Forward-Looking Statements





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

? while the Company had net income for the years ended December 31, 2021 and


       2020 and the six months ended June 30, 2022 there are no assurances that
       the Company can remain profitable in future periods; in line with this

risk, the Company incurred a net operating loss for both the quarters


       ended December 31, 2021 and March 31, 2022,




  ?    while we have expended significant funds in recent years to increase

manufacturing and barrier rental capacity, and plan to continue to do so,

there is no assurance that we will achieve significantly greater revenues,

? although the ultimate impact is uncertain at this time, resurgence of the

coronavirus outbreak may significantly affect the Company's financial


       condition, liquidity, and results of operations. In this respect, the
       Company had previously experienced the following negative impacts on its
       business: backlog reduction during 2020 from that in 2019, lower

production volumes, employee absences, and bidding restrictions within


       certain key states. The Company is continuing to experience delays in
       receipt of materials through its supply chain,

? our debt level increased significantly in February 2022, and our ability


       to satisfy the same cannot be assured,




  ?    our ability to collect accounts receivable may be adversely affected by
       the coronavirus outbreak,

? the continued availability of financing in the amounts, at the times, and


       on the terms required, to support our future business and capital
       projects,

? the extent to which we are successful in developing, acquiring, licensing,


       or securing patents for proprietary products,

? changes in economic conditions specific to any one or more of our markets

(including the availability of public funds and grants for construction),






  ?    the Company's operations in the first six months of 2022 and for the full
       year 2021 were adversely impacted by inflation in the purchase of raw

materials such as cement and aggregates, steel, and also with labor costs,


       and expects such inflationary factors to continue throughout 2022,

? 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,

? our compliance with governmental regulations,

? the outcome of future litigation, if any,

? potential decreases in our year to year contract backlog,






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




  ?    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,

? the cyclical nature of the construction industry,

? our exposure to increased interest expense payments should interest rates


       change, and




  ?    the other factors and information disclosed and discussed in other
       sections of this report.

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






         14

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Overview; Potential Effect of the COVID-19 Outbreak





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 customers are primarily general contractors and federal, state, and
local transportation authorities located in the Mid-Atlantic, Northeastern,
Midwestern regions and parts of the Southeastern region of the United
States. The Company's operating strategy has involved producing innovative and
proprietary products, including SlenderWall™, a patented, lightweight,
energy-efficient concrete and steel exterior insulated wall panel for use in
building construction; J-J Hooks® Highway Safety Barrier, a positive-connected
highway safety barrier; 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 sales and net income 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 production schedule, possibly
causing momentary slowdowns in sales and net income. As a result of these
factors, the Company is not always able to earn a profit for each period,
therefore, please read Management's Discussion and Analysis of Financial
Condition and Results of Operations and the accompanying financial statements
with these factors in mind.




The full impact of the COVID-19 outbreak, including a recent resurgence in the
United States, continues to evolve as of the date of this report. As such, it is
uncertain as to the full magnitude that the pandemic may have on the Company's
financial condition, liquidity, and future results of operations. The Company
had previously experienced an adverse impact to its business by a reduction in
revenues in 2020 from that of 2019, a reduction in backlog during 2020 from that
in 2019, lower production volumes, employee absence, and bidding restrictions
within certain key states such as Maryland and North Carolina. The Company is
currently experiencing delays in receipt of materials through its supply chain.
The Company may be further negatively impacted in the following respects:



a) by the potential inability of customers of the Company to pay amounts owed to
the Company for products or services already provided should their businesses
suffer setbacks; this risk is heightened by the relatively long lag time
experienced by the Company in collecting accounts receivable (see "Liquidity and
Capital Resources" below);

b) by potential supply side issues should our vendors experience hardships, and
have to reduce or terminate operations, due to the COVID-19 outbreak, impacting
the Company's sourcing of materials;

c) by increased adverse effects on our workforce due to contracting or taking
care of a relative who has contracted COVID-19, or have been quarantined by a
medical professional; in this respect, our workforce had previously been
impacted with an effect on operations at all locations, but this impact has
substantially diminished as of the filing date, but no assurance can be provided
as to future impacts, particularly in view of new coronavirus outbreaks;

d) in the event that any of the three states in which we have facilities provide
for the quarantine of our manufacturing employees, our production manufacturing
will be significantly affected;

e) in the event that any of the states in which we sell our products and services may eliminate, cancel, or delay projects due to monetary limitations resulting from the COVID-19 outbreak; in this respect, the Company had previously seen a reduction in bidding activity;

f) the reduction of state infrastructure budgets due to the reduction in funding through the gas tax, or other funding sources;

g) in the event of an increase in the overall loan defaults, which in turn impacts the banking sector's ability to fund projects in which the Company's products may be utilized; and



h) in the event that economic hardships force the Company to default on loan
payments, our loans may be called and our ability to borrow under our bank

line
of credit could cease;



Management is actively monitoring the global situation on its financial
condition, liquidity, operations, suppliers, industry, and workforce. Given the
daily evolution of the COVID-19 outbreak and the global responses to curb its
spread, the Company is not able to estimate the ultimate effects of the COVID-19
outbreak on its results of operations, financial condition, or liquidity for the
remainder of 2022 or future years.



The discussions below, including without limitation with respect to liquidity,
are subject to the future effects of the COVID-19 outbreak. In this respect,
should the outbreak cause serious economic harm in our areas of operation, our
revenue expectations are unlikely to be fulfilled.




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The Company had (in thousands) a net loss of $119 for the first quarter 2022 and
net income of $910 for the second quarter 2022, resulting in net income of $791
for the six months ended June 30, 2022. The cost of goods sold as a percent of
revenue, not including royalties, for the three and six months ended June 30,
2022, were 80% and 84%, as compared to 77% and 70% for the three and six months
ended June 30, 2021. The increase in cost of goods sold as a percentage of
revenue, not including royalties, for the three month and six months ended June
30, 2022, compared to the three and six months ended June 30, 2021, is due
mainly to short-term special barrier rental projects that occurred in the first
quarter of 2021, which typically carry higher margins than product sales.
Additionally, reduced production volume during the first six months of 2022
resulted in reduced absorption of overhead costs. Increased material and labor
costs also impacted margins for the three and six month periods ended June 30,
2022 as compared to the same periods in 2021. Total revenues for the three and
six month periods ended June 30, 2022 were $13,253 and $23,688 compared to
$12,307 and $27,523 for the three and six month periods ended June 30, 2021. The
decrease in total revenue for the six month period ended June 30, 2022 from June
30, 2021 is mainly from barrier rentals, which the prior period included
significant revenues from short-term special barrier rental projects.
Additionally, the Company continued to experience delays in approvals of
customer drawings and therefore delaying production on certain projects. The
increase in total revenue for the three month period ended June 30, 2022 from
June 30, 2021 is mainly from increased barrier sales for one specific job
produced in North Carolina and increased barrier rentals. As of August 1, 2022,
the Company's sales backlog was approximately $35.7 million, as compared to
approximately $26.0 million at the same time in 2021.



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

Three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021





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 six month periods ended June 30, 2022, and 2021. As
indicated in "Overview; Potential Effect of COVID-19 Outbreak" above, should a
resurgence of the COVID-19 outbreak cause serious economic harm in our area of
operations, our revenue expectations are unlikely to be fulfilled.



Revenue by
Type                       Three Months Ended June 30,

Six Months Ended June 30,


                  2022         2021       $ Change      % Change         2022         2021       $ Change      % Change
Soundwall
Sales           $    430     $  2,391     $  (1,961 )         (82 )%   $  1,794     $  4,090     $  (2,296 )         (56 )%
Architectural
Panel Sales        1,347        1,249            98             8 %       2,253        3,437        (1,184 )         (34 )%
SlenderWall
Sales                 51          220          (169 )         (77 )%      1,007          220           787           358 %
Miscellaneous
Wall Sales           637          781          (144 )         (18 )%        988        1,284          (296 )         (23 )%

Barrier Sales      2,338        1,066         1,272           119 %       3,252        2,557           695            27 %
Easi-Set
Building
Sales                948          848           100            12 %       1,563        1,602           (39 )          (2 )%
Utility Sales        666          469           197            42 %       1,132          736           396            54 %
Miscellaneous
Sales                371          219           152            69 %         649          736           (87 )         (12 )%
Total Product
Sales              6,788        7,243          (455 )          (6 )%     12,638       14,662        (2,024 )         (14 )%
Barrier
Rentals            1,962        1,182           780            66 %       3,447        6,958        (3,511 )         (50 )%
Royalty
Income               771          692            79            11 %       1,198        1,112            86             8 %
Shipping and
Installation
Revenue            3,732        3,190           542            17 %       6,405        4,791         1,614            34 %
Total Service
Revenue            6,465        5,064         1,401            28 %

11,050 12,861 (1,811 ) (14 )%



Total Revenue   $ 13,253     $ 12,307     $     946             8 %    $ 23,688     $ 27,523     $  (3,835 )         (14 )%





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 building sales, utility sales, and shipping and installation
revenue are recognized as revenue at a point in time.



Soundwall Sales - Soundwall sales were significantly lower for the three and six
month periods ended June 30, 2022, compared to the same periods in 2021. The
decrease is mainly due to lower production, as the Company has temporarily
experienced delays in customer drawing approvals. Soundwall sales are expected
to trend slightly higher throughout the remainder of 2022 as compared to the
first half of 2022, although no assurance can be given.



Architectural Panel Sales - Architectural panel sales increased for the three
months ended June 30, 2022, compared to the same period in 2021. The increase is
from a small architectural project that began production in the second quarter
of 2022 and is expected to continue through the third quarter of 2022.
Architectural sales decreased for the six month period ended June 30, 2022
compared to the same period in 2021. This decrease is related to production of a
large architectural project that began production in the first quarter 2021, and
concluded during the third quarter 2021. Architectural sales are expected to
trend slightly lower throughout 2022, as compared to 2021.



SlenderWall Sales - SlenderWall sales decreased for the three month period ended
June 30, 2022, as compared to the same period in 2021. A large SlenderWall
project wrapped up production during the second quarter of 2022. SlenderWall
sales increased for the six month period ended June 30, 2022 as compared to the
same period in 2021. The Company was awarded a large SlenderWall project, which
began production in 2021 and continued through the first quarter of 2022. The
Company continues to focus sales initiatives on SlenderWall, but no assurance
can be given as to the success of this endeavor.




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Miscellaneous Wall Sales - Miscellaneous wall sales decreased for the three and
six month periods ended June 30, 2022 compared to the same periods in 2021 due
to the decreased amount of retaining wall projects in production. Miscellaneous
wall sales are expected to trend similarly for the remainder of 2022, although
no assurance can be provided.



Barrier Sales - Barrier sales increased for the three and six month periods
ended June 30, 2022, compared to the same periods in 2021. The increase is
related to a large project produced in North Carolina during the second quarter
of 2022. Barrier sales are expected to trend lower throughout the remainder of
2022 than in previous years, in line with the Company's strategic shift to
barrier rentals.



Easi-Set® Building Sales - Building and restroom sales increased for the three
month period ended June 30, 2022, compared to the same period in 2021 mainly due
to increased building sales at the Virginia plant. Building and restroom sales
decreased slightly for the six month period ended June 30, 2022. Building and
restroom sales are expected to continue to trend similarly to the six months
ended June 30, 2022 for the remainder of 2022 as compared to 2021, although no
assurance can be provided.



Utility Sales - Utility sales increased for the three and six month periods
ended June 30, 2022, compared to the same periods in 2021. 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 increase for the full year 2022 as
compared to 2021, 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 increased for the three month
period ended June 30, 2022, compared to the same period in 2021. The increase is
mainly from the South Carolina facility that began production on a few smaller
jobs. Miscellaneous product sales decreased for the six month period ended June
30, 2022 as compared to the same period for 2021. The decrease is mainly
attributed to specialty concrete blocks produced at the North Carolina plant
during the first quarter of 2021. Miscellaneous product sales are expected to
remain lower throughout 2022, although no assurance can be provided.



Barrier Rentals - Barrier rentals increased for the three month period ended
June 30, 2022 compared to the same period in 2021. This increase is mainly
attributed to a smaller short-term special project that occurred during the
second quarter of 2022 and from certain barrier rental jobs that completed
earlier than projected and resulted in the acceleration of revenue recognition.
Barrier rentals decreased significantly for the six month period ended June 30,
2022, compared to the same period in 2021. The decrease is mainly due to the
significant revenues generated from a few short-term special projects that
occurred during the first quarter of 2021. Revenue from the Company's core
rental barrier fleet increased by 29% for the six month period ended June 30,
2022 compared to the same period in 2021. Due to the infrequent nature of
special projects, full year 2022 barrier rentals are expect to be lower than
full year 2021 barrier rentals. The Company expects increased barrier rentals of
the core rental fleet throughout 2022 with the expansion of the rental fleet,
although no assurance can be provided.



Royalty Income - Royalties slightly increased for the three and six month
periods ended June 30, 2022, compared to the same periods in 2021.
Infrastructure spending continues to drive royalties, and the Company expects
royalties to increase for 2022 compared to 2021, although no assurance can

be
given.



Shipping and Installation - Shipping revenue results from shipping our products
to the customers' final destination and is recognized when the shipping services
take place. Installation activities include the installation of our products at
the customers' construction sites. Installation revenue is recognized when
attaching architectural and SlenderWall panels to a building, installing an
Easi-Set® building at customers' sites, or setting any of our other precast
products at a site, specific to the requirements of the owner. Shipping and
installation revenue increased for the three and six month periods ended June
30, 2022, compared to the same periods in 2021. The increase is mainly
attributed to the increase in shipping and installation of SlenderWall and
architectural panels during the first six months of 2022 as compared to the

first six months of 2021.




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Cost of Goods Sold - Total cost of goods sold as a percent of revenue, not
including royalties, for the three and six months ended June 30, 2022, was 80%
and 84%, respectively, as compared to 77% and 70% for the three and six months
ended June 30, 2021. The increase in cost of goods sold as a percentage of
revenue, not including royalties, for the three months ended June 30, 2022,
compared to the three months ended June 30, 2021, is mainly due to the reduced
absorption of fixed overhead due to lower production volume. The increase in
cost of goods sold as a percentage of revenue, not including royalties, for the
six months ended June 30, 2022, compared to the six months ended June 30, 2021,
is mainly due to short-term barrier rental special projects that occurred in the
first quarter of 2021, which typically carry higher margins than product sales,
and to a lesser extent, the reduced absorption of fixed overhead due to lower
production volume. The margins for both the three and six month periods ended
June 30, 2022 were negatively impacted due to increased material and labor costs
as compared to the same periods in 2021.



General and Administrative Expenses - For the three months ended June 30, 2022,
the Company's general and administrative expenses increased by $69 to $1,409
from $1,340 during the same period in 2021. The minor increase is mainly
attributed to additional administrative costs that occurred during the second
quarter of 2022. For the six months ended June 30, 2022 the Company's general
and administrative expenses decreased by $97 to $2,568 from $2,665 during the
same period in 2021. The decrease in general and administrative expenses for the
six month period ended June 30, 2022, is mainly attributed to a decrease in
salaries and wages, as management continues to assess and monitor total general
and administrative expenses. General and administrative expense as a percentage
of total revenue was 11% for the three month periods ended June 30, 2022 and
2021, and 11% and 10% for the six month periods ended June 30, 2022 and 2021,
respectively.



Selling Expenses - Selling expenses for the three months ended June 30, 2022
increased to $725 from $696 for the same period in 2021, and selling expenses
for the six months ended June 30, 2022 increased to $1,388 from $1,291 for the
same period in 2021. Selling expenses increased for the three and six month
periods ended June 30, 2022 compared to the three and six month periods ended
June 30, 2021 due to additional salespersons hired and increased marketing
expenses. The Company expects selling expenses to increase in future periods
with the plan for additional sales associates and increased advertising spending
aligning with the strategy to increase SlenderWall sales and barrier rentals.



Operating Income (Loss) - The Company had operating income for the three month
period ended June 30, 2022 of $1,096 compared to operating income of $1,278 for
the same period in 2021. The decrease is mainly due to the increase in cost of
goods sold as a percent of revenue. The Company had operating income for the six
month period ended June 30, 2022 of $922 compared to operating income of $5,079
for the same period in 2021. The decrease in operating income is due to a
decrease in gross profit associated with lower product sales, and to a greater
extent, a few short-term special barrier rental projects that occurred during
the first quarter of 2021.



Interest Expense - Interest expense was $71 and $56 for the three month periods
ended June 30, 2022 and 2021, respectively. Interest expense was $118 and $98
for the six month periods ended June 30, 2022 and 2021, respectively. The
Company expects interest expense for 2022 to be higher compared to the full year
of 2021 due to the increased level of indebtedness.



Income Tax Expense (Benefit) - The Company had income tax expense of $307 with
an effective rate of 25% for the three months ended June 30, 2022, compared to
income tax expense of $328 with an effective rate of 25% for the same period in
2021. The Company had income tax expense of $267 with an effective rate of 25%
for the six months ended June 30, 2022 compared to income tax expense of $1,269
with an effective rate of 25% for the same period in 2021.



Net Income (Loss) - The Company had net income of $910 for the three months
ended June 30, 2022, compared to net income of $985 for the same period in 2021.
The basic and diluted earnings per share was $0.17 for the three months ended
June 30, 2022, and the basic and diluted earnings per share was $0.19 for the
three months ended June 30, 2021. The Company had net income of $791 for the six
months ended June 30, 2022, compared to net income of $3,852 for the same period
in 2021. The basic and diluted earnings per share was $0.15 for the six months
ended June 30, 2022 and the basic and diluted earnings per share was $0.74 for
the six months ended June 30, 2021.




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Liquidity and Capital Resources (dollar amounts in thousands)

Reference is made to "Overview; Potential Effect of the COVID-19 Outbreak" above in the context of the discussion below.





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 June 30, 2022 was $1,712.



On March 27, 2020, the Company completed the refinancing of existing loans with
a note payable to the Bank in the amount of $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
June 30, 2022 was $2,185.



On February 10, 2022, the Company completed the financing for its prior
acquisition of certain real property in Midland, VA totaling approximately 29.8
acres with a note payable to the Bank in the amount of $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 June 30, 2022 was $2,760.

The Company additionally has 2 smaller installment loans with annual interest rates of 2.90% and 3.99%, maturing in 2025, with balances totaling $61.





Under the loan covenants with the Bank, the Company is limited to annual capital
expenditures of $3,500 and must maintain tangible net worth of $10,000. The
Company received a special exception to the capital expenditure covenant from
the Bank to purchase barrier during 2022 for $5,000 (see Note 5 Commitments
under Item 1 of the Financial Statements). The Company is in compliance with all
covenants pursuant to the loan agreements as of June 30, 2022.



In addition to the notes payable discussed above, the Company has a $4,000 line
of credit with the Bank with no balance outstanding as of June 30, 2022. 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% per annum, and
matures on October 1, 2022. The loan is collateralized by a first lien position
on the Company's accounts receivable and inventory and a second lien position on
all other business assets. Key provisions of the line of credit require the
Company (i) to obtain bank approval for capital expenditures in excess of $3,500
during the term of the loan and (ii) to obtain bank approval prior to its
funding of any acquisition. On October 21, 2021, 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 on October 21,
2022. As of June 30, 2022, the Company had not purchased any equipment pursuant
to the $1,500 commitment.



On June 30, 2022, the Company had cash totaling $12,425 compared to cash
totaling $13,492 on December 31, 2021. The decrease in cash is primarily the
result of cash absorbed by operations during the six month period ended June 30,
2022. More specifically, the Company's accounts receivable position increased
and significant income tax payments were remitted related to the 2021 tax year
during the six month period ended June 30, 2022. The Company's cash position
will likely be further reduced related to the significant capital expenditures
described in the following paragraph.



Capital spending for the six months ended June 30, 2022, totaled $1,962, as
compared to $926 for the same period in 2021. The 2022 expenditures were
primarily for the buy-back of barrier for the barrier rental fleet. The Company
intends to invest approximately $8,000 for the full year 2022, which includes a
significant expansion in the barrier rental fleet with approximate costs of
$5,000, and approximately $1,500 for yard development, and $1,500 for
miscellaneous manufacturing equipment, excluding acquisitions and plant
expansions (which none are anticipated at this time), although no assurance

can
be provided.

The Company's outstanding notes payable are financed at fixed rates of interest. This leaves the Company almost impervious to fluctuating interest rates.






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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 96 days for the six months ended June 30, 2022, compared to 91 days for the
year ended December 31, 2021.



If actual results regarding the Company's production, sales, and subsequent
collections on customer receivables are materially inconsistent with
management's expectations, the Company may in the future encounter cash flow and
liquidity issues. If the 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 $3,531 on June 30, 2022, and $2,845 on December 31,
2021, or an increase of $686. The increase in inventory is mainly due to the
increase of raw materials inventory on-hand compared to the prior year related
to large utility projects in Virginia and large barrier projects in North
Carolina. Inventory turnover was 13.1, annualized for the six months ended June
30, 2022, compared to 15.4, annualized for the same period in 2021.

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, 2021. There have been no changes as of June 30, 2022.





Seasonality



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



Inflation



Management believes that the Company's operations were affected by inflation
during the three and six month periods ended June 30, 2022 and for the full year
2021, particularly in the purchases of certain raw materials such as cement and
aggregates, steel, and also with labor costs. The Company believes that raw
material pricing and labor costs will continue to increase in 2022, although no
assurance can be given regarding future pricing or costs.



Sales Backlog

As of August 1, 2022, the Company's sales backlog was approximately $35.7 million, as compared to approximately $26.0 million at the same time in 2021. 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.






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