Delaware
|
54-1727060
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
Incorporation
or Organization)
|
Securities
Registered Pursuant to Section 12(g) of the Exchange
Act:
|
||
Common Stock, $.01 par
value per share
|
||
(Title
of Class)
|
||
Preferred Stock
Purchase Rights
|
||
(Title
of Class)
|
Large Accelerated Filer o | Accelerated filer o |
Non-accelerated Filer o | Smaller reporting company x |
|
·
|
our
high level of indebtedness and ability to satisfy the
same,
|
|
·
|
Our
revenues and net income decreased in 2008 as compared to 2007, due in part
to current economic conditions,
|
|
·
|
the
continued availability of financing in the amounts, at the times, and on
the terms required, to support our future business and capital
projects,
|
|
·
|
the
extent to which we are successful in developing, acquiring, licensing or
securing patents for proprietary
products,
|
|
·
|
changes
in economic conditions specific to any one or more of our markets
(including the availability of public funds and grants for
construction),
|
|
·
|
changes
in general economic conditions, such as the expected weakening in
construction activity in 2009in the Company’s primary service
area,
|
|
·
|
adverse
weather which inhibits the demand for our
products,
|
|
·
|
our
compliance with governmental
regulations,
|
|
·
|
the
outcome of future litigation,
|
|
·
|
on
material construction projects, our ability to produce and install product
that conforms to contract specifications and in a time frame that meets
the contract requirements ,
|
|
·
|
the
cyclical nature of the construction
industry,
|
|
·
|
our
exposure to increased interest expense payments should interest rates
change
|
|
·
|
the
board of directors, which is composed of four members, has only one
outside, independent director,
|
|
·
|
the
Company does not have a separate audit committee; the board of
directors functions in that role,
|
|
·
|
the
Company’s board of directors does not have a member that qualifies as an
audit committee financial expert as defined in the
regulations,
|
|
·
|
the
Company has experienced a high degree of employee turnover,
and
|
|
·
|
the
other factors and information disclosed and discussed in other sections of
this report.
|
Item
1.
|
Business
|
|
|
Communications
Operations -- to house fiber optics regenerators, switching
stations and microwave transmission shelters, cellular phone sites, and
cable television repeater stations.
|
|
|
Government Applications
-- to federal, state and local authorities for uses such as weather and
pollution monitoring stations; military storage, housing and operations;
park vending enclosures; rest rooms; kiosks; traffic control systems;
school maintenance and athletic storage; airport lighting control and
transmitter housing; and law enforcement evidence and ammunition
storage.
|
|
|
|
|
Utilities Installations
-- for electrical switching stations and transformer housing, gas control
shelters and valve enclosures, water and sewage pumping stations, and
storage of contaminated substances or flammable materials which require
spill containment.
|
|
|
Commercial and Industrial
Locations -- for electrical and mechanical housing, cemetery
maintenance storage, golf course vending enclosures, mechanical rooms,
rest rooms, emergency generator shelters, gate houses, automobile garages,
hazardous materials storage, food or bottle storage, animal shelters, and
range houses.
|
Item
2.
|
Property
|
Item
3.
|
Legal
Proceedings
|
Item
4.
|
Submission
of Matters to Vote of Security
Holders.
|
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Small
Business Issuer Purchases of Equity
Securities.
|
Item
6.
|
Selected
Financial Data
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
·
|
Disclosure
of the objectives for using derivative instruments be disclosed in terms
of underlying risk and accounting
designation;
|
|
·
|
Disclosure
of the fair values of derivative instruments and their gains and losses in
a tabular format;
|
|
·
|
Disclosure
of information about credit-risk-related contingent features;
and
|
|
·
|
Cross-reference
from the derivative footnote to other footnotes in which
derivative-related information is
disclosed.
|
Item
7A
|
Quantitative
and Qualitative Disclosures about Market
Risk
|
Financial
Statements and Supplementary Data
|
Report
of Independent Registered Public Accountants
|
F-3
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-4-5
|
Consolidated
Statements of Operations for the years ended December 31, 2008 and
2007
|
F-6
|
Consolidated
Statements of Changes in Stockholders' Equity for the years ended
December
31, 2008 and 2007
|
F-7
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and
2007
|
F-8-9
|
Summary
of Significant Accounting Policies
|
F-10-13
|
Notes
to Consolidated Financial Statements
|
F-14-20
|
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure
|
Item
9A(T).
|
Controls
and Procedures.
|
Item
9B.
|
Other
Information.
|
Item
10.
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act
|
Rodney
I. Smith
|
70
|
1970
|
Chief
Executive Officer, President and
|
Chairman
of the Board of Directors
|
|||
Ashley
B. Smith
|
46
|
1994
|
Vice
President
|
Director
|
|||
Wesley
A. Taylor
|
61
|
1994
|
Vice
President of Administration,
|
Secretary
and Director
|
|||
Andrew
G. Kavounis
|
83
|
1995
|
Director
|
William
A. Kenter
|
62
|
2008
|
Chief
Financial Officer
|
Steve
Ott
|
42
|
2005
|
Vice
President of Engineering
|
Smith-Midland - Virginia |
Section
16(a).
|
Beneficial
Ownership Reporting Compliance
|
Item
11.
|
Executive
Compensation.
|
Name
and Principal Position
|
Year
|
Salary
($)(1)
|
Bonus
($)(2)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Compen-sation Plan($)
|
Non-qualified
Deferred Compen-sation Earning ($)
|
All
Other Compen-sation ($)(3)
|
Total ($)
|
|||||||||||||||||||||||||
Rodney
I. Smith (3)
|
2008
|
120,154 | 8,420 | — | 32,000 | — | — | 102,137 | 262,711 | |||||||||||||||||||||||||
President,
Chief
|
2007
|
99,000 | — | — | 29,000 | — | — | 104,400 | 232,400 | |||||||||||||||||||||||||
Executive
Officer
|
|
|||||||||||||||||||||||||||||||||
and
Chairman of the
|
||||||||||||||||||||||||||||||||||
Board.
|
||||||||||||||||||||||||||||||||||
Ashley
B. Smith
|
2008
|
125,955 | 4,723 | — | 11,840 | — | — | 1,261 | 143,779 | |||||||||||||||||||||||||
VP
of Sales and
|
2007
|
117,389 | — | — | 10,150 | — | — | 4,923 | 132,462 | |||||||||||||||||||||||||
Marketing
and Director
|
||||||||||||||||||||||||||||||||||
Wesley
A. Taylor
|
2008
|
120,224 | 4,308 | — | 5,600 | — | — | 1,000 | 131,132 | |||||||||||||||||||||||||
VP
of Administration,
|
2007
|
95,200 | — | — | 10,150 | — | — | 4,970 | 110,320 | |||||||||||||||||||||||||
Secretary,
Treasurer,
|
||||||||||||||||||||||||||||||||||
and
Director
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($/Sh)
|
Option
Expiration Date
|
|||||||||
Rodney
I. Smith
|
20,000 | — | 0.5625 |
12/28/2009
|
|||||||||
20,000 | — | 0.80 |
4/22/2011
|
||||||||||
80,000 | — | 0.81 |
5/3/2011
|
||||||||||
20,000 | — | 1.39 |
12/25/2011
|
||||||||||
20,000 | — | 0.83 |
12/16/2013
|
||||||||||
20,000 | — | 2.52 |
9/29/2015
|
||||||||||
13,333 | 6,667 | 2.25 |
5/21/2016
|
||||||||||
6,667 | 13,333 | 2.15 |
5/21/2017
|
||||||||||
— | 40,000 | 1.21 |
6/29/2018
|
||||||||||
200,000 | 60,000 | ||||||||||||
TOTAL
|
|||||||||||||
Ashley
B. Smith
|
7,000 | — | 0.5625 |
12/28/2009
|
|||||||||
10,000 | — | 0.80 |
4/22/2011
|
||||||||||
10,000 | — | 1.39 |
12/25/2011
|
||||||||||
10,000 | — | 0.83 |
12/16/2013
|
||||||||||
10,000 | — | 2.52 |
9/29/2015
|
||||||||||
4,667 | 2,333 | 2.25 |
5/21/2016
|
||||||||||
2,333 | 4,667 | 2.15 |
5/21/2017
|
||||||||||
— | 14,800 | 1.21 |
6/29/2018
|
||||||||||
TOTAL
|
54,000 | 21,800 | |||||||||||
Wesley
A. Taylor
|
6,667 | — | 0.83 |
12/16/2013
|
|||||||||
10,000 | — | 2.52 |
9/29/2015
|
||||||||||
4,667 | 2,333 | 2.25 |
5/21/2016
|
||||||||||
2,333 | 4,667 | 2.15 |
5/21/2017
|
||||||||||
— | 7,000 | 1.21 |
6/29/2018
|
||||||||||
TOTAL
|
23,667 | 14,000 | |||||||||||
TOTAL
|
277,667 | 95,800 |
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($)(1)
|
Non-Equity
Incentive Plan Compen-sation
|
Non-Qualified
Deferred Compen-sation Earnings
|
All
Other Compen-sation
|
Total
($)
|
|||||||||||||||||||||
Rodney
I. Smith
|
1,000 | — | 32,000 | — | — | — | 33,000 | |||||||||||||||||||||
Andrew
G. Kavounis (2)
|
2,000 | — | — | — | — | — | 2,000 | |||||||||||||||||||||
Ashley
B. Smith
|
1,000 | — | 11,840 | — | — | — | 12,840 | |||||||||||||||||||||
Wesley
A. Taylor
|
1,000 | — | 5,600 | — | — | — | 6,600 | |||||||||||||||||||||
(1)
|
Option
awards for Messrs. R. Smith, A. Smith and Taylor disclosed in the “Summary
Compensation Table” disclosed above.
|
(2)
|
3,000
options were outstanding as of December 31, 2008, of which 3,000 were
exercisable as of December 31,
2008.
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
Name
and Adress of Beneficial Owner (1)
|
Number
of Shares Beneficially Owned (2)
|
Percentage
of Class
|
||||||
Rodney
I. Smith (1)(3)(4)(5)
|
733,398 | 15.2 | % | |||||
Ashley
B. Smith (1)(3)(4)(6)
|
143,617 | 3.1 | % | |||||
Wesley
A. Taylor (1)(7)
|
38,750 | * | ||||||
Andrew
G. Kavounis (1)(8)
|
4,000 | * | ||||||
AL
Frank Asset Management, Inc. (9)
|
630,547 | 13.6 | % | |||||
All
directors and executive officers
|
||||||||
as
a group (5 persons)(2)(10)
|
919,765 | 18.8 | % |
(1)
|
The address for each of Messrs.
Rodney I. Smith, Ashley B. Smith, Taylor, and Kavounis is c/o
Smith-Midland Corporation, P.O. Box 300, 5119 Catlett Road, Midland,
Virginia 22728.
|
(2)
|
Pursuant to the rules and
regulations of the Securities and Exchange Commission, shares of Common
Stock that an individual or group has a right to acquire within 60 days
pursuant to the exercise of options or warrants are deemed to be
outstanding for the purposes of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person shown in the
table.
|
(3)
|
Ashley
B. Smith is the son of Rodney I. Smith. Each of Rodney I. Smith
and Ashley B. Smith disclaims beneficial ownership of the other’s shares
of Common Stock.
|
(4)
|
Does not include options to
purchase 5,000 shares held by Matthew Smith and an aggregate of 86,489
shares of Common Stock held by Matthew Smith and Roderick
Smith. Matthew Smith and Roderick Smith are sons of Rodney I.
Smith, and brothers of Ashley B. Smith. Also, does not include
shares held by Merry Robin Bachetti, sister of Rodney I. Smith and aunt of
Ashley B. Smith, for which each of Rodney I. Smith and Ashley B. Smith
disclaims beneficial
ownership.
|
(5)
|
Includes 50,000 shares of Common
Stock held by Hazel Bowling, former wife of Rodney I. Smith, and mother of
Mr. Smith’s children. Mr. Smith disclaims beneficial ownership of the
shares held by Hazel Bowling. Includes options to purchase
200,000 shares.
|
(6)
|
Includes options to purchase
54,000 shares.
|
(7)
|
Includes
options to purchase 13,667 shares.
|
Includes options to purchase
4,000 shares.
|
Address of holder is 32392 Coast
Highway, Suite 260, Laguna Beach, CA
92651
|
(10)
|
Includes options to purchase
271,667 shares for all directors, executive officers as a
group.
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted
average exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
|||||||||
Equity
compensation plans approved by security holders
|
542,157 | 1.52 | 432,999 | |||||||||
Equity
compensation plans not approved by security holders
|
— | — | — | |||||||||
Total
|
542,157 | 1.52 | 432,999 |
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
Item
14.
|
Principal
Accountant Fees and Services
|
2008
|
2007
|
|||||||
Audit
Fees
|
$ | 171,489 | $ | 141,578 | ||||
Tax
Fees
|
23,696 | 25,840 | ||||||
Total
Fees
|
$ | 195,185 | $ | 167,418 | ||||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
(2)
|
The
following exhibits are filed
herewith:
|
3.1
|
Certificate
of Incorporation, as amended (Incorporated by reference to the Company’s
Registration Statement on Form SB-2 (No. 33-89312) declared effective by
the Commission on December 13,
1995).
|
3.2
|
Bylaws
of the Company adopted on January 21, 2003 (Incorporated by reference to
the Company’s Registration Statement on Form 8-A (No. 000-25964) filed
with the Commission on January 24,
2003).
|
4.1
|
Specimen
Common Stock Certificate (Incorporated by reference to the Company’s
Registration Statement on Form SB-2 (No. 33-89312) declared effective by
the Commission on December 13,
1995).
|
Rights
Agreement, dated as of January 21, 2003, between the Company and
Computershare Trust Company, Inc., as rights agent, including the Form of
Certificate of Designations, the Form of Rights Certificate and the
Summary of Rights to Purchase Preferred Shares attached thereto as
Exhibits A, B, and C, respectively (Incorporated by reference to the
Company’s Registration Statement on Form 8-A (No. 000-25964) filed with
the Commission on January 24,
2003).
|
10.1
|
Lease
Agreement, dated January 1, 1995, between the Company and Rodney I. Smith
(Incorporated by reference to the Company’s Registration Statement on Form
SB-2 (No. 33-89312) declared effective by the Commission on December 13,
1995).
|
10.2
|
Collateral
Assignment of Letters Patent, dated between the Company and Rodney I.
Smith (Incorporated by reference to the Company’s Registration Form SB-2
(No. 33-89312) declared effective by the Commission on December 13,
1995).
|
10.3
|
Form
of License Agreement between the Company and its Licensee (Incorporated by
reference to the Company’s Registration Statement on Form SB-2 (No. 33-
89312) declared effective by the Commission on December 13,
1995).
|
10.4
|
First
National Bank of New England Loan Agreement, assumed by UPS Capital, dated
June 25, 1998 (Incorporated by reference to the Company’s Quarterly Report
on Form 10-QSB for the quarter ended June 30,
1998).
|
10.5
|
First
National Bank of New England Loan Note, dated June 25, 1998 (Incorporated
by reference to the Company’s Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1998).
|
10.6
|
First
National Bank of New England Commercial Loan Agreement dated December 20,
1999 (Incorporated by reference to the Company’s Annual Report on Form
10-KSB for the year ended December 31,
1999).
|
10.7
|
First
National Bank of New England Commercial Term Promissory Note dated
December 20, 1999 (Incorporated by reference to the Company’s Annual
Report on Form 10-KSB for the year ended December 31,
1999).
|
10.8
|
Employment
Agreement, dated September 30, 2002, between the Company and Rodney I.
Smith. (Incorporated by reference to the Company’s Annual
Report on Form 10-KSB for the year ended December 31,
2003).
|
10.9
|
Amendment
No. 1 to Employment Agreement, dated as of December 31, 2008, between the
Company and Rodney I. Smith.
|
10.10
|
2004
Stock Option Plan (Incorporated by reference to the Company’s Annual
Report on Form 10-KSB for the year ended December 31,
2004).
|
10.11
|
UPS
Capital Business Credit Loan Note dated December 16, 2004 (Incorporated by
reference to the Company’s Annual Report on Form 10-KSB for the year ended
December 31, 2004).
|
10.12
|
Commercial
Loan Agreement, dated June 15, 2006, by and between Smith- Midland
Corporation, a Virginia corporation and a subsidiary of the Company (the
“Borrower”) and Greater Atlantic Bank (the “Lender”) contemplating a
single advance term loan in the amount of $365,000 and addendum thereto (
Incorporated by reference to the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 21,
2006).
|
10.13
|
Promissory
Note, dated June 15, 2006, in the amount of $365,000 issued by the
Borrower to the Lender (Incorporated by reference to the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on
June 21, 2006).
|
10.14
|
Commercial
Loan Agreement, dated June 15, 2006, by and between the Borrower and the
Lender contemplating a multiple advance draw loan up to the aggregate
amount of $500,000 and addendum thereto (Incorporated by reference to the
Company’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 21,
2006).
|
10.15
|
Commercial
Loan Agreement, dated June 15, 2006, by and between the Borrower and the
Lender contemplating a revolving multiple advance draw loan up to the
aggregate amount of $1,500,000 and addendum thereto (Incorporated by
reference to the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 21,
2006).
|
10.16
|
Promissory
Note, dated June 15, 2006, in the amount of $1,500,000 issued by the
Borrower to the Lender (Incorporated by reference to the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on
June 21, 2006).
|
10.17
|
Security
Agreement, dated June 15, 2006, by and between the Borrower and the Lender
securing the Promissory Note in the amount of $365,000 (Incorporated by
reference to the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 21,
2006).
|
10.18
|
Security
Agreement, dated June 15, 2006, by and between the Borrower and the Lender
securing any promissory note(s) the Borrower may issue to evidence any
advance(s) under the Commercial Loan Agreement by and between Borrower and
the Lender contemplating a multiple advance draw loan up to the aggregate
amount of $500,000 (Incorporated by reference to the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on
June 21, 2006).
|
10.19
|
Security
Agreement, dated June 15, 2006, by and between the Borrower and the Lender
securing the Promissory Note in the amount of $1,500,000 (Incorporated by
reference to the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 21,
2006).
|
10.20
|
Form
of Guaranty, dated June 15, 2006, given by the Company and subsidiaries
(except the Borrower) with respect to each of (i) the Promissory Note in
the amount of $365,000; (ii) any promissory note(s) that the Borrower may
issue to evidence any advance(s) under the Commercial Loan Agreement by
and between the Borrower and the Lender contemplating a multiple advance
draw loan up to the aggregate amount of $500,000; and (iii) the Promissory
Note in the amount of $1,500,000 issued by the Borrower to the Lender
(Incorporated by reference to the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 21,
2006).
|
10.21
|
Omnibus
Modification of Lender Loan Documents Agreement, dated June 15, 2006
(Incorporated by reference to the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 21,
2006).
|
10.22
|
Omnibus
Modification of UPS Capital Loan Documents Agreement, dated June 15, 2006
(Incorporated by reference to the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 21,
2006).
|
10.23
|
Commercial
Loan Agreement, dated August 7, 2007, by and between the Borrower and the
Lender contemplating a multiple advance loan up to the aggregate amount of
$700,000 and addendum thereto (incorporated by reference to the Company’s
Quarterly Report on Form 10-QSB for the quarter ended June 30,
2007).
|
10.24
|
Commercial
Debt Modification Agreement, dated August 7, 2007, by and between the
Borrower and the Lender to extend the maturity date of the Working Capital
Line of Credit to June 15, 2008,
|
|
(incorporated
by reference to the Company’s Quarterly Report on Form 10-QSB for the
quarter ended June 30, 2007).
|
10.25
|
Commercial
Security Agreement dated August 7, 2007 by and between the Borrower and
the Lender securing any promissory note(s) the Borrower may issue to
evidence any advance(s) under the Commercial Loan Agreement by and between
Borrower and Lender contemplating a multiple advance draw loan up to the
aggregate amount of $700,000, (incorporated by reference to the Company’s
Quarterly Report on Form 10-QSB for the quarter ended June 30,
2007).
|
10.26
|
Form
of Guaranty, dated August 7, 2007 given by the Company and each of its
subsidiaries (except the Borrower) with respect to any promissory note(s)
that the Borrower may issue to evidence any advance(s) under the
Commercial Loan Agreement by and between the Borrower and the Lender
contemplating a multiple advance draw loan up to the aggregate amount of
$700,000 (incorporated by reference to the Company’s Quarterly Report on
Form 10-QSB for the quarter ended June 30,
2007).
|
10.27
|
2008
Stock Option Plan (Incorporated by reference to the Company’s Registration
Statement on Form S-8 (No. 333-155920) filed on December 4,
2008).
|
14.1
|
Code
of Professional Conduct (Incorporated by reference to the Company’s Annual
Report on Form 10-KSB for the year ended December 31,
2003).
|
List
of Subsidiaries of the Company (Incorporated by reference to the Company’s
Annual Report on Form 10-KSB for the year ended December 31,
1995).
|
23.1
|
Consent
of BDO Seidman, LLP.
|
31.1
|
Certification
of Chief Executive Officer.
|
31.2
|
Certification
of Principal Financial Officer.
|
32.1
|
Certification
pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
Name
|
Capacity
|
Date
|
||
/s/ Rodney I. Smith
|
Director
|
March
31, 2009
|
||
Rodney
I. Smith
|
||||
/s/ Wesley A. Taylor
|
Director
|
March
31, 2009
|
||
Wesley
A. Taylor
|
||||
/s/ Ashley B. Smith
|
Director
|
March
31, 2009
|
||
Ashley
B. Smith
|
||||
/s/ Andrew G. Kavounis
|
Director
|
March
31, 2009
|
||
Andrew
G. Kavounis
|
Report
of Independent Registered Public Accountants
|
F-3
|
Consolidated
Financial Statements
|
|
Balance
Sheets
|
F-4-5
|
Statements
of Operations
|
F-6
|
Statements
of Stockholders' Equity
|
F-7
|
Statements
of Cash Flows
|
F-8-9
|
Summary
of Significant Accounting Policies
|
F-10-13
|
Notes
to Consolidated Financial Statements
|
F-14-20
|
December
31,
|
||||||||
ASSETS
(Note 2)
|
2008
|
2007
|
||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 1,363,284 | $ | 282,440 | ||||
Accounts
receivable
|
||||||||
Trade
- billed, (less allowance for doubtful
|
||||||||
accounts
of $396,665 and $243,318)
|
5,831,182 | 5,900,684 | ||||||
Trade
- unbilled
|
660,165 | 316,059 | ||||||
Inventories
|
||||||||
Raw
materials
|
851,394 | 825,328 | ||||||
Finished
goods
|
1,572,830 | 1,968,978 | ||||||
Prepaid
expenses and other assets
|
155,772 | 152,289 | ||||||
Prepaid
income taxes (Note 4)
|
258,150 | 322,835 | ||||||
Deferred
taxes (Note 4)
|
471,000 | 367,000 | ||||||
Total
current assets
|
11,163,777 | 10,135,613 | ||||||
Property
and equipment, net (Note 1)
|
4,223,555 | 4,102,181 | ||||||
Total
other assets
|
163,735 | 200,090 | ||||||
Total
assets
|
$ | 15,551,067 | $ | 14,437,884 | ||||
December
31,
|
||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
2008
|
2007
|
||||||
Current
liabilities
|
||||||||
Accounts
payable - trade
|
$ | 2,142,478 | $ | 1,776,594 | ||||
Accrued
income taxes payable
|
— | 656,370 | ||||||
Accrued
expenses and other liabilities
|
1,074,889 | 587,399 | ||||||
Current
maturities of notes payable (Note 2)
|
1,022,476 | 605,376 | ||||||
Customer
deposits
|
858,437 | 643,509 | ||||||
Total
current liabilities
|
5,098,280 | 4,269,248 | ||||||
Notes
payable - less current maturities (Note 2)
|
3,569,321 | 3,991,036 | ||||||
Deferred
tax liability (Note 4)
|
317,000 | 175,000 | ||||||
Total
liabilities
|
8,984,601 | 8,435,284 | ||||||
Commitments
and contingencies (Note 5)
|
||||||||
Stockholders’
equity (Note 6)
|
||||||||
Preferred
stock, $.01 par value; authorized 1,000,000
|
||||||||
shares,
none outstanding
|
— | — | ||||||
Common
stock, $.01 par value; authorized 8,000,000
|
||||||||
shares;
4,670,882 issued and outstanding
|
46,709 | 46,709 | ||||||
Additional
paid-in capital
|
4,701,820 | 4,558,947 | ||||||
Retained
earnings
|
1,920,237 | 1,499,244 | ||||||
6,668,766 | 6,104,900 | |||||||
Treasury
stock, at cost, 40,920 shares
|
(102,300 | ) | (102,300 | ) | ||||
Total
stockholders’ equity
|
6,566,466 | 6,002,600 | ||||||
Total
liabilities and stockholders' equity
|
$ | 15,551,067 | $ | 14,437,884 |
December
31,
|
||||||||
2008
|
2007
|
|||||||
Revenue
|
||||||||
Products
sales and leasing
|
$ | 24,312,888 | $ | 24,567,148 | ||||
Shipping
and installation revenue
|
4,063,202 | 5,198,166 | ||||||
Royalties
|
1,479,689 | 1,755,323 | ||||||
Total
revenue
|
29,855,779 | 31,520,637 | ||||||
Cost
of goods sold
|
23,177,596 | 23,743,906 | ||||||
Gross
profit
|
6,678,183 | 7,776,731 | ||||||
Operating
expenses
|
||||||||
General
and administrative expenses
|
3,324,845 | 3,285,593 | ||||||
Selling
expenses
|
2,392,766 | 1,942,685 | ||||||
Total
operating expenses
|
5,717,611 | 5,228,278 | ||||||
Operating
income
|
960,572 | 2,548,453 | ||||||
Other
income (expense)
|
||||||||
Interest
expense
|
(343,107 | ) | (430,048 | ) | ||||
Interest
income
|
28,040 | 22,858 | ||||||
Gain
(loss) on sale of assets
|
44,581 | (13,892 | ) | |||||
Other,
net
|
(1,093 | ) | 989 | |||||
Total
other income (expense)
|
(271,579 | ) | (420,093 | ) | ||||
Income
before income tax expense
|
688,993 | 2,128,360 | ||||||
Income
tax expense (Note 4)
|
268,000 | 876,000 | ||||||
Net
income
|
$ | 420,993 | $ | 1,252,360 | ||||
Basic earnings (loss) per
share (Note 8)
|
0.27 | (0.18 | ) | |||||
Diluted earnings (loss) per
share (Note 8)
|
0.26 | (0.18 | ) | |||||
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Total
|
||||||||||||||||
Balance, December 31,
2006
|
$ | 46,346 | $ | 4,415,363 | $ | 246,884 | $ | (102,300 | ) | $ | 4,606,293 | |||||||||
Stock
options exercised
|
363 | 37,691 | — | 38,054 | ||||||||||||||||
Stock
option compensation
|
— | 105,893 | — | 105,893 | ||||||||||||||||
Net
Income
|
— | — | 1,252,360 | 1,252,360 | ||||||||||||||||
Balance, December 31,
2007
|
46,709 | 4,558,947 | 1,499,244 | (102,300 | ) | 6,002,600 | ||||||||||||||
Stock
option compensation
|
— | 142,873 | — | — | 142,873 | |||||||||||||||
Net
income
|
— | — | 420,993 | — | 420,993 | |||||||||||||||
Balance, December 31,
2008
|
$ | 46,709 | $ | 4,701,820 | $ | 1,920,237 | $ | (102,300 | ) | $ | 6,566,466 |
December
31,
|
||||||||
2008
|
2007
|
|||||||
Reconciliation
of net income to net cash
|
||||||||
provided by operating
activities
|
||||||||
Net
income
|
$ | 420,993 | $ | 1,252,360 | ||||
Adjustments
to reconcile net
|
||||||||
income
to net cash provided by operating
|
||||||||
activities
|
||||||||
Depreciation
and amortization
|
642,805 | 735,218 | ||||||
Deferred
taxes
|
38,000 | 62,000 | ||||||
Stock
option compensation expense
|
142,873 | 105,893 | ||||||
Gain
(loss) on sale of fixed assets
|
(44,581 | ) | 13,892 | |||||
(Increase)
decrease in
|
||||||||
Accounts
receivable - billed
|
69,502 | (483,209 | ) | |||||
Accounts
receivable - unbilled
|
(344,106 | ) | 509,465 | |||||
Inventories
|
199,382 | 323,166 | ||||||
Prepaid
expenses and other assets
|
60,839 | (42,066 | ) | |||||
Prepaid
income taxes
|
64,685 | (69,897 | ) | |||||
Increase
(decrease) in
|
||||||||
Accounts
payable - trade
|
365,884 | (957,380 | ) | |||||
Accrued
expenses and other liabilities
|
487,490 | (1,296,987 | ) | |||||
Accrued
income taxes
|
(656,370 | ) | 656,370 | |||||
Customer
deposits
|
214,928 | 29,382 | ||||||
Net
cash provided by operating activities
|
$ | 1,662,324 | $ | 838,207 | ||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
Cash
Flows From Investing Activities
|
||||||||
Purchases
of property and equipment
|
$ | (654,740 | ) | $ | (579,571 | ) | ||
Proceeds
from sale of fixed assets
|
77,878 | 19,961 | ||||||
Net
cash absorbed by investing activities
|
(576,862 | ) | (559,610 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Proceeds
from borrowings on Line of Credit, net
|
500,000 | (50,000 | ) | |||||
Proceeds
from long-term borrowings
|
171,022 | 46,126 | ||||||
Repayments
of long-term borrowings
|
(675,640 | ) | (513,027 | ) | ||||
Proceeds
from options exercised
|
— | 38,054 | ||||||
Net
cash absorbed by financing activities
|
(4,618 | ) | (478,847 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
|
1,080,844 | (200,250 | ) | |||||
Cash and cash
equivalents, beginning of year
|
282,440 | 482,690 | ||||||
Cash and cash
equivalents, end of year
|
$ | 1,363,284 | $ | 282,440 | ||||
Supplemental
schedule of non-cash investing activities
|
||||||||
Noncash
investing and financing – capital lease additions
|
— | 518,250 | ||||||
Cash
Payments for interest
|
343,107 | 430,048 | ||||||
Cash
Payments for income taxes
|
1,144,424 | 211,733 | ||||||
Nature
of Business
|
Smith-Midland
Corporation and its wholly owned subsidiaries (the “Company”) develop,
manufacture, license, sell and install precast concrete products for the
construction, transportation and utilities industries in the Mid-Atlantic,
Northeastern, and Midwestern regions of the United
States.
|
Principles
of
Consolidation
|
The
accompanying consolidated financial statements include the accounts of
Smith-Midland Corporation and its wholly owned
subsidiaries. The Company’s wholly owned subsidiaries consist
of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina
Corporation, a North Carolina corporation, Easi-Set Industries, Inc., a
Virginia corporation, Concrete Safety Systems, Inc., a Virginia
corporation, Midland Advertising and Design, Inc., doing business as Ad
Ventures, a Virginia corporation. All material intercompany
accounts and transactions have been eliminated in
consolidation.
|
Reclassifications
|
Certain
immaterial reclassifications have been made between prior year amounts for
cost of goods sold and general and administrative expenses to conform to
current year presentation.
|
Cash
and Cash Equivalents
|
The
Company considers all unrestricted cash and money market accounts
purchased with an original maturity of three months or less as cash and
cash equivalents.
|
Inventories
|
Inventories
are stated at the lower of cost, using the first-in, first-out (FIFO)
method, or market.
|
Property
and
Equipment
|
Property
and equipment is stated at cost. Expenditures for ordinary maintenance and
repairs are charged to income as incurred. Costs of betterments, renewals,
and major replacements are capitalized. At the time properties are retired
or otherwise disposed of, the related cost and allowance for depreciation
are eliminated from the accounts and any gain or loss on disposition is
reflected in income.
|
Depreciation
is computed using the straight-line method over the following estimated
useful lives:
|
Years
|
||||
Buildings
|
10-33 | |||
Trucks
and automotive equipment
|
3-10 | |||
Shop
machinery and equipment
|
3-10 | |||
Land
improvements
|
10-15 | |||
Office
equipment
|
3-10 |
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
|
Stock
Options
|
Effective
January 1, 2006, the Company adopted the fair value recognition provisions
of SFAS No. 123(R) (“SFAS 123R”), “Share-Based Payment, ”
using the modified prospective method. SFAS 123R requires stock based
compensation to be measured based on the fair value of the award on the
date of grant and the corresponding expense to be recognized over the
period during which an employee is required to provide services in
exchange for the award. The fair value of each stock option award is
estimated using a Black-Scholes option pricing model based on certain
assumptions including expected term, risk-free interest rate, stock price
volatility, and dividend yield. The assumption for expected term is based
on evaluations of historical and expected future employee exercise
behavior. The risk-free interest rate is based on the U.S. Treasury rates
at the date of grant with maturity dates approximately equal to the
expected term at the grant date. The historical volatility of the
Company’s stock is used as the basis for the volatility assumption. The
Company has never paid cash dividends, and does not currently intend to
pay cash dividends, and thus assumed a 0% dividend yield. The fair value
of restricted stock unit grants is based on the closing share price for
our common stock as quoted on the OTC Bulletin Board Market on the date of
grant. See Note 6 of Notes to the Consolidated Financial Statements for
additional information related to stock based compensation. The
Company granted 127,825 and 92,500 stock options during the years ended
December 31, 2008 and 2007, respectively. The fair value of
each option on the date of grant was estimated using the Black-Scholes
option pricing model with the following assumptions: no dividend yield,
expected volatility of 72% and a risk-free interest rate of 3.34 for 2008
and expected volatility of 73% and a risk-free interest rate of 4.42% for
2007, with expected lives of six years for both 2008 and
2007. The weighted average per share fair value of options
granted during the years ended December 31, 2008 and 2007 were $.80 and
$1.45, respectively. Substantially all options become vested and
exercisable ratably over a three-year period.
|
Revenue
Recognition
|
The
Company primarily recognizes revenue on the sale of its standard precast
concrete products at shipment date, including revenue derived from any
projects to be completed under short-term
contracts. Installation of the Company’s standard products is
typically performed by the customer; however, in some circumstances, the
Company will install certain products which are accomplished at the time
of delivery. The installation activities are usually completed
the day of delivery or the following day. In utility building
sales, the majority of the buildings are erected on the Company’s site and
delivered completely installed.
Leasing
fees are paid at the beginning of the lease agreement and recorded to a
deferred revenue account. As the revenue is earned each month
during the contract, the amount earned is recorded as lease income and an
equivalent amount is debited to deferred revenue.
Royalties
are recognized as revenue as they are earned. The Company
licenses certain other precast companies to produce its licensed products
to our engineering specifications under licensing
agreements. The agreements are typically for five year terms
and require royalty payments from 4% to 6% which are paid on a monthly
basis. The revenue from licensing agreements are recognized in
the month earned.
Certain
sales of Soundwall, architectural precast panels and Slenderwall™ concrete
products revenue is recognized using the percentage of completion method
for recording revenues on long term contracts under ARB 45 and SOP
81-1. The contracts are executed by both parties and clearly
stipulate the requirements for progress payments and a schedule of
delivery dates. Provisions for estimated losses on contracts
are made in the period in which such losses are determined.
Shipping
revenues are recognized in the period the shipping services are provided
to the customer.
Smith-Midland
products are typically sold pursuant to an implicit warranty as to
merchantability only. Warranty claims are reviewed and resolved
on a case by case method. Although the Company does incur costs
for these types of expense, historically the amount of expense is
immaterial.
|
Shipping
and Handling
|
Amounts
billed to customers are recorded in sales and the costs associated with
the shipping and handling are recorded as cost of goods
sold.
|
Sales
and Use Taxes
|
Use
taxes on construction materials are reported gross in general and
administrative expense.
|
The
Company sells products to highway contractors operating under government
funded highway programs and other customers and extends credit based on an
evaluation of the customer’s financial condition, generally without
requiring collateral. Exposure to losses on receivables is principally
dependent on each customer’s financial condition. The Company monitors its
exposure to credit losses and maintains allowances for anticipated losses.
Management reviews accounts receivable on a monthly basis to determine the
probability of collection. Any accounts receivable that are deemed to be
uncollectible along with a general reserve, which is calculated based upon
the aging category of the receivable, is included in the overall allowance
for doubtful accounts. Management believes the allowance for doubtful
accounts at December 31, 2008 is adequate. However, actual write-offs may
exceed the recorded allowance. Due to inclement weather, the
Company may experience reduced revenues from December through February and
may realize the substantial part of its revenues during the other months
of the year.
|
|
Fair
Value of
Financial
Instruments
|
The
carrying value for each of the Company’s financial instruments (consisting
of cash, accounts receivable and accounts payable and short-term line of
credit) approximates fair value because of the short-term nature of those
instruments. The estimated fair value of the long-term debt approximates
carrying value based on current rates offered to the Company for debt of
the similar maturities.
|
Estimates
|
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
|
The
Company expenses all advertising costs as incurred. Advertising expense
was approximately $333,000 and $314,000 in 2008 and 2007,
respectively.
|
|
Earnings
Per Share
|
Earnings
per share is based on the weighted average number of shares of common
stock and dilutive common stock equivalents outstanding. Basic earnings
per share is computed by dividing income available to common shareholders
by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of
securities that could share in earnings of an entity.
|
Long-Lived
Assets
|
The
Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable based on undiscounted estimated future operating cash flows.
When any such impairment exists, the related assets will be written down
to fair value. No impairment losses have been recorded through December
31, 2008.
|
Recent
Accounting
Pronouncements
|
In
September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” (SFAS
157). This statement establishes a framework for measuring fair value in
generally accepted accounting principles (“GAAP”), and expands disclosures
about fair value measurements. While the Statement applies
under other accounting pronouncements that require or permit fair value
measurements, it does not require any new fair value
measurements. SFAS 157 defines fair value as the price that
would be received to sell an asset or paid to transfer a liability (an
exit price) in an orderly transaction between market participants at the
measurement date. In addition, the Statement establishes a fair
value hierarchy, which prioritizes the inputs to the valuation techniques
used to measure fair value into three broad levels. Lastly,
SFAS 157 requires additional disclosures for each interim and annual
period separately for each major category of assets and
liabilities. This Statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. In February
2008, FASB Staff Position (FSP)FAS 157-2 was issued, which defers the
effective date of SFAS 157 until January 1, 2009 for
nonfinancial assets and liabilities except those items recognized or
disclosed at fair value on an annual or more frequently recurring
basis. The adoption of this Statement has not, and is not
expected to have a material impact on the Company’s financial
statements.
|
Recent Accounting
Pronouncements
(continued)
|
In
December 2007, the FASB issued FAS 160, “Noncontrolling Interests in
Consolidated Financial Statements – an Amendment of ARB 51”, to establish
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. SFAS
160 requires the company to clearly identify and present
ownership interests in subsidiaries held by parties other than the company
in the consolidated financial statements within the equity section but
separate from the company’s equity. It also requires the amount
of consolidated net income attributable to the parent and to the
noncontrolling interest be clearly identified and presented on the face of
the consolidated statement of income; changes in ownership interest be
accounted for similarly, as equity transactions; and when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the
former subsidiary and the gain or loss on the deconsolidation of the
subsidiary be measured at fair value. SFAS160 applies to fiscal
years beginning after December 15, 2008. Earlier adoption is
prohibited. Management has not determined the effect, if any,
the adoption of this Statement will have on the Company’s results of
operations or financial position.
|
|
In
December 2007, the FASB issued SFAS 141 (R), “Business Combinations”, to
create greater consistency in the accounting and financial reporting of
business combinations. SFAS 141 (R) requires a company to
recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquired entity to be measured at their
fair values as of the acquisition date. SFAS 141 (R) also
requires companies to recognize and measure goodwill acquired in a
business combination or a gain from a bargain purchase and how to evaluate
the nature and financial effects of the business
combination. SFAS 141 (R) applies to fiscal years beginning
after December 15, 2008 and is adopted prospectively. Earlier
adoption is prohibited. Management does not expect the adoption
of this statement will have a material effect on the Company’s results of
operations or financial position, but it is dependent on future
acquisition activities, if any.
In
March, 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities - an Amendment of FASB Statement
133. Statement 161 enhances required disclosures regarding
derivatives and hedging activities, including enhanced disclosures
regarding how: (a) an entity uses
derivative instruments; (b) derivative
instruments and related hedged items are accounted for under FASB
Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities; and (c) derivative
instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. Specifically, Statement
161 requires:
|
·
Disclosure of the
objectives for using derivative instruments be disclosed in terms of
underlying risk and accounting designation;
·
Disclosure of the
fair values of derivative instruments and their gains and losses in a
tabular format;
·
Disclosure of
information about credit-risk-related contingent features;
and
·
Cross-reference from
the derivative footnote to other footnotes in which derivative-related
information is disclosed.
|
1.
|
Property and Equipment
|
Property
and equipment consists of the following:
|
||||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
|
||||||||
Land
and land improvements
|
$ | 514,601 | $ | 514,601 | ||||
Buildings
|
2,826,380 | 2,739,460 | ||||||
Machinery
and equipment
|
7,694,488 | 7,189,672 | ||||||
Rental
equipment
|
764,710 | 711,368 | ||||||
11,800,179 | 11,155,101 | |||||||
Less:
accumulated depreciation
|
7,576,624 | 7,052,920 | ||||||
$ | 4,223,555 | $ | 4,102,181 |
2.
|
Notes
Payable
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Note
payable to Greater Atlantic Bank, maturing June 2021; with monthly
payments of approximately $36,000 of principal and interest at prime plus
.5% (3.75% at December 31, 2008); collateralized by principally all assets
of the Company.
|
$ | 3,003,810 | $ | 3,168,126 | ||||
Note
payable to Greater Atlantic Bank, maturing on October 15, 2010; with
monthly payments of approximately $8,400 of principal and interest at
5-year treasury plus 3.25% (4.8% at December 31, 2008); collateralized by
a second priority lien on Company assets.
|
177,496 | 253,317 | ||||||
The
Company also has a $1,500,000 line of credit with Greater Atlantic Bank.
The line matures June 15, 2009 and bears interest at the prime rate (3.25%
at December 31, 2008); collateralized by a second priority lien on all
accounts receivable, inventory, and certain other assets of the
Company.
|
500,000 | 200,000 | ||||||
Capital
Lease obligations, for machinery and equipment maturing through 2013, with
interest at 7% through 10%.
|
449,637 | 505,354 | ||||||
Installment
notes and capitalized leases, collateralized by certain machinery and
equipment maturing at various dates, primarily through 2013, with interest
at 7.25% through 11.07%.
|
460,854 | 469,615 | ||||||
4,591,797 | 4,596,412 | |||||||
Less
current maturities
|
1,022,476 | 605,376 | ||||||
$ | 3,569,321 | $ | 3,991,036 | |||||
2.
|
Notes Payable (continued)
|
Year
Ending December 31,
|
||||
2009
|
$ | 1,022,476 | ||
2010
|
583,776 | |||
2011
|
438,855 | |||
2012
|
385,350 | |||
2013
|
313,781 | |||
Thereafter
|
1,847,559 | |||
$ | 4,591,797 |
Year
ending December 31,
|
||||
2009
|
$ | 141,714 | ||
2010
|
137,022 | |||
2011
|
137,021 | |||
2012
|
91,090 | |||
2013
|
3,561 | |||
Total
payments
|
510,408 | |||
Less
amounts representing interest (at approximately 7%)
|
60,771 | |||
$ | 449,637 |
3.
|
Related Party Transactions
|
4.
|
Income
Taxes
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Federal:
|
||||||||
Current
|
$ | 168,000 | $ | 815,000 | ||||
Deferred
|
31,000 | (51,000 | ) | |||||
199,000 | 764,000 | |||||||
State:
|
||||||||
Current
|
62,000 | 123,000 | ||||||
Deferred
|
7,000 | (11,000 | ) | |||||
69,000 | 112,000 | |||||||
$ | 268,000 | $ | 876,000 | |||||
December
31,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
Income
taxes at statutory rate
|
$ | 234,000 | 34 | % | $ | 724,000 | 34 | % | ||||||||
Increase
(decrease) in taxes resulting from:
|
||||||||||||||||
State
income taxes,
|
||||||||||||||||
net
of federal benefit
|
34,000 | 5 | % | 77,000 | 4 | % | ||||||||||
Other
|
— | — | 75,000 | 3 | % | |||||||||||
$ | 268,000 | 39 | % | $ | 876,000 | 41 | % |
4.
|
Income
Taxes (continued)
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Net
operating loss and AMT carrybacks
|
$ | 63,000 | $ | 66,000 | ||||
Depreciation
|
(317,000 | ) | (241,000 | ) | ||||
Provision
for doubtful accounts
|
155,000 | 95,000 | ||||||
Vacation
accrued
|
77,000 | 84,000 | ||||||
Deferred
income
|
108,000 | 120,000 | ||||||
Other
|
68,000 | 68,000 | ||||||
Net
deferred tax asset
|
154,000 | 192,000 | ||||||
Current
portion, net
|
471,000 | 367,000 | ||||||
Long-term
portion, net
|
(317,000 | ) | (175,000 | ) | ||||
$ | 154,000 | $ | 192,000 |
Employee Benefit Plans
|
6.
|
Stock
Options
|
Weighted
Average Exercise Price
|
Options
Outstanding
|
Vested
and Exercisable
|
||||||||||
Balance,
December 31, 2006
|
1.49 | 511,424 | 354,149 | |||||||||
Granted
|
2.15 | 92,500 | — | |||||||||
Forfeited
|
2.25 | (25,500 | ) | (10,500 | ) | |||||||
Exercised
|
1.05 | (36,267 | ) | (36,267 | ) | |||||||
Vested
|
2.40 | — | 65,231 | |||||||||
Balance,
December 31, 2007
|
1.26 | 542,157 | 372,613 | |||||||||
Granted
|
1.21 | 127,825 | — | |||||||||
Forfeited
|
1.00 | (27,825 | ) | (27,825 | ) | |||||||
Exercised
|
— | — | — | |||||||||
Vested
|
2.30 | — | 88,211 | |||||||||
Balance,
December 31, 2008
|
1.52 | 642,157 | 432,999 |
7.
|
Commitments and
Contingencies
|
|
1.
|
The
Company was required to forgive outstanding retainage receivables from
JPIC of approximately $199,000, of which the Company had previously
reserved for in the amount of
$100,000.
|
|
2.
|
The
Company was required to make a $426,000 cash payment to JPIC, which has
been made.
|
|
3.
|
Both
parties agreed to release each other from any and all other claims arising
out of this dispute.
|
9.
|
Earnings
Per Share
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Basic
earnings per share
|
||||||||
Income
available to common shareholder
|
$ | 420,993 | $ | 1,252,360 | ||||
Weighted
average shares outstanding
|
4,670,882 | 4,646,733 | ||||||
Basic
earnings per share
|
$ | 0.09 | $ | 0.27 | ||||
Diluted
earnings per share
|
||||||||
Income
available to common shareholder
|
$ | 420,993 | $ | 1,252,360 | ||||
Weighted
average shares outstanding
|
4,670,882 | 4,646,733 | ||||||
Dilutive
effect of stock options
|
67,119 | 146,982 | ||||||
Total
weighted average shares outstanding
|
4,738,001 | 4,793,715 | ||||||
Diluted
earnings per share
|
$ | 0.09 | $ | 0.26 | ||||