U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended Commission File Number
March 31, 2003 1-13752
------------------------------ ----------------------
SMITH-MIDLAND CORPORATION
-----------------------------------------------
(Exact Name of Small Business
Issuer as Specified in Its Charter)
Delaware 54-1727060
------------------------ --------------------------
(State of Incorporation) (I.R.S. Employer I.D. No.)
5119 Catlett Road, P.O. Box 300, Midland, Virginia 22728
(Address of Principal Executive Offices)
(540) 439-3266
(Issuer's Telephone Number, Including Area Code)
As of May 7, 2003, the Company had outstanding 4,432,948 shares of Common Stock,
$.01 par value per share.
Transitional Small Business Disclosure Format:
Yes No X
------- -------
1
SMITH-MIDLAND CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
-----------
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited); 3
March 31, 2003 and December 31, 2002
Consolidated Statements of Operations 4
(Unaudited); Three months ended
March 31, 2003 and 2002
Consolidated Statements of Cash Flows 5
(Unaudited); Three months ended
March 31, 2003 and 2002
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Item 3. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Certifications 15
2
PART I - Financial Information
Item 1. Financial Statements
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31 December 31
2003 2002
Assets Unaudited Audited
---------- ----------
Current assets
Cash $ 952,174 $1,223,756
Accounts receivable
Trade - billed (less allowance for doubtful accounts of 4,752,061 4,950,528
$275,857 and $242,739)
Trade - unbilled 73,041 351,986
Inventories
Raw materials 648,129 498,984
Finished goods 1,766,269 1,490,635
Prepaid expenses and other assets 266,811 310,054
Total currents assets 8,458,485 8,825,943
Property and equipment, net 3,102,584 3,018,729
Other assets
Notes receivable, officer 457,519 463,519
Claims and accounts receivable 960,254 960,254
Other 227,349 230,393
Total other assets 1,645,122 1,654,166
Total assets 13,206,191 13,498,838
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable - trade $2,696,206 $1,978,437
Accrued expenses and other liabilities 287,851 934,271
Current maturities of notes payable 297,953 412,112
Customer deposits 71,824 71,265
Total current liabilities 3,353,834 3,396,085
Reserve for contract loss 1,001,681 1,001,682
Notes payable - less current maturities 3,848,746 3,816,393
Notes payable - related parties 39,244 43,707
Total liabilities 8,243,505 8,257,867
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; authorized 1,000,000
shares, none outstanding
Common stock, $.01 par value; authorized 8,000,000 shares; 44,329 44,329
4,432,948 and 4,432,948 issued and outstanding
Additional paid-in capital 4,178,649 4,178,649
Retained earnings 842,008 1,120,293
5,064,986 5,343,271
Treasury stock, at cost, 40,920 shares (102,300) (102,300)
Total stockholders' equity 4,962,686 5,240,971
Total liabilities and stockholders' equity $13,206,191 $13,498,838
=========== ===========
3
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
-------------------------------------
2003 2002
---- ----
Revenue
Product sales and leasing $4,358,538 $5,237,859
Royalties 131,604 169,737
Total Revenue 4,490,142 5,407,596
Cost of goods sold 3,737,215 4,165,963
Gross profit 752,927 1,241,633
Operating expenses:
General and administrative expenses 822,338 591,121
Selling expenses 357,200 318,278
Total operating expenses 1,179,538 909,399
Operating income (loss) (426,611) 332,234
Other income (expense):
Interest expense (64,366) (74,654)
Interest income 8,628 10,329
Other, net 33,502 (31,257)
Total other income (expense) (22,236) (95,582)
Income (loss) before income taxes (448,847) 236,652
Income tax expense (benefit) (170,562) 27,400
Net income (loss) (278,285) 209,252
========== ==========
Basic earnings (loss) per share $(.06) $.06
========== ==========
Diluted earnings (loss) per share $(.06) $.05
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
4
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended March 31
-------------------------------------
2003 2002
---------- ----------
Cash flows from operating activities:
Cash received from customers $4,967,554 $6,296,911
Cash paid to suppliers and employees (4,664,624) (6,248,457)
Income taxes paid, net (388,711) (27,400)
Interest paid (64,366) (74,654)
Other 153,323 (20,928)
Net cash provided (absorbed) by operating activities 3,176 (74,528)
Cash flows from investing activities:
Purchases of property and equipment (205,639) (168,612)
Proceeds from sale of fixed assets 11,151 0
(Increase) decrease in officer note receivable 6,000 6,000
Net cash absorbed by investing activities (188,488) (162,612)
Cash flows from financing activities:
Proceeds from borrowings 0 40,263
Repayments of borrowings (81,806) (82,031)
Repayments on borrowings - related parties, net (4,464) (2,721)
Proceeds from warrants exercised 0 99,343
Net cash provided by financing activities (86,270) 54,854
Net increase (decrease) in cash and cash equivalents (271,582) (182,286)
Cash and cash equivalents at beginning of period 1,223,756 942,131
Cash and cash equivalents at end of period 952,174 759,845
Reconciliation of net income (loss) to net cash provided
(absorbed by operating activities:
Net income (loss) (278,285) 209,252
Adjustments to reconcile net income (loss) to net cash
provided (absorbed) by operating activities:
Depreciation and amortization 115,787 93,229
Loss on disposal of fixed assets (5,154) 0
Decrease (increase) in:
Accounts receivable - billed 198,467 854,219
Accounts receivable - unbilled 278,945 (29,821)
Inventories (424,779) (98,469)
Prepaid expenses and other assets 46,287 (89,281)
Increase (decrease) in:
Accounts payable - trade 717,769 (925,694)
Accrued expenses and other liabilities (87,147) (152,880)
Accrued income taxes (559,273) 0
Customer deposits 559 64,917
Net cash provided (absorbed) by operating activities 3,176 $74,528
5
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2003
(Unaudited)
Basis of Presentation
As permitted by the rules of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-QSB, these notes are condensed and do
not contain all disclosures required by generally accepted accounting
principles. Reference should be made to the consolidated financial statements
and related notes included in the Smith-Midland Corporation's Annual Report on
Form 10-KSB for the year ended December 31, 2002.
In the opinion of the management of Smith-Midland Corporation (the
"Company"), the accompanying financial statements reflect all adjustments of a
normal recurring nature which were necessary for a fair presentation of the
Company's results of operations for the three month period ended March 31, 2003
and 2002.
The results disclosed in the consolidated statements of operations are not
necessarily indicative of the results to be expected for any future periods.
Principles of Consolidation
The Company's accompanying consolidated financial statements include the
accounts of Smith-Midland Corporation, a Delaware corporation, and its wholly
owned subsidiaries: Smith-Midland Corporation, a Virginia corporation; Easi-Set
Industries, Inc., a Virginia corporation; Smith-Carolina Corporation, a North
Carolina corporation; Concrete Safety Systems, Inc., a Virginia corporation; and
Midland Advertising & Design, Inc., a Virginia corporation. All significant
inter-company accounts and transactions have been eliminated in consolidation.
Reclassifications
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 2003 presentation.
Inventories
Inventories are stated at the lower of cost, using the first-in, first-out
(FIFO) method, or market.
Property and Equipment
Property and equipment, net is stated at depreciated cost. Expenditures for
ordinary maintenance and repairs are charged to income as incurred. Costs of
betterments, renewals, and major replacements are capitalized. At the time
properties are retired or otherwise disposed of, the related cost and allowance
for depreciation are eliminated from the accounts and any gain or loss on
disposition is reflected in income.
6
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 10-30
Office equipment 3-10
Income Taxes
The provision for income taxes is based on earnings reported in the
financial statements. A deferred income tax asset or liability is determined by
applying currently enacted tax laws and rates to the expected reversal of the
cumulative temporary differences between the carrying value of assets and
liabilities for financial statement and income tax purposes. Deferred income tax
expense is measured by the change in the deferred income tax asset or liability
during the year.
An income tax benefit of $170,562 was recorded for the three month period
ending March 31, 2003 due to the net operating loss for the quarter.
Revenue Recognition
The Company primarily recognizes revenue on the sale of its standard
precast concrete products at shipment date, including revenue derived from any
projects to be completed under short-term contracts. Installation 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 collectability is in doubt, in which event revenue is
recognized as cash is received. Certain sales of soundwall, architectural
precast panels and SlenderwallTM concrete products are recognized upon
completion of production and customer site inspections. Provisions for estimated
losses on contracts are made in the period in which such losses are determined.
Estimates
The preparation of these financial statements 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. Actual results could differ from those estimates.
Earnings Per Share
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilutive effect of
securities that could share in earnings of an entity. Earnings per share was
calculated as follows:
Three Months Ended March 31
---------------------------
2003 2002
---------- ----------
Net income (loss) $ (278,285) $ 209,252
Average shares outstanding 4,432,928 3,255,471
For basic earnings per share
Dilutive effect of stock options and warrants 0 875,458
Average Shares Outstanding for Diluted Earnings per Share 4,484,582 4,130,929
Basic earnings (loss) per share $(.06) $.06
Diluted earnings (loss) per share $(.06) $.05
7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The Company generates revenues primarily from the sale, licensing, leasing,
shipping 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 SlenderwallTM, a
patent-pending, lightweight, energy efficient concrete and steel exterior wall
panel for use in building construction; J-J HooksTM 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 custom order precast concrete products with
various architectural surfaces, typically used in commercial building
construction, as well as utility vaults, farm products such as cattleguards,
water and feed troughs.
This Form 10-QSB contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements and the results for the
three months ended March 31, 2003 are not necessarily indicative of the results
for the Company's operations for the year ending December 31, 2003. Factors that
might cause such a difference include, but are not limited to, product demand,
the impact of competitive products and pricing, capacity and supply constraints
or difficulties, general business and economic conditions, the effect of the
Company's accounting policies and other risks detailed in the Company's Annual
Report on Form 10-KSB and other filings with the Securities and Exchange
Commission.
Results of Operations
Three months ended March 31, 2003 compared to the three months ended March
31, 2002
During the quarter ended March 31, 2003, the Company recorded
several expenses that are not representative of ongoing operations. These
include the write-off of health claims receivable of $114,937 that was deemed to
be uncollectible; an increase in field repairs of $49,467 for a solution to a
difficult customer satisfaction issue; and legal expense of $31,185 that
resulted from greater time spent on the Seacoast case and general corporate
matters.
For the three months ended March 31, 2003, the Company had total revenue of
$4,490,142 compared to total revenue of $5,407,595 for the three months ended
March 31, 2002, a decrease of $917,453, or 17%. Total product sales were
$3,175,922 for the three months ended March 31, 2003 compared to $4,364,227 for
the same period in 2002, a decrease of $1,188,305, or 27%. The lower product
sales were a result of reduced construction activity in most of the Company's
market areas due to the severe winter weather and poor economic conditions. The
decrease occurred mainly in the sales of SlenderwallTM. Royalty income was also
down because of lower sales on the part of Easi-Set licensees. Shipping and
installation revenue was $1,071,797 for the three months ended March 31, 2003
and $789,773 for the same period in 2002, an increase of $282,085, or 36%. The
revenue increase was attributable to higher installation revenue due to an
increase in installation activity primarily on the commercial building projects.
This increase was accompanied by an increase in shipping and installation
expense however, the net expense amount for the three months ended March 31,
2003 was $101,885 compared to a net expense of $115,139 for the same period in
2002, a decrease of $13,254.
8
Total cost of goods sold for the three months ended March 31, 2003 was
$3,737,215, a decrease of $428,748, or 10%, from $4,165,963 for the three months
ended March 31, 2002. The majority of the decrease was due to the decreased
volume. Cost of goods sold as a percentage of total revenue increased to 83% for
the three months ended March 31, 2003, from 77% for the three months ended March
31, 2002. Most of the increase in the cost of goods sold percentage was due to
fixed manufacturing expenses which includes engineering, quality control and
purchasing; the amount of these expenses decreased from the same period in 2002
but because it was spread over a lower amount of sales the expense as a
percentage of sales actually increased. The Company also incurred shipping and
installation expense of $1,173,682 for the three months ended March 31, 2003 and
$904,911 for the same period in 2002, an increase of $268,771 or 30%. Field
repairs increased by $49,467 from $83,724 for the period ended March 31, 2002 to
$143,191 for the same period in 2003 as the Company solved a difficult customer
satisfaction issue. Utilities expense increased in the Virginia plant by $29,707
from $14,370 for the period ended March 31, 2002 to $44,077 for the same period
in 2003 due to the extremely cold winter weather in the mid-atlantic area.
For the three months ended March 31, 2003, the Company's general and
administrative expenses increased $231,217 to $822,338 from $591,121 during the
same period in 2002. The 39% increase is mainly due to higher costs in the areas
of health insurance, legal fees, bad debt allowance and personnel related
expenses. There was an adjustment to the health claims receivable that resulted
in an expense of $114,937 to adjust the amount to our policy limit. This was
charged on a pro-rata basis to each department so only a portion shows up in
general and administrative. Legal expenses for the period ended March 31, 2003
included an increase of $13,092 for the ongoing case with Seacoast that is
described in the Companys' Form 10-KSB for 2002 and an expense of $18,093 for
legal work on special corporate legal matters. There was also an expense of
approximately $42,000 for personnel replacements.
Selling expenses for the three months ended March 31, 2003 increased
$38,922, or 12%, to $357,200 from $318,278 for the three months ended March 31,
2002, resulting primarily from higher marketing and professional fees which is
in line with the Company's strategy of building the business for long-term
success.
The Company's operating loss for the three months ended March 31, 2003 was
$426,611 compared to operating income of $332,233 for the three months ended
March 31, 2002, a decrease of $758,844. The decreased operating income was
primarily the result of the lower gross profit and the higher selling, general
and administrative expenses.
Interest expense was $64,366 for the three months ended March 31, 2003,
compared to $74,654 for the three months ended March 31, 2002. The decrease of
$10,288, or 14%, was due to a lower average interest rate during the 2003 period
and lower levels of average debt outstanding.
Other income (net) was $42,131 for the three months ended March 31, 2003
compared to other expense (net) of $20,927 for the three months ended March 31,
2002, an increase of $63,058. The increase is attributable to higher levels of
miscellaneous income in the current period and a gain on the disposal of assets.
The net loss was $278,285 for the three months ended March 31, 2003,
compared to a net income of $209,252 for the same period in 2002. The basic and
diluted net loss per share for the current three month period was $(.06) and
$(.06) compared to basic and diluted net earnings per share of $.06 and $.05 for
the three months ended March 31, 2002.
Liquidity and Capital Resources
The Company has financed its capital expenditures, operating requirements
and growth to date primarily with proceeds from operations, and bank and other
borrowings. The Company had $4,214,936 of indebtedness at March 31 2003, of
which $342,097 was scheduled to mature within twelve months.
9
Schedule of Contractual Obligations:
Payments due by period
----------------------
Less than
Total 1 year 1-3 years 4-5 years After 5 years
----- ------ --------- --------- -------------
Long-term debt and
capital leases $4,146,699 $297,953 $586,223 $339,111 $2,923,412
Debt to Related
Parties 39,244 17,039 22,205 0 0
Operating leases 28,993 27,105 992 896 0
Total contractual
cash obligations $4,214,936 $342,097 $609,420 $340,007 $2,923,412
The Company has a $3,667,585 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 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 also has a $1,000,000 line of
credit, under which there were no outstanding borrowings at March 31, 2003. This
commercial revolving promissory note, which carries a variable interest rate of
1% above prime has a maturity of April 1, 2004
At March 31, 2003, the Company had cash totaling $952,174 compared to
cash totaling $1,224,756 at December 31, 2002. During the period, the financing
activities used $86,270 (net) in cash for the repayment of debt; used $188,488
in its investing activities, primarily for the purchase of new equipment. The
Company's operating activities provided cash of $3,176 (net) after deducting the
resources required to fund the Company's daily operations.
Capital spending totaled $205,639 in the three month period ended
March 31, 2003 versus $168,612 in the comparable period of the prior year,
mainly because of routine equipment replacements and plant modernization.
Planned capital expenditures for 2003 are limited as stated above by the FIB
loan agreement. The Company plans to make additional capital expenditures for
routine equipment replacement, productivity improvements and plant upgrades that
are planned for 2003 based on the achievement of operating goals and the
availability of funds.
As a result of the Company's substantial debt burden, the Company is
especially sensitive to changes in the prevailing interest rates. Fluctuations
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, if
interest rates should increase.
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
long before it receives payment. In the event cash flow from operations,
collection of claims, and existing credit facilities are not adequate to support
operations, the Company would be required to obtain alternative sources of both
short-term and long-term 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 annual 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.
10
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.
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.
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 that 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.
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. Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (SFAS 123), establishes alternative
methods of accounting for stock options. The Company's Form 10-KSB for the
period ended December 31, 2002 shows the effect on earnings if the fair value
method prescribed by SFAS 123 had been adopted.
Other Comments
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 traditionally experiences reduced revenues
from December through March and realizes the substantial part of its revenues
during the other months of the year. The Company typically experiences lower
profits, or losses, during the winter months, and must have sufficient working
capital to fund its operations at a reduced level until spring construction
season. The failure to generate or obtain sufficient working capital during the
winter may have a material adverse effect on the Company.
As of March 31, 2003 the Company's backlog was significantly lower than it
was at the same period in 2002. The majority of the projects relating to the
backlog as of March 31, 2003 are scheduled to be constructed in 2003. The drop
in the Company's backlog from March 31, 2002 is due to a decreased level of new
sales and projects as a result of the slower economy. In the event the economic
slowdown continues, future sales levels are liable to be adversely effected.
Management believes that the Company's operations have not been materially
affected by inflation.
11
Item 3. Controls and Procedures
Our principal executive and financial officers have concluded, based on
their evaluation as of a date within 90 days before the filing of the Form
10-QSB, that our disclosure controls and procedures under Rule 13a-14 of the
Securities Exchange Act of 1934 are effective to ensure that information we are
required to disclose in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and include controls and procedures designed to
ensure that information we are required to disclose in such reports is
accumulated and communicated to management, including our principal executive
and financial officers, as appropriate to allow timely decisions regarding
required disclosure.
Subsequent to our evaluation, there were no significant changes in internal
controls or other factors that could significantly affect these internal
controls.
12
PART II - Other Information
Item 1. Legal Proceedings.
Reference is made to Item 3 of the Company's Annual Report on Form 10-KSB
for the year ended December 31, 2002 for information as to reported legal
proceedings.
Item 2. Changes in Securities and Use of Proceeds. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(1) The following exhibits are filed herewith:
Exhibit
No.
---
99.1 Certification pursuant to 18 U.S.C. Section 1350.
99.2 Certification pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K
On January 24,2003, the company filed a Form 8-K to report the adoption of a
Shareholder Rights Plan and amended By-laws, as well as the hiring of a new
Chief Financial Officer.
13
SIGNATURES
In accordance with the requirements 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: May 14, 2003 By: /s/ Rodney I. Smith
--------------------------------------
Rodney I. Smith
Chairman of the Board,
Chief Executive Officer and President
(principal executive officer)
Date: May 14, 2003 By: /s/ John K. Johnson
--------------------------------------
John K. Johnson
Chief Financial Officer
(principal financial officer)
14
CERTIFICATIONS
I, Rodney I. Smith, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Smith-Midland
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003 By: /s/ Rodney I. Smith
-------------------------
Rodney I. Smith
Chairman of the Board, Chief
Executive Officer and President
15
I, John K. Johnson, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Smith-Midland
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003 By: /s/ John K. Johnson
--------------------------------
John K. Johnson
Chief Financial Officer
16