for sale~~available-for-sale securities are shown net of income tax expense (benefit) of ~~$(4)~~$8 and $1$(4) for June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

SMITH-MIDLAND CORPORATION ~~AND SUBSIDIARIES~~

~~CONDENSED~~CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS' EQUITY

Six Months Ended
June 30,
2018 2017
Cash flows from operating activities:
Net income $ 270
$ 1,569
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 504
460
Gain on sale of assets (55 ) (16 )
Allowance for doubtful accounts 3
(150 )
Stock compensation 186
220
Deferred taxes (3 ) 29
(Increase) decrease in
Accounts receivable - billed (2,298 ) (1,915 )
Accounts receivable - unbilled (1,021 ) 32
Inventories 424
(865 )
Prepaid expenses and other assets 45
(213 )
Deferred buy-back lease asset, net (2,986 ) —
Refundable income taxes 33
168
Increase (decrease) in
Accounts payable - trade (73 ) 390
Accrued expenses and other liabilities —
400
Deferred revenue 54
672
Accrued compensation (543 ) (301 )
Accrued income taxes payable 80
—
Deferred buy-back lease obligation 3,733
—
Customer deposits 308
790
Net cash provided by (used in) operating activities (1,339 ) 1,270
Cash flows from investing activities:
Purchases of investment securities available-for-sale (16 ) (21 )
Purchases of property and equipment (1,057 ) (2,159 )
Proceeds from sale of fixed assets 67
22
Net cash used in investing activities (1,006 ) (2,158 )
Cash flows from financing activities:
Proceeds from long-term borrowings 350
183
Repayments of long-term borrowings (312 ) (287 )
Dividends paid on common stock (256 ) (49 )
Proceeds from options exercised 12
117
Net cash used in financing activities (206 ) (36 )
Net decrease in cash and cash equivalents (2,551 ) (924 )
Cash and cash equivalents
Beginning of period 3,390
3,523
End of period $ 839
$ 2,599

	Common Stock	Additional Paid-in Capital	Treasury Stock	Accumulated Other Comprehensive Loss	Retained Earnings	Total
Balance, December 31, 2018	$51	$5,973	$(102)	$(37)	$12,962	$18,847
Net unrealized holding gain	—	—	—	25	—	25
Vesting of restricted stock	1	153	—	—	—	154
Net income	—	—	—	—	604	604
Balance, June 30, 2019	$52	$6,126	$(102)	$(12)	$13,566	$19,630

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Balance, December 31, 2017

Net unrealized holding loss

Proceeds from options exercised

Vesting of restricted stock

Balance, June 30, 2018

SMITH-MIDLAND CORPORATION AND SUBSIDIARIES

~~NOTES~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

SMITH-MIDLAND CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. – INTERIM FINANCIAL REPORTING

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, and with the instructions to Form 10-Q and Article 10 and Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures that are included in our annual financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, summary of significant accounting policies, and the related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. The condensed consolidated December 31, ~~2017~~2018 balance sheet was derived from the audited financial statements included in the Form 10-K. Dollar amounts in the footnotes are stated in thousands, except for per share data.

In the opinion of management, these condensed consolidated financial statements reflect all adjustments (which consist of normal, recurring adjustments) necessary for a fair presentation of the financial position and results of operations and cash flows for the periods presented. The results disclosed in the condensed consolidated statements of operations are not necessarily indicative of the results to be expected in any future periods.

Recent Accounting Pronouncements

~~On February 25, 2016,~~Fair Value Measurement. In August 2018, the FASB issued ASU No. ~~2016-02,~~ ~~Leases~~ ~~(Topic 842)~~2018-13, “Fair Value (“FV”) Measurement (Topic 820). ~~Adoption~~” Among other modifications, the standard removes the requirements to disclose: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the FV hierarchy; (ii) the policy for timing transfers between levels; and (iii) the valuation process for Level 3 FV measurements. The standard will require public entities to disclose: (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 FV measurements held at the end of the reporting period; and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 FV measurements. The additional disclosure requirements should be applied prospectively for the most recent interim or annual period presented in the fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented. The amendments in this ~~ASU requires lessees to recognize assets and liabilities for most leases. For public business entities the guidance is~~standard are effective for ~~financial statements issued for annual periods beginning~~fiscal years ending after December 15, ~~2018, and interim periods within those annual periods and early~~2019. Early adoption is ~~permitted. The Company is currently evaluating~~permitted, and an entity may adopt the ~~impact~~removed or modified disclosures and delay the adoption of new disclosures until the effective date. We have not completed our assessment of the standard but we do not expect the adoption to have a material impact on the ~~Company’s~~Company's consolidated financial position, results of operations and cash flows.

Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued guidance on the measurement of credit losses on certain financial instruments. The guidance introduces a new impairment model known as the current expected credit loss model that will replace the incurred loss impairment methodology currently included under GAAP. This guidance requires entities to present certain investments in debt securities, trade accounts receivable and other financial assets at their net carrying value of the amount expected to be collected on the financial statements. The guidance will be effective for the Company on January 1, 2020, and must be applied on a modified retrospective basis with early adoption permitted. The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows and disclosures.

Recently Adopted Accounting Pronouncements

Comprehensive Income. In February 2018, the FASB issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606)~~2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220). ~~Adoption~~” This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of ~~this ASU requires that an entity recognize the amount of revenue to which it expects to be entitled~~2017. This standard was effective for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP when it became effective. The standard allowed for application retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective method). The Company adopted the new revenue guidance effective January 1, 2018 using the modified retrospective method to all contracts that were not substantially complete at the date of adoption. The adoption of Topic 606interim and annual reporting periods beginning after December 15, 2018. We did not ~~have, and is not expected~~exercise the option to have, a material impact on the timing or amount of revenue recognized as compared to the Company's previous revenue recognition policies. Accordingly, there was no adjustment recorded to beginning retained earnings for cumulative impact of adoption on January 1, 2018.make this reclassification.

Product Sales - Over Time

Under Topic 606, the Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services provided. Revenue associated with contracts with customers is recognized over time as the Company's performance creates or enhances customer controlled assets or creates or enhances an asset with no alternative use, which the Company has an enforceable right to receive compensation as defined under the contract for performance completed. To determine the amount of revenue to recognize over time, the Company recognizes revenue over the contract terms based on the output method. The Company applied the "as-invoiced" practical expedient as the amount of consideration the Company has the right to invoice corresponds directly with the value of the Company's performance to date.

As the output method is driven by units produced, the Company recognizes revenues based on the value transferred to the customer relative to the remaining value to be transferred. The Company also matches the costs associated with the units produced. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined and the amount of the loss updated in subsequent reporting periods. Revenue recognition also includes an amount related to a contract asset or contract liability. If the recognized revenue is greater than the amount billed to the customer, a contract asset is recorded in accounts receivable - unbilled. Conversely, if the amount billed to the customer is greater than the recognized revenue, a contract liability is recorded in customer ~~deposits on uncompleted contracts.~~deposits. Changes in the job performance, job conditions and final contract settlements are factors that influence management’s assessment of total contract value and therefore, profit and revenue recognition.

A portion of the work the Company performs requires financial assurances in the form of performance and payment bonds or letters of credit at the time of execution of the contract. Some contracts include retention provisions of up to 10% which are generally withheld from each progress payment as retainage until the contract work has been completed and approved.

Product Sales - Point in Time

For certain product sales that do not meet the over time criteria, under Topic 606 the Company recognizes revenue when the product has been shipped to the destination in accordance with the terms outlined in the contract where a present obligation to pay exists as they have gained ~~physical possession~~control of the product.

Accounts Receivable and Contract Balances

The timing of when we bill our customers is generally dependent upon ~~advance~~ billing terms, milestone billings based on the completion of certain phases of the work, or when services are provided or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings, are reported on our Condensed Consolidated Balance Sheets as "Accounts receivable - unbilled". Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimate earnings recognized to date, are reported on our Condensed Consolidated Balance Sheets as customer deposits (i.e. contract liabilities).

Any uncollected billed amounts for our performance obligations recognized over time, including contract retentions, are recorded within accounts receivable. At June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, accounts receivable included contract retentions ~~(in thousands)~~ of approximately ~~$1,381~~$1,576 and ~~$1,065,~~$1,704, respectively.

Our billed and unbilled revenue may be exposed to potential credit risk if our customers should encounter financial difficulties, and we maintain reserves for specifically-identified potential uncollectible receivables. At June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, our allowances for doubtful accounts ~~(in thousands)~~ were ~~$211~~$270 and ~~$208,~~$214, respectively.

As discussed in Recently Adopted Accounting Pronouncements, no adjustment to beginning 2018 retained earnings was recorded as a result of our adoption of Topic 606 due to no changes in the methods and/or timing of our revenue recognition for our uncompleted contracts. Further, the difference in our results of the first and second quarter 2018 between application of the new standard on our contracts and what results would have been if such contracts had been reported using the accounting standards previously in effect, for such contracts, did not change.

Sale to ~~Customers~~Customer with a Buy-Back Guarantee

Barrier Rentals - Leasing Fees

The Company licenses certain products to other precast companies to ~~produce~~manufacture the Company's products to engineering specifications under the licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% of total sales of licensed products, which are paid on a monthly basis. The revenues from licensing agreements are recognized in the month earned, in accordance with Topic 606-10-55-65.

Shipping and Installation

Shipping and installation revenues are recognized as a distinct performance obligation in the period the shipping and installation services are provided to the customer, in accordance with Topic 606.

Disaggregation of Revenue

In the following table, revenue is disaggregated by primary sources of ~~revenue (in thousands):~~revenue:

Three Months Ended June 30

Six Months Ended June 30

~~Smith-Midland~~The Company's products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is minimal.

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

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company currently operates in one operating and reportable business segment for financial reporting purposes.

Reclassifications of Certain Items Included within Comparable Prior Year Periods and Previous Current Year Interim Periods

Certain minor reclassifications have been made to prior year amounts to conform to current year ~~presentation.~~

presentation, including separation of current and non-current portion of deferred revenue and deferred buy-back lease obligation.

NOTE 2. – NET INCOME PER SHARE

Basic earnings per common share exclude all common stock equivalents, primarily restricted stock awards, and is computed using the weighted average number of common shares outstanding during the period. The diluted earnings per common share calculation reflects the potential dilutive effect of securities that could share in earnings of the Company. As of June 30, ~~2018,~~2019, there are no outstanding stock options. For periods prior to June 30, ~~2018~~2019 outstanding options were excluded from the diluted earnings per share calculation when they would have an anti-dilutive effect. Earnings per share are calculated as ~~follows (in thousands, except earnings per share):~~follows:

Three Months Ended June 30,

	Six Months Ended June 30,
	2019	2018
Basic income per share

Net income	$604	$270

Weighted average shares outstanding	5,134	5,076

Basic income per share	$0.12	$0.05

Diluted income per share

Net income	$604	$270

Weighted average shares outstanding	5,134	5,076
Dilutive effect of stock options and restricted stock	7	25

Total weighted average shares outstanding	5,141	5,101

Diluted income per share	$0.12	$0.05

Six Months Ended
June 30,
2018 2017
Basic income per share

Net income $ 270
$ 1,569

Weighted average shares outstanding 5,076
5,026

Basic income per share $ 0.05
$ 0.31

Diluted income per share

Net income $ 270
$ 1,569

  Weighted average shares outstanding 5,076
5,026
    Dilutive effect of stock options and restricted stock 25
39

  Total weighted average shares outstanding 5,101
5,065

    Diluted income per share $ 0.05
$ 0.31

NOTE 3. – NOTES PAYABLE ~~(dollar amounts in thousands)~~

The Company has a mortgage note payable to Summit Community Bank (the “Bank”), with a balance of ~~$937~~$661 as of June 30, ~~2018.~~2019. The note has a maturity date of September 20, 2021 and a fixed interest rate of 3.99% annually with monthly payments of $26 and is secured by principally all of the assets of the Company. Under the terms of the note, the Bank will permit chattel mortgages on purchased equipment not to exceed $250 for any one individual loan so long as the Company is not in default.

The Company has a mortgage note payable to the Bank for the the purchase of the Columbia, South Carolina facility. Such loan is evidenced by a promissory note dated July 19, 2016. The note provides for a 15 year term, a fixed annual interest rate of 5.29%, monthly fixed payments of $11 and a security interest in favor of the Bank in respect ofto the land, building and fixtures purchased with the proceeds of the loan. The balance of the loan at June 30, ~~2018~~2019 was ~~$1,203.~~$1,137.

The Company additionally has 1514 smaller installment loans with annual interest rates between 2.94% and ~~5.29%~~5.75%, maturing between 2020 and 2024, with varying balances totaling ~~$1,431.~~$1,410.

Under the loan ~~agreement~~covenants with the Bank, the Company is limited to annual capital expenditures of ~~$1,500.~~$3,500. The Company is in compliance with all covenants pursuant to the loan ~~agreement~~agreements as of June 30, ~~2018.~~2019.

~~The~~

In addition to the notes payable discussed above, the Company also has a ~~$2,000~~$4,000 line of credit ~~secured by accounts receivable and inventory,~~with the Bank that had a balance of ~~which none was outstanding~~$1,500 at June 30, ~~2018.~~2019 used to fund the construction of the North Carolina expansion, which will be converted to long-term debt when the financing closes in 2019. The line of credit is evidenced by a commercial revolving promissory note ~~with the Bank,~~ which carries a variable interest rate ~~equal~~of prime and matures on September 18, 2019. The loan is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. Key provisions of the line of credit require the Company, (i) to obtain bank approval for capital expenditures in excess of $3,500 during the term of the loan; and (ii) to obtain bank approval prior to its funding any acquisition. On September 18, 2018 the Company received a Commitment Letter from the Bank to provide a guidance line of credit specifically to purchase business equipment in an amount up to $1,500. The commitment provides for the purchase of equipment with minimum advances of $50 for which a note payable will be executed with a term not to exceed five years with an interest rate at the Wall Street ~~Journal's~~Journal prime ~~rate. In addition,~~rate plus 0.5% with a floor of 4.49% per annum. The loan is collateralized by a first lien position on all equipment purchased under the ~~Company has a~~line. The commitment ~~from~~for the ~~Bank in the amount of $1,500 for an equipment line of credit. Neither~~guidance line of credit ~~carried a balance at~~matures on September 17, 2019. As of June 30, ~~2018.~~2019, the Company had not purchased any equipment pursuant to the $1,500 commitment.

NOTE 4. – STOCK COMPENSATION

In accordance with ASC 718, the Company had no stock option expense for the three and six months ended June 30, 2018 and June 30, 2017. The Company uses the Black-Scholes option-pricing model to measure the fair value of stock options granted to employees. In 2016, the Company's Board of Directors replaced the 2008 Stock Option Plan with the 2016 Equity Incentive Plan, which does not provide for the issuance of options. Consequently, the Company cannot issue any additional options, if, and until, a new stock option plan is approved by the Board of Directors.

~~The following table summarizes options outstanding at June 30, 2018:~~

Number of Shares Weighted Average Exercise Price
Balance, December 31, 2017 10,333
$ 1.21
Granted —
—
Forfeited —
—
Exercised (10,333 ) (1.21 )

Outstanding options at June 30, 2018 —
$ —

Outstanding exercisable options at June 30, 2018 —
$ —

The fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of the date of grant. Restricted stock activity during the six months ended June 30, ~~2018~~2019 is as follows:

						Number of Shares	Weighted Average Grant Date Fair Value per Share

	Number of Shares		Weighted Average Grant Date Fair Value per Share
Balance, December 31, 2017	125,333		$	5.13
Balance, December 31, 2018						69,500	$5.19
Granted	2,500		7.00			2,000	7.43
Vested	(22,167	)	(5.62		)	(21,667)	(5.63)
Forfeited	(1,333	)	(4.95		)	—

Non-vested, end of period	104,333		$	5.14		49,833	$5.15

Awards are ~~being~~ amortized to expense ratably, on an annual basis, over a three year vesting term, except one grant in January ~~2018~~2019 for ~~2,500~~2,000 shares of restricted stock, and one grant in January ~~2017~~2018 for ~~15,000~~2,500 shares of restricted stock, which both vested upon grant. There was stock compensation expense of approximately ~~$186,000~~$154 for the six months ended June 30, ~~2018~~2019 and ~~$220,000~~$186 for the six months ended June 30, ~~2017.~~2018. The total unrecognized compensation cost as of June 30, ~~2018~~2019 related to the non-vested restricted stock is approximately ~~$535,000.~~$128.

NOTE 5. – SUBSEQUENT EVENTS

In July 2019, the Company entered into an agreement to purchase used highway safety barrier and crash cushion attenuators, at a rate below current manufacturing costs, over approximately a one year period. Under the agreement, title will transfer to the Company upon physical inspection and acceptance. The Company estimates the total purchase value to $2.2 million, which can vary based upon actual quantities purchased.

~~ITEM~~ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report and related documents include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act 1934. 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:

~~no assurance on profitable operations; in this respect, while~~

●

While the Company was profitable for the years ended December 31, 2018 and 2017, and ~~2016, and the second quarter of 2018, it reported a net loss~~ for the ~~three months ended March 31, 2018.~~first half of 2019, there are no assurances that the Company can remain profitable in future periods,

●

our debt level ~~decreased~~increased in ~~2017,~~2018 and ~~increased during~~in the first six months of ~~2018,~~2019, and our ability to satisfy the same cannot be assured,

●

the continued availability of financing in the amounts, at the times, and on the terms required, to support our future business and capital projects,

●

the extent to which we are successful in developing, acquiring, licensing or securing patents for proprietary products,

●

changes in economic conditions specific to any one or more of our markets (including the availability of public funds and grants for construction),

●

the highly competitive nature of our industry and our ability to effectively compete,

●

changes in general economic conditions in the Company’s primary service areas,

●

the ability to generate sufficient revenues to justify our expansion of manufacturing facilities,

●

adverse weather, which inhibits the demand for our products,

●

our compliance with governmental regulations,

●

the outcome of future litigation, if any,

●

our contract backlog,

●

on material construction projects, our ability to produce and install product that conforms to contract specifications and in a time frame that meets the contract requirements,

●

the cyclical nature of the construction industry,

●

our exposure to increased interest expense payments should interest rates change,

●

the Company’s Board of Directors, which is composed of five members, has only two outside, independent directors, and

●

the other factors and information disclosed and discussed in other sections of this Report and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017.~~2018.

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.

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

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.

The Company had (in thousands) a net ~~loss~~income of ~~$421~~$331 for the first quarter ~~2018~~2019 and net income of ~~$691~~$273 for the second quarter ~~of 2018,~~2019, resulting in net income of ~~$270~~$604 for the six months ended June 30, ~~2018.~~2019. The cost of goods sold as a percent of revenue, not including royalties, for the three and six months ended June 30, ~~2018~~2019 was ~~74%~~83% and ~~79%~~82%, respectively, as compared to ~~77%~~74% and ~~73%~~79% for the three and six months ended June 30, ~~2017,~~2018, respectively. The decrease in cost of goods sold as a percentage of revenue, not including royalties, for the second quarter of 2018, compared to the second quarter of 2017, is mainly due to a decrease in direct labor costs. The increase in cost of goods sold as a percentage of revenue, not including royalties, for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018, ~~compared to the same period in 2017,~~ is mainly due to ~~a short-term, high risk special project~~increased wages and the associated labor costs, flat selling prices for certain products due to competitive pricing pressure, and the increase in shipping and installation which ~~occurred in~~typically have lower margins than product sales, as compared to the first ~~quarter 2017 that had~~half 2018 costs when there were higher ~~margins than typical manufacturing.~~ margin jobs.Total sales for the three and six month periods ended June 30, 2019 were $10,852 and $21,041, respectively, compared to $9,833 and $18,958 for the three and six months ended June 30, 2018, ~~are lower than~~respectively. The increase was mainly from the ~~same period in 2017 mainly due~~Easi-Set building sales, and barrier rentals, which were impacted favorably from the deferred buy-back revenue recognition, and shipping and installation revenue. With respect to the ~~deferred revenue associated~~barrier customer contract described in Note 1 ("Sale to Customer with ~~the guaranteed buy-back agreement for~~a Buy-Back Guarantee"), although barrier ~~of $3,733. Although the barrier revenue is~~product sales from this contract are not ~~currently~~ being recognized, the Company ~~will recognize the~~is recognizing barrier rental revenue ~~over~~which will continue through the life of the customer's project. ~~Production at each manufacturing plant continues~~Accordingly, once all product is delivered to this customer, the Company will nonetheless continue to recognize the net profits from this project until the buy-back option is either exercised or expired. Delivery of product commenced in the second quarter of 2018 and is expected to be ~~strong, rental orders~~completed by the end of 2019. The buy-back option expires when the customer completes the project utilizing the barrier, which is expected to be in 2022. Thus, whereas the Company will likely have completed its production and delivery/installation obligations in 2019, it will nonetheless continue to ~~increase, and royalties show a positive trend. The current backlog of $35.3 million supports revenues into 2019.~~recognize net profits through 2022. Management ~~anticipates continued profit~~expects sales to increase for the ~~remainder~~second half of ~~2018,~~2019 as compared to the first six months of 2019, although no assurance can be given.

Results of Operations (dollar amounts in thousands, except per share data)

Three and six months endedJune 30, ~~2018~~ 2019compared to the three and six months endedJune 30, ~~2017~~2018

Sales include revenues from product sales, ~~royalty income,~~ barrier ~~rental~~rentals, royalty income, and shipping and installation ~~income.~~revenues. Product sales are further divided into soundwall, architectural and SlenderWall™ panels, miscellaneous wall panels, highway barrier, Easi-Set® and Easi-Span® buildings, utility ~~and farm~~ products, and miscellaneous precast products. The following table summarizes the sales by product type and comparison for the three and six month periods ended June 30, ~~2018,~~2019 and ~~2017.~~2018.

Revenue by Type (Disaggregated Revenue)	Three Months Ended June 30				Six Months Ended June 30
	2019	2018	Change	% Change	2019	2018	Change	% Change
Soundwall Sales	$1,939	$2,525	$(586)	(23)%	$4,053	$5,005	$(952)	(19)%
Architectural Panel Sales	424	245	179	73%	424	457	(33)	(7)%
SlenderWall Sales	772	1,422	(650)	(46)%	2,735	2,565	170	7%
Miscellaneous Wall Sales	406	267	139	52%	769	759	10	1%
Barrier Sales	1,817	1,590	227	14%	3,408	3,875	(467)	(12)%
Easi-Set and Easi-Span Building Sales	1,335	560	775	138%	2,369	1,062	1,307	123%
Utility Sales	449	246	203	83%	757	460	297	65%
Miscellaneous Sales	185	88	97	110%	316	213	103	47%
Total Product Sales	7,327	6,943	384	6%	14,831	14,396	435	3%
Barrier Rentals	582	340	242	71%	1,163	649	514	79%
Royalty Income	429	506	(77)	(15)%	735	727	8	1%
Shipping and Installation Revenue	2,514	2,044	470	23%	4,312	3,186	1,126	35%
Total Service Revenue	3,525	2,890	635	22%	6,210	4,562	1,648	36%

Total Revenue	$10,852	$9,833	$1,019	10%	$21,041	$18,958	$2,083	11%

~~Revenue By Type~~ ~~(Disaggregated Revenue)~~

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 Change % of Change 2018 2017 Change % of Change
Product Sales:
Soundwall Sales $ 2,525
$ 1,429
$ 1,096
77% $ 5,005
$ 2,656
$ 2,349
88%
Architectural Panel Sales 245
—
245
100% 457
18
439
2,439%
SlenderWall Sales 1,422
—
1,422
100% 2,565
—
2,565
100%
Miscellaneous Wall Sales 267
709
(442 ) (62)% 759
1,372
(613 ) (45)%
Barrier Sales 1,590
3,912
(2,322 ) (59)% 3,875
6,069
(2,194 ) (36)%
Easi-Set and Easi-Span Building Sales 560
1,061
(501 ) (47)% 1,062
1,397
(335 ) (24)%
Utility and Farm Product Sales 246
350
(104 ) (30)% 460
808
(348 ) (43)%
Miscellaneous Product Sales 88
150
(62 ) (41)% 213
239
(26 ) (11)%
Total Product Sales 6,943
7,611
(668 ) (9)% 14,396
12,559
1,837
15%
Barrier Rentals 340
302
38
13% 649
2,825
(2,176 ) (77)%
Royalty Income 506
473
33
7% 727
904
(177 ) (20)%
Shipping and Installation Revenue 2,044
2,342
(298 ) (13)% 3,186
3,937
(751 ) (19)%
Total Service Revenue 2,890
3,117
(227 ) (7)% 4,562
7,666
(3,104 ) (40)%

Total Revenue $ 9,833
$ 10,728
$ (895 ) (8)% $ 18,958
$ 20,225
$ (1,267 ) (6)%

Soundwall Sales - Soundwall sales ~~increased~~decreased for the three and six month periods ended June 30, ~~2018~~2019 when compared to the same periods in ~~2017.~~2018. The ~~significant increase~~decrease for the three month period in soundwall sales is ~~because all three production facilities are currently producing soundwall projects. Our newest and largest soundwall contract, awarded~~mainly attributed to the reduction in ~~April 2018, is expected to be produced and delivered over a three year period. This project will help maintain higher~~ soundwall production with lower sales prices at the North Carolina and ~~sales over~~South Carolina plants in the ~~next several years.~~first half of 2019. The Virginia plant has increased soundwall production for their largest order ever, which will continue production into 2020. With the current backlog and continued increase in highway work, management expects soundwall sales to trend up for the remainder of the year ~~and the full year 2018 soundwall sales to surpass the full year 2017 soundwall sales.~~2019.

Architectural Panel Sales - Architectural panel sales increased ~~during~~for the three ~~and six month periods~~months ended June 30, ~~2018,~~2019 compared to the same ~~periods~~period in ~~2017. Although architectural panel sales increased over~~2018, and decreased slightly for the ~~prior year, revenue will remain at a low volume through~~six months ended June 30, 2019 compared to the ~~remainder of~~same period in 2018. There will continue to be production during ~~2018, as~~ the ~~Company is close to finalizing the contract on~~remainder of 2019, at a low volume that will not be a large ~~SlenderWall project, for which architectural panels are~~portion of revenue. Architectural panel sales continue to be a ~~compliment~~smaller complimentary product ~~in design.~~to the Company's high profile proprietary product SlenderWall.

SlenderWall^TM- ~~There were significant~~ SlenderWall panel sales decreased for the three month period ended June 30, 2019 as compared to the same period in 2018, and increased for the six month period ended June 30, 2019 as compared to the same period in 2018. The Company finished producing a major SlenderWall project during the first quarter 2019, while only producing a couple smaller projects during the second quarter 2019. The Company continues to focus sales initiatives for SlenderWall with the hiring of a new regional sales manager for the proprietary product.

Miscellaneous Wall Sales - Miscellaneous wall sales increased for the three and six month periods ended June 30, 2018, as compared to no sales in the same periods of 2017. SlenderWall sales are projected to continue through the remainder of 2018 as production of a large project is expected to run through the end of the year 2018 and into 2019. This proprietary product continues to remain a focus of the sales team, with the long-term expectation of expanding SlenderWall sales in both the Charlotte, North Carolina and Atlanta, Georgia markets to match growth in the Southeast United States.

~~Miscellaneous Wall Sales~~ ~~- Miscellaneous wall sales decreased for the three and six month periods ended June 30, 2018, when~~2019 compared to the same periods in ~~2017.~~2018. The Company had avery few miscellaneous wall projects ~~that finished in~~during the first ~~quarter~~six months of 2019 and 2018. With varying market demand, miscellaneous wall sales are expected to ~~be flat or trend down~~remain low for ~~the remainder of 2018; however, the Company continues to bid on~~2019 until selective miscellaneous wall projects ~~as they~~ are released, ~~as some projects~~which can be ~~very~~highly profitable due to their unique characteristics.

Barrier Sales - - Barrier sales ~~decreased~~increased during the three ~~and six~~ month ~~periods~~period ended June 30, ~~2018,~~2019 compared to the same ~~periods~~period in ~~2017.~~2018, and decreased during the six month period ended June 30, 2019 compared to the same period in 2018. Although barrier production ~~has increased, a large~~decreased during the more recent six month period, the Company completed production of its largest barrier order ever during the second quarter of 2019. A portion of barrier production is not being recognized as barrier sales due to the guaranteed buy-back ~~contract,~~agreement with a customer; instead the Company ~~will recognize~~is recognizing the income as barrier rental revenue over the duration of the project, for which deliveries began in the second quarter of 2018 and are expected to be completed by the end of 2019.Accordingly, during and after product delivery to this customer, the ~~year 2018.~~Company will recognize the revenue as barrier rental revenue until the buy-back option is either exercised by the customer, or expired, which is expected to be in 2022. Thus, whereas the Company is likely to have completed its production and delivery of all product in 2019, it will recognize net profits through 2022. Management expects barrier sales to be lower for ~~the remainder of 2018~~2019 as compared to annual barrier sales for ~~2017 due to~~2018. Beyond 2019, future barrier sales growth is expected with the ~~buy-back guarantee.~~new MASH TL3 requirements which the Company product line can satisfy, although no assurance can be given.

Easi-Set® and Easi-Span® Building Sales - Building and restroom sales ~~decreased~~increased significantly for the three and six month periods ended June 30, ~~2018,~~2019 compared to the same periods in ~~2017.~~2018. The Company ~~continues to see an increase in bids in the local markets of~~has increased building production at all three manufacturing facilities. ~~Bids from the~~The Company has recently seen competitive pricing pressure in certain building and restroom sales. The Columbia, South Carolina plant ~~have picked up significantly.~~started producing a large building order during the second quarter 2019. Management expects ~~the Company will see~~there to be an increase during the third quarter of 2019 in building and restroom ~~sales in 2018 over 2017.~~sales.

Utility ~~and Farm Product~~ Sales - Utility and farm products sales ~~decreased~~increased in the three and six month periods ended June 30, ~~2018, as~~2019 compared to the same periods in ~~2017.~~2018. Utility products are tied closely with infrastructure spending by federal, state and local governments. ~~With the passage of the federal highway bill,~~The Company continues to bid on utility projects and ~~growth in residential and commercial construction, sales and bids~~is competitive on ~~these products are slowly improving. Although~~larger quantities, although there are competitors who specialize in lower priced utility ~~products, the Company is much more competitive on large contracts.~~products. Management believes utility product sales will remain at the current level or slightly increase during the remainder of ~~2018.~~2019.

Miscellaneous ~~Product~~ Sales - Miscellaneous ~~products~~sales are ~~products produced and~~items sold that do not meet the criteria defined for other revenue categories. Miscellaneous ~~product~~ sales ~~decreased~~increased for the three and six month periods ended June 30, ~~2018, as~~2019 compared to the same ~~periods~~period in ~~2017.~~2018. Management believes that miscellaneous product sales will ~~decrease~~remain low for the remainder of the year.

Barrier Rentals - Barrier rentals increased significantly for the three and six month ~~period~~periods ended June 30, ~~2018 as~~2019 compared to the same ~~period~~periods in ~~2017.~~2018. The increase is mainly due to ~~a focus on providing additional~~the recognition of revenue associated with the guaranteed buy-back agreement deferral. The Company's core barrier rental ~~services to customers. Barrier rentals decreased significantly~~fleet also showed an increase for the three and six month ~~period~~periods ended June 30, ~~2018,~~2019 compared to the same ~~period~~periods in 2017. The decrease is mainly due to a special project that occurred in the first quarter of 2017. Excluding the special project in 2017, barrier rental sales in the first six months of 2018 increased when compared to the same period in 2017.2018. With the Company expanding the barrier rental services, management believes it has the potential to increase barrier rental revenue for the remainder of ~~2018,~~2019, and moving forward as the outlays for infrastructure spending by federal and state governments continue to increase. As stated above in Barrier Sales, barrier rental revenue will continue to be positively effected for future periods due to the accounting treatment afforded to the guaranteed buy-back agreement with a customer.

Royalty Income - Royalties ~~increased~~decreased for the three month period ended June 30, ~~2018,~~2019 compared to the same period in ~~2017. The Company had strong royalty revenue in the second quarter~~ 2018, ~~for barrier~~ and ~~SlenderWall. Royalties decreased~~slightly increased for the six month period ended June 30, ~~2018 as~~2019 compared to the same period in ~~2017. The decrease was due~~2018. Royalties for barrier and buildings increased for the six month period ended June 30, 2019 compared to the ~~slow first quarter~~same period for 2018. SlenderWall royalties for the six months ended June 30, 2019 lag behind the same period in 2018, ~~for barrier, which was attributable to poor weather conditions in the southern states.~~as projects can be multi-year initiatives. Management continues to seek new licensee opportunities to expand product offerings around the world. With steady ~~increase~~increases in construction and infrastructure spending, management believes royalty revenue will ~~continue~~be higher in 2019 as compared to ~~increase through the end of~~ 2018, although no assurance can be given.

Shipping and Installation - Shipping revenue results from shipping our products to the customers' final destination and is recognized when the shipping services take place. Installation activities include installation of our products at the customers’ construction sites. Installation revenue results when attaching architectural and SlenderWall panels to a building, installing an Easi-Set® building at a customers' sites or setting any of our other precast products at a site specific to the requirements of the owner. Shipping and installation revenue ~~decreased~~increased for the three and six month periods ended June 30, ~~2018,~~2019, compared to the same periods in ~~2017.~~2018. The ~~decrease resulted~~increase is mainly derived from ~~minimal~~shipping and installation associated with barrier, barrier rental deliveries, and SlenderWall installation and deliveries, which increased significantly in the first ~~quarter~~six months of ~~2018, mainly deriving from previously produced SlenderWall projects that were shipped and installed during~~2019 compared to the ~~same period in 2017.~~first six months of 2018. The Company ~~expects~~continues to expand shipping and installation services through ~~additional~~ products such as barrier and barrier ~~rental. Management expects shipping~~rentals to help drive top and ~~installation to increase through the end of 2018, although no assurance can be given.~~bottom line performance.

Cost of Goods Sold - Total cost of goods sold for the three months ended June 30, ~~2018 decreased~~2019 increased by ~~$994 , or 13%,~~$1,839 from the same period in ~~2017.~~2018. Total cost of goods sold, as a percentage of total revenue, not including royalties, was ~~74%~~83% for the three months ended June 30, ~~2018, a decrease~~2019, an increase from ~~77%~~74% for the same period in 2017. The decrease in cost of goods sold as a percentage of revenue, not including royalties, for the second quarter of 2018, compared to the same period in 2017, is mainly due to a decrease in direct labor costs. 2018. Total cost of goods sold for the six months ended June 30, ~~2018~~2019 increased by ~~$360, or 2%,~~$2,272 from the same period in ~~2017.~~2018. Total cost of goods sold, as a percentage of total revenue, not including royalties, was ~~79%~~82% for the six months ended June 30, ~~2018,~~2019, an increase from ~~73%~~79% for the same period in ~~2017.~~2018. The increase is due to increased wages and the associated labor costs, flat selling prices for certain products due to competitive pricing pressure, and the increase in ~~cost of goods sold~~ shipping and installation which typically have lower margins than product sales, as ~~a percentage of revenue, not including royalties, for the first six months of 2018,~~ compared to the ~~same period in 2017, is mainly due to a short-term, high risk special project which occurred in the~~ first ~~quarter 2017 that had~~half 2018 costs when there were higher margins than typical manufacturing. The increase also resulted from design issues on soundwall projects at the Columbia, South Carolina plant, which required the Company to incorporate more steel than estimated in the projects and also increased the associated direct labor.margin jobs. The Company ~~has corrected these design issues on future bids, but is still in negotiations~~expects labor costs to ~~rectify the current contracts through change orders. The Company expects~~continue to increase and raw material prices to ~~continue to~~slightly increase ~~through~~during the remainder of ~~2018.~~2019, although it has had slight decreases in steel prices. The Company continues to seek vendor pricing opportunities, and focuses on lean production methods to improve quality, create capacity, and eliminate process waste, while driving value to the customer.

General and Administrative Expenses - For the three months ended June 30, ~~2018~~2019 the Company's general and administrative expenses ~~increased~~decreased by ~~$319, or 28%,~~$310 to ~~$1,452~~$1,143 from ~~$1,133~~$1,452 during the same period in ~~2017,~~2018, and for the six months ended June 30, ~~2018~~2019 the Company's general and administrative expenses ~~increased~~decreased by ~~$436, or 18%,~~$569 to ~~$2,919~~$2,350 from ~~$2,483 during the same period in 2017.~~$2,919. The ~~increased~~decreased general and administrative expenses for the three and six month periods ended June 30, ~~2018~~2019 is mainly attributed to ~~an increase~~a decrease in non-cash stock compensation as compared to the same period in 2018, and a decrease in salaries ~~use tax~~and associated ~~with SlenderWall sales, and an increase in bad debt expense.~~benefits. General and administrative expense as a percentage of total revenue was ~~15%~~11% and ~~12%~~15% for the six months ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~The total unrecognized compensation cost related to non-vested restricted stock is approximately $535 as of June 30, 2018.~~

Selling Expenses - Selling expenses for the three months ended June 30, ~~2018 decreased~~2019 slightly increased to ~~$613~~$640 from ~~$651~~$613 for the same period in ~~2017, or 2%. The decrease was mainly due to a reduction in advertising and marketing costs for the period.~~2018. Selling expenses for the six months ended June 30, ~~2018 increased~~2019 slightly decreased to ~~$1,290~~$1,207 from ~~$1,261~~$1,290 for the same period in ~~2017, or 6%. The increase in sales expense for the six month period was mainly related to an increase in salaries.~~2018. As the Company grows, additional selling expenses will be incurred. Management expects selling expenses to increase in ~~2018~~2019 as compared to ~~2017.~~2018.

Operating Income - The Company had operating income for the three month period ended June 30, ~~2018~~2019 of ~~$911,~~$373 compared to operating income of ~~$1,093~~$911 for the same period in ~~2017.~~2018. The decrease in operating income for the three month period ended June 30, ~~2018~~2019 compared to the same period in ~~2017,~~2018, was ~~primarily~~mainly due to ~~an increase~~the reduction in ~~general and administrative expenses.~~gross profit margins. The Company had operating income for the six month period ended June 30, ~~2018~~2019 of ~~$358,~~$821 compared to operating income of ~~$2,450~~$358 for the same period in ~~2017.~~2018. The ~~decrease~~increase in operating income ~~for six month period ended June 30, 2018, compared to the same period in 2017, was~~is mainly due to ~~an increase in cost of goods sold as~~increased sales and a ~~percentage of revenue, excluding royalties, an increase~~reduction in general and administrative ~~expenses, and the higher margin special project, which occurred in the first quarter 2017.~~costs.

Interest Expense - Interest expense was ~~$44~~$40 and ~~$45,~~$44 for the three month period ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Interest expense was ~~$90~~$85 and ~~$91,~~$90 for the six month period ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Although~~The Company expects interest expense to slightly increase for the ~~Company added two small loans at~~full year 2019, as compared to the ~~end of~~full year 2018, due to the ~~first quarter 2018, larger loan balances continue to be paid down and are towards~~debt financing on the ~~end of the loan periods.~~North Carolina expansion project.

Income Tax Expense - The Company had an income tax expense of $86 with an effective rate of 23% for the three months ended June 30, 2019 compared to income tax expense of $225 with an effective rate of ~~25% for the three months ended June 30, 2018, compared to income tax expense of $363 with an effective rate of 34%~~24% for the same period in ~~2017.~~2018. The Company had an income tax expense of ~~$90~~$185 with an effective rate of ~~25%~~23% for the six months ended June 30, ~~2018,~~2019 compared to income tax expense of ~~$849~~$90 with an effective tax rate of ~~35%~~25% for the same period in ~~2017.The change in tax rate is due to adoption of the Tax Cuts and Jobs Act during December 2017, which lowered the Federal tax rate from 34% to 21% prospectively.~~2018.

Net Income - The Company had net income of ~~$691~~$273 for the three months ended June 30, ~~2018,~~2019, compared to net income of ~~$711~~$691 for the same period in ~~2017.~~2018. The basic and diluted income per share was ~~$0.14~~$0.05 for the three months ended June 30, ~~2018,~~2019, and the basic and diluted income per share was $0.14 for the three months ended June 30, ~~2017.~~ 2018. The Company had a net income of ~~$270~~$604 for the six months ended June 30, ~~2018,~~2019, compared to net income of ~~$1,569~~$270 for the same period in ~~2017.~~2018. The basic and diluted income per share was $0.12 for the six months ended June 30, 2019, and the basic and diluted income per share was $0.05 for the six months ended June 30, ~~2018, and the basic and diluted income per share was $0.31 for the six months ended June 30, 2017.~~2018.

Liquidity and Capital Resources (dollar amounts in thousands)

The Company financed its capital expenditures and operating requirements for the first six months of ~~2018~~2019 primarily from cash balances and ~~notes payable to a bank.~~the line-of-credit construction draws. The Company had ~~$3,571~~$3,208 of debt obligations at June 30, ~~2018,~~2019, of which ~~$693~~$740 was scheduled to mature within twelve ~~months.~~months, along with the line of credit balance of $1,500. During the six months ended June 30, ~~2018,~~2019, the Company made repayments of outstanding debt in the amount of ~~$312~~$343 and received ~~$350~~$49 in proceeds of borrowings for the financing of ~~two yard cranes.~~a vehicle. The Company had draws on the line of credit of $500 during the six months ended June 30, 2019.

The Company has a mortgage note payable to Summit Community Bank (the “Bank”) with a balance of ~~$937~~$661 as of June 30, ~~2018.~~2019. The note has a maturity date of September 20, 2021 and a fixed interest rate of 3.99% annually with monthly payments of $26 and is secured by principally all of the assets of the Company. Under the terms of the note, the Bank will permit chattel mortgages on purchased equipment not to exceed $250 for any one individual loan so long as the Company is not in default.

The Company has a mortgage note payable to the Bank for the the purchase of the Columbia, South Carolina facility. Such loan is evidenced by a promissory note, dated July 19, 2016. The note provides for a 15 year term, a fixed annual interest rate of 5.29%, monthly fixed payments of $11 and a security interest in favor of the Bank in respect ofto the land, building and fixtures purchased with the proceeds of the loan. The balance of the loan at June 30, ~~2018~~2019 was ~~$1,203.~~$1,137.

The Company additionally has 1514 smaller installment loans with annual interest rates between 2.94% and 5.29%, maturing between 2020 and 2024, with varying balances totaling ~~$1,431.~~$1,410.

Under the loan ~~agreement~~covenants with the Bank, the Company is limited to annual capital expenditures of ~~$1,500.~~$3,500, excluding the deferred buy-back lease asset. The Company is in compliance with all covenants pursuant to the loan agreements.

~~The~~

In addition to the notes payable discussed above, the Company also has a ~~$2,000~~$4,000 line of credit ~~secured~~with the Bank that had a balance of $1,500 at June 30, 2019 used to fund the construction of the North Carolina expansion, which will be converted to long-term debt when the financing closes in 2019. The line of credit is evidenced by a commercial revolving promissory note which carries a variable interest rate of prime and matures on September 18, 2019. The loan is collateralized by a first lien position on the Company's accounts receivable and ~~inventory. In addition,~~inventory and a second lien position on all other business assets. Key provisions of the line of credit require the Company, ~~has~~(i) to obtain bank approval for capital expenditures in excess of $3,500 per annum during the term of the loan; and (ii) to obtain bank approval prior to its funding any acquisition. On September 18, 2018 the Company received a ~~commitment~~Commitment Letter from the Bank ~~in the amount of $1,500 for an equipment line of credit. Neither~~to provide a guidance line of credit ~~carried~~specifically to purchase business equipment in an amount up to $1,500. The commitment provides for the purchase of equipment with minimum advances of $50 for which a ~~balance~~note payable will be executed with a term not to exceed five years with an interest rate at the Wall Street Journal prime rate plus 0.5% with a floor of 4.49% per annum. The loan is collateralized by a first lien position on all equipment purchased under the line. The commitment for the guidance line of credit matures on September 17, 2019. As of June 30, ~~2018.~~2019, the Company had not purchased any equipment pursuant to the $1,500 commitment.

At June 30, ~~2018,~~2019, the Company had cash ~~and cash equivalents~~ totaling ~~$839~~$1,641 and ~~$1,097 of~~ investment securities totaling $1,156, compared to cash ~~and cash equivalents~~ totaling ~~$3,390~~$1,946 and ~~$1,098 of~~ investment securities totaling $1,107 at December 31, ~~2017.~~2018. Investment securities at June 30, ~~2018~~2019 consist of shares of USVAX (a Virginia Bond Fund). The decrease in cash is primarily the result of the ~~increase in accounts receivable at~~purchase of capital expenditures for the six months ended June 30, ~~2018~~2019 as compared to the balance at December 31, 2017, due to increased production and billings toward the end of the second quarter and an increase in retainage on several large projects. The purchase of capital assets and the repayment of notes payable were also factors in the decrease of cash and cash equivalents.2018.

Capital spending for the six months ended June 30, ~~2018~~2019 totaled ~~$1,057,~~$1,996, as compared to ~~$2,159~~$1,057 for the same period in ~~2017.~~2018. The ~~2018~~2019 expenditures were mainly for ~~new~~the North Carolina plant expansion along with yard ~~cranes~~ and ~~miscellaneous~~ manufacturing equipment. The Company plans to make additional capital purchases of approximately ~~$1,500~~$2,000 over the remainder of the year, excluding ~~any~~the North Carolina plant ~~expansions. The Company is currently in the process of increasing its annual capital expenditure limits with the Bank to remain in compliance with loan covenants.~~expansion. The additional ~~2018~~2019 expenditures are expected to be for rental barrier, land improvements, and miscellaneous manufacturing equipment.

The Company received approval from the Bank for the financing of the North Carolina expansion and for additional land expansions at the Virginia manufacturing plant. The expansions are excluded from the capital expenditure limitations in the loan agreements with the Bank. ~~Both projects are expected to begin in the third quarter 2018.~~ See "North Carolina Plant Expansion" below.

The Company's two mortgage notes payable are financed at fixed rates of interest. This leaves the Company almost impervious to fluctuating interest rates. Increases in such rates will only slightly affect the interest paid by the Company on an annual basis. Approximately ~~94%~~95% of the Company's debt obligations are financed at a fixed interest rate so that each 1% increase in the interest rates of the Company’s outstanding debt will reduce income by approximately $2 annually.

The Company’s cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 35 to 90 days after the products are produced and with some architectural contracts, retainage may be held until the entire project is completed. This payment schedule may result in liquidity problems for the Company because it must bear a portion of the cost of production before it receives payment from its customers. The Company’s average days sales outstanding (DSO), excluding the effect of unbilled revenue, was 78100 days for the six months ended June 30, ~~2018~~2019 compared to 7586 days for the year ended December 31, ~~2017.~~2018. The increase in DSO is mainly due to retainage being withheld on multiple large projects. Although no assurances can be given, the Company believes that anticipated cash flow from operations and the availability under the lines of credits will be sufficient to finance the Company’s operations for at least the next 12 months.

The Company’s inventory was ~~$3,092~~$3,003 at June 30, ~~2018~~2019 and ~~$3,515~~$3,560 at December 31, ~~2017,~~2018, or a decrease of ~~$423.~~$557. The decrease in inventory is due to sales of finished goods on hand at December 31, ~~2017.~~2018 and the decrease in raw materials for use in production during the first half of 2019. Inventory turnover was ~~9.8,~~10.9, annualized for the six months ended June 30, ~~2018,~~2019, compared to ~~7.2~~9.8 for the same period in ~~2017.~~2018.

Critical Accounting Policies and Estimates

The Company’s critical accounting policies are more fully described in its Summary of Accounting Policies to the Company’s consolidated financial statements on Form 10-K for the year ended December 31, ~~2017.~~2018. There have been no changes as of June 30, ~~2018.~~2019.

Seasonality

The Company services the construction industry primarily in areas of the United States where construction activity may be inhibited by adverse weather during the winter. As a result, the Company may experience reduced revenues from December through February and realize a more significant part of its revenues during the other months of the year. The Company may experience 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

Raw material costs for the Company, cement, steel, aggregates, and other direct materials used in production have ~~increased~~remained flat for the first six months of ~~2018. Steel tariffs have impacted pricing, as the demand for steel has also increased.~~2019. The Company anticipates raw material prices will ~~continue to~~ increase over the remainder of ~~2018,~~2019, although no assurance can be given regarding future pricing.

Sales Backlog

As of August ~~1, 2018,~~2, 2019, the Company’s sales backlog was approximately ~~$35.3~~$27.6 million, as compared to approximately ~~$30.2~~$35.3 million at the same time in ~~2017.~~2018. The decrease is mainly due to the large orders booked in early 2018 combined with competitive pricing pressure on recent bids. It is estimated that majority of the projects in the sales backlog will be produced within 12 months, with a portion extending several years.

North Carolina Plant Expansion

The Company currently owns 46 acres on which it ~~plans to build~~is in the process of building a 15,000 square foot manufacturing plant with additional space for future ~~expansion.~~expansion in North Carolina. This expansion is estimated to cost ~~$3.3 million~~$3,300 and will increase production and storage capacity. The project ~~will be~~is being funded through bank ~~financing.~~financing and cash. Management expects completion of the new facility ~~by the end of the first quarter 2019 with manufacturing expected~~and production to ~~begin~~commence during the ~~second~~third quarter ~~2019 at the new facility.~~2019. The current North Carolina facility will remain operational during the construction of the new plant, ~~and future use is not determined at this time.~~with production continuing during the transition to the new facility. There can be no assurance as to the cost, financing, timetable, completion, or success of this project.

~~ITEM~~ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

~~ITEM~~ITEM 4. Controls and Procedures

(a) Disclosure controls and procedures

The Company carried out our evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective at June 30, ~~2018.~~2019.

(b) Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the three months ended June 30, ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II — OTHER INFORMATION

~~ITEM~~ITEM 1. Legal Proceedings

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

~~ITEM~~ITEM 1A. Risk Factors

Not required

~~ITEM~~ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults Upon Senior Securities

None

ITEM 4. Mine Safety Disclosures

Not applicable

ITEM 5. Other Information

None

~~ITEM 3. Defaults Upon Senior Securities~~

~~None~~

~~ITEM 4. Mine Safety Disclosures~~

~~Not applicable~~

~~ITEM 5. Other Information~~

~~None~~

~~ITEM~~TEM 6. Exhibits



Exhibit No.		Exhibit Description
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
32.1		Certification pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		SMITH-MIDLAND CORPORATION (Registrant)

Date:	August ~~2, 2018~~8, 2019	By:	/s/ Ashley B. Smith
			Ashley B. Smith, Chief Executive Officer
			(Principal Executive Officer)


Date:	August ~~2, 2018~~8, 2019	By:	/s/ Adam J. Krick
			Adam J. Krick, Chief Financial Officer
			(Principal Financial Officer)

~~Smith-Midland Corporation~~

~~Exhibit Index to Quarterly Report on Form 10-Q~~

~~For The Three Months Ended June 30, 2018~~



~~Exhibit~~ No	~~Exhibit Description~~
~~31.1~~	~~Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.~~
~~31.2~~	~~Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.~~
~~32.1~~	~~Certification pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~101.INS~~	~~XBRL Instance Document.~~
~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document.~~
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document.~~
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document.~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~

Delaware	54-1727060

~~Delaware~~	~~54-1727060~~
(State or other jurisdiction of	~~(I.R.S. Employer~~
incorporation or organization)	(I.R.S. EmployerIdentification No.)




PART I. FINANCIAL INFORMATION	Page

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets, June 30, ~~2018~~2019 (Unaudited) and December 31, ~~2017~~2018	43

	Condensed Consolidated Statements of Operations (Unaudited) for the three months ended June 30, ~~2018~~2019 and June 30, ~~2017~~2018	65

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended June 30, ~~2018~~2019 and June 30, ~~2017~~2018	76

	Condensed Consolidated Statements of Operations (Unaudited) for the six months ended June 30, ~~2018~~2019 and June 30, ~~2017~~2018	87

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the six months ended June 30, ~~2018~~2019 and June 30, ~~2017~~2018	98

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the six months ended June 30, 2019 and June 30, 2018	9

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, ~~2018~~2019 and June 30, ~~2017~~2018	10

	Notes to Condensed Consolidated Financial Statements (Unaudited)	11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2425

Item 4.	Controls and Procedures	2425

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2526

Item 1A.	Risk Factors	2526

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2526

Item 3.	Defaults Upon Senior Securities	2526

Item 4.	Mine Safety Disclosures	2627

Item 5.	Other Information	2627

Item 6.	Exhibits	2627

	Signatures	2728

ASSETS	June 30, 2019 (Unaudited)	December 31, 2018
Current assets
Cash	$1,641	$1,946
Investment securities, available-for-sale, at fair value	1,156	1,107
Accounts receivable, net
Trade - billed (less allowance for doubtful accounts of $270 and $214), including contract retentions	11,085	12,281
Trade - unbilled	267	1,313
Inventories, net
Raw materials	499	1,005
Finished goods (less reserves of $39)	2,504	2,555
Prepaid expenses and other assets	553	480
Refundable income taxes	210	909

Total current assets	17,915	21,596

Property and equipment, net	15,894	14,102

Deferred buy-back lease asset, net	5,376	5,304

Other assets	313	367

Total assets	$39,498	$41,369



ASSETS	June 30, 2018 (Unaudited)		December 31, 2017
Current assets
Cash and cash equivalents	$	839	$	3,390
Investment securities, available-for-sale, at fair value	1,097		1,098
Accounts receivable, net
Trade - billed (less allowance for doubtful accounts of $211 and $208)	11,262		8,967
Trade - unbilled	1,272		251
Inventories, net
Raw materials	904		819
Finished goods (less reserves of $39)	2,188		2,696
Prepaid expenses and other assets	441		452
Refundable income taxes	1,325		1,359

Total current assets	19,328		19,032

Property and equipment, net	10,434		9,867

Deferred buy-back lease asset, net	2,986		—

Other assets	269		326

Total assets	$	33,017	$	29,225

LIABILITIES AND STOCKHOLDERS' EQUITY	June 30, 2019 (Unaudited)	December 31, 2018
Current liabilities
Accounts payable - trade	$2,560	$4,212
Accrued expenses and other liabilities	184	610
Deferred revenue	1,418	1,112
Accrued compensation	822	1,556
Dividend payable	—	281
Line-of-credit construction draw	1,500	1,000
Deferred buy-back lease obligation	889	720
Operating lease liabilities	107	—
Current maturities of notes payable	740	711
Customer deposits	1,241	1,658

Total current liabilities	9,461	11,860

Deferred revenue	610	570
Deferred buy-back lease obligation	5,738	5,873
Operating lease liabilities	252	—
Notes payable - less current maturities	2,468	2,792
Deferred tax liability	1,339	1,427

Total liabilities	19,868	22,522

Stockholders’ equity
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding	—	—
Common stock, $.01 par value; authorized 8,000,000 shares; 5,225,245 and 5,223,245 issued and 5,134,492 and 5,112,825 outstanding, respectively	52	51
Additional paid-in capital	6,126	5,973
Treasury stock, at cost, 40,920 shares	(102)	(102)
Accumulated other comprehensive loss	(12)	(37)
Retained earnings	13,566	12,962

Total stockholders' equity	19,630	18,847

Total liabilities and stockholders' equity	$39,498	$41,369



þ	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



o	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


	Three Months Ended June 30,						Three Months Ended June 30,
	2018			2017			2019	2018
Revenue
Product sales	$	6,943		$	7,611		$7,327	$6,943
Barrier rentals	340			302			582	340
Royalty income	506			473			429	506
Shipping and installation revenue	2,044			2,342			2,514	2,044

Total revenue	9,833			10,728			10,852	9,833

Cost of goods sold	6,857			7,851			8,696	6,857

Gross profit	2,976			2,877			2,156	2,976

Operating expenses
General and administrative expenses	1,452			1,133			1,143	1,452
Selling expenses	613			651			640	613

Total operating expenses	2,065			1,784			1,783	2,065

Operating income	911			1,093			373	911

Other income (expense)
Interest expense	(44		)	(45		)	(40)	(44)
Interest income	9			9			11	9
Gain on sale of assets	31			4			10	31
Other income	9			13			5	9

Total other income (expense)	5			(19		)	(14)	5

Income before income tax expense	916			1,074			359	916

Income tax expense	225			363			86	225

Net income	$	691		$	711		$273	$691

Basic and diluted earnings per share	$	0.14		$	0.14		$0.05	$0.14

Weighted average number of common shares outstanding:
Basic	5,080			5,045			5,134	5,080
Diluted	5,104			5,095			5,143	5,104


	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019	2018
Revenue
Products sales	$	14,396		$	12,559
Product sales							$14,831	$14,396
Barrier rentals	649			2,825			1,163	649
Royalty income	727			904			735	727
Shipping and installation revenue	3,186			3,937			4,312	3,186

Total revenue	18,958			20,225			21,041	18,958

Cost of goods sold	14,391			14,031			16,663	14,391

Gross profit	4,567			6,194			4,378	4,567

Operating expenses
General and administrative expenses	2,919			2,483			2,350	2,919
Selling expenses	1,290			1,261			1,207	1,290

Total operating expenses	4,209			3,744			3,557	4,209

Operating income	358			2,450			821	358

Other income (expense)
Interest expense	(90		)	(91		)	(85)	(90)
Interest income	19			19			21	19
Gain on sale of assets	55			16			12	55
Other income	18			24			20	18

Total other income (expense)	2			(32		)	(32)	2

Income before income tax expense	360			2,418			789	360

Income tax expense	90			849			185	90

Net income	$	270		$	1,569		$604	$270

Basic and diluted income per share	$	0.05		$	0.31
Basic and diluted earnings per share							$0.12	$0.05

Weighted average number of common shares outstanding:
Basic	5,076			5,026			5,134	5,076
Diluted	5,101			5,065			5,141	5,101

Revenue by Type																	Three Months Ended June 30				Six Months Ended June 30
																	2019	2018	Change	% Change	2019	2018	Change	% Change

	Three Months Ended June 30,								Six Months Ended June 30,
	2018		2017		Change			% of Change	2018		2017		Change			% of Change
Product Sales:
Soundwall Sales	$	2,525	$	1,429	$	1,096		77%	$	5,005	$	2,656	$	2,349		88%	$1,939	$2,525	$(586)	(23)%	$4,053	$5,005	$(952)	(19)%
Architectural Panel Sales	245		—		245			100%	457		18		439			2,439%	424	245	179	73%	424	457	(33)	(7)%
SlenderWall Sales	1,422		—		1,422			100%	2,565		—		2,565			100%	772	1,422	(650)	(46)%	2,735	2,565	170	7%
Miscellaneous Wall Sales	267		709		(442		)	(62)%	759		1,372		(613		)	(45)%	406	267	139	52%	769	759	10	1%
Barrier Sales	1,590		3,912		(2,322		)	(59)%	3,875		6,069		(2,194		)	(36)%	1,817	1,590	227	14%	3,408	3,875	(467)	(12)%
Easi-Set and Easi-Span Building Sales	560		1,061		(501		)	(47)%	1,062		1,397		(335		)	(24)%	1,335	560	775	138%	2,369	1,062	1,307	123%
Utility and Farm Product Sales	246		350		(104		)	(30)%	460		808		(348		)	(43)%
Miscellaneous Product Sales	88		150		(62		)	(41)%	213		239		(26		)	(11)%
Utility Sales																	449	246	203	83%	757	460	297	65%
Miscellaneous Sales																	185	88	97	110%	316	213	103	47%
Total Product Sales	6,943		7,611		(668		)	(9)%	14,396		12,559		1,837			15%	7,327	6,943	384	6%	14,831	14,396	435	3%
Barrier Rentals	340		302		38			13%	649		2,825		(2,176		)	(77)%	582	340	242	71%	1,163	649	514	79%
Royalty Income	506		473		33			7%	727		904		(177		)	(20)%	429	506	(77)	(15)%	735	727	8	1%
Shipping and Installation Revenue	2,044		2,342		(298		)	(13)%	3,186		3,937		(751		)	(19)%	2,514	2,044	470	23%	4,312	3,186	1,126	35%
Total Service Revenue	2,890		3,117		(227		)	(7)%	4,562		7,666		(3,104		)	(40)%	3,525	2,890	635	22%	6,210	4,562	1,648	36%

Total Revenue	$	9,833	$	10,728	$	(895	)	(8)%	$	18,958	$	20,225	$	(1,267	)	(6)%	$10,852	$9,833	$1,019	10%	$21,041	$18,958	$2,083	11%



	Number of Shares		Weighted Average Exercise Price
Balance, December 31, 2017	10,333		$	1.21
Granted	—		—
Forfeited	—		—
Exercised	(10,333	)	(1.21		)

Outstanding options at June 30, 2018	—		$	—

Outstanding exercisable options at June 30, 2018	—		$	—