In place of the traditional letter to the Stockholders, I have outlined for you five initiatives underway at Smith-Midland Corporation.

1. Easi-Set Product licensing Expansion

Easi-Set Industries, our licensing Company, is now set to take advantage of years of expanding and perfecting our licensing programs, as well as fine tuning our products through actual field experience.

In addition to the extremely successful J-J Hooks Concrete Safety Barrier and Easi-Set Transportable Precast Buildings, Easi-Set is rolling out SlenderWall Precast Concrete/Steel Stud Exterior Cladding for commercial and residential mid-rise and high-rise construction in the US, Canada and Mexico. Visit the recently launched web site at www.SlenderWall.com for more information.

Easi-Set is also introducing Beach Prisms, a shoreline erosion control product that uses the preferred natural “soft” approach as opposed to the “hard” approach of seawalls and jetties, to solve this worldwide problem. Visit the recently launched web site at www.BeachPrisms.com for more information.

2. Concrete Safety Systems Expands With New General Manager

New General Manager, John Sieber, has been hired and is working to expand Concrete Safety Systems, our highway safety barrier rental company. Concrete Safety Systems is, as a percentage of sales, our second most profitable subsidiary. We will take advantage of this unusual opportunity to expand in a market segment where we have almost no competition. Visit the recently launched website at www.CSS-Rental.com for more information.

3. Regional Beach Prisms Sales Manager Hired. Easi-Set Will license Beach Prisms Production Worldwide.

Regional Sales Manager, Jay McKenna, has been hired for the introduction of Beach Prisms, a shoreline erosion control product. Beach Prisms are a full profit product for production at the Smith-Midland Precast Plant and Easi-Set licensees. Early advertising and promotional efforts have yielded overwhelming levels of interest in this product.

 4. H2Out Patent in Process – World’s First “In The Caulk Joint” Secondary Drainage And Street Level Detection Product

A Patent Application is in the Patent Office for our new H2Out, the world’s first “in the caulk joint” secondary drainage and street level leak detection product for panelized exterior cladding. A second line of caulking and drainage strip located behind the exterior line of caulking exits all water leakage to the exterior of the building preventing moisture and mold and lawsuits from tenants and owners of buildings. According to some, water intrusion and resulting mold will be the next asbestos for class action trial attorneys. Owners of H2Out - protected buildings from Smith-Midland and Easi-Set licensees worldwide will avoid this high risk. Details available at www.SlenderWall.com/cladding_technology.shtml#h2out.

5. Smith-Midland Commitment to Open Off-Shore Engineering Office In Philippines

The Senior Management Team at Smith-Midland has committed to opening an Engineering Office in the Philippines for the company’s construction products for Smith Midland , Easi-Set and its licensees. The lower cost of this off-shore engineering office will bring hundreds of thousands of savings to the bottom line of our companies.

The successful execution of these 5 initiatives will change the company and its subsidiaries into a Powerhouse Organization.

On behalf of all the Smith-Midland associates I thank you, our valued Stockholders and customers, for your confidence in us and for giving us the opportunity to serve you.

Sincerely,

Rodney I. Smith
President