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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

Common Stock, $0.01 par value per share, outstanding as of ~~May~~November 1, 2023: ~~5,256,413~~5,257,413 shares, net of treasury shares

ASSETS	March 31, 2023 (Unaudited)		December 31, 2022		September 30, 2023 (Unaudited)		December 31, 2022
Current assets
Cash	$	3,936	$	6,726	$	5,849	$	6,726
Accounts receivable, net
Trade - billed (less allowance of approximately $937 and $781, respectively), including contract retentions		17,867		16,223
Trade - billed (less allowance for credit losses of approximately $792 and $781, respectively), including contract retentions						16,842		16,223
Trade - unbilled		2,534		990		1,244		990
Inventories, net
Raw materials		2,705		1,776		1,965		1,776
Finished goods		2,286		2,042		2,243		2,042
Prepaid expenses		776		706		1,274		706
Refundable income taxes		476		477		476		477

Total current assets		30,580		28,940		29,893		28,940

Property and equipment, net		25,676		25,124		27,412		25,124

Other assets		243		249		349		249

Total assets	$	56,499	$	54,313	$	57,654	$	54,313

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

LIABILITIES AND STOCKHOLDERS' EQUITY	March 31, 2023 (Unaudited)			December 31, 2022
LIABILITIES AND STOCKHOLDERS’ EQUITY							September 30, 2023 (Unaudited)			December 31, 2022
Current liabilities
Accounts payable - trade	$	6,440		$	5,816		$	5,476		$	5,816
Accrued expenses and other liabilities		745			799			1,182			799
Deferred revenue		2,001			2,243
Deferred revenues								2,153			2,243
Accrued compensation		640			788			774			788
Accrued income taxes		168			146			235			146
Operating lease liabilities		64			77
Operating lease liabilitiess								42			77
Current maturities of notes payable		636			618			627			618
Customer deposits		2,494			737			2,436			737

Total current liabilities		13,188			11,224			12,925			11,224

Deferred revenue		2,475			2,174			3,552			2,174
Operating lease liabilities		34			45			13			45
Notes payable - less current maturities		5,558			5,730			5,260			5,730
Deferred tax liability		2,087			2,085			2,086			2,085

Total liabilities		23,342			21,258			23,836			21,258

Stockholders’ equity
Preferred stock, $0.01 par value; authorized 1,000,000 shares, none issued and outstanding		—			—
Common stock, $0.01 par value; authorized 8,000,000 shares; 5,345,189 and 5,345,189 issued and 5,256,413 and 5,256,413 outstanding, respectively		53			53
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding								—			—
Common stock, $.01 par value; authorized 8,000,000 shares; 5,348,189 and 5,345,189 issued and 5,257,413 and 5,256,413 outstanding, respectively								54			53
Additional paid-in capital		7,525			7,440			7,701			7,440
Treasury stock, at cost, 40,920 shares		(102	)		(102	)		(102	)		(102	)
Retained earnings		25,681			25,664			26,165			25,664

Total stockholders' equity		33,157			33,055
Total stockholders’ equity								33,818			33,055

Total liabilities and stockholders' equity	$	56,499		$	54,313
Total liabilities and stockholders’ equity							$	57,654		$	54,313

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

	Three Months Ended March 31,						Three Months Ended September 30,						Nine months Ended September 30,
	2023			2022			2023			2022			2023			2022
Revenue
Product sales	$	8,242		$	5,851		$	10,898		$	7,076		$	29,842		$	19,714
Barrier rentals		1,120			1,485			784			1,369			2,604			4,816
Royalty income		411			427			822			833			1,827			2,031
Shipping and installation revenue		3,069			2,672			3,147			2,678			8,918			9,083

Total revenue		12,842			10,435			15,651			11,956			43,191			35,644

Cost of goods sold		10,676			8,787			12,074			9,874			35,662			28,683

Gross profit		2,166			1,648			3,577			2,082			7,529			6,961

Operating expenses
General and administrative expenses		1,350			1,159			1,187			1,229			4,420			3,797
Selling expenses		762			662			888			849			2,533			2,236

Total operating expenses		2,112			1,821			2,075			2,078			6,953			6,033

Operating income (loss)		54			(173	)		1,502			4			576			928

Other income (expense)
Interest expense		(64	)		(48	)		(64	)		(69	)		(192	)		(187	)
Interest income		6			3			6			3			17			9
Gain on sale of assets		82			39			53			29			252			94
Other income		25			20			16			26			72			208

Total other income (expense)		49			14			11			(11	)		149			124

Income (loss) before income tax expense (benefit)		103			(159	)		1,513			(7	)		725			1,052

Income tax expense (benefit)		23			(40	)		247			(12	)		160			256

Net income (loss)	$	80		$	(119	)	$	1,266		$	5		$	565		$	796

Basic and diluted earnings (loss) per common share	$	0.02		$	(0.02	)	$	0.24		$	0.00		$	0.11		$	0.15

Weighted average number of common shares outstanding:
Basic		5,256			5,230			5,256			5,231			5,256			5,230
Diluted		5,290			5,230			5,298			5,286			5,293			5,281

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY

	Common Stock				Treasury Stock						Additional Paid-in		Retained						Common Stock				Treasury Stock						Additional Paid-in		Retained
	Shares		Amount		Shares			Amount			Capital		Earnings			Total			Shares		Amount		Shares			Amount			Capital		Earnings			Total

Balance, December 31, 2022		5,345,189		53		(40,920	)		(102	)		7,440		25,664			33,055			5,345,189		53		(40,920	)		(102	)		7,440		25,664			33,055

Restricted stock issued		—		—		—			—			—		—			—

Vesting of restricted stock		—		—		—			—			85		—			85
Stock-Based Compensation Expense																				—		—		—			—			85		—			85

Adoption of ASU 2016-13		—		—		—			—			—		(63	)		(63	)		—		—		—			—			—		(63	)		(63	)

Net income (loss)		—		—		—			—			—		80			80			—		—		—			—			—		80			80

Balance, March 31, 2023		5,345,189	$	53		(40,920	)	$	(102	)	$	7,525	$	25,681		$	33,157			5,345,189	$	53		(40,920	)	$	(102	)	$	7,525	$	25,681		$	33,157

Stock-Based Compensation Expense																				—		—		—			—			86		—			86

Net income (loss)																				—		—		—			—			—		(782	)		(782	)

Balance, June 30, 2023																				5,345,189	$	53		(40,920	)	$	(102	)	$	7,611	$	24,899		$	32,461

Restricted Stock Issued																				3,000
Stock-Based Compensation Expense																				—		1		—			—			90		—			91

Net income (loss)																				—		—		—			—			—		1,266			1,266

Balance, September 30, 2023																				5,348,189	$	54		(40,920	)	$	(102	)	$	7,701	$	26,165		$	33,818

Balance, December 31, 2021		5,353,095	$	53		(40,920	)	$	(102	)	$	6,935	$	24,864		$	31,157			5,353,095	$	53		(40,920	)	$	(102	)	$	6,935	$	24,864		$	31,750

Restricted stock issued		—		—		—			—			—		—			—

Vesting of restricted stock		—		—		—			—			126		—			126
Stock-Based Compensation Expense																				—		—		—			—			126		—			126

Net income (loss)		—		—		—			—			—		(119	)		(119	)		—		—		—			—			—		(119	)		(119	)

Balance, March 31, 2022		5,353,095	$	53		(40,920	)	$	(102	)	$	7,061	$	24,745		$	31,757			5,353,095	$	53		(40,920	)	$	(102	)	$	7,061	$	24,745		$	31,757

Stock-Based Compensation Expense																				—		—		—			—			126		—			126

Net income (loss)																				—		—		—			—			—		910			910

Balance, June 30, 2022																				5,353,095	$	53		(40,920	)	$	(102	)	$	7,187	$	25,655		$	32,793

Stock-Based Compensation Expense																				—		—		—			—			126		—			126

Net income (loss)																				—		—		—			—			—		5			5

Balance, September 30, 2022																				5,353,095	$	53		(40,920	)	$	(102	)	$	7,313	$	25,660		$	32,924

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

	Three Months Ended March 31,						Nine Months Ended September 30,
	2023			2022			2023			2022
Cash flows from operating activities:
Net income (loss)	$	80		$	(119	)	$	565		$	796
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		594			703			1,795			2,127
(Gain) loss on sale of property and equipment		(82	)		(39	)
Provision for Bad Debts		92			30
Stock compensation		85			126
(Gain) loss on sale of assets								(252	)		(94	)
Allowance for credit losses								(53	)		—
Stock-based compensation expense								261			379
Deferred taxes		1			5			—			(5	)
(Increase) decrease in
Accounts receivable - billed		(1,800	)		(2,064	)		(630	)		(3,163	)
Accounts receivable - unbilled		(1,544	)		(24	)		(254	)		161
Inventories		(1,173	)		(480	)
Inventories, net								(390	)		(1,139	)
Prepaid expenses and other assets		(70	)		90			(685	)		(104	)
Refundable income taxes		2			—			1			235
Increase (decrease) in
Accounts payable - trade		624			1,454			(340	)		2,506
Accrued expenses and other liabilities		(54	)		(365	)		383			(230	)
Deferred revenue		59			(11	)		1,288			227
Accrued compensation		(148	)		(129	)		(14	)		(444	)
Accrued income taxes		22			(43	)		89			(1,918	)
Deferred buy-back lease obligation		—			(314	)		—			(2,851	)
Customer deposits		1,757			(13	)		1,699			184
Net cash provided by (used in) operating activities		(1,555	)		(1,193	)		3,463			(3,333	)
Cash flows from investing activities:
Purchases of property and equipment		(1,164	)		(196	)		(4,131	)		(3,739	)
Deferred buy-back asset								—			1,909
Proceeds from the sale of property and equipment		82			39			252			103
Net cash provided by (used in) investing activities		(1,082	)		(157	)		(3,879	)		(1,727	)
Cash flows from financing activities:
Proceeds from long-term borrowings		—			2,805			—			2,805
Repayments of long-term borrowings		(153	)		(129	)		(461	)		(429	)
Net cash provided by (used in) financing activities		(153	)		2,676			(461	)		2,376
Net increase (decrease) in cash		(2,790	)		1,326			(877	)		(2,684	)
Cash
Beginning of period		6,726			13,492			6,726			13,492
End of period	$	3,936		$	14,818		$	5,849		$	10,808

Supplemental Cash Flow Information:
Cash payments for interest	$	64		$	48		$	192		$	187
Cash payments for income taxes	$	—		$	—		$	6		$	2,179
Capital expenditures included in accounts payable							$	2,625		$	1,340

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures that are included in our annual consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, summary of significant accounting policies, and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. The condensed consolidated December 31, 2022 balance sheet was derived from the audited financial statements included in the Form 10-K. Dollar amounts in the footnotes are stated in thousands, except for per share data.

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

The FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” This standard replaces the incurred loss impairment methodology with a methodology that reflects estimates of expected credit losses over their contractual life that are recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. We adopted this standard, and all related amendments, effective January 1, 2023, on a modified retrospective basis. The cumulative effect of the adoption resulted in an increase ~~(in thousands)~~ of ~~$63~~$64 in the allowance and a corresponding decrease in retained earnings as of January 1, 2023.

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

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

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

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

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

Any uncollected billed amounts for our performance obligations recognized over time, including contract retentions, are recorded within “Accounts receivable trade – billed”. On ~~March 31,~~September 30, 2023, and December 31, 2022, accounts receivable included contract retentions ~~(in thousands)~~ of approximately ~~$921~~$608 and $932, respectively, which are considered contract assets.

Our billed and unbilled revenue may be exposed to potential credit risk if our customers should encounter financial difficulties, and we maintain ~~reserves~~an allowance for ~~potential uncollectible receivables.~~estimated expected credit losses. A considerable amount of judgment is required when determining expected credit losses. Estimates of such expected losses are recorded based on historical losses experienced by the Company, current macro- and micro-economic conditions, and expected macro- and micro-economic conditions. Additionally, additional reserves are accumulated when we believe a specific customer may not be able to meet its financial obligations due to deterioration in financial condition or credit rating. Factors relevant to our assessment include our prior collection history with our customers, the related aging of past due balances, projections of credit losses based on historical trends or past events, and forecasts of future economic conditions. On ~~March 31,~~September 30, 2023, and December 31, 2022, ~~our allowances for doubtful accounts (in thousands) were $937~~the allowance was $792 and $781, respectively.

The change in the allowance for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 was as follows:

Balance at December 31, 2022	$	781	$	781
Cumulative Effect of Adoption of ASU 2016-13		64		64
Current Provision for Expected Credit Losses		92
Balance at March 31, 2023	$	937
Provision for Expected Credit Losses				(53	)
Balance at September 30, 2023			$	792

The Company entered into a buy-back agreement with one specific customer. Under this agreement, the Company guaranteed to buy-back barrier at a predetermined price at the end of the long-term project, subject to the condition of the product. Although the Company received payment in full when the product was produced, we were required to account for these transactions as operating leases. The amount of sale proceeds equal to the buy-back obligation was deferred until the buy-back was executed. The remaining sale proceeds were deferred in the same account and recognized on a straight-line basis over the usage period, such usage period commencing on delivery to the job-site and ending at the time the buy-back was executed. The Company capitalized the cost of the product on the Condensed Consolidated Balance Sheet, and depreciated the value, less residual value, to cost of leasing revenue in ~~"Cost~~“Cost of goods ~~sold"~~sold” over the estimated useful life of the asset. The deferred revenue and deferred costs related to the buy-back agreement were fully amortized as of December 31, 2022 and, therefore, the accounting as described has no impact on the ~~current~~nine month period ended ~~March 31,~~September 30, 2023.

Pursuant to an amendment entered into by the Company with the customer on April 13, 2022, the Company agreed to purchase barrier back in the amount equal to the buy-back guarantee. Accordingly, the Company settled any remaining deferred balances, in excess of the buy-back payment, to leasing revenue, and reclassified the net book value of the purchased product to ~~"Property~~“Property and equipment, ~~net"~~net”. The revenue was recognized in accordance with Topic 842, Leases. ~~As of December 31, 2022, the Company acquired all barrier subject to the buy-back agreement.~~ See Note 5. Commitments for additional information regarding the amendment.

Leasing fees are paid by customers at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease, in accordance with Topic 842, Leases.

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

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

In the following table, revenue is disaggregated by primary sources of revenue:

Revenue by Type	Three Months Ended March 31,										Three Months Ended September 30,										Nine Months Ended September 30,
	2023		2022		Change			% Change			2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
Soundwall Sales	$	1,046	$	1,364	$	(318	)		(23	)%	$	2,361	$	833	$	1,528			183	%	$	5,085	$	2,626	$	2,459			94	%
Architectural Panel Sales		409		906		(497	)		(55	)%		315		1,223		(908	)		(74	)%		1,044		3,476		(2,432	)		(70	)%
SlenderWall Sales		1,281		956		325			34	%		2,299		11		2,288			20,800	%		5,066		1,018		4,048			398	%
Miscellaneous Wall Sales		1,205		351		854			243	%		1,442		1,396		45			3	%		5,580		2,384		3,196			134	%
Barrier Sales		2,759		914		1,845			202	%		1,417		847		570			67	%		6,000		4,099		1,901			46	%
Easi-Set and Easi-Span Building Sales		1,007		615		392			64	%
Easi-Set Building Sales												1,226		1,523		(297	)		(20	)%		3,675		3,086		589			19	%
Utility Sales		275		466		(191	)		(41	)%		891		523		368			70	%		1,787		1,655		132			8	%
Miscellaneous Sales		260		279		(19	)		(7	)%		947		720		227			32	%		1,605		1,370		235			17	%
Total Product Sales		8,242		5,851		2,391			41	%		10,898		7,076		3,822			54	%		29,842		19,714		10,128			51	%
Barrier Rentals		1,120		1,485		(365	)		(25	)%		784		1,369		(585	)		(43	)%		2,604		4,816		(2,212	)		(46	)%
Royalty Income		411		427		(16	)		(4	)%		822		833		(11	)		(1	)%		1,827		2,031		(204	)		(10	)%
Shipping and Installation Revenue		3,069		2,672		397			15	%		3,147		2,678		469			18	%		8,918		9,083		(165	)		(2	)%
Total Service Revenue		4,600		4,584		16			0	%		4,753		4,880		(127	)		(3	)%		13,349		15,930		(2,581	)		(16	)%

Total Revenue	$	12,842	$	10,435	$	2,407			23	%	$	15,651	$	11,956	$	3,695			31	%	$	43,191	$	35,644	$	7,547			21	%

The revenue items: soundwall sales, architectural panel sales, SlenderWall sales, miscellaneous wall sales, miscellaneous sales, barrier rentals, and royalty income are recognized as revenue over time. The revenue items: barrier sales, Easi-Set ~~and Easi-Span~~ building sales, utility sales, and shipping and installation revenue are recognized as revenue at a point in time.

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 warranty claims, historically such amounts are minimal.

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

The carrying value for each of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, and accrued expenses, are carried at cost which approximates fair value because of the short-term nature of those instruments and are categorized as Level 1 within the GAAP fair value hierarchy. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of similar maturities and is categorized as Level 2 liabilities within the GAAP fair value hierarchy.

Historically, various customers have comprised greater than 10% of revenue during a given quarter or year. These customers are typically not the same quarter to quarter or year to year. ~~The Company views revenue details by jobs, and not by customers.~~ In the event a customer were to go out of business during a project, it is likely that the owner of the project would assign a new contractor to the job, and the Company would complete its scope of work. Therefore, the Company believes that it does not have a short-term vulnerability of severe impact to operations. ~~In cases where customers are less than 10% of revenue, the Company assesses if there is a near term severe impact.~~ The Company has determined that no customer, if lost, would result in a near term severe impact to the Company’s operations.

No customer represented greater than 10% of the Company’s consolidated net accounts receivable position, as of either September 30, 2023 or December 31, 2022. For the three month period ended September 30, 2023, the Company derived approximately 11% and 17% of its revenue from two separate customers. No customer represented more than 10% of the Company’s revenue for the three month period ended September 30, 2022. For the nine month periods ended September 30, 2023 the Company derived 15% of its revenue from one customer and no customer represented more than 10% of its revenue for the nine month period ended September 30, 2022.

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

Earnings (loss) per share are calculated as follows (in thousands, except earnings per share):

	Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022			2023		2022		2023		2022
Basic earnings (loss) per common share

Net income (loss)	$	80	$	(119	)	$	1,266	$	5	$	565	$	796

Weighted average shares outstanding		5,256		5,230			5,256		5,231		5,256		5,230

Basic earnings (loss) per common share	$	0.02	$	(0.02	)	$	0.24	$	0.00	$	0.11	$	0.15

Diluted earnings (loss) per common share

Net income (loss)	$	80	$	(119	)	$	1,266	$	5	$	565	$	796

Weighted average shares outstanding		5,256		5,230			5,256		5,231		5,256		5,230
Dilutive effect of restricted stock		34		—			42		55		37		51

Total weighted average shares outstanding		5,290		5,230			5,298		5,286		5,293		5,281

Diluted earnings (loss) per common share	$	0.02	$	(0.02	)	$	0.24	$	0.00	$	0.11	$	0.15

There was no restricted stock excluded from the diluted earnings per share calculation for the three and nine month periods ended ~~March 31,~~September 30, 2023 and ~~March 31,~~September 30, 2022.

The Company has a mortgage note payable to Summit Community Bank (the “Bank”) for the construction of its North Carolina facility. The note carries a ten-year term at a fixed interest rate of 3.64% annually per the Promissory Note Rate Conversion Agreement, with monthly payments of $22, and is secured by all of the assets of Smith-Carolina and a guarantee by the Company. The loan matures on October 10, 2029. The balance of the note payable on ~~March 31,~~September 30, 2023 was ~~$1,539.~~$1,452.

On March 27, 2020, the Company completed the refinancing of existing loans with a note payable to the Bank ~~in the amount of~~for $2,701. A portion of the funds, $678, was secured for improvements to an existing five-acre parcel for additional storage at the Midland, Virginia plant. The loan is collateralized by a first lien position on the Virginia property, building, and assets. The ~~refinance also released the lien on the manufacturing plant in Hopkins, South Carolina (Columbia). The~~ interest rate per the Promissory Note is fixed at 3.99% per annum, with principal and interest payments payable monthly over 120 months for $27. The loan matures on March 27, 2030. The balance of the note payable on ~~March 31,~~September 30, 2023 was ~~$1,978.~~$1,878.

On February 10, 2022, the Company completed the financing for its prior acquisition of certain real property in Midland, VAVirginia totaling approximately 29.8 acres with a note payable to the Bank ~~in the amount of~~for $2,805. The loan is collateralized by a first lien position on the related real property. The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months for $21. The loan matures on February 10, 2037. The balance of the note payable on ~~March 31,~~September 30, 2023 was ~~$2,632.~~$2,584.

The Company additionally has two smaller installment loans with annual interest rates of 2.90% and 3.99%, maturing in 2025, with balances totaling ~~$45.~~$35.

Under the loan covenants with the Bank, the Company is limited to annual capital expenditures of $5,000 and must maintain tangible net worth of $10,000. The Company is in compliance with all covenants pursuant to the loan agreements as of ~~March 31,~~September 30, 2023.

In addition to the notes payable discussed above, the Company has a $5,000 line of credit with the Bank with no balance outstanding as of ~~March 31,~~September 30, 2023. The line of credit is evidenced by a commercial revolving promissory note, which carries a variable interest rate of prime, with a floor of 3.50%~~, and matures~~. The line of credit was scheduled to mature on October 1, 2023, but was extended to December 1, 2023. The loan is collateralized by a first lien position on the ~~Company's~~Company’s accounts receivable and inventory and a second lien position on all other business assets. Key provisions of the line of credit require the Company (i) to obtain bank approval for capital expenditures in excess of $5,000 during the term of the loan and (ii) to obtain bank approval prior to its funding of any acquisition. On October 1, 2022, the Company received a Commitment Letter from the Bank to provide a guidance line of credit specifically to purchase business equipment in an amount up to $1,500. The commitment provides for the purchase of equipment for which a note payable will be executed with a term not to exceed five years with an interest rate at the Wall Street Journal prime rate plus 0.50% with a floor of 3.50% per annum. The loan is collateralized by a first lien position on all equipment purchased under the line. The commitment for the guidance line of credit ~~matures~~was scheduled to mature on October 1, 2023, but was extended to December 1, 2023. As of ~~March 31,~~September 30, 2023, the Company had not purchased any equipment pursuant to the $1,500 commitment.

The fair value of restricted stock awards is estimated to be the market price of the ~~Company's~~Company’s common stock at the close of the date of grant. Restricted stock activity during the ~~three~~nine months ended ~~March 31,~~September 30, 2023, is as follows:

	Performance- Based		Service- Based		Number of Shares		Weighted Average Grant Date Fair Value per Share		Performance-Based		Service-Based		Number of Shares		Weighted Average Grant Date Fair Value per Share
Non-vested, December 31, 2022		36,254		11,605		47,859	$	12.70		36,254		11,605		47,859	$	12.70
Granted		—		—		—		—		—		3,000		3,000		19.15
Vested		—		—		—		—		—		1,000		1,000		19.15
Forfeited		—		—		—		—

Non-vested, March 31, 2023		36,254		11,605		47,859	$	12.70
Non-vested, September 30, 2023										36,254		13,605		49,859	$	12.96

The actual number of performance-based shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three year performance measurement period based on measures that include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and free cash flow. The EBITDA margin and ~~revenue-growth~~revenue growth performance targets have been set for each of the Minimum, Target, and Maximum levels. The actual performance amount received is determined by the Compensation Committee and may be adjusted for items determined to be unusual in nature or infrequent in occurrence. A smaller portion is also earned based on Board discretion and continued service. The stock compensation cost is recognized over the requisite performance/service period using the straight-line method and can be periodically adjusted for the probable number of shares to be awarded.

~~Awards are being amortized to expense ratably, based upon the vesting schedule.~~ Stock compensation ~~(in thousands)~~expense for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023 was approximately ~~$85,~~$90 and $261, respectively, based upon the value at the date of grant. Stock compensation expense for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2022 was approximately $126 and $379, respectively, based upon the value at the date of grant. There was ~~$230~~$98 of unrecognized compensation cost related to the non-vested restricted stock as of ~~March 31,~~September 30, 2023 to be recognized through 2025.

On April 13, 2022, the Company and its customer entered into an amendment to the buy-back agreement described in ‘Revenue Recognition-Sale to Customer with a Buy-Back Agreement’. Pursuant to the amendment, the Company agreed to purchase all of the barrier subject to the buy-back agreement, 210,000 linear feet, as well as approximately an additional 115,000 linear feet. The total estimated purchase price is $5,000, representing the barrier, associated loading, freight, and yarding. In accordance with ASC 842 Leases, a portion of the total $5,000 buy-back was previously recorded as a deferred buy-back obligation on the Consolidated Balance Sheets. The deferred buy-back lease asset and obligation were fully reduced as the Company picked up the original 210,000 linear feet throughout 2022. ~~The~~As of September 30, 2023, the Company ~~continues~~has picked up all barrier related to ~~pick up remaining pieces of barrier in excess of the original deferred buy-back obligation~~this purchase agreement and ~~is capitalizing~~does not expect to incur any additional costs ~~as incurred.~~ related to this purchase.

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

This Quarterly Report and related documents include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act 1934. Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the Company’s actual results, performance (financial or operating), or achievements expressed or implied by such forward looking statements not to occur or be realized. Such forward looking statements generally are based upon the Company’s best estimates of future results, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “continue,” or similar terms, variations of those terms or the negative of those terms. Potential risks and uncertainties include, among other things, such factors as:

~~cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information and adversely impact our reputation and results of operations,~~

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

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

The Company was incorporated in Delaware on August 2, 1994. Prior to a corporate reorganization completed in October 1994, the Company conducted its business primarily through Smith-Midland Virginia, which was incorporated in 1960 as Smith Cattleguard Company, a Virginia corporation, and 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.

As a part of the construction industry, the ~~Company's~~Company’s sales and net ~~income~~income(loss) may vary greatly from quarter to quarter over a given year. Because of the cyclical nature of the construction industry, many factors not under our control, such as weather and project delays, affect the ~~Company's~~Company’s production schedule, possibly causing momentary slowdowns in sales and net income. ~~In addition, revenues are affected by the number, size, and timing of significant projects to which the Company is contracted.~~ As a result of these factors, the Company is not always able to earn a profit for each period, therefore, please read ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations and the accompanying financial statements with these factors in mind.

The Company had net income of $80 for the first quarter 2023, ~~compared to a~~ net loss of ~~$119~~$782 for the ~~first~~second quarter ~~2022.~~2023, and net income of $1,266 for the third quarter 2023, resulting in net income of $565 for the nine months ended September 30, 2023. Total ~~revenue~~revenues for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023 ~~was $12,842~~were $15,651 and $43,191 compared to ~~$10,435~~$11,956 and $35,644 for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2022. The increase in total revenue for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023 from ~~March 31,~~September 30, 2022 is ~~due primarily to~~mainly from an increase in ~~barrier~~SlenderWall sales, ~~at our North Carolina~~soundwall sales, and ~~South Carolina manufacturing plants.~~ miscellaneous wall sales.

The cost of goods sold as a percent of revenue, not including royalties, for the three and nine months ended ~~March 31,~~September 30, 2023, ~~was~~were 81% and 86%, as compared to ~~88%~~89% and 85% for the three and nine months ended ~~March 31,~~September 30, 2022. The decrease in cost of goods sold as a percentage of revenue, not including royalties, for the three months ended ~~March 31,~~September 30, 2023, compared to the three months ended ~~March 31,~~September 30, 2022, is due to ~~the increase in overall production volumes which increased the absorption of overhead costs, and due to the increase in~~greater revenue generated from SlenderWall sales, a proprietary product, which typically carries higher ~~margin product. Additionally, the decrease~~margins that non-proprietary products. The increase in cost of goods sold as a percentage of revenue, not including royalties, ~~was~~for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, is due to ~~production throughout~~additional costs, approximately $400, incurred for the ~~first~~remaking of panels for a specific project in the second quarter of 2023. To a lesser extent, cost of goods sold as a percentage of revenue, not including royalties, was negatively impacted by less revenue generated from barrier rental through the nine month period ended September 30, 2023, which typically carry higher margins than product sales. Increased material and labor costs also affected margins for the three and nine month periods ended September 30, 2023 as compared to the same periods in 2022.

General and administrative expenses were adversely affected by a one-time wire fraud incident in the second quarter of 2023 ~~having included contracts that factored~~resulting in the rising inflationary costs experienced throughout 2022. Total general and administrative expenses for the three-month period ended March 31, 2023 were $1,350 compared to $1,159 for the three-month period ended March 31, 2022 due to an ~~increase in~~additional expense ~~related~~of $275, net of insurance proceeds. Subsequent to the ~~allowance for credit losses and in increase in salaries and wages. Total selling expenses increased for~~incident, the ~~three month period ended March 31, 2023~~Company has revised its payment procedures to ~~$762 from $662 for~~reduce the ~~three month period ended March 31, 2022 due to the hiring~~possibility of ~~additional of sales personnel.~~ another wire fraud incident occurring.

As of ~~May~~November 1, 2023, the Company’s sales backlog was approximately ~~$51.4~~$60.2 million, as compared to approximately ~~$32.7~~$51.4 million at the same time in 2022. It is estimated that the majority of the projects in the sales backlog will be produced within 12 months, with a portion extending several years.

Three and nine months ended ~~March 31,~~September 30, 2023, compared to the three and nine months ended ~~March 31,~~September 30, 2022

Revenue includes product sales, barrier rentals, royalty income, and shipping and installation revenues. Product sales are further divided into soundwall, architectural and SlenderWall™ panels, miscellaneous wall panels, highway barrier, Easi-Set® buildings, utility products, and miscellaneous precast products. The following table summarizes the sales by product type and comparison for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023, and 2022.

Revenue by Type	Three Months Ended March 31,										Three Months Ended September 30,										Nine Months Ended September 30,
	2023		2022		Change			% Change			2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
Soundwall Sales	$	1,046	$	1,364	$	(318	)		(23	)%	$	2,361	$	833	$	1,528			183	%	$	5,085	$	2,626	$	2,459			94	%
Architectural Panel Sales		409		906		(497	)		(55	)%		315		1,223		(908	)		(74	)%		1,044		3,476		(2,432	)		(70	)%
SlenderWall Sales		1,281		956		325			34	%		2,299		11		2,288			20,800	%		5,066		1,018		4,048			398	%
Miscellaneous Wall Sales		1,205		351		854			243	%		1,442		1,396		45			3	%		5,580		2,384		3,196			134	%
Barrier Sales		2,759		914		1,845			202	%		1,417		847		570			67	%		6,000		4,099		1,901			46	%
Easi-Set and Easi-Span Building Sales		1,007		615		392			64	%
Easi-Set Building Sales												1,226		1,523		(297	)		(20	)%		3,675		3,086		589			19	%
Utility Sales		275		466		(191	)		(41	)%		891		523		368			70	%		1,787		1,655		132			8	%
Miscellaneous Sales		260		279		(19	)		(7	)%		947		720		227			32	%		1,605		1,370		235			17	%
Total Product Sales		8,242		5,851		2,391			41	%		10,898		7,076		3,822			54	%		29,842		19,714		10,128			51	%
Barrier Rentals		1,120		1,485		(365	)		(25	)%		784		1,369		(585	)		(43	)%		2,604		4,816		(2,212	)		(46	)%
Royalty Income		411		427		(16	)		(4	)%		822		833		(11	)		(1	)%		1,827		2,031		(204	)		(10	)%
Shipping and Installation Revenue		3,069		2,672		397			15	%		3,147		2,678		469			18	%		8,918		9,083		(165	)		(2	)%
Total Service Revenue		4,600		4,584		16			0	%		4,753		4,880		(127	)		(3	)%		13,349		15,930		(2,581	)		(16	)%

Total Revenue	$	12,842	$	10,435	$	2,407			23	%	$	15,651	$	11,956	$	3,695			31	%	$	43,191	$	35,644	$	7,547			21	%

Soundwall Sales - Soundwall sales were ~~lower~~higher for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023, compared to the same ~~period~~periods in 2022. The ~~decrease~~increase is mainly due to ~~lower~~higher production ~~as a project completed production~~volumes at the North Carolina and South Carolina plants reflecting larger soundwall projects than in the ~~South Carolina plant in 2022.~~prior periods. Soundwall sales are expected to trend ~~slightly higher throughout~~similarly for the ~~remainder~~fourth quarter of 2023 as compared to the first ~~quarter~~three quarters of 2023, although no assurance can be given.

Architectural Panel Sales - Architectural panel sales decreased for the three ~~months~~and nine month periods ended ~~March 31,~~September 30, 2023, compared to the same period in 2022. The decrease is from the completion of two architectural projects ~~that began production in 2021 and completed~~ in the ~~second~~third quarter of 2022. Architectural sales are expected to trend similarly ~~throughout~~for the fourth quarter of 2023, as compared to the first ~~quarter~~three quarters of 2023, although no assurance can be given.

SlenderWall Sales - SlenderWall sales increased for the three ~~months~~and nine month periods ended ~~March 31,~~September 30, 2023, as compared to the same ~~period~~periods in 2022. ~~A larger SlenderWall~~The increase is due to two projects being produced consecutively throughout 2023 in comparison to a single project in 2022, which production was completed in ~~production during~~ the first quarter of 2022. SlenderWall sales are expected to trend lower throughout the remainder of 2023 ~~than the SlenderWall project in production during~~as compared to the first ~~quarter~~three quarters of ~~2022.~~2023. The Company continues to focus sales initiatives on SlenderWall, but no assurance can be given as to the success of this endeavor.

Miscellaneous Wall Sales - Miscellaneous wall sales increased for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023 compared to the same ~~period~~periods in 2022 due to the increased production of retaining wall projects at the Virginia and South Carolina plants. Miscellaneous wall sales are expected to trend similarly ~~throughout 2023 as~~for the ~~first~~fourth quarter of 2023, although no assurance can be provided.

Barrier Sales - Barrier sales ~~significantly~~ increased for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023, compared to the same ~~period~~periods in 2022. The increase is due to large barrier projects at all three manufacturing facilities that had significant production volumes in ~~North Carolina~~the first and ~~South Carolina.~~third quarters of 2023. Barrier sales are expected to trend higher infor the full year 2023 than 2022 due to ~~the~~ large barrier ~~projects in North Carolina and South Carolina,~~orders, however the Company continues to shift marketing efforts from barrier sales to barrier rentals in the Delaware to Virginia region.

Easi-Set® ~~and Easi-Span~~ Building Sales -– Building ~~and restroom~~ sales ~~increased~~decreased for the three month period ended ~~March 31,~~September 30, 2023, compared to the same period in 2022. The decrease is due to normal fluctuations in sale volumes. Building sales increased for the nine month period ended September 30, 2023, compared to the same period in 2022 mainly due to increased building sales at all three manufacturing ~~plants.~~plants reflecting normal product sale fluctuations. Building ~~and restroom~~ sales are expected to continue to trend similarly ~~throughout~~for the ~~remainder~~fourth quarter of 2023, as compared to the first ~~quarter~~three quarters of ~~2023.~~2023, although no assurance can be provided.

Utility Sales - Utility sales ~~decreased~~increased for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023, compared to the same ~~period~~periods in 2022. ~~The Company continues to competitively bid on utility projects to gain market share and has recently won multiple data center projects increasing the sales volume of dry utility vaults.~~ Utility sales are expected to trend ~~higher~~similarly for the ~~remainder~~fourth quarter of 2023 as compared to the ~~first~~third quarter of 2023, although no assurance can be provided.

Miscellaneous Product Sales - Miscellaneous products ~~are products that~~ are produced or sold that do not meet the criteria defined for other revenue categories. Examples would include precast concrete slabs, concrete blocks, or small add-on items. Miscellaneous product sales ~~decreased~~increased for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023, compared to the same ~~period~~periods in 2022. ~~The decrease is mainly from the South Carolina facility that completed production on a few smaller jobs.~~ Miscellaneous product sales are expected to trend similarly throughout the remainder of 2023, ~~as compared to the first quarter of 2023.~~although no assurance can be provided.

Barrier Rentals – Barrier rentals decreased for the three and nine month periods ended September 30, 2023 compared to the same periods in 2022. Revenue from the Company’s core rental barrier fleet decreased by 39% for the nine month period ended ~~March 31,~~September 30, 2023 compared to the same period in 2022. ~~This~~The decrease in barrier rental revenue for the three and nine month periods ended September 30, 2023 is due to additional revenue recognized in the prior periods related to the barrier buy-back agreement which was fully recognized as of December 31, 2022. Additionally, the decrease is ~~mainly attributed~~related to a ~~slight~~temporary slowdown in ~~large~~ barrier rental projects during the first half of 2023, however the Company saw an increase in projects during the latter half of the third quarter of 2023. Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher throughout the remainder of 2023, as compared to barrier rental revenue, excluding revenue from special barrier projects, in the first ~~quarter~~nine months of 2023, reflecting increased bidding activity, although no assurance can be ~~given.~~provided.

Royalty Income – Royalties decreased for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023, compared to the same ~~period~~periods in ~~2022 due~~2022. The decrease is related to ~~the weather related~~project delays ~~in projects~~ experienced by licensees. ~~It is expected that infrastructure spending will continue to drive royalties, and the~~The Company expects royalties ~~for 2023~~ to ~~exceed royalty income~~trend similarly for the ~~full year 2022,~~remainder of 2023, compared to the first half of 2023, although no assurance can be ~~given.~~provided.

Shipping and Installation –- Shipping revenue results from shipping our products to the ~~customers'~~customers’ final destination and is recognized when the shipping services take place. Installation activities include the installation of our products at the customers’ construction ~~site.~~sites. Installation revenue ~~results~~is recognized when attaching architectural ~~wall~~and SlenderWall panels to a building, installing an Easi-Set® ~~or Easi-Span~~ building at ~~a customers' site, setting highway barrier,~~customers’ sites, or setting any of our other precast products at a site, specific to the requirements of the owner. Shipping and installation ~~revenues~~revenue increased for the three month period ended ~~March 31,~~September 30, 2023, compared to the same period in 2022. The increase is ~~mainly attributed~~related to the increase in shipping and installation of ~~SlenderWall~~barrier rental projects. Shipping and ~~architectural panels. This~~installation revenue decreased for the nine month period ended September 30, 2023, compared to the same period in 2022. The decrease is ~~associated with~~mainly attributed to the ~~increased production~~decrease in shipping and installation of SlenderWall and architectural panels ~~that occurred in~~during the ~~third and fourth quarters~~first nine months of ~~2021.~~

~~Cost of Goods Sold~~ ~~- Total cost of goods sold as a percent of revenue, excluding royalties, for the three months ended March 31,~~ 2023 ~~was 86%,~~ as compared to 88% for the three months ended March 31, 2022. The decrease in cost of goods sold as a percentage of revenue, not including royalties, for the three months ended March 31, 2023, compared to the three months ended March 31, 2022, is due to the increase in overall production volumes, which increased the absorption of overhead costs. The increase in SlenderWall revenue as a percent of total revenue from the first ~~quarter~~nine months of 2022 to the first quarter of 2023, decreased the cost of goods sold as a percentage of revenue, not including royalties, as SlenderWall sales typically carry higher margins than other product sales. Finally, the decrease in cost of goods sold as a percentage of revenue, not including royalties, decreased due to production throughout the first quarter of 2023 included having contracts that factored in the rising inflationary costs experienced throughout 2022.

Cost of Goods Sold - Total cost of goods sold as a percent of revenue, not including royalties, for the three and nine months ended September 30, 2023, was 81% and 86%, respectively, as compared to 89% and 85% for the three and nine months ended September 30, 2022. The decrease in cost of goods sold as a percentage of revenue, not including royalties, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, is mainly due to greater revenue generated from SlenderWall sales, a proprietary product, which typically carries higher margins that non-proprietary products. The increase in cost of goods sold as a percentage of revenue, not including royalties, for the nine months ended September 30, 2023, compared to nine months ended September 30, 2022, is mainly due to additional costs incurred, approximately $400, for the production of panels remade for one specific project in the second quarter of 2023. To a lesser extent, the margins for the nine month period ended September 30, 2023 were negatively impacted by the decrease in revenues derived from barrier rental revenue which carry higher margins than product sales. Higher revenue levels in the three and nine month periods ended September 30, 2023, than in the comparable prior year periods, had a favorable affect on cost of goods sold as a percent of revenue, not including royalties, reflecting the absorption of fixed overhead costs. Increased material and labor costs also affected margins for the three and nine month periods ended September 30, 2023 as compared to the same periods in 2022.

General and Administrative Expenses - For the three ~~months~~and nine month periods ended ~~March 31,~~September 30, 2023, the ~~Company's~~Company’s general and administrative expenses ~~increased by $191~~were $1,187 and $4,420, respectively compared to ~~$1,350 from $1,159 during~~$1,229 and $3,797 for the same ~~period~~periods in 2022. The increase is mainly attributed to an increase in expense related to the allowance for credit losses and in increase in salaries and wages during the first quarter of 2023 compared to the first quarter of 2022. General and administrative expense as a percentage of total revenue ~~was~~for the three and nine month periods ended September 30, 2023 were 8% and 10%, respectively, and 10% and 11%, respectively, for the three and nine month periods ended September 30, 2022. The decrease of general and administrative expenses for the three month period ended ~~March 31,~~September 30, 2023 compared to the same period in 2022, is the result of $67 of insurance proceeds received in the recent quarter as a partial recovery of the wire fraud loss described in the next sentence. The increase of general and administrative expenses for the nine month period ended September 30, 2023 compared to the same period in 2022, ~~respectively.~~is primarily the result of an additional expense incurred related to one-time wire fraud incident in the second quarter of 2023, resulting in additional expense of $275, net of the insurance proceeds received to date. Any further funds recovered through insurance claims in future periods will offset the increased expense, although no assurance can be provided to the extent to which funds will be recovered. General and administrative expenses for the nine month period ended September 30, 2023 also increased over the prior year period due to an increase in allowance for credit losses and an increase in salaries and wages.

Selling Expenses - Selling expenses for the three ~~months~~and nine month periods ended ~~March 31,~~September 30, 2023 ~~increased~~were $888 and $2,533, respectively compared to ~~$762 from $662~~$849 and $2,236 for the same ~~period~~periods in 2022. ~~The increase in selling~~Selling expenses increased for the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023 compared to the ~~same period in~~three and nine month periods ended September 30, 2022 is due to ~~the hiring of~~ additional ~~salespeople and has contributed~~salespersons, increased commissions related to ~~the increase in backlog to $51.4 million. The Company expects selling expenses to increase in future periods with the plan for additional~~increased sales, ~~associates~~ and increased ~~advertising~~ spending ~~aligning with the strategy to increase SlenderWall sales and barrier rentals.~~for marketing.

Operating Income (Loss) - The Company had operating income for the three and nine month periods ended September 30, 2023 of $1,502 and $576, respectively compared to operating income of $4 and $928 for the same periods in 2022. The increase in operating income for the three month period ended ~~March 31,~~September 30, 2023 ~~of $54~~ compared to ~~operating loss of $173 for~~ the same period in ~~2022. The increase~~2022 is mainly due to the increase in revenue and the decrease in cost of goods sold as a percent of revenue. The decrease in operating income for the nine month period ended September 30, 2023 compared to the same period in 2022 is mainly due to the increase in cost of goods sold as a percent of revenue and ~~increased sales volume.~~increase in general and administrative expenses.

Interest Expense - Interest expense was $64 and ~~$48~~$69 for the three month periods ended ~~March 31,~~September 30, 2023 and 2022, respectively. Interest expense was $192 and $187 for the nine month periods ended September 30, 2023 and 2022, respectively. The Company expects interest expense for 2023 to be higher compared to the full year of 2022 due to the increased level of ~~indebtedness that took place in 2022.~~indebtedness.

Income Tax Expense (Benefit) - The Company had an income tax expense of ~~$23~~$247 with an effective rate of 16% for the three months ended ~~March 31,~~September 30, 2023, compared to income tax benefit of ~~$40~~$12 for the same period in 2022. The Company had income tax expense of $160 with an effective rate of 22% for the nine months ended September 30, 2023 compared to income tax expense of $256 with an effective rate of 24% for the same period in 2022.

Net Income (Loss) - The Company had net income of ~~$80~~$1,266 for the three months ended ~~March 31,~~September 30, 2023, compared to net ~~loss~~income of ~~$119~~$5 for the same period in 2022. The basic and diluted earnings per share was ~~$0.02~~$0.24 for the three months ended ~~March 31,~~September 30, 2023, and the basic and diluted ~~loss~~earnings per share was ~~$0.02~~$0.00 for the three months ended ~~March 31,~~September 30, 2022. The Company had net income of $565 for the nine months ended September 30, 2023, compared to net income of $796 for the same period in 2022. The basic and diluted earnings per share was $0.11 for the nine months ended September 30, 2023 and the basic and diluted earnings per share was $0.15 for the nine months ended September 30, 2022.

The Company additionally has two smaller installment loans with annual interest rates of 2.90% and 3.99%, maturing in 2025, with balances totaling ~~$45.~~$35.

Under the loan covenants with the Bank, the Company is limited to annual capital expenditures of $5,000 and must maintain tangible net worth of $10,000. The Company is ~~compliant~~in compliance with all covenants pursuant to the loan agreements as of ~~March 31,~~September 30, 2023.

The ~~Company's~~Company’s outstanding notes payable are financed at fixed rates of interest. This leaves the Company with almost ~~impervious~~no risk related to fluctuating interest rates. Increases in such rates will only affect the interest paid by the Company if new debt is obtained, or the available line of credit is drawn upon, with a variable interest rate.

On ~~March 31,~~September 30, 2023, the Company had cash totaling ~~$3,936~~$5,849 compared to cash totaling $6,726 on December 31, 2022. The decrease in cash is primarily the result of cash absorbed by ~~operations~~investing activities during the ~~three~~nine month period ended ~~March 31,~~September 30, 2023. More specifically, the ~~Company’s accounts receivable position increased, inventory increased, and~~Company had significant ~~payments were remitted~~cash outlays related to land development of a storage lot for the rental barrier ~~buy-back. Offsetting~~fleet and a new batch plant system for the ~~reduction in cash, in part, was an increase in customer deposits during the first quarter of 2023.~~South Carolina manufacturing facility. The Company expects its cash position to be favorably affected to the extent that it ~~is successful in collecting~~continues to collect outstanding accounts receivable balances.

The Company’s accounts receivable balances, net of allowance for expected credit losses, at ~~March 31,~~September 30, 2023 was ~~$17,867,~~$16,842, compared to $16,223 at December 31, 2022. The increase, and relatively large balance, is primarily the result of the continued effects of turnover of the accounts receivable position experienced throughout the later part of 2022 and into the first quarter of 2023. The Company expects accounts receivable balances to trend downwards, ~~beginning in the second quarter of 2023,~~ with increased collection efforts as a result of the fulfillment of the accounts receivable position, although no assurance can be provided.

Capital spending for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 totaled ~~$1,157~~$4,131 as compared to ~~$196~~$3,739 for the same period in 2022. The 2023 expenditures were primarily for the ~~buy-back of barrier to increase the barrier rental fleet and for the~~ development of a storage lot for the barrier rental ~~fleet.~~fleet and the installation of a new batch plant system for the South Carolina production facility. The Company intends to invest approximately $5,000 for the full year 2023, which includes the land development of a storage lot, the new batch plant system, ~~completion of yard development,~~ completion of the barrier buy-back, and miscellaneous manufacturing equipment. Anticipated capital expenditures excludes acquisitions and plant expansions.

The Company’s cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 30 to 90 days after the products are produced, and with some architectural contracts, retainage may be held until the entire project is completed. This payment schedule may result in liquidity challenges for the Company because it must bear a portion of the cost of production before it receives payment from its customers. The Company’s average days sales outstanding (DSO), excluding the effect of unbilled revenue, was ~~122~~116 days for the nine months ended September 30, 2023, compared to 99 days for the three months ended ~~March 31, 2023, compared~~September 30, 2022. . The increase, is primarily the result of the continued effects of turnover of the accounts receivable position experienced throughout the later part of 2022 and into the first quarter of 2023. The Company expects DSO to ~~102 days for the three months ended March 31, 2022.~~trend downwards, with increased collection efforts, although no assurance can be provided.

If actual results regarding the ~~Company's~~Company’s production, sales, and subsequent collections on customer receivables are materially inconsistent with ~~management's~~management’s expectations, the Company may in the future encounter cash flow and liquidity issues. If the ~~Company's~~Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants and could cause defaults and acceleration under its loan agreements and lose access to the credit facility. Although no assurances can be given, the Company believes that its current cash resources, anticipated cash flow from operations, and the availability under the line of credit will be sufficient to finance the Company’s operations for at least the next 12 months.

The Company’s inventory was ~~$4,991~~$4,208 on ~~March 31,~~September 30, 2023, and $3,818 on December 31, ~~2022, or an increase of $1,173.~~2022. The increase in inventory is mainly due to the increase of raw materials inventory ~~on-hand compared to the prior year. The increase is related to the additional materials~~ needed on-hand for the anticipated production volumes later in 2023 to execute on the Company’s backlog. Inventory turnover was ~~13.4,~~15.3, annualized for the ~~three~~nine months ended ~~March 31,~~September 30, 2023, compared to ~~12.6,~~13.8, annualized for the same period in 2022.

~~The Company’s critical accounting policies~~Any estimates used by the Company are more fully described, where applicable, in its ~~Summary of~~Critical Accounting Policies to the Company’s consolidated financial statements on Form 10-K for the year ended December 31, 2022. Through September 30, 2023, the only change in policies involving estimates is regarding the calculation of the allowance for expected credit losses as discussed under Accounts Receivable and Contract Balances.

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

Management believes that the Company’s operations were affected by inflation during the three and nine month ~~period~~periods ended ~~March 31,~~September 30, 2023 and for the full year 2022, particularly in the purchases of certain raw materials such as cement and aggregates and steel, and also with labor costs. The Company believes that raw material pricing and labor costs ~~may~~will continue to increase in 2023, although no assurance can be given regarding future pricing or costs.

As of ~~May~~August 1, 2023, the Company’s sales backlog was approximately ~~$51.4~~$60.2 million, as compared to approximately ~~$32.7~~$51.4 million at the same time in 2022. It is estimated that the majority of the projects in the sales backlog will be produced within 12 months, with a portion extending several years.

The Company carried out ~~our~~an evaluation, under the supervision and with the participation of ~~our~~ management, including ~~our~~the 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, as a result of our material weakness in internal controls over financial reporting disclosed within our Annual Report on Form 10-K for the year ended December 31, 2022, management concluded that our disclosure controls and procedures were not effective as of ~~March 31,~~September 30, 2023. A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In this respect, management identified a material weakness in the methodology used to estimate the allowance for doubtful accounts. Notwithstanding the existence of this material weakness, management believes that the consolidated financial statements in this Form 10-Q present, in all material respects, the Company’s financial condition as reported, in conformity with United States Generally Accepted Accounting Principles (“GAAP”).

Management is committed to the remediation of the material weakness described above. To address the material weakness associated with the estimation of the allowance for doubtful accounts, management revised the methodology applied ~~for~~in the fourth quarter of 2022. Further, the methodology for calculating the allowance has been further revised in the first quarter of 2023 in consideration of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” Refer to Recently Adopted Accounting Pronouncement in the Financial Statements of the Company set forth herein, for additional information. Management believes they have sufficiently designed and implemented a revised control and will test sufficiency of operating effectiveness as part of their year-end process.

Other than as described above, there were no other changes in the Company’s internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act during the quarter ended ~~March 31,~~September 30, 2023 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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

The Company has set Wednesday, July 26, 2023 (the “Meeting Date”) as the date of the Company’s 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”). Stockholders of record on May 29, 2023 will be entitled to receive notice of and to vote at the 2023 Annual Meeting or any adjournment thereof. The time and location of the 2023 Annual Meeting will be specified in the Company’s proxy statement for the 2023 Annual Meeting.

Because the Meeting Date for the 2023 Annual Meeting has changed by more than 30 days from the anniversary date of the Company’s 2022 Annual Meeting of Stockholders, prior deadlines regarding the submission of stockholder proposals in connection with the 2023 Annual Meeting are no longer applicable. In accordance with Rule 14a-5(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is providing stockholders with new information with respect to the submission of proposals intended to be included in the Company’s proxy materials under Rule 14a-8 promulgated under the Exchange Act (“Rule 14a-8”).

Pursuant to Rule 14a-8, the deadline for receipt of stockholder proposals intended to be included in the Company’s proxy materials must be a reasonable time before the Company begins to print and send such proxy materials. Such proposals must be received by the Company’s Secretary at the Company’s headquarters at 5119 Catlett Road, Midland, Virginia 22728, on or before the close of business on May 26, 2023, which the Company has determined to be a reasonable time before it expects to begin to print and send its proxy materials. Proposals must comply with the requirements of Rule 14a-8 and the interpretations thereof, and may be omitted from the proxy materials if not in compliance with applicable requirements.

Additionally, in accordance with the advance notice provisions set forth in the Company’s by-laws, in order for a stockholder proposal to be submitted outside of Rule 14a-8 or a director nomination submitted by a stockholder to be considered timely, it was required to be received by the Company’s Secretary by December 21, 2022. There is no change to the deadline for proposals made outside of the Rule 14a-8 process or a director nomination submitted by a stockholder, and the time period for making such proposals has passed. None

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.

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

PART I. FINANCIAL INFORMATION		Page

Item 1. Financial Statements (Unaudited)		3

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Income (Loss)		5

Condensed Consolidated Statements of ~~Stockholders'~~Stockholders’ Equity		6

Condensed Consolidated Statements of Cash Flows		7

Notes to Condensed Consolidated Financial Statements		8

Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures About Market Risk		21

Item 4. Controls and Procedures		21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		22

Item 1A. Risk Factors		22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22

Item 3. Defaults Upon Senior Securities		22

Item 4. Mine Safety Disclosures		22

Item 5. Other Information		22

Item 6. Exhibits		23

Signatures		24

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

	SMITH-MIDLAND CORPORATION (Registrant)

Date: ~~May 15,~~November 9, 2023	By:	/s/ Ashley B. Smith
		Ashley B. Smith, Chief Executive Officer
		(Principal Executive Officer)

Date: ~~May 15,~~November 9, 2023	By:	/s/ Stephanie Poe
		Stephanie Poe, Chief Financial Officer
		(Principal Financial Officer)

	●	while the Company had net income for the ~~quarter~~quarters ended September 30, 2023 and March 31, 2023 and the years ended December 31, 2022 and 2021 there are no assurances that the Company can remain profitable in future periods; in line with this risk, the Company incurred losses from operations for the quarters ended June 30, 2023, December 31, 2022, and March 31, 2022, ~~and December 31, 2021,~~

	●	there can be no assurances of revenue growth; in line with this risk, the Company had lower revenues for the year ended December 31, 2022 than in the prior year,

	●	while we have expended significant funds in recent years to increase manufacturing capacity and the barrier rental fleet, and plan to continue to increase manufacturing capacity, there is no assurance that we will achieve significantly greater revenues,

	●	our debt level increased significantly in February 2022, and our ability to satisfy the same cannot be assured,

	●	our cash resources were significantly reduced during 2022 and through the first quarter of 2023 reflecting the significant purchase of barrier and equipment and a significant increase in accounts receivables and there can be no assurance that the Company’s cash will not be further reduced,

	●	our accounts receivables has increased during 2022 and through the first and third quarter of 2023 and our ability to fully collect these balances cannot be assured,

	●	we identified a material weakness in internal controls over financial ~~reports~~reporting related to the methodology applied to the estimation of the allowance for doubtful accounts for the fourth quarter of 2022,

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

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

	●	the Company’s operations in ~~2022 and~~ the first ~~quarter~~nine months of 2023 and for the full year 2022 were adversely impacted by inflation in the purchase of raw materials such as cement and aggregates, steel, and also with labor costs, and continues to be adversely impacted,

	●	changes in general economic conditions in our primary service areas,

	●	adverse weather, which inhibits the demand for our products, or the installation or completion of projects,

	●	potential decreases in our year to year contract backlog,

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

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