SMITH MIDLAND CORP - Quarter Report: 2010 September (Form 10-Q)
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30, 2010
or
|
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from ________ to ________
Commission
File Number 1-13752
Smith-Midland
Corporation
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
54-1727060
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
of
incorporation or organization)
|
Identification
No.)
|
5119
Catlett Road, P.O. Box 300
Midland,
VA 22728
(Address,
zip code of principal executive offices)
(540) 439-3266
(Registrant’s
telephone number, including area code)
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes þ No o
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).
Yes o No o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer o Accelerated
filer o
Non-accelerated
filer o Smaller
reporting company þ
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
Yes o No þ
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 par
value, outstanding as of November 9, 2010: 4,661,962 shares, net of treasury
shares
SMITH-MIDLAND
CORPORATION
Form
10-Q Index
|
Page
|
||||
|
PART
I.
|
FINANCIAL
INFORMATION
|
|||
|
Item
1.
|
Financial
Statements
|
|||
|
Condensed
Consolidated Balance Sheets (Unaudited), September 30, 2010 and
December 31, 2009
|
3
|
|||
|
Condensed
Consolidated Statements of Operations (Unaudited) for the three months
ended September 30, 2010 and September 30, 2009
|
5
|
|||
|
Condensed
Consolidated Statements of Operations (Unaudited) for the nine months
ended September 30, 2010 and September 30, 2009
|
6
|
|||
|
Condensed
Consolidated Statements of Cash Flows (Unaudited) for the nine months
ended September 30, 2010 and September 30, 2009
|
7
|
|||
|
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
8
|
|||
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
11
|
||
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
18
|
||
|
Item
4.
|
Controls
and Procedures
|
18
|
||
|
PART
II.
|
OTHER
INFORMATION
|
|||
|
Item
1.
|
Legal
Proceedings
|
19
|
||
|
Item
1A.
|
Risk
Factors
|
19
|
||
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
19
|
||
|
Item
3.
|
Defaults
Upon Senior Securities
|
19
|
||
|
Item
4.
|
Removed
and Reserved
|
19
|
||
|
Item
5.
|
Other
Information
|
19
|
||
|
Item
6
|
Exhibits
|
19
|
||
|
Exhibit
10.1
|
||||
|
Exhibit
10.2
|
||||
|
Exhibit
10.3
|
||||
|
Exhibit
10.4
|
||||
|
Exhibit
10.5
|
||||
|
Exhibit
31.1
|
||||
|
Exhibit
31.2
|
||||
|
Exhibit
32
|
||||
|
Signatures
|
20
|
|||
2
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
September
30,
|
December
31,
|
|||||||
|
ASSETS
|
2010
|
2009
|
||||||
|
Current
assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 1,600,051 | $ | 2,929,868 | ||||
|
Accounts
receivable
|
||||||||
|
Trade
- billed, (less allowance for doubtful accounts of $309,931 and
$253,082)
|
4,898,335 | 4,134,729 | ||||||
|
Trade
- unbilled
|
4,010,201 | 713,322 | ||||||
|
Inventories
|
||||||||
|
Raw
materials
|
529,518 | 648,023 | ||||||
|
Finished
goods
|
1,341,602 | 1,955,347 | ||||||
|
Prepaid
expenses and other assets
|
136,961 | 80,786 | ||||||
|
Prepaid
income taxes
|
- | 138,003 | ||||||
|
Deferred
taxes
|
446,000 | 444,000 | ||||||
|
Total
current assets
|
12,962,668 | 11,044,078 | ||||||
|
Property
and equipment, net
|
4,637,286 | 4,183,124 | ||||||
|
Total
other assets
|
115,373 | 127,552 | ||||||
|
Total
assets
|
$ | 17,715,327 | $ | 15,354,754 | ||||
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
3
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
September
30,
|
December
31,
|
|||||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
2010
|
2009
|
||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable - trade
|
$ | 1,313,629 | $ | 1,205,228 | ||||
|
Accrued
expenses and other liabilities
|
1,599,880 | 1,063,445 | ||||||
|
Accrued
income taxes payable
|
221,650 | - | ||||||
|
Current
maturities of notes payable
|
515,463 | 481,078 | ||||||
|
Customer
deposits
|
272,169 | 704,270 | ||||||
|
Total
current liabilities
|
3,922,791 | 3,454,021 | ||||||
|
Notes
payable - less current maturities
|
2,820,112 | 3,077,302 | ||||||
|
Deferred
tax liability
|
539,000 | 337,000 | ||||||
|
Total
liabilities
|
7,281,903 | 6,868,323 | ||||||
|
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; 4,702,882 issued and
outstanding
|
47,029 | 47,029 | ||||||
|
Additional
paid-in capital
|
4,846,454 | 4,812,401 | ||||||
|
Retained
earnings
|
5,642,241 | 3,729,301 | ||||||
| 10,535,724 | 8,588,731 | |||||||
|
Treasury
stock, at cost, 40,920 shares
|
(102,300 | ) | (102,300 | ) | ||||
|
Total
stockholders’ equity
|
10,433,424 | 8,486,431 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 17,715,327 | $ | 15,354,754 | ||||
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
4
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Revenue
|
||||||||
|
Products
sales and leasing
|
$ | 7,505,181 | $ | 5,514,234 | ||||
|
Shipping
and installation revenue
|
1,071,157 | 1,602,784 | ||||||
|
Royalties
|
419,620 | 435,157 | ||||||
|
Total
revenue
|
8,995,958 | 7,552,175 | ||||||
|
Cost
of goods sold
|
6,169,371 | 5,471,205 | ||||||
|
Gross
profit
|
2,826,587 | 2,080,970 | ||||||
|
Operating
expenses
|
||||||||
|
General
and administrative expenses
|
668,727 | 822,647 | ||||||
|
Selling
expenses
|
699,421 | 498,934 | ||||||
|
Total
operating expenses
|
1,368,148 | 1,321,581 | ||||||
|
Operating
income
|
1,458,439 | 759,389 | ||||||
|
Other
income (expense)
|
||||||||
|
Interest
expense
|
(38,104 | ) | (46,252 | ) | ||||
|
Interest
income
|
1,393 | 13,344 | ||||||
|
Gain
on sale of assets
|
2,321 | 37,355 | ||||||
|
Other,
net
|
438 | (645 | ) | |||||
|
Total
other (expense)
|
(33,952 | ) | 3,802 | |||||
|
Income
before income tax expense
|
1,424,487 | 763,191 | ||||||
|
Income
tax expense
|
523,000 | 272,000 | ||||||
|
Net
income
|
$ | 901,487 | $ | 491,191 | ||||
|
Basic
earnings per share
|
$ | 0.19 | $ | 0.11 | ||||
|
Diluted
earnings per share
|
$ | 0.19 | $ | 0.10 | ||||
|
Weighted
average number of common shares outstanding:
|
||||||||
|
Basic
|
4,702,882 | 4,670,882 | ||||||
|
Diluted
|
4,792,796 | 4,841,767 | ||||||
The accompanying notes are an integral
part of the condensed consolidated financial statements.
5
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Nine
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Revenue
|
||||||||
|
Products
sales and leasing
|
$ | 19,531,551 | $ | 18,998,458 | ||||
|
Shipping
and installation revenue
|
2,190,497 | 4,014,216 | ||||||
|
Royalties
|
1,317,496 | 1,271,026 | ||||||
|
Total
revenue
|
23,039,544 | 24,283,700 | ||||||
|
Cost
of goods sold
|
16,100,316 | 16,688,328 | ||||||
|
Gross
profit
|
6,939,228 | 7,595,372 | ||||||
|
Operating
expenses
|
||||||||
|
General
and administrative expenses
|
1,892,485 | 2,396,617 | ||||||
|
Selling
expenses
|
1,880,921 | 1,626,215 | ||||||
|
Total
operating expenses
|
3,773,406 | 4,022,832 | ||||||
|
Operating
income
|
3,165,822 | 3,572,540 | ||||||
|
Other
income (expense)
|
||||||||
|
Interest
expense
|
(126,603 | ) | (167,585 | ) | ||||
|
Interest
income
|
17,924 | 14,358 | ||||||
|
Gain
on sale of assets
|
6,988 | 61,457 | ||||||
|
Other,
net
|
(191 | ) | (900 | ) | ||||
|
Total
other (expense)
|
(101,882 | ) | (92,670 | ) | ||||
|
Income
before income tax expense
|
3,063,940 | 3,479,870 | ||||||
|
Income
tax expense
|
1,151,000 | 1,351,000 | ||||||
|
Net
income
|
$ | 1,912,940 | $ | 2,128,870 | ||||
|
Basic
earnings per share
|
$ | 0.41 | $ | 0.46 | ||||
|
Diluted
earnings per share
|
$ | 0.40 | $ | 0.45 | ||||
|
Weighted
average number of common shares outstanding:
|
||||||||
|
Basic
|
4,702,882 | 4,670,882 | ||||||
|
Diluted
|
4,802,516 | 4,773,428 | ||||||
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
6
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Nine
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Reconciliation
of net income to cash provided (absorbed) by operating
activities
|
||||||||
|
Net
income
|
$ | 1,912,940 | $ | 2,128,870 | ||||
|
Adjustments
to reconcile net income to net cash provided (absorbed) by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
545,569 | 519,936 | ||||||
|
Stock
option compensation expense
|
34,054 | 71,231 | ||||||
|
Gain
on disposal of fixed assets
|
(6,988 | ) | (61,457 | ) | ||||
|
Deferred
taxes
|
200,000 | 49,000 | ||||||
|
(Increase)
decrease in:
|
||||||||
|
Accounts
receivable - billed
|
(763,606 | ) | 410,217 | |||||
|
Accounts
receivable - unbilled
|
(3,296,879 | ) | (18,510 | ) | ||||
|
Inventories
|
732,250 | 616,390 | ||||||
|
Prepaid
taxes and other assets
|
(43,996 | ) | 347,983 | |||||
|
Increase
(decrease) in:
|
||||||||
|
Accounts
payable - trade
|
108,401 | (1,192,967 | ) | |||||
|
Accrued
expenses and other
|
536,434 | (274,214 | ) | |||||
|
Accrued
income taxes payable
|
359,653 | 378,998 | ||||||
|
Customer
deposits
|
(432,101 | ) | (320,375 | ) | ||||
|
Net
cash provided (absorbed) by operating activities
|
(114,269 | ) | 2,655,102 | |||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property and equipment
|
(1,012,054 | ) | (604,790 | ) | ||||
|
Proceeds
from sale of fixed assets
|
19,311 | 86,388 | ||||||
|
Net
cash absorbed by investing activities
|
(992,743 | ) | (518,402 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Repayments
on lines of credit, net
|
- | (500,000 | ) | |||||
|
Proceeds
from long-term borrowings
|
118,505 | - | ||||||
|
Repayments
of long-term borrowings and capital leases
|
(341,310 | ) | (487,614 | ) | ||||
|
Net
cash provided (absorbed) by financing activities
|
(222,805 | ) | (987,614 | ) | ||||
|
Net
increase (decrease) in cash and cash equivalents
|
(1,329,817 | ) | 1,149,086 | |||||
|
Cash
and cash equivalents
|
||||||||
|
Beginning
of period
|
2,929,868 | 1,363,284 | ||||||
|
End
of period
|
$ | 1,600,051 | $ | 2,512,370 | ||||
|
Supplemental
schedule of non-cash investing activities
|
||||||||
|
Cash
Payments for interest
|
$ | 126,603 | $ | 167,585 | ||||
|
Cash
Payments for income taxes
|
$ | 476,500 | $ | 664,728 | ||||
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
7
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1. – INTERIM FINANCIAL REPORTING
Basis
of Presentation
The
accompanying condensed consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information, and with the instructions to Form
10-Q and Article 10 of 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
and the related notes included in our Annual Report on Form 10-K for the year
ended December 31, 2009. The December 31, 2009 balance sheet was
derived from audited financial statements included in the Form
10-K.
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 income are not necessarily indicative of the results
to be expected in any future periods.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Revenue
Recognition
The
Company primarily recognizes revenue on the sale of its standard precast
concrete products at shipment date, including revenue derived from any projects
to be completed under short-term contracts. Installation of the
Company’s standard products is typically performed by the customer; however, in
some circumstances, the Company will install certain products which are
accomplished at the time of delivery. The installation activities are
usually completed the day of delivery or the following day. In
utility building sales, the majority of the buildings are erected on the
Company’s site and delivered completely installed.
Leasing
fees are paid at the beginning of the lease agreement and recorded to a deferred
revenue account. As the revenue is earned each month during the
contract, the amount earned is recorded as lease income and an equivalent amount
is debited to deferred revenue.
Royalties
are recognized as revenue as they are earned. The Company licenses
certain other precast companies to produce its licensed products to our
engineering specifications under licensing agreements. The agreements
are typically for five year terms and require royalty payments from 4% to 6%
which are paid on a monthly basis. The revenue from licensing
agreements is recognized in the month earned.
Certain
sales of Soundwall, architectural precast panels and Slenderwall™ concrete
products revenue is recognized using the percentage of completion method for
recording revenues on long term contracts pursuant to ASC
605-35-25. The contracts are executed by both parties and clearly
stipulate the requirements for progress payments and a schedule of delivery
dates. Provisions for estimated losses on contracts are made in the
period in which such losses are determined.
Shipping
revenues are recognized in the period the shipping services are provided to the
customer.
Smith-Midland
products are typically sold pursuant to an implicit warranty as to
merchantability only. Warranty claims are reviewed and resolved on a
case by case method. Although the Company does incur costs for these
types of expense, historically the amount of expense is immaterial.
8
NOTE
2. – NET INCOME PER COMMON SHARE
Basic earnings per common share exclude
all dilutive stock options and are computed using the weighted average number of
common shares outstanding during the period. The diluted earnings per common
share calculation reflect the potential dilutive effect of securities that could
share in earnings of an entity. Outstanding options excluded from the
diluted earnings per share calculation because they would have an anti-dilutive
effect were 258,166 and 260,666 for the three months ended September 30, 2010
and 2009, and 258,166 and 312,666 for the nine months ended September 30, 2010
and 2009, respectively.
|
Three
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Basic
earnings per share
|
||||||||
|
Income
available to common shareholder
|
$ | 901,487 | $ | 491,191 | ||||
|
Weighted
average shares outstanding
|
4,702,882 | 4,670,882 | ||||||
|
Basic
earnings per share
|
$ | 0.19 | $ | 0.11 | ||||
|
Diluted
earnings per share
|
||||||||
|
Income
available to common shareholder
|
$ | 901,487 | $ | 491,191 | ||||
|
Weighted
average shares outstanding
|
4,702,882 | 4,670,882 | ||||||
|
Dilutive
effect of stock options
|
89,914 | 170,885 | ||||||
|
Total
weighted average shares outstanding
|
4,792,796 | 4,841,767 | ||||||
|
Diluted
earnings per share
|
$ | 0.19 | $ | 0.10 | ||||
|
Nine
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Basic
earnings per share
|
||||||||
|
Income
available to common shareholder
|
$ | 1,912,940 | $ | 2,128,870 | ||||
|
Weighted
average shares outstanding
|
4,702,882 | 4,670,882 | ||||||
|
Basic
earnings per share
|
$ | 0.41 | $ | 0.46 | ||||
|
Diluted
earnings per share
|
||||||||
|
Income
available to common shareholder
|
$ | 1,912,940 | $ | 2,128,870 | ||||
|
Weighted
average shares outstanding
|
4,702,882 | 4,670,882 | ||||||
|
Dilutive
effect of stock options
|
99,634 | 102,546 | ||||||
|
Total
weighted average shares outstanding
|
4,802,516 | 4,773,428 | ||||||
|
Diluted
earnings per share
|
$ | 0.40 | $ | 0.45 | ||||
9
NOTE
3. – STOCK OPTIONS
In
accordance with ASC 718, stock option expense for the three months ended
September 30, 2010 and 2009 was $8,522 and $19,699, respectively and for the
nine months ended September 30, 2010 and 2009 was $34,054 and $71,231,
respectively. The Company uses the Black-Scholes option-pricing model
to measure the fair value of stock options granted to employees. The
Company did not issue any stock options for the nine months ended September 30,
2010.
The
following table summarized options outstanding at September 30,
2010:
|
Number
of Shares
|
Weighted
Average Exercise Price
|
|||||||
|
Balance,
December 31, 2009
|
594,990 | $ | 1.59 | |||||
|
Granted
|
- | - | ||||||
|
Forfeited
|
- | - | ||||||
|
Exercised
|
- | - | ||||||
|
Outstanding
options at end of quarter
|
594,990 | 1.59 | ||||||
|
Outstanding
exercisable options at end of quarter
|
556,271 | 1.62 | ||||||
The
intrinsic value of outstanding and exercisable options at September 30, 2010 was
approximately $122,000 and $115,000, respectively.
NOTE
4. – RECENT PRONOUNCEMENTS
In
January 2010, the FASB issued ASU 2010-06 codified as ASC 820-10-50, “Improving Disclosures about Fair
Value Measurements” (“ASC 855”). This update amended guidance
and issued a clarification with regard to disclosure requirements about fair
market value measurement. A reporting entity is required to disclose
separately the amounts of significant transfers in and out of Level 1 and Level
2 fair value measurements and describe the reasons for the transfers. In
addition, for measurements utilizing significant unobservable inputs, a
reporting entity should present separately information about purchases, sales,
issuances, and settlements. We adopted ASC 855 on January 1, 2010.
There was no impact upon adoption of ASC 855 to our financial position or
results of operations.
In July
2010, the FASB issued FASB ASC 2010-20 "Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses." This standard amends
existing guidance by requiring more robust and disaggregated disclosures by an
entity about the credit quality of its financing receivables and its allowance
for credit losses. These disclosures will provide financial statement users with
additional information about the nature of credit risks inherent in our
financing receivables, how we analyze and assess credit risk in determining our
allowance for credit losses, and the reasons for any changes we may make in our
allowance for credit losses. This update is generally effective for interim and
annual reporting periods ending on or after December 15, 2010. We
believe the adoption of this standard will not have a material effect on our
financial statements.
NOTE
5. – SUBSEQUENT EVENTS
As of
November 12, 2010, the date on which the Company issued these financial
statements, management has evaluated events and transactions occurring
subsequent to September 30, 2010 and has determined that there have been no
significant events or transactions that provide additional evidence about
conditions of the Company that existed as of the balance sheet
date.
10
Forward-Looking
Statements
This Quarterly Report and related
documents include “forward-looking statements” within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange
Act. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which could cause the Company’s actual results,
performance (financial or operating) or achievements expressed or implied by
such forward looking statements not to occur or be realized. Such
forward looking statements generally are based upon the Company’s best estimates
of future results, performance or achievement, based upon current conditions and
the most recent results of operations. Forward-looking statements may
be identified by the use of forward-looking terminology such as “may,” “will,”
“expect,” “believe,” “estimate,” “anticipate,” “continue,” or similar terms,
variations of those terms or the negative of those terms. Potential
risks and uncertainties include, among other things, such factors
as:
|
·
|
our
level of indebtedness and ability to satisfy the same,
|
|
·
|
the
continued availability of financing in the amounts, at the times, and on
the terms required, to support our future business and capital
projects,
|
|
·
|
the
extent to which we are successful in developing, acquiring, licensing or
securing patents for proprietary
products,
|
|
·
|
changes
in economic conditions specific to any one or more of our markets
(including the availability of public funds and grants for
construction),
|
|
·
|
changes
in general economic conditions, such as the current weakness in
construction in 2010 in the Company’s primary service
area,
|
|
·
|
adverse
weather which inhibits the demand for our
products,
|
|
·
|
our
compliance with governmental
regulations,
|
|
·
|
the
outcome of future litigation,
|
|
·
|
on
material construction projects, our ability to produce and install product
that conforms to contract specifications and in a time frame that meets
the contract requirements,
|
|
·
|
the
cyclical nature of the construction
industry,
|
|
·
|
our
exposure to increased interest expense payments should interest rates
change,
|
|
·
|
the
Company’s Board of Directors, which is composed of four members, has only
one outside, independent director,
|
|
·
|
the
Company does not have an audit committee; the Board of Directors functions
in that role,
|
|
·
|
the
Company’s Board of Directors does not have a member that qualifies as an
audit committee financial expert as defined in SEC regulations,
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, 2009.
|
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.
Overview
11
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.
While the Company’s results of
operations for the nine months ended September 30, 2010 were very positive,
sales and net income were down from the same period in 2009. A
significant reason for the decrease in both sales and net income was the
contract for rental of highway barrier for the presidential inauguration held in
January of 2009 resulting in unusually high sales and earnings for the first
quarter of 2009. In addition, the construction industry recession has
had a slightly negative impact on the Company’s sales overall.
Results
of Operations
Three
months ended September 30, 2010 compared to the three months ended September 30,
2009
|
Revenue
By Type
|
||||||||||||||||
|
2010
|
2009
|
Change
|
%
of Change
|
|||||||||||||
|
Product
Sales:
|
||||||||||||||||
|
Soundwall
Sales
|
$ | 2,715,827 | $ | 230,691 | $ | 2,485,137 | 1077 | % | ||||||||
|
Architectural
Panel Sales
|
54,894 | 867,063 | (812,169 | ) | -94 | % | ||||||||||
|
Slenderwall
Sales
|
442,042 | - | 442,042 | - | ||||||||||||
|
Total
Wall Sales
|
3,212,764 | 1,097,754 | 2,115,010 | 193 | % | |||||||||||
|
Barrier
Sales
|
1,321,423 | 1,734,027 | (412,604 | ) | -24 | % | ||||||||||
|
Beach
Prisms
|
- | 2,907 | (2,907 | ) | -100 | % | ||||||||||
|
Easi-Set
and Easi-Span Building Sales
|
931,047 | 1,157,804 | (226,757 | ) | -20 | % | ||||||||||
|
Utility
and Farm Product Sales
|
589,818 | 526,845 | 62,973 | 12 | % | |||||||||||
|
Miscellaneous
Product Sales
|
1,249,012 | 876,848 | 372,164 | 42 | % | |||||||||||
|
Total
Product Sales
|
7,304,063 | 5,396,185 | 1,907,879 | 35 | % | |||||||||||
|
Shipping
and Installation
|
1,071,157 | 1,602,784 | (531,627 | ) | -33 | % | ||||||||||
|
Barrier
Rentals
|
201,118 | 118,050 | 83,068 | 70 | % | |||||||||||
|
Royalties
income
|
419,620 | 435,157 | (15,537 | ) | -4 | % | ||||||||||
|
Total
Service Revenue
|
1,691,895 | 2,155,990 | (464,095 | ) | -22 | % | ||||||||||
|
Total
Revenue
|
$ | 8,995,958 | $ | 7,552,175 | $ | 1,443,783 | 19 | % | ||||||||
Wall
Sales – Wall
sales are generally large contracts issued by general contractors for production
and delivery of a specific wall panel for a specific construction
project. Changes in the mix of wall sales depend on what contracts
are in production during the period. Overall wall sales increased
during the period as a result of a large contract for the manufacturing and
delivery of Soundwall in the state of Maryland. This contract will
continue for the remainder of 2010 and into the first quarter of
2011. While the Company did not produce a significant amount of
architectural panels during the period, the Company is scheduled to begin
production on several new architectural contracts in the fourth quarter of
2010. The Company has a contract for the production of Slenderwall™
which started in third quarter 2010 and will finish in the fourth quarter of
2010. There were no Slenderwall™ sales for the same period of
2009.
12
Barrier
Sales – Barrier sales decreased during the three months ended September
30, 2010 compared to the same period in 2009. While there was a
decrease in barrier sales during the period, sales have remained above
expectation for the nine month period ended September 30, 2010. It is
anticipated, due to a decrease in road projects by federal and state
governments, that barrier sales will moderate slightly in the fourth quarter of
2010.
Easi-Set®
and Easi-Span® Building Sales – Building sales decreased moderately
during the three months ended September 30, 2010 compared to the same period in
2009. The decrease in Building sales was primarily due to scheduled
times for the production and delivery of Building orders in the
backlog. Based on the current backlog of building orders, management
believes building sales will be moderately higher in the final quarter of
2010. Management believes that the decrease in building sale in the
current year to be also attributable to the current economic
conditions
Utility
and Farm Product Sales – Utility and farm product sales increased by 18%
for the three months ended September 30, 2010 compared to the same period
2009. The increase relates to a contract awarded to the Company for
utility manholes for a state highway project in northern
Virginia. Management believes that utility and farm product sales
will remain strong for the remainder of 2010.
Miscellaneous
Product Sales – Miscellaneous products are products produced and sold
that do not meet the criteria defined for other revenue
categories. For the three months ended September 30, 2010,
miscellaneous sales increased by 42% over the same period in
2009. The increase in sales relates to a large contract to
manufacture, ship and install 18 specialty buildings at the Marine Corps
facility at Camp Lejeune, NC.
Shipping
and Installation – Shipping and installation revenue decreased by
$531, 627 for the three months ended September 30, 2010 compared to the
same period in 2009 due primarily to the shipping schedule for Soundwall panels
manufactured in early 2010 which will start shipping in the fourth quarter of
2010. In addition, the Company is currently producing less
architectural wall panels which require installation as opposed to Soundwall
panels which normally do not require installation by the
Company. Shipping and installation revenue is expected to remain
below 2009 levels for the remainder of 2010.
Barrier
Rentals – Barrier rentals increased significantly for the three months
ended September 30, 2010 compared to the same period in 2009, primarily due to
the reluctance of customers to purchase Barrier in uncertain economic
conditions.
Royalty
Income – Royalty revenue decreased slightly during the three months ended
September 30, 2010, compared to the same period in 2009. The majority
of the royalties earned in 2010 are from Barrier sales by
licensees. The Company expects royalty revenue to remain at the same
level for the remainder of the year.
Cost of
Goods Sold – Total cost of goods sold for the three months ended
September 30, 2010 was $6,169,371, an increase of $698,166, or 13%, from
$5,471,205 for the same period in 2009. The increase in total cost of
goods sold results from the increase in sales for the three months ended
September 30, 2010, compared to the same period in 2009. Total cost
of goods sold, as a percentage of total revenue, not including royalties,
decreased to 72% for the three months ended September 30, 2010 from 77% for the
same period in 2009. The decrease in cost of goods sold as a
percentage of total revenue, excluding royalties, was primarily attributable to
the change in product mix for the period, a shift to projects with more
profitable margins, and a better use of manpower in the manufacturing
process.
General
and Administrative Expenses – For the three months ended September 30,
2010, the Company's general and administrative expenses decreased by $153,920,
or 19%, to $668,727 from $822,647 during the same period in 2009. The
decrease in expense primarily resulted from a decrease in use tax charged on
installation of architectural walls and as noted in the revenue analysis
discussed above, there was a significant decrease in architectural wall sales
for the period, and a decrease in overall expenses during the period such as bad
debts and legal fees. General and administrative expense as a
percentage of total revenue was 7% and 11% for the three months ended September
30, 2010 and 2009, respectively.
Selling
Expenses –
Selling expenses for the three months ended September 30, 2010 increased to
$699,421 from $498,934 for the same period in 2009, or 40%. The
increase was due in part to higher salaries and commissions earned, two
additional salespersons and a general increase in overall expenses such as
advertising and travel expenses during the three months ended September 30, 2010
compared to the same period in 2009.
Operating
Income – The Company had operating income for the three months ended
September 30, 2010 of $1,458,439 compared to operating income of $759,389 for
the same period in 2009, a increase of $699,050, or 92%. The increase
in operating income was primarily the result of increased revenues and a
decrease in cost of goods sold as more fully described above.
13
Interest
Expense – Interest expense was $38,104 for the three months ended
September 30, 2010 compared to $46,252 for the same period in
2009. The decrease of $8,148, or 18%, was due primarily to a decrease
in notes payable outstanding during the period.
Income
Tax Expense – The Company had income tax expense of $523,000 for the
three months ended September 30, 2010 compared to $272,000 for the same period
in 2009.
Net
Income – The Company had net income of $901,487 for the three months
ended September 30, 2010, compared to net income of $491,191 for the same period
in 2009.
Nine
months ended September 30, 2010 compared to the nine months ended September 30,
2009
|
Revenue
By Type
|
||||||||||||||||
|
2010
|
2009
|
Change
|
%
of Change
|
|||||||||||||
|
Product
Sales:
|
||||||||||||||||
|
Soundwall
Sales
|
$ | 7,931,785 | $ | 2,883,122 | $ | 5,048,663 | 175 | % | ||||||||
|
Architectural
Panel Sales
|
651,406 | 5,188,272 | (4,536,866 | ) | -87 | % | ||||||||||
|
Slenderwall
Sales
|
442,042 | - | 442,042 | - | ||||||||||||
|
Miscellaneous
Wall Sales
|
- | 8,236 | (8,236 | ) | -100 | % | ||||||||||
|
Total
Wall Sales
|
9,025,233 | 8,079,629 | 945,604 | 12 | % | |||||||||||
|
Barrier
Sales
|
3,622,704 | 3,328,396 | 294,308 | 9 | % | |||||||||||
|
Beach
Prisms
|
12,408 | 34,782 | (22,374 | ) | -64 | % | ||||||||||
|
Easi-Set
and Easi-Span Building Sales
|
2,392,348 | 2,850,413 | (458,065 | ) | -16 | % | ||||||||||
|
Utility
and Farm Product Sales
|
1,869,739 | 1,599,879 | 269,860 | 17 | % | |||||||||||
|
Miscellaneous
Product Sales
|
1,848,979 | 1,603,835 | 245,144 | 15 | % | |||||||||||
|
Total
Product Sales
|
18,771,412 | 17,496,935 | 1,274,477 | 7 | % | |||||||||||
|
Shipping
and Installation
|
2,190,497 | 4,014,216 | (1,823,719 | ) | -45 | % | ||||||||||
|
Barrier
Rentals
|
760,140 | 1,501,523 | (741,384 | ) | -49 | % | ||||||||||
|
Royalties
income
|
1,317,496 | 1,271,026 | 46,470 | 4 | % | |||||||||||
|
Total
Service Revenue
|
4,268,132 | 6,786,765 | (2,518,633 | ) | -37 | % | ||||||||||
|
Total
Revenue
|
$ | 23,039,544 | $ | 24,283,700 | $ | (1,244,156 | ) | -5 | % | |||||||
Wall
Sales – Wall
sales are generally large contracts issued by general contractors for production
and delivery of a specific wall panel for a specific construction
project. Changes in the mix of wall sales depend on what contracts
are in production during the period. Overall wall sales increased
during the period as a result of a large contract for the manufacturing and
delivery of Soundwall in the state of Maryland. This contract will
continue for the remainder of 2010 and into the first quarter of
2011. While the Company did not produce a significant amount of
architectural panels during the period, the Company has several contracts that
will begin production in the fourth quarter of 2010. The Company is
currently producing Slenderwall™ panels for a contract that started in the third
quarter of 210 and will complete in by years’ end. There were no
Slenderwall™ sales for the same period of 2009.
Barrier
Sales – Barrier sales increased by 9% during the nine months ended
September 30, 2010 compared to the same period in 2009. The increase
in sales for 2010 is partly a result of strong barrier sales in the first six
months of 2010. It is anticipated by the Company that barrier sales
will moderate slightly in the fourth quarter of 2010.
Easi-Set®
and Easi-Span® Building Sales – Building sales declined by 16% or
$458,065 during the nine months ended September 30, 2010 compared to the same
period in 2009. The decrease was primarily was primarily due to the
timing of production and delivery of buildings currently in the Company’s’
backlog. Increasing Easi-Set®, Easi-Span® and restroom building sales
is a major marketing goal for the Company that began in late 2009 and will
continue through 2010. Based on the current backlog of building
orders, management believes building sales will be moderately higher in the
final quarter of 2010. Management believes that the decrease in
building sales in 2010 to be attributable to the current economic
conditions.
14
Utility
and Farm Product Sales – Utility and farm product sales increased
slightly for the nine months ended September 30, 2010 compared to the same
period 2009. The increase relates to a contract awarded to the
Company for utility manholes for a state highway project in northern
Virginia. Management believes that utility and farm product sales
will remain strong for the remainder of 2010.
Miscellaneous
Product Sales – Miscellaneous products are products produced and sold
that do not meet the criteria defined for other revenue
categories. For the nine months ended September 30, 2010
miscellaneous sales increased by 15% over the same period in
2009. The increase in sales relates to a large contract to
manufacture, ship and install 18 specialty buildings at the Marine Corps
facility at Camp Lejeune, NC. In addition, in the most recent period,
Company produced steam tunnels for two universities in Northern
Virginia.
Shipping
and Installation – Shipping and installation revenue decreased by
$1,823,719, or 45%, for the nine months ended September 30, 2010 compared to the
same period in 2009 due primarily to the shipping schedule for Soundwall panels
manufactured early in 2010 which will start shipping in the fourth quarter of
2010. In addition, the Company is currently producing less
architectural wall panels which require installation as opposed to Soundwall
panels which normally do not require installation by the
Company. Shipping and installation revenue is expected to remain
below 2009 levels for the remainder of 2010.
Barrier
Rentals – Barrier rentals were down significantly for the nine months
ended September 30, 2010 compared to 2009, primarily due to the rental of
barrier for the Presidential Inauguration in January 2009. Management
believes that barrier rentals will remain at the current levels for the
remainder of the 2010.
Royalty
Income – Royalty revenue increased slightly for the nine months ended
September 30, 2010 as a result of increased sales of Barrier by our licensees
and the addition of three new licensees in 2010. The new licenses
were for Barrier products, Slenderwall™ panels and Easi-Set® and Easi-Span®
Buildings.
Cost of
Goods Sold – Total cost of goods sold for the nine months ended September
30, 2010 was $16,100,316, a decrease of $588,012, or 4%, from $16,888,328 for
the same period in 2009. Total cost of goods sold, as a percentage of
total revenue, not including royalties, increased to 74% for the nine months
ended September 30, 2010 from 73% for the same period in 2009. The
increase in cost of goods sold as a percentage of total revenue, excluding
royalties, was primarily attributable to the change in product mix and a
decrease in sales for the period. The Company continues to focus on
improving production processes in 2010.
General
and Administrative Expenses – For the nine months ended September 30,
2010, the Company's general and administrative expenses decreased by $504,132,
or 21%, to $1,892,485 from $2,396,617 during the same period in
2009. The decrease in expense primarily resulted from a decrease in
use tax charged on installation of architectural walls, as noted in the revenue
analysis discussed above, there was a significant decrease in architectural wall
sales for the period, and a decrease in bad debts expense and audit and tax
related expenses. General and administrative expense as a percentage
of total revenue was 8% and 10% for the nine months ended September 30, 2010 and
2009, respectively.
Selling
Expenses –
Selling expenses for the nine months ended September 30, 2010 increased to
$1,880,921 from $1,626,215 for the same period in 2009, or 16%. The
increase was due in part to higher commissions earned, two additional
salespersons, increased advertising expense and a general increase in overall
expenses during the nine months ended September 30, 2010 compared to the same
period in 2009.
Operating
Income – The Company had operating income for the nine months ended
September 30, 2010 of $3,165,822 compared to operating income of $3,572,540 for
the same period in 2009, a decrease of $406,718, or 11%. The decrease
in operating income was primarily the result of decreased revenues for the
period.
Interest
Expense – Interest expense was $126,603 for the nine months ended
September 30, 2010 compared to $167,585 for the same period in
2009. The decrease of $40,982, or 24%, was due primarily to a
decrease in notes payable outstanding during the period.
15
Income
Tax Expense – The Company had income tax expense of $1,151,000 for the
nine months ended September 30, 2010 compared to $1,351,000 for the same period
in 2009.
Net
Income – The Company had net income of $1,912,940 for the nine months
ended September 30, 2010, compared to net income of $2,128,870 for the same
period in 2009.
Liquidity
and Capital Resources
The
Company has financed its capital expenditures and its operating requirements for
the first nine months of 2010 primarily from cash balances and an equipment line
of credit. The Company had $3,335,575 of debt obligations at
September 30, 2010, of which $515,463 was scheduled to mature within twelve
months. During the nine months ended September 30, 2010, the Company
made repayments of outstanding debt in the amount $341,310. The
Company executed a $2,000,000 line of credit constituting a renewal of the
existing $1,500,000 line of credit during 2010. The new line of
credit is evidenced by a commercial revolving promissory note, which carries a
variable interest rate of prime plus .5% and matures on July 7,
2011. In addition, the Company has a commitment from Summit Community
Bank in the amount of $1,000,000 for the purchase of equipment which expires on
May 6, 2011. The Company also received a commitment on May 6, 2010
for a commercial business line of credit to improve its property located in
Midland, VA, in the amount of $575,000.
At September 30, 2010, the Company had
cash totaling $1,600,051 compared to cash totaling
$2,929,868 on December 31,
2009. The decrease in cash is a result of an increase in unbilled
receivables in the total amount of $3,296,879 for the nine months ended
September 30, 2010. The increase in unbilled receivables is a result
of several large projects that are currently in production but have not been
invoiced to the customer as of September 30, 2010. As the unbilled
receivables are invoiced during the final quarter of 2010, the receivables
are expected to convert to cash consistent with our
normal collection
period. During
the period, operating activities absorbed $114,269 of cash, investing activities absorbed
$992,743, and financing activities absorbed $222,805.
Capital spending totaled $1,012,054 for
the nine months ended September 30, 2010, as compared to $604,790 for the same
period in 2009. The 2010 expenditures were primarily for the upgrade
and replacement of equipment in the precast plant and additional highway barrier
for rental operations. The Company plans to make additional capital
expenditures for routine equipment replacement, productivity improvements, and
plant upgrades, which are planned through 2010 and 2011 based on the continued
achievement of operating goals and the availability of funds. Total
annual expenditures for 2010 for capital assets are estimated at $1.2
million. The Company is still evaluating its capital expenditures
plans for 2011.
As a
result of the Company’s existing variable rate debt burden, the Company is
sensitive to changes in the prevailing interest rates. Increases in
such 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. Each
1% increase in interest rates affecting the Company’s outstanding debt will
reduce income by approximately $33,000 annually.
The Company’s cash flow from operations
is affected by production schedules set by contractors, which generally provide
for payment 35 to 75 days after the products are produced. This
payment schedule may result in liquidity problems for the Company because it
must bear the cost of production for its products before it receives
payment. The Company’s average days sales outstanding, excluding the
effect of unbilled revenue, increased from 68 days for the year ended December
31, 2009 to 71 days for the nine months ended September 30,
2010. Although no assurances can be given, the Company believes that
anticipated cash flow from operations and the available lines of credits will be
sufficient to finance the Company’s operations for at least the next twelve
months.
The Company’s inventory was $1,871,120
at September 30, 2010 and at December 31, 2009 was $2,603,370 or a decrease of
$732,250. Inventory turnover was 8.9 for the nine months ended
September 30, 2010 and 6.7 at December 31, 2009, on an annualized
basis.
16
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, 2009. The preparation of
financial statements in conformity with accounting principles generally accepted
within the United States requires management to make estimates and assumptions
in certain circumstances that affect amounts reported in the accompanying
financial statements and related notes. In preparing these financial
statements, management has made its best estimates and judgments of certain
amounts included in the financial statements, giving due consideration to
materiality. The Company does not believe there is a great likelihood
that materially different amounts would be reported related to the accounting
policies described below, however, application of these accounting policies
involves the exercise of judgment and the use of assumptions as to future
uncertainties and as a result, actual results could differ from these
estimates.
The
Company evaluates the adequacy of its allowance for doubtful accounts at the end
of each quarter. In performing this evaluation, the Company analyzes the payment
history of its significant past due accounts, subsequent cash collections on
these accounts and comparative accounts receivable aging
statistics. Based on this information, along with other related
factors, 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 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,
Slenderwall™, and other architectural 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 for a specific customer contract and
not yet billed.
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 the substantial 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, steel, cement, aggregates and other direct
materials used in production remained relatively stable during 2009 and the
first nine months of 2010.
Sales
Backlog
As of November 5, 2010, the Company’s
sales backlog was approximately $12.0 million, as compared to approximately
$14.0 million at the same date in 2009. It is estimated that
substantially all of the projects in the sales backlog will be produced within
12 months. The Company also maintains a regularly occurring repeat
customer business, which should be considered in addition to the ordered
production backlog described above. These orders typically have a quick turn
around and represent purchases of a significant portion of the Company’s
inventoried standard products, such as highway safety barrier, utility and
Easi-Set® and Easi-Span® building
products. Historically, this regularly occurring repeat customer
business has ranged from $5,000,000 to $7,000,000 annually.
17
(a) Disclosure
controls and procedures
We
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 September 30, 2010.
(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 September 30, 2010 that has materially affected, or is
reasonably likely to materially affect, its internal control over financial
reporting.
18
The
Company is not presently involved in any litigation of a material
nature.
ITEM
1A. Risk Factors
Not required
None
ITEM
3. Defaults Upon Senior Securities
None
ITEM
4. Removed and Reserved
ITEM
5. Other Information
None
|
Exhibit
No.
|
Exhibit Description |
|
10.1
|
Promissory
Note, dated July 7, 2010, in the amount of $2,000,000 issued to Summit
Community Bank (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K of the Company filed with the SEC on July 19,
2010).
|
|
10.2
|
The
Commercial Security Agreement dated July 7, 2010 (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company
filed with the SEC on July 19,
2010).
|
|
10.3
|
Summit
Community Bank Commitment Letter dated May 6, 2010, for a line of credit
in the amount of $2,000,000 (incorporated by reference to Exhibit 10.3 to
the Current Report on Form 8-K of the Company filed with the SEC on July
19, 2010).
|
|
10.4
|
Summit
Community Bank Commitment Letter dated May 6, 2010, for the guidance line
of credit in the amount of $1,000,000 (incorporated by reference to
Exhibit 10.4 to the Current Report on Form 8-K of the Company filed with
the SEC on July 19, 2010).
|
|
10.5
|
Summit
Community Bank Commitment Letter dated May 6, 2010, for the business line
of credit in the amount of $575,000 (incorporated by reference to Exhibit
10.5 to the Current Report on Form 8-K of the Company filed with the SEC
on July 19, 2010).
|
|
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
|
19
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:
November 12, 2010
|
By:
|
/s/ Rodney I. Smith | |
|
Rodney
I. Smith,
|
|||
|
President
(Principal
Executive Officer)
|
|||
|
Date:
November 12, 2010
|
By:
|
/s/ William A. Kenter | |
| William A. Kenter, | |||
|
Chief
Financial Officer
|
|||
|
(Principal
Financial Officer)
|
|||
20
Exhibit
Index to Quarterly Report on Form 10-Q
For
the nine months ended September 30, 2010
|
Exhibit
No
|
Exhibit Description |
|
10.1
|
Promissory
Note, dated July 7, 2010, in the amount of $2,000,000 issued to Summit
Community Bank (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K of the Company filed with the SEC on July 19,
2010).
|
|
10.2
|
The
Commercial Security Agreement dated July 7, 2010 (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K of the Company
filed with the SEC on July 19,
2010).
|
|
10.3
|
Summit
Community Bank Commitment Letter dated May 6, 2010, for a line of credit
in the amount of $2,000,000 (incorporated by reference to Exhibit 10.3 to
the Current Report on Form 8-K of the Company filed with the SEC on July
19, 2010).
|
|
10.4
|
Summit
Community Bank Commitment Letter dated May 6, 2010, for the guidance line
of credit in the amount of $1,000,000 (incorporated by reference to
Exhibit 10.4 to the Current Report on Form 8-K of the Company filed with
the SEC on July 19, 2010).
|
|
10.5
|
Summit
Community Bank Commitment Letter dated May 6, 2010, for the business line
of credit in the amount of $575,000 (incorporated by reference to Exhibit
10.5 to the Current Report on Form 8-K of the Company filed with the SEC
on July 19, 2010).
|
|
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
|
21