UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q
(Mark One)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                               For the quarterly period ended September 30, 2008

                                       OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                               Commission File Number: 333-11625

                       EASTERN LIGHT CAPITAL, INCORPORATED
                       -----------------------------------
                           (Exact name of Registrant)

            Delaware                                          94-3240473
 ------------------------------                            ----------------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification Number)

  100 Pine Street
  Suite 560
  San Francisco, California                                       94111
-----------------------------------------                  ------------------
  (Address of principal executive office)                       (Zip code)

                                 (415) 693-9500
                                 --------------
                         (Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
 Common Stock $0.01 par value                   American Stock Exchange

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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 [X] No [_]


Smaller Reporting Company        Yes [X] No [_]


As of October 31, 2008, the issuer's common shares closed at $4.29 and the
aggregate market value of the issuer's shares of Common Stock, $.01 par value,
held by non-affiliates of the issuer was approximately $1,595,000. At that date
approximately 372,000 common shares were outstanding of which 280,000 common
shares were held by non-affiliates.





<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

                                TABLE OF CONTENTS


                   PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

         Condensed Consolidated Balance Sheets                                 3

         Condensed Consolidated Statements of Operations                       4

         Condensed Consolidated Statements of Cash Flows                       5

         Notes to Condensed Consolidated Financial Statements               6-13

ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION       14-17
         AND RESULTS OF OPERATIONS

ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK               17-18

ITEM 4   CONTROLS AND PROCEDURES                                              18

                           PART II - OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS                                                    19

ITEM 1A  RISK FACTORS                                                      19-22

ITEM 1B  UNRESOLVED STAFF COMMENTS                                            22

ITEM 2   CHANGES IN SECURITIES                                                22

ITEM 3   DEFAULTS UPON SENIOR SECURITIES                                      22

ITEM 4   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                    22

ITEM 5   OTHER INFORMATION                                                    22

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K                                  22-23

         SIGNATURES                                                           24

         CERTIFICATIONS


     All other items called for by the instructions to Form 10-Q have been
omitted because the items are not applicable or the relevant information is not
material.

<PAGE>
<TABLE>
<CAPTION>

                          EASTERN LIGHT CAPITAL, INC.
                     Condensed Consolidated Balance Sheets

                                                                         September 30,   December 31,
                                                                             2008            2007
                                                                         (unaudited)
ASSETS                                                                   ------------    ------------

<S>                                                                      <C>             <C>
    Cash and cash equivalents                                            $  1,874,434    $    962,190
    Marketable securities                                                      96,238         133,459
    Accounts receivable                                                       899,256       1,189,339
    Allowance for doubtful accounts                                          (522,930)       (910,000)
                                                                         ------------    ------------
        Net accounts receivable                                               376,326         279,339
    Notes receivable:
       Mortgage notes receivable                                            6,432,267      11,144,365
       Allowance for loan losses                                             (312,151)     (2,155,000)
                                                                         ------------    ------------
          Net notes receivable                                              6,120,116       8,989,365
    Real estate owned                                                       5,235,776       1,804,826
    Other assets (net of accumulated depreciation of $1,093)                   23,317              --
                                                                         ------------    ------------

    Total assets                                                         $ 13,726,207    $ 12,169,179
                                                                         ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

    Liabilities
         Bank loans payable                                              $  2,008,258    $  3,641,828
         REO mortgages payable                                              3,143,635              --
         Other liabilities                                                    359,104         313,336
                                                                         ------------    ------------
    Total liabilities                                                       5,510,997       3,955,164

    Stockholders' equity
       Preferred stock, $.01 par value;1,600,000 shares authorized;             2,138           2,138
           213,820 shares issued and outstanding at September 30, 2008
           and December 31, 2007
       Additional paid in capital - preferred stock                         5,509,728       5,509,728
    Less treasury stock: 16,919 and 16,919 preferred shares at
           September 30, 2008 and December 31, 2007 at cost                  (229,179)       (229,179)

       Common stock, $.01 par value; 2,000,000 shares authorized;               5,000           5,000
           500,032 shares issued and outstanding at September 30, 2008
           and December 31, 2007
       Additional paid in capital - common stock                            9,404,373       9,394,577
    Less treasury stock: 125,000 and 119,500 common shares at
           September 30, 2008 and December 31, 2007 at cost                (1,724,890)     (1,699,771)
       Accumulated other comprehensive loss                                      (477)           (385)
    Accumulated deficit                                                    (4,751,483)     (4,768,093)
                                                                         ------------    ------------

    Total stockholders' equity                                              8,215,210       8,214,015
                                                                         ------------    ------------

    Total liabilities and stockholders' equity                           $ 13,726,207    $ 12,169,179
                                                                         ============    ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3


<PAGE>
<TABLE>
<CAPTION>

                          EASTERN LIGHT CAPITAL, INC.
                Condensed Consolidated Statements of Operations
                                  (unaudited)



                                                       Three Months Ended             Nine Months Ended
                                                           September 30                  September 30
                                                       2008            2007           2008          2007
                                                   -----------    -----------    -----------    -----------
<S>                                                <C>            <C>            <C>            <C>
REVENUES
       Interest income                             $   142,095    $   234,390    $   501,796    $   878,073
       Other income                                     17,092         18,104         23,445         24,702
                                                   -----------    -----------    -----------    -----------
       Total revenues                                  159,187        252,494        525,241        902,775

EXPENSES
       Loan servicing fees to related parties               --             --             --         15,500
       Interest expense on loans                        23,734         69,554        104,820        254,522
       Provision (recovery) of doubtful accounts       (26,478)            --        (66,524)            --
       Provision (recovery) for loan losses                 --        545,545        (56,509)       767,194
       Wages and salaries                               95,792        105,121        290,623        309,880
       Non-income taxes                                 14,997          9,408         34,995         28,561
       Loan origination costs                               --         20,939             --         83,404
       General and administrative                       76,123        256,658        237,409        457,556
                                                   -----------    -----------    -----------    -----------
       Total expenses                                  184,168      1,007,225        544,814      1,916,617
                                                   -----------    -----------    -----------    -----------

LOSS FROM OPERATIONS                                   (24,981)      (754,731)       (19,573)    (1,013,842)
OTHER INCOME (EXPENSE)
       Operating expenses of real estate owned              --             --          7,379             --
       Gain (loss) on real estate owned                 16,423         (9,396)        72,793        (12,578)
       Gain (loss) on securities transactions           13,802           (241)       (43,989)       (10,908)
                                                   -----------    -----------    -----------    -----------
       Other income (expense), net                      30,225         (9,637)        36,183        (23,486)
                                                   -----------    -----------    -----------    -----------

NET INCOME (LOSS)                                  $     5,244    $  (764,368)   $    16,610    $(1,037,328)
                                                   ===========    ===========    ===========    ===========

PREFERRED DIVIDENDS                                         --             --             --             --
                                                   -----------    -----------    -----------    -----------

NET INCOME (LOSS)                                  $     5,244    $  (764,368)   $    16,610    $(1,037,328)
                                                   ===========    ===========    ===========    ===========

BASIC EARNINGS PER COMMON SHARE                    $      0.01    $     (2.01)   $      0.04    $     (2.73)
                                                   ===========    ===========    ===========    ===========

DILUTED EARNINGS PER COMMON SHARE                  $      0.01    $     (2.01)   $      0.04    $     (2.73)
                                                   ===========    ===========    ===========    ===========

DIVIDENDS PAID PER PREFERRED SHARE                 $        --    $        --    $        --    $        --
                                                   ===========    ===========    ===========    ===========

DIVIDENDS PAID PER COMMON SHARE                    $        --    $        --    $        --    $        --
                                                   ===========    ===========    ===========    ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>
<TABLE>
<CAPTION>
                          EASTERN LIGHT CAPITAL, INC.
                Condensed Consolidated Statements of Cash Flows
                                  (unaudited)

                                                              Nine Months Ended
                                                                September 30
                                                            2008            2007
                                                         -----------    -----------
<S>                                                      <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                   $    16,610    $(1,037,328)
     Adjustments to reconcile net income (loss)
     to net cash used in operating activities:
       Stock-based compensation expense                        9,796             --
       Unrealized gain (loss) on marketable securities        51,074        (78,897)
       Change in allowance for loan losses                    12,693        287,691
       Change in allowance for doubtful accounts            (132,033)       170,000
       Change in accounts receivable                         (90,540)        69,558
       Change in other assets, net                            23,317             --
       Change in other liabilities                          (424,452)        (5,486)
                                                         -----------    -----------
         Net cash used in operating activities              (533,535)      (594,462)

CASH FLOWS FROM INVESTING ACTIVITIES
     Loss from sale of marketable securities                 (13,853)          (421)
     Proceeds from origination costs                              --         83,404
     Change in real estate owned, net                      1,764,050     (1,594,825)
     Proceeds from mortgage notes receivable               1,340,701      5,964,156
                                                         -----------    -----------
       Net cash provided by investing activities           3,090,898      4,452,314

CASH FLOWS FROM FINANCING ACTIVITIES
     Payments for bank loans, net                         (1,620,000)    (3,125,906)
     Purchase of treasury stock, common shares               (25,119)            --
     Preferred dividends paid                                     --             --
     Common dividends paid                                        --             --
                                                         -----------    -----------
       Net cash used in financing activities              (1,645,119)    (3,125,906)
                                                         -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         912,244        731,946

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD               962,190        599,943
                                                         -----------    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                 $ 1,874,434    $ 1,331,889
                                                         ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash paid for interest                              $   117,923    $   272,212
                                                         ===========    ===========
     Cash paid for taxes                                 $    22,371    $        48
                                                         ===========    ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES
     Foreclosures, net of reserves and senior liens      $ 2,051,365    $ 1,839,089
                                                         ===========    ===========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

1.   Organization
     ------------

     References to the "Company" refer to Eastern Light Capital, Incorporated
     (the "Trust") - a Real Estate Investment Trust ("REIT") - and WrenCap
     Funding Corporation ("WCFC"), collectively. The Trust was incorporated in
     Delaware on December 12, 1995. On July of 2008, the Trust - formerly known
     as Capital Alliance Income Trust, Ltd - was renamed Eastern Light Capital,
     Incorporated.

     On April 15, 1997 the Trust formed, a taxable REIT subsidiary, Capital
     Alliance Funding Corporation ("CAFC"). On April 20, 2007, the subsidiary
     was renamed to WrenCap Funding Corporation. Both the Trust and WCFC are
     incorporated in Delaware. The Trust owns all of WCFC's common and preferred
     shares and the Trust and WCFC are consolidated in the Company's financial
     statements.

     Prior to December 29, 2006, the Company was externally advised by Capital
     Alliance Advisors, Inc. (the "Former Manager", "CAAI"). On December 29,
     2006, the Former Manager was terminated and the Company became self
     advised.

2.   Summary of significant accounting policies
     ------------------------------------------

     Basis of presentation.    The accompanying unaudited condensed consolidated
     financial statements have been prepared in accordance with accounting
     principles generally accepted in the United States of America ("U.S. GAAP")
     for interim financial statements and pursuant to the instructions on the
     Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange
     Commission (the "SEC"). The financial information herein reflects all
     adjustments (consisting of normal, recurring adjustments) which are, in the
     opinion of management, necessary for a fair presentation of interim results
     for the Company. The results of operations for the three and nine months
     ended September 30, 2008, are not necessarily indicative of the results to
     be expected for the full year. These financial statements should be read in
     conjunction with the Company's audited financial statements and the notes
     thereto included in the Company's Form 10-KSB filed for the year ended
     December 31, 2007. The condensed balance sheet as of December 31, 2007 was
     derived from the Company's audited financial statements but does not
     include all disclosures required by U.S. GAAP.

     Use of estimates.   The preparation of consolidated financial statements in
     conformity with accounting principles generally accepted in the United
     States of America requires management to make estimates and assumptions
     that affect the reported amounts of assets and liabilities and disclosure
     of contingent assets and liabilities at the date of the consolidated
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     Income Taxes.    The Trust has elected to be taxed as a REIT under the
     Internal Revenue Code of 1986, as amended (the "Code"). Under the Code,
     REIT's are generally not required to pay federal income taxes if they
     distribute at least 90% of their taxable income and meet certain income,
     asset and stockholder tests. If the Company fails to qualify as a REIT in
     any taxable year, the Company will be subject to federal income taxes at
     regular federal corporate rates (including any alternative minimum tax) and
     may not be able to qualify as a REIT for the four subsequent taxable years.

     Even as a REIT, the Company may be subject to certain state and local taxes
     on its income and property, and to federal income and excise taxes on its
     undistributable taxable income.

     Revenue recognition. Interest income is recorded on the accrual basis of
     accounting in accordance with the terms of the loans. Management reviews
     the likelihood that a loan will be repaid when the payment of principal or
     interest is delinquent over two payments. For these delinquent loans,
     Management may establish a loan loss reserve to protect against principal
     losses in the loan portfolio and an allowance for doubtful accounts to
     protect against losses from accrued interest. If the mortgage's collateral
     is considered insufficient to satisfy the outstanding balance, after
     estimated foreclosure and selling costs, additional interest is not
     accrued. Loan origination income and extension fees are deferred and
     recognized over the remaining life of the loan as interest income.

                                       6
<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

2.   Summary of significant accounting policies (continued)
     ------------------------------------------------------

     Cash and cash equivalents.    Cash and cash equivalents include cash and
     highly liquid investments with maturities of three months or less when
     purchased. The Company deposits cash in financial institutions insured by
     the Federal Deposit Insurance Corporation. At times, the Company's account
     balances may exceed the insured limits. The Company has not experienced
     losses on these accounts and management believes the Company is not exposed
     to significant risks on such accounts.

     Marketable securities.    Marketable securities are classified as either
     trading, or available-for-sale as defined by SFAS 115. Trading securities,
     if acquired, would be reported at fair value, with unrealized gains and
     losses reported in the statement of operations. Available-for-sale
     securities are reported at fair value with unrealized gains and losses
     excluded from earnings and reported in accumulated other comprehensive
     loss. Realized gains and losses on sales of both trading and
     available-for-sale securities are determined on an average cost basis and
     are reported in the statement of operations.

     Concentration of credit risk.    The Company holds numerous mortgage notes
     receivable. These notes are secured by deeds of trust on residential
     properties located primarily in California, which results in a
     concentration of credit risk. The value of the loan portfolio may be
     affected by changes in the economy or other conditions of the geographical
     area. Three loans representing approximately 7% of the loan portfolio are
     deeds of trust on residential properties not in California.

     Stock-based compensation.    During the nine months ended September 30,
     2007 no option awards were issued. During the nine months ended September
     30, 2008, 84,655 options were re-issued. As the options were re-issued, no
     further disclosure is required pursuant to FASB Statement No. 123 (revised
     2004) ("FAS 123(R)"), "Share-Based Payment," which is a revision of FASB
     Statement No. 123 ("FAS 123"), "Accounting for Stock-Based Compensation."

     Fair value of financial instruments.    For cash and cash equivalents, the
     carrying amount is a reasonable estimate of fair value. For mortgage notes
     receivable, fair value is estimated by comparing the mortgage note
     receivable interest rate to current interest rates at which similar loans
     would be made to borrowers with similar credit ratings and for the same
     remaining maturities. For loans payable, fair value is estimated by
     comparing the current applicable interest rates to the current applicable
     borrowing rates. As of September 30, 2008 and December 31, 2007, the fair
     value of the Company's assets and liabilities approximate the carrying
     amounts reflected in the consolidated financial statements.

     Reclassifications.    Certain 2007 amounts have been reclassified to
     conform to the 2008 presentation. Such reclassifications had no effect on
     reported net income or earnings per share.

     Earnings per share.   In accordance with SFAS No. 128 "Earnings Per Share,"
     the Company presents both basic and diluted earnings per share. Basic
     earnings per share excludes dilution and is computed by dividing net income
     available to common stockholders by the weighted average number of shares
     outstanding for the period. Diluted earnings per share reflects the
     potential dilution that could occur if securities or other contracts to
     issue common stock were exercised or converted into common stock, where
     such exercise or conversion would result in a lower earnings per share
     amount. At September 30, 2008, options to purchase 88,940 shares of common
     stock are not considered in the diluted earnings per share calculation due
     to anti-dilution. This is disclosed in Note 7.

     Recent accounting pronouncements.    In February 2007, the FASB issued SFAS
     No. 159, "The Fair Value Option for Financial Assets and Financial
     Liabilities" (SFAS 159). SFAS 159 permits entities to choose to measure
     many financial instruments and certain other items at fair value that are
     not currently required to be measured at fair value. SFAS 159 also
     establishes presentation and disclosure requirements designed to facilitate
     comparison between entities that choose different measurement attributes
     for similar types of assets and liabilities. Effective January 1, 2008, the
     Trust adopted SFAS 159. The Trust's adoption of SFAS 159 did not have a
     material impact on the condensed consolidated financial statements.


                                       7
<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

2.   Summary of significant accounting policies (continued)
     ------------------------------------------------------

     In December 2007, the FASB issued SFAS No. 141 (R), "Business Combinations"
     ("SFAS 141 (R)") which replaces SFAS No. 141, "Business Combinations" and
     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 acquisition costs to be expensed as incurred and does not permit
     certain restructuring activities previously allowed under Emerging Issues
     Task Force Issue No. 95-3 to be recorded as a component of purchase
     accounting. SFAS 141 (R) applies prospectively to business combinations for
     which the acquisition date is on or after the beginning of the first annual
     reporting period beginning on or after December 15, 2008. The Company is
     currently evaluating the effect the adoption of SFAS 141 (R) may have on
     the Company's condensed consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests
     in Consolidated Financial Statements and amendment of ARB No. 51" ("SFAS
     160"). Among other items, SFAS 160 requires all entities to report
     non-controlling (minority) interests in subsidiaries in the same way as
     equity in the consolidated financial statements. SFAS 160 is effective for
     the first annual reporting period beginning after December 15, 2008. The
     Company is evaluating the effect of this recently issued standard on its
     condensed consolidated financial statements.

     In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
     Instruments and Hedging Activities - an amendment to FASB Statement No.
     133." SFAS No. 161 is intended to improve financial standards for
     derivative instruments and hedging activities by requiring enhanced
     disclosures to enable investors to better understand their efforts on an
     entity's financial position, financial performance, and cash flows.
     Entities are required to provide enhanced disclosures about: (a) how and
     why entity uses derivative instruments; (b) how derivative instruments and
     related hedged items are accounted for under Statement 133 and its related
     interpretations; and (c) how derivative instruments and related hedged
     items affect an entity's financial position, financial performance, and
     cash flows. It is effective for financial statements issued for fiscal
     years beginning after November 15, 2008, with early adoption encouraged.
     The adoption of this statement, which is expected to occur in the first
     quarter of 2009, is not expected to have a material effect on the Company's
     condensed consolidated financial statements.

     In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether
     Instruments Granted in Share-Based Payment Transactions Are Participating
     Securities," to clarify that all outstanding unvested share-based payment
     awards that contain no forfeitable rights to dividends or dividend
     equivalents, whether paid or unpaid, are participating securities. An
     entity must include participating securities in its calculation of basic
     and diluted earnings per share (EPS) pursuant to the two-class method, as
     described in FASB Statement 128, Earnings per Share. FSP EITF 03-6-1 is
     effective for fiscal years beginning after December 15, 2008 and interim
     periods within those fiscal years. The Company is evaluating the impact
     that the adoption of FSP EITF 03-6-1, if any, will have on its condensed
     consolidated financial statements.

     In October 2008, the FASB issued FSP SFAS No. 157-3, "Determining the Fair
     Value of a Financial Asset When the Market for That Asset Is Not Active",
     ("FSP 157-3"), to clarify the application of the provisions of SFAS 157 in
     an inactive market and how an entity would determine fair value in an
     inactive market. FSP 157-3 was effective upon issuance and applies to
     Financial Assets within the scope of accounting pronouncements that require
     or permit fair value measurements in accordance with statement 157. The
     Company does not expect the adoption of FSP No. 157-3 to have a material
     impact on its condensed consolidated financial statements.


                                       8
<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


3.   Mortgage notes receivable
     -------------------------

     Reconciliation of the mortgage notes receivable balances follows:

                                              September 30,    December 31,
                                                  2008            2007
                                              ------------    ------------
     Balance, beginning of period             $ 11,144,365    $ 17,121,939
     Additions during period:
        Originations                                    --              --
     Deductions during period:
        Collections of principal                   (38,907)       (162,099)
        Repayments                              (1,301,794)     (3,750,290)
        Write off of uncollectible loans                --         (91,447)
        Foreclosures, net of reserve            (3,371,397)     (1,973,738)
                                              ------------    ------------
     Balance, end of period                   $  6,432,267    $ 11,144,365
                                              ============    ============

     Mortgage notes receivable are stated at the principal outstanding. Interest
     on the mortgages is due monthly and principal is usually due as a balloon
     payment at loan maturity.

     As of September 30, 2008, the Company's loan portfolio included 21 loans
     totaling $6,432,267 of which 8 loans totaling $2,795,772 representing 43%
     of the loan portfolio were delinquent over two payments. In assessing the
     collectability of these delinquent mortgage loans, management has
     established a loan loss reserve of $312,151, if it is necessary to
     foreclose upon the mortgage loans.

     As of December 31, 2007, the Company's loan portfolio included 31 loans
     totaling $11,144,365 of which 10 loans totaling $4,182,117 representing 37%
     of the loan portfolio were delinquent over two payments. In assessing the
     collectability of these delinquent mortgage loans, management has
     established a loan loss reserve of $2,155,000, if it is necessary to
     foreclose upon the mortgage loans.

     In assessing the delinquent mortgage loans, management estimates a net gain
     will be recognized, if it is necessary to foreclose on the delinquent
     mortgage loans. Estimates are based on an anticipated sales price of the
     foreclosed property that includes a discount from the latest appraised
     value of the property, less the sum of pre-existing liens, costs of
     disposition, the face amount of the mortgage loan and accrued interest
     receivable.

4.   Allowance for loan losses
     -------------------------

     The allowance for loan losses is based on the risk value of the subject
     collateral and non-collateral based metrics. Management believes a $312,151
     and $2,155,000 allowance for loan losses is adequate to protect against
     potential losses inherent in all mortgage notes receivable as of September
     30, 2008 and December 31, 2007, respectively. Actual losses may differ from
     the estimate.

     A reconciliation of the allowance for loan losses follows:

                                                     September 30,  December 31,
                                                         2008           2007
                                                     ------------   -----------
     Provision for loan losses
         as reported on consolidated statements of
          operations                                 $    (56,509)  $ 1,852,194
     Adjustment for prior accruals                         68,509            --
     Write-off of uncollectible loans, net             (1,854,849)     (479,503)
                                                     ------------   -----------
     Total adjustments to allowance                    (1,842,849)    1,372,691
     Balance, beginning of period                       2,155,000       782,309
                                                     ------------   -----------
     Balance, end of period                          $    312,151   $ 2,155,000
                                                     ============   ===========

                                        9

<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

5.   Real estate owned
     -----------------

     As of December 31, 2007, the Company owned three properties. During the
     nine months ended September 30, 2008, the Company foreclosed on six
     properties, sold two properties and wrote off one property. Three of these
     properties included senior liens of $1,998,377, $511,939 and $633,319. As
     of September 30, 2008, the Company owned five properties.

     A reconciliation of the real estate owned account shows its cash and
     non-cash activities follows:
<TABLE>
<CAPTION>
                                                                 September 30,  December 31,
                                                                    2008           2007
                                                                 -----------    -----------
<S>                                                              <C>            <C>
     Balance, beginning of period                                $ 1,804,826    $   245,000
     Add: Foreclosed mortgage notes, net of reserve (non-cash)     6,468,649      1,973,738
     Less: Write-downs of property (non-cash)                     (1,273,649)      (108,864)
     Add: Deferred carrying costs                                    108,775             --
     Add: Gain (loss) on sale (non-cash)                                  --        (63,229)
     Less: Proceeds from sale of real estate owned                (1,872,825)      (241,819)
                                                                 -----------    -----------

     Balance, end of period                                      $ 5,235,776    $ 1,804,826
                                                                 ===========    ===========
</TABLE>

6.   Bank loans payable
     ------------------

     The Company has a line of credit with a Bank in which the Company pledges
     qualified mortgage notes and receives advances of up to 80% of the value of
     the note. Interest is payable monthly at the daily one month LIBOR rate and
     a spread of 2.00%. During the nine months ended September 30, 2008, the
     Company reduced its institutional borrowings from $3,641,828 to $2,000,000.
     As of September 30, 2008, the Company had an accrued interest payable of
     $8,258. The Company is actively negotiating an extension of the line of
     credit which is scheduled to mature on November 14, 2008. On November 7,
     2008, the Federal Deposit Insurance Company ("FDIC") seized the Bank.
     Documentation of the extension has been suspended until the FDIC reviews
     the Company's extension request.

7.   Earnings per share
     ------------------

     The following table represents a reconciliation of the numerators and
     denominators of the basic and diluted earnings per common share for the
     three and nine months ended September 30, 2008 and 2007:
<TABLE>
<CAPTION>
                                                               Three months ended          Nine months ended
                                                                  September 30,              September 30,
                                                            ------------------------   -------------------------
                                                               2008          2007         2008           2007
                                                            -----------   ----------   -----------   -----------
     Numerator:
<S>                                                         <C>           <C>          <C>           <C>
       Net income (loss)                                    $     5,244   $ (764,368)  $    16,610   $(1,037,328)

       Preferred dividends                                           --           --            --            --
                                                            -----------   ----------   -----------   -----------
       Numerator for basic and diluted earnings per share
       income (loss) available to common stockholders       $     5,244   $ (764,368)  $    16,610   $(1,037,328)
                                                            ===========   ==========   ===========   ===========
     Denominator:
       Basic weighted average shares outstanding                377,115      380,532       379,393       380,532
       Dilutive effect of options                                 7,637           --         3,787            --
                                                            -----------   ----------   -----------   -----------
       Diluted weighted average shares outstanding              384,752      380,532       383,180       380,532
                                                            ===========   ==========   ===========   ===========

     Basic earnings per common share                        $      0.01   $    (2.01)  $      0.04   $     (2.73)
                                                            ===========   ==========   ===========   ===========
     Diluted earnings per common share                      $      0.01   $    (2.01)  $      0.04   $     (2.73)
                                                            ===========   ==========   ===========   ===========
</TABLE>

                                       10
<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


8.   Related party transactions
     --------------------------

     On January 1, 2007, to facilitate the transition to self-management, the
     Trust engaged the Former Manager to continue servicing its mortgage loans
     and REO until alternate servicing was arranged. CAAI was paid $50 per month
     per loan file for loan servicing and $500 per month per REO. Effective June
     30, 2007, the Former Manager's loan servicing responsibilities was
     terminated. The Trust paid $5,650 in loan servicing fees and $1,500 in REO
     coordination fees for the three months ended June 30, 2007. Within the 2007
     financial statements loan servicing and REO coordination fees are included
     in loan servicing fees to related parties.

     On January 1, 2007, the Trust entered into a sub-lease agreement with the
     Former Manager. As of June 30, 2008 and 2007, the Trust paid rent of
     $20,483 and $19,588, respectively, to the Former Manager. The sub-lease was
     terminated July 4, 2008 and the Trust has relocated and entered into a new
     three year lease with an independent third party.

     On March 8, 2008, Thomas B. Swartz, a Non-Independent Director, resigned
     from the Trust's Board of Directors. Mr. Swartz received $21,100 in cash
     and his stock options were allowed to continue until their scheduled
     maturity or June 3, 2009, whichever date occurs earlier.

9.   Preferred, common and treasury stock
     ------------------------------------

     The Preferred Share dividend preference is non-cumulative The Preferred
     Shares are entitled to a dividend in an amount equal to an annualized
     return on the adjusted net capital contribution of Preferred Shares at each
     dividend record date during each year. If the Directors do not set a record
     date, the record date is the first day of the month. The annualized return
     is the lesser of: (a) 10.25%, (b) 1.50 % over the Prime Rate (determined on
     a not less than quarterly basis) or (c) the rate set by the Board of
     Directors.

     After declaring dividends for a given year to the Preferred Shareholders in
     the amount of the dividend preference, no further dividends may be declared
     on the Preferred Shares for the subject year, until the dividends declared
     on each Common Share for that year equals the dividend preference for each
     Preferred Share for such year. Any additional dividends will be allocated
     such that the amounts of dividends per share to the Preferred Shareholders
     and Common Shareholders for the subject year are equal.

     Preferred Shareholders are entitled to receive all liquidating
     distributions until they have received an amount equal to their aggregate
     adjusted net capital contribution. Thereafter, Common Shareholders are
     entitled to all liquidation distributions until the aggregate adjusted net
     capital contributions of all Common Shares has been reduced to zero. Any
     subsequent liquidating distributions will be allocated among Common
     Shareholders and Preferred Shareholders pro rata.

     The Preferred Shares are redeemable by a shareholder, subject to the
     consent of the Board of Directors, annually on June 30 ("Redemption Date")
     for written redemption requests received by May 15 of such year. Preferred
     Shares requesting redemption shall cease to be entitled to distribution,
     voting rights and other benefits as of May 30 prior to the Redemption Date.
     However, if the Board of Directors postpones or delays action on Preferred
     Shares redemption request beyond June 30, the date for the suspension of
     such shareholders rights and benefits shall be delayed proportionately. The
     Board of Directors may in its sole discretion deny, delay, postpone or
     consent to any or all requests for redemption. The redemption amount to be
     paid for redemption of such Preferred Shares is the adjusted net capital
     contribution plus unpaid declared and accrued dividends, divided by the
     aggregate net capital contributions plus declared and accrued but unpaid
     dividends attributable to all Preferred Shares outstanding, multiplied by
     the net asset value of the Trust attributable to the Preferred Shares which
     shall be that percentage of the Trust's net asset value that the aggregate
     adjusted net capital contributions of all Preferred Shares bears to the
     adjusted net capital contributions of all Shares outstanding.

     The Trust has the power to redeem or prohibit the transfer of a sufficient
     number of Common and/or Preferred Shares or the exercise of warrants and/or
     options and to prohibit the transfer of shares to persons that would result
     in a violation of the Trust's shareholding requirements. Only with the
     explicit approval of the Trust's Board of Directors may a shareholder own
     more than 9.8% of the total outstanding shares.


                                       11
<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


10.  Fair Value Measurements
     -----------------------

     Effective January 1, 2008, the Company adopted SFAS No. 157, "Fair Value
     Measurement", for its financial assets and liabilities that are re-measured
     and reported at fair value at each reporting period and non-financial
     assets and liabilities that are re-measured and reported at fair value at
     least annually. In accordance with the provisions of FAS 157-2, "Effective
     Date of FASB Statement No. 157", the Company has elected to defer adoption
     of SFAS 157 as it relates to its non-financial assets and non-financial
     liabilities that are recognized and disclosed at fair value in the
     financial statements on a nonrecurring basis until January 1, 2009. The
     Company is evaluating the impact, if any, this standard will have on its
     non-financial assets and liabilities.

     The adoption of SFAS 157 to the Company's financial assets and liabilities
     that are re-measured and reported at fair value at least annually did not
     have an impact on the Company's financial results.

     The following table presents information about the Company's assets and
     liabilities that are measured at fair value on a recurring basis as of
     September 30, 2008 and indicates the fair value hierarchy of the valuation
     techniques the Company utilized to determine such fair value. In general,
     fair values determined by Level 1 inputs utilize quoted prices (unadjusted)
     in active markets for identical assets or liabilities. Fair values
     determined by Level 2 inputs utilize data points that are observable such
     as quoted prices, interest rates and yield curves. Fair values determined
     by Level 3 inputs are unobservable data points for the asset or liability
     and includes situations where there is little, if any, market activity for
     the asset or liability.

                                  Sept. 30,
                                      2008    Level 1   Level 2     Level 3
                                  --------   --------   -------   ---------
     Asset:
          Cash equivalents        $  5,095   $  5,095   $    --   $      --
          Marketable securities     96,238     96,238
                                             --------   -------   ---------
     Total                        $101,333   $101,333   $    --   $      --
                                  ========   ========   =======   =========

     The fair values of the Company's cash equivalents and marketable securities
     are determined through market observable and corroborated sources. The
     carrying amounts reflected in the balance sheets for other current assets
     and accrued expenses approximate fair value due to their short-term
     maturities.

11.  Contingencies
     -------------

     The Company is involved in five legal proceedings as of September 30, 2008.

     On April 14, 2006, CAIT and CAFC were served a summons alleging that the
     Company was involved with misleading a former mortgage holder. Upon the
     satisfaction of their mortgage claim from the proceeds of a Company
     provided mortgage, the former mortgage holder released their escrow
     settlement to the new purchaser without re-recording their subordinate
     mortgage claim. On July 14, 2006, the property was sold at a Trustee sale
     and the Company's loan was paid in full. The former mortgage holder's
     unrecorded claim was not satisfied at the aforementioned Trustee sale. The
     Company believes the former mortgage holder's action is without merit and
     is seeking dismissal.

     On November 1, 2007, CAFC was served a summons dated September 5, 2007 from
     a former borrower alleging that the Company assisted the replacement lender
     to unlawfully and illegally foreclose on the former borrower's property.
     The Company believes the former mortgage holder's action is without merit
     and is seeking dismissal.

     In March 2008, CAIT was named as a defendant in a complaint alleging breach
     of contract, fraud and negligence relating to two foreclosed properties.
     The Company believes the former mortgage holder's action is without merit
     and is seeking dismissal.

                                       12

<PAGE>
                           EASTERN LIGHT CAPITAL, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)



11.  Contingencies (continued)
     -------------------------

     On December 7, 2004, CAFC was named as defendant in a case filed. Plaintiff
     alleged that CAFC made a fraudulent loan to him by cross collateralizing
     two separate properties. The cross collateralization was necessary to grant
     the borrower the desired loan, since there was insufficient equity in the
     primary property used as collateral for the loan. Two amended complaints
     have been filed in addition to the initial one. The Plaintiff initially
     represented himself. After CAFC was allowed by the court to foreclose on
     the primary collateral and the borrowing was paid in full. Plaintiff, upon
     the Court's insistence, obtained counsel and has filed an amended
     complaint. The Plaintiff was deposed in May of 2006 and in June of 2008,
     the case was dismissed.

     On November 9, 2007, CAIT and CAFC were each served a summons dated October
     9, 2007 alleging that the Company defrauded another mortgage company's
     investors. The other mortgage company, a former lender to a CAFC borrower,
     received the payoff proceeds of a CAFC provided loan from escrow. The other
     mortgage investment company allegedly failed to distribute the payoff
     proceeds of the repaid mortgage to the mortgage note's owners/participants
     and an owner/participant of the repaid note alleges that the Company
     assisted in the fraud. In July of 2008, the Company was dismissed from the
     case.

12.  Subsequent Event
     ----------------

     The Company has a $2,000,000 credit facility with a Bank scheduled to
     mature on November 14, 2008. On November 7, 2008, the FDIC seized the Bank
     and approval of the line of credit has been suspended until the FDIC
     completes its review of the Company's extension request. If the FDIC does
     not approve the extension, the Company may not have adequate liquidity to
     satisfy the credit facility's outstanding balance.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





                                       13
<PAGE>

                                 PART I - ITEM 2

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein are not based on historical information and
certain statements contained in future filings by the Company with the SEC, in
the Company's press releases or in the Company's public and stockholder
communications may not be based on historical facts and are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by reference to a future
period or periods, or by the use of forward-looking terms such as "may", "will",
"expect", "anticipate", or similar terms. Actual results could materially differ
from those in the forward-looking statements due to a variety of factors.

Preparation of the Company's consolidated financial statements is based upon the
operating results of the Trust and WCFC. Management's discussion and analysis of
the results of operations for the three and nine months ended September 30, 2008
and 2007 follows:

OVERVIEW

In May of 1997, the Trust registered its common shares with the Securities and
Exchange Commission under the Securities Act of 1933. On September 30, 1998, the
initial public offering of Common Shares was completed. Since October 1, 1998,
the common shares have been listed on the American Stock Exchange ("AMEX").
During the fourth quarter of 2006, the Company's shareholders voted to terminate
the outside manager ("Former Manager" or "CAAI") and initiate internal
management. On December 29, 2006, the Former Manager's management and advisory
contracts were terminated and the Company commenced self-management. On July 2,
2008, the shareholder approved a new corporate name, Eastern Light Capital,
Incorporated. The common shares trade on the AMEX with the ticker symbol ELC.

Since the onset of 2007, the mortgage industry has experienced and is continuing
to experience tumultuous change. Many industry participants have announced
significant workforce reductions, delayed earnings reports and experienced
precipitous drops in their share price. The most unfortunate companies have
sought bankruptcy protection or have been forced into regulatory supervised
mergers with better capitalized companies. The trends which precipitated these
changes include the absence of credit, increasing residential mortgage
delinquencies, loan foreclosures and the protracted withdrawal of investor
interest in mortgage securities and whole loans.

The Company's residential loan portfolio continues to contain unacceptable
levels of non-performing assets. These delinquencies reduce current revenues
until the non-performing loans are monetized and their proceeds re-invested.
During 2007, significant loan loss reserves were taken to recognize the embedded
losses in non-performing loans and the general decline in residential mortgage
loan values. In response to these problems and to maximize shareholder value,
Management has continued to focus on efficient asset management as the strategic
alternative to selling loans at depressed valuations. As mortgage loans are
monetized, the Company's investment focus will expand to provide a source of
future profitability and increased shareholder value. Due to the distress of
California residential properties, foreclosed loans, also known as Other Real
Estate Owned or "REO" are requiring additional time to monetize. These REO's may
require additional unreserved write-downs, if the values of residential real
estate continue to decline.

The Trust is a real estate investment trust ("REIT") and REIT's are generally
required to distribute at least 90% of their annual taxable income as dividend
payments. During 2005, 2006 and 2007, the Trust incurred taxable losses. On
account of these losses, dividend payments were curtailed during 2005. These
taxable losses, also known as Net Operating Losses ("NOL"), allow the Trust to
retain future taxable income equal to the cumulative amount of its NOL balance.
The Internal Revenue Code waives mandatory dividend payments until prior years
taxable losses are recovered. As of December 31, 2007, the Company's total NOL
carryforward is approximately $3,195,480.

When the Trust produces pre-NOL taxable income, the Trust's Board of Directors
will need to reconcile the competing opportunities of strengthening the
Company's balance sheet and the priority of restoring dividend payments. This
issue will require additional review and analysis by the Board of Directors.

The Company has a $2,000,000 credit facility with a Bank scheduled to mature on
November 14, 2008. On November 7, 2008, the FDIC seized the Bank and approval of
the line of credit has been suspended until the FDIC completes its review of the
Company's extension request. If the FDIC does not approve the extension, the
Company may not have adequate liquidity to satisfy the credit facility's
outstanding balance.

                                       14
<PAGE>
CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are in accordance with
accounting principles generally accepted in the United States of America. The
Company's significant accounting policies are described in the notes to the
consolidated financial statements. Certain accounting policies require
management to make significant estimates and assumptions, which have a material
impact on the carrying value of certain assets and liabilities, and the Company
considers these to be critical accounting policies. The estimates and
assumptions used are based on historical experience and other factors, which
management believes to be reasonable under the circumstances. Actual results
could differ significantly from these estimates and assumptions, which could
have a material impact on the carrying value of assets and liabilities at the
balance sheet dates and results of operations for the reporting periods.

The following are critical accounting policies that require the most significant
estimates and assumptions that are particularly susceptible to a significant
change in the preparation of the financial statements and are not presented in
their relative order of importance.

Revenue recognition. Interest income accrues as it is earned. Loans are placed
on a nonaccrual status when concern exists as to the ultimate collectability of
principal or interest. Nonaccrual status loans are returned to an accrual status
when principal and interest become current and are anticipated to be fully
collectible.

Allowance for Loan Losses. A provision for loan losses is based on management's
evaluation of an amount that is adequate to absorb losses inherent in the
existing loan portfolio. The evaluation, which includes a review of all loans on
which full collection may not be reasonably assumed, considers among other
matters, general economic conditions, the fair market value or the estimated net
realizable value of the underlying collateral, past loan loss experience, trends
in loan delinquency and other factors that warrant recognition in providing for
an adequate loan loss allowance.

Allowance for Doubtful Accounts. An allowance for accounts receivable claims is
based on management's evaluation of the likelihood of collection. The evaluation
is based on the security of the claim, the payee's ability and willingness to
pay the claim in full and the costs associated with collection.

Real estate owned. Real estate owned represents property acquired in foreclosure
of mortgage notes receivable. The real estate is carried at the lower of the
value of the mortgage note receivable less selling costs on the real estate or
fair market value. Certain estimates and assumptions are required in determining
the cost to sell or in estimating the fair market value of the real estate.

Stock options. Stock options granted prior to December 15, 2005 were issued with
exercise prices no less than the market price of the Trust's common stock on the
dates of grant. Because the exercise price is fixed at or above market price and
other key terms are fixed, use of the intrinsic-value method was utilized and
the Trust did not recognize an expense for these options. If the terms of these
options were changed, variable accounting might need to be used, and the Trust
might then need to begin recognizing compensation expense for the options.
Options granted after December 15, 2005 are issued with exercise prices not less
than 110% of the market price of the Trust's common stock on the award dates and
are subject to a mandatory expense calculation at the award dates and recognized
upon vesting.

The Audit Committee of the Trust's Board of Directors has discussed and approved
the critical accounting policies and the development, selection and disclosure
of the estimates and alternatives prior to filing this report with the
Securities and Exchange Commission.

Operating Strategy.

Mortgage investment loans are reported as mortgage notes receivable and are held
until prepayment, maturity or foreclosure. The Company owns non-conforming
mortgage loans on one-to-four unit residential properties secured by first and
second deeds of trust. These loans are primarily secured by California real
estate. Historically, the Trust limited its mortgage investments to a cumulative
loan to value ratio ("CLTV") that did not exceed 75% of the underlying
collateral at the time of investment. The Company seeks to maximize the value of
its loan portfolio through active asset management. The Company is reviewing its
current investment policies to include other REIT permissible assets in addition
to residential mortgage loans.

                                       15
<PAGE>



Loan Origination.   During 2007 and the nine months ended September 30, 2008,
the Company did not make or acquire any new loans. Prospectively, portfolio
loans may be internally originated or acquired from unaffiliated third parties.

Asset Management.    Asset management is mortgage loan servicing and real estate
owned ("REO") dispositions. Loan servicing consists of collecting payments from
borrowers making required advances, accounting for principal and interest
payments, holding borrowed proceeds in escrow until fulfillment of mortgage loan
requirements, monitoring insurance coverage and real property tax payments,
contacting delinquent borrowers, and in the event of unremedied defaults
performing other administrative duties including supervising foreclosures. In
assessing a delinquent mortgage loan, management reviews the likelihood that a
net gain will be recognized from foreclosing on the delinquent mortgage loan.
Estimates are based on an anticipated sales price of the foreclosed property
that includes a discount from the latest appraised value of the property, less
the sum of pre-existing liens, costs of disposition, the face amount of the
mortgage loan and accrued interest receivable.

Only mortgage loans owned by the Company are serviced. The Company does not
acquire loan servicing rights or maintain a loan's servicing rights at
disposition. REO dispositions include all of the supervisory and administrative
processes of preparing a foreclosed asset for sale.

Commitments and Contingencies.    The Company only issues loan commitments on a
conditional basis and generally funds such loans promptly upon removal of any
conditions. The Trust did not have any commitments to fund loans as of September
30, 2008 and 2007. On December 14, 2005, the Trust unconditionally guaranteed
CAFC's sale of mortgage loans to Lehman Brothers Bank. During 2005, no loans
were sold to Lehman Brothers Bank pursuant to this guarantee. During the first
quarter of 2006, two loans for $2,500,000 were sold to Lehman Brothers Bank
pursuant to this guarantee. Since the first quarter of 2006, the Company has not
sold any loans to Lehman Brothers Bank or its affiliates. The Company is unaware
of any liabilities to Lehman Brothers Bank pursuant to this guarantee.

As of September 30, 2008, the Company owned five properties. Three of these
properties included senior liens of $1,998,377, $511,939 and $633,319. These
claims are non-recourse to the Company if the underlying collateral value is
insufficient to satisfy the senior lien.

As of September 30, 2008, the following table summarizes the Company's
outstanding repayment obligations:
<TABLE>
<CAPTION>
             Maximum Other
      Commercial Commitments (a)         Total Amounts        Amount of Commitment Expiration Per Period
       as of September 30, 2008            Committed     --------------------------------------------------------
                                                          Less than     1 - 3 years       4 - 5          After 5
                                                           1 year                         years           years
-----------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>                <C>             <C>             <C>
Lines of Credit (b)                        $2,008,258    $2,000,258         $0              0               0
-----------------------------------------------------------------------------------------------------------------
Standby Repurchase Obligations                 0             $0             $0              0               0
-----------------------------------------------------------------------------------------------------------------
Total Commercial Commitments              $2,008,258     $2,000,258         $0              0               0
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Commercial commitments are funding commitments that could potentially
     require registrant performance in the event of demands by third parties or
     contingent events, such as under lines of credit extended or under
     guarantees of debt.

(b)  Unless extended, outstanding obligations as of September 30, 2008 are
     payable on or before November 14, 2008.

RESULTS OF OPERATIONS

         The historical information presented herein is not necessarily
indicative of future operations.

Three months ended September 30, 2008 and 2007.   Revenues for the third quarter
decreased to $159,187 as compared to $252,494 for the same period in the prior
year. The decrease in revenue, during the third quarter of 2008 was due to
decreases in interest income of $92,925. Interest income declines on account of
a reduction in the mortgage notes receivable balance.

Expenses for the third quarter of 2008 decreased to $184,168 as compared to
$1,007,225 for the same period in the prior year. The decrease in expenses
during the third quarter of 2008 was primarily due to the decreases in the
provision for loan losses of $545,545, in interest expenses of $45,820, and
general and administrative of $180,535.


                                       16
<PAGE>

Nine months ended September 30, 2008 and 2007.   Revenues for the nine months of
2008 decreased to $525,241 as compared to $902,775 for the same period in the
prior year. The decrease in revenue, during the first nine months of 2008 was
due to decreases in interest income of $376,277. Interest income declines on
account of a reduction in the mortgage notes receivable balance.

Expenses for the nine months ended September 30, 2008 decreased to $544,814 as
compared to $1,916,617 for the same period in the prior year. The decrease in
expenses during the first nine months of 2008 was primarily due to the decreases
in the provision for loan losses of $823,703, in interest expenses of $149,702
and general and administrative of $220,147.

LIQUIDITY AND CAPITAL RESOURCES

The Trust's $2,000,000 Bank borrowing is scheduled to mature on November 14,
2008. On November 7, 2008, the FDIC seized the Bank and approval of the line of
credit has been suspended until the FDIC completes its review of the Company's
extension request. If the FDIC does not approve the extension, the Company may
not have adequate liquidity to satisfy the credit facility's outstanding
balance. The Company's cash and near cash investments are not sufficient to
retire the facility's outstanding balance of approximately $2,000,000.
Management believes that the FDIC will extend the facility's scheduled maturity
and that the cash flows from operations, mortgage principal payments and the
sales proceeds of REO will be sufficient to meet the liquidity needs of the
company's businesses for the next twelve months.

Nine months ended September 30, 2008 and 2007. As of January 1, 2008 and 2007,
the Trust had $962,190 and $599,943 of cash and cash equivalents, respectively.
During the nine month period ended September 30, 2008, cash and cash equivalents
increased by $912,244. During the nine month period ended September 30, 2007,
cash and cash equivalents increased by $731,946. After taking into effect the
various transactions discussed below, cash and cash equivalents at September 30,
2008 and 2007 were $1,874,434 and $1,331,889.

The following summarizes the changes in net cash provided by operating
activities, net cash used for investing activities, and net cash provided by
financing activities.

Net cash used in operating activities during the nine months ended September 30,
2008 and 2007 was $533,535 and $594,462, respectively. During the first nine
months of 2008, net income provided $16,610, a change in accounts receivable
used $90,540, a change in other liabilities used $424,452 and a change in
allowance for doubtful accounts used $132,033. During the first nine months of
2007, net loss used $1,037,328, a change in allowance for doubtful accounts
provided $170,000 and a change in allowance for loan losses provided $287,691.

Net cash provided by investing activities for the nine months ended September
30, 2008 and 2007 was $3,090,898 and $4,452,314, respectively. During the first
nine months of 2008, proceeds from mortgage notes receivable provided $1,340,701
and the change in REO provided $1,764,050. During the first nine months of 2007,
proceeds from mortgage notes receivable provided $5,964,156 and the change in
REO used $1,594,825.

Net cash used in financing activities during the nine months ended September 30,
2008 and 2007 was $1,645,119 and $3,125,906, respectively. During the first nine
months of 2008, net payments of bank loans used cash of $1,620,000 and the
purchase of treasury stock used $25,119. During the first nine months of 2007,
net payments of bank loans used cash of $3,125,906.

                                 PART I - ITEM 3
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk.    Market risk is the exposure to loss resulting from changes in
interest rates, credit spreads, foreign exchange rates, commodity prices, and
equity prices. The primary market risks to which the Company is exposed are
interest rate risk and credit risk.

Interest rate risk.    Interest rate risk is highly sensitive to many factors,
including governmental, monetary and tax policies, domestic and international
economic and political considerations and other factors beyond the control of
the Company. Changes in the general level of the U.S. Treasury yield curve can
have significant effects on the market value of the Company's portfolio. The
majority of the Company's assets are fixed-rate loans with a spread to U.S.
Treasuries. The Trust's loans are valued on the September 30, 2008 and December
31, 2007 balance sheet at the lower of cost or market.


                                       17
<PAGE>
As U.S. Treasury securities are priced to a lower yield and/or the spread to
U.S. Treasuries used to price the Company's assets are decreased, the market
value of the Company's portfolio may increase. Conversely, as U.S. Treasury
securities are priced to a higher yield and/or the spread to U.S. Treasuries
used to price the Company's assets is increased, the market value of the
Company's portfolio may decline. Changes in the level of the U.S. Treasury yield
curve can also affect, among other things, the prepayment assumptions used to
value certain of the Trust's loans. In addition, changes in the general level of
the United States Prime Rate or one month LIBOR can affect the Trust's net
interest income. The Company's borrowings are floating rate based on a spread
over the daily one month LIBOR. As these rates increases or decreases, the
Company's interest expense will move in the same direction.

On account of the relatively short adjusted weighted average maturity of the
Company's portfolio loans (17 months), a variety of financial instruments
available to limit the effects of interest rate fluctuations on its operations
have not been utilized. The use of these types of derivatives (such as interest
rate swaps, caps, floors and other interest rate exchange contracts) to hedge
interest-earnings assets and/or interest-bearing liabilities carry risks,
including the risk that the net losses on a hedge position may exceed the amount
invested in such instruments. As the level of variable rate mortgage financing
of the portfolio increases or the weighted average maturity of the portfolio
increases, the Trust may utilize a variety of financial instruments to limit the
effects of interest rate fluctuations.

Credit risk. Credit risk is the exposure to loss from loan defaults and
foreclosures. Default and foreclosure rates are subject to a wide variety of
factors, including, but not limited to, property values, supply/demand factors,
construction trends, consumer behavior, regional economics, interest rates, the
strength of the American economy and other factors beyond the control of the
Company.

All loans are subject to a certain probability of default and foreclosure. An
increase in default rates will reduce the book value of the Company's assets and
the Company's earnings and cash flow available to fund operations and pay
dividends.

The Company manages credit risk through the underwriting process, limiting loans
at the time of funding to 75% of the collateral's appraised value, establishing
loss assumptions and carefully monitoring loan performance. Nevertheless, the
Company assumes that a certain portion of its loans will default and adjusts the
allowance for loan losses based on that assumption.

Asset and liability management. Asset and liability management is concerned with
the timing and magnitude of the maturity of assets and liabilities. In general,
management's strategy is to approximately match the term of the Trust's
liabilities to the portfolio's adjusted weighted average maturity (17 months).

The majority of the Company's assets pay a fixed coupon and the income from such
assets are relatively unaffected by interest rate changes. The Company's
borrowings are currently under a variable rate line of credit that resets daily.
Given this relationship between assets and liabilities, the Company's interest
rate sensitivity gap is highly negative. This implies that a period of falling
short term interest rates will tend to increase the Company's net interest
income, while a period of rising short term rates will tend to reduce the
Trust's net interest income.


                                 PART I - ITEM 4
                             CONTROLS AND PROCEDURES

(A) Evaluation of Disclosure Controls and Procedures. The Chief Executive
Officer and the Principal Accounting Officer of the Trust have, based on their
evaluation of the Company's disclosure controls and procedures within 90 days of
the filing date of this report, evaluated the effectiveness of such controls and
procedures. Based on such evaluations, they have concluded that the Trust's
disclosure controls and procedures have effectively operated to ensure that all
material information relating to the Company and its operations and financial
condition has been made known to them by other officers and employees within the
Company and its Manager on a timely basis.

(B) Changes in Internal Controls. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
those controls subsequent to the date of their evaluation. Accordingly, no
corrective actions with regard to such controls or procedures have been
required.


                                       18

<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1     LEGAL PROCEEDINGS

See Note 11, Contingencies, to the accompanying unaudited condensed consolidated
financial statements for disclosure of legal proceedings that involve the
Company.

ITEM 1A       RISK FACTORS

The Company routinely encounters and addresses risks, some of which will cause
its future results to fluctuate. The Company's present view of certain important
strategic risks is presented below and these risk factors set forth below are
not the only risks that the Company may face or that could adversely affect
operating performance and value. If any of the risks discussed in this Form 10-Q
actually occur, the business, financial condition and results of operations
could be materially adversely affected. If this were to occur, the trading price
of the Company's securities could decline significantly and an investor may lose
all or part of their investment.

The following discussion of risk factors contains "forward-looking statements",
which may be important to understanding any statement in this Form 10-Q or
elsewhere. The following information should be read in conjunction with Part I,
Item 1 - Management's Discussion and Analysis of Financial Condition and Results
of Operations on Form 10-KSB for 2007.

     Increased borrowing costs related to funding agreements would adversely
affect operating profitability.

The Company's borrowing costs under funding agreements correspond to LIBOR plus
a margin. The LIBOR rate may vary and increased borrowing costs would adversely
affect operating profitability.

     Higher interest rates may harm the Company's book value and cause the price
of its securities to decline.

Increases in interest rates may harm the market value of the Company's mortgage
assets. Fixed rate mortgages are generally harmed by an increase in the general
rate of interest. In accordance with GAAP, the Company may be required to reduce
its book value by the amount of any decrease in the market value of its
mortgage-related assets.

     Failure to procure replacement funding on favorable terms, or at all, may
adversely affect the Company's results and may, in turn, negatively affect the
Company's share price.

The current situation in the sub-prime mortgage sector and the current weakness
in the broader mortgage market have adversely affected the Company's lender. The
FDIC has seized the current lender and the FDIC may be unwilling or unable to
provide the Company with financing. This will reduce liquidity and may cause the
Company to default on its borrowing obligations. Also, if one or more major
market participants fail, it could negatively impact the marketability of all
securities and this could negatively impact the value of the mortgages in the
Company's portfolio, thus reducing its net book value.

     Possible market developments could cause the Company's lender to require
the Company pledge additional assets as collateral. If these assets are
insufficient to meet the collateral requirements, then the Company may be
compelled to liquidate particular assets at an inopportune time.

Possible market developments, including a sharp rise in interest rates, a change
in prepayment rates or increasing market concern about the value or liquidity of
one or more asset categories in which the Company invests may reduce the market
value of the Company's investments and cause the Company to encumber additional
collateral. This requirement for additional collateral may compel the Company to
liquidate its assets at a disadvantageous time, thus harming operating results
and net profitability.

     The Company's funding agreements to borrow funds may give its lender
greater rights in the event that either the Company or the lender files for
bankruptcy or the Company defaults on its repayment obligations.

The Company's borrowings under repurchase agreements may qualify for special
treatment under the bankruptcy code or a borrowing default, giving the Company's
lender the ability to avoid the automatic stay provisions of the bankruptcy code
and to take possession of and liquidate the Company's collateral under the
repurchase agreements without delay in the event that the Company files for
bankruptcy or defaults. Furthermore, the special treatment of repurchase
agreements under the bankruptcy code may make it difficult for the Company to
recover its pledged assets in the event that a lender files for bankruptcy.
Thus, the use of repurchase agreements exposes the Company's pledged assets to
risk in the event of a bankruptcy filing by either the Company or its lender.


                                       19
<PAGE>
     Competition may prevent the Company from acquiring mortgage-related assets
at favorable yields and that would negatively impact the Company's
profitability.

Future marginal GAAP net income largely depends on the Company's ability to
acquire mortgage-related assets at favorable spreads over its borrowing costs.
In acquiring mortgage assets, the Company competes with other REITs, investment
banking firms, savings and loan associations, banks, insurance companies, mutual
funds, other lenders and other entities that purchase mortgage-related assets,
many of which have greater financial resources. As a result, the Company may not
in the future be able to acquire sufficient mortgage assets at favorable spreads
over its borrowing costs. If that occurs, future marginal profitability will be
harmed.

     Mortgages are subject to delinquency, foreclosure and loss, which could
result in losses.

Residential mortgage loans are secured by single-family residential property and
are subject to risks of loss, delinquency and foreclosure. The ability of a
borrower to repay a loan secured by a residential property is dependent upon the
income or assets of the borrower. A number of factors, including a general
economic downturn, acts of nature, terrorism, social unrest and civil
disturbances, may impair borrower's abilities to repay their loans. Accordingly,
the Company is subject to all of the risks of the underlying mortgage loans. In
the event of a mortgage default, the Company may not realize its anticipated
return on its investment and may incur a loss.

     Changes to the nature, extent or regulation of the business activities of
Fannie Mae or Freddie Mac or declines in the U.S. real estate or credit markets
might adversely affect their credit ratings and the market prices of their
securities, including mortgage assets owned by the Company.

Fannie Mae and Freddie Mac are shareholder-owned publicly traded corporations
created by charters of the U.S. Congress. They are commonly referred to as
government-sponsored enterprises ("GSEs") because of their special relationship
with the U.S. government, although their obligations are not guaranteed by the
U.S. government. Fannie Mae and Freddie Mac purchase mortgage loans from
mortgage originators and either hold those mortgages in their portfolios or pool
them into MBS, which they guarantee for full and timely payment of principal and
interest, regardless of whether the mortgagors actually make the payments.
Fannie Mae's and Freddie Mac's obligations in respect of their respective
guarantees rank equally with their respective senior unsecured debt securities,
which are currently rated AAA by Standard and Poor's, Moody's and Fitch.

There can be no assurance that Fannie Mae or Freddie Mac will continue to
maintain their special relationship with the U.S. government or that the current
regulatory structure of Fannie Mae and Freddie Mac will be maintained.
Furthermore, the recent conditions in the U.S. subprime mortgage market have
exposed Fannie Mae and Freddie Mac to substantial losses, and they could face
more losses if the U.S. real estate and credit markets continue to decline.
Elimination or modification of the special relationship or a change in their
current regulatory structure, or further declines in the U.S. real estate or
credit markets, could require or cause Fannie Mae or Freddie Mac to change the
nature and extent of their business activities, could adversely affect their
activities, financial condition and overall risk profile, and could adversely
affect their credit ratings and the market prices of residential whole loans and
the shareholder's equity in the Company.

     The Company's Board of Directors may change the Company's operating
policies and strategies without prior notice or stockholder approval and such
changes could harm the Company's business, results of operation and stock price.

The Company's Board of Directors can modify or significantly waive the current
operating policies and strategies without prior notice and without stockholder
approval. The Company cannot predict the effect any change to its current
operating policies and strategies may have on its business, operating results
and stock price; however, the effects may be adverse.

     The Company depends on key personnel and the loss of any of its key
personnel could harm its operations.

The Company depends on the diligence, experience and skill of its officers and
other employees. Key officers include: Richard J. Wrensen, Chairman, President,
Chief Executive Officer and Chief Financial Officer; Andrea Barney, Principal
Accounting Officer and Controller; and Gregory Bronshvag, Vice President
Operations and Secretary. The Company's dependence on its key personnel is
heightened by the fact that it has a relatively small number of employees and
the loss of any key person could harm the entire business, financial condition,
cash flow and results of operations. In particular, the loss of the services of
Richard J. Wrensen could seriously harm its business.


                                       20
<PAGE>
     The Company may forego attractive opportunities in lieu of complying with
REIT requirements.

In order to qualify as a REIT for federal income tax purposes, the Company must
continually satisfy test concerning, among other things, its sources of income,
the nature and diversification of the Company's mortgage portfolio and other
assets, the amount it distributes to its stockholders and the ownership of its
stock. The Company may also be required to make distributions to stockholders at
disadvantageous times or when it does not have funds readily available for
distribution. Thus, compliance with REIT requirements may hinder the Company's
ability to operate solely on the basis of maximizing profits.

     Failure to maintain an exemption from the Investment Company Act would harm
the Company's results of operations.

The Company believes that it conducts its business in a manner that allows it to
avoid being regulated as an investment company under the Investment Company Act
of 1940, as amended. If the Company failed to continue to qualify for an
exemption from registration as an investment company, it ability to use leverage
would be substantially reduced and the Company would be unable to conduct its
business as planned. The Investment Company Act exempts entities that are
primarily engaged in the business of purchasing or otherwise acquiring
"mortgages and other liens on and interest in real estate". Under the SEC's
current interpretation, qualification for this exemption generally requires the
Company to maintain at least 55% of its assets directly in qualifying real
estate interests. In meeting the 55% requirement under the Investment Company
Act, the Company currently may treat residential mortgages as qualifying
interest. If the SEC or its staff adopts a contrary interpretation, the Company
could be required to sell a substantial amount of its residential whole loans
under potentially adverse market conditions. Further, in order to maintain its
exemption from registration as an investment company, the Company may be
precluded from acquiring other investments whose yield is somewhat higher than
the yield on whole mortgage loans or MBS.

     The Company has not established a minimum dividend payment level for its
common stockholders and there are no assurances of the Company's ability to pay
dividends in the future.

After fully utilizing its Net Operating Loss Carry-forward, the Company intends
to pay quarterly dividends and to make distributions to its stockholders in
amounts such that all or substantially all of its taxable income in each year,
subject to certain adjustments, is distributed. This, along with other factors,
should enable the Company to qualify for the tax benefits accorded to a REIT
under the Code. The Company has not established a minimum dividend payment level
for stockholders and its ability to pay dividends may be harmed by the risk
factors described in this report on Form 10-Q. All distributions to the
Company's stockholders will be made at the discretion of its Board of Directors
and will depend on its earnings, its financial condition, maintenance of its
REIT status and such other factors as its Board of Directors may deem relevant
from time to time. There are no assurances of the Company's ability to pay
dividends in the future. If the Company were to raise additional capital, its
earnings per share and dividends per share may decline as a result of not being
able to invest all of the new capital during the quarter in which additional
shares are sold and possibly the entire following calendar quarter.

     The Company's charter does not permit ownership of over 9.8% of its common
or preferred stock and attempts to acquire the common or preferred stock in
excess of the 9.8% limit are void without prior approval from the Board of
Directors.

For the purpose of preserving the REIT qualification and for other reasons, the
Company's charter prohibits direct or constructive ownership by any person of
more than 9.8% of the lesser of the total number or value of the outstanding
shares of its common stock or more than 9.8% of the outstanding shares of its
preferred stock. The charter's constructive ownership rules are complex and may
cause the outstanding stock owned by a group of related individuals or entities
to be deemed to be constructively owned by one individual or entity. As a
result, the acquisition of less than 9.8% of the outstanding stock by an
individual or entity could cause that individual or entity to own constructively
in excess of 9.8% of the outstanding stock and thus by subject to the Company
charter's ownership limit. Any attempt to own or transfer shares of the common
or preferred stock in excess of the ownership limit without the consent of the
Board of Directors shall be void and will result in the shares being transferred
by operation of law to a charitable trust. The Board of Directors has granted
one exemption from the 9.8% ownership limitation.

     Future offering of debt securities, which would be senior to all classes of
stock and equity securities, may harm the market price of the Company's common
and preferred stock.

In the future, the Company may attempt to increase its capital resources by
making additional offerings of debt or equity securities, including commercial
paper, medium-term notes, senior or subordinated notes and classes of preferred
stock or common stock. Upon liquidation, holders of the Company's debt
securities and share of preferred stock and lenders with respect to other
borrowings will receive a distribution of the Company's available assets prior
to the common stockholders. The preferred stockholders may have a preference on
dividend payments that could limit the Company's ability to make a dividend
distribution to the common stockholders. Because the decision to issue
securities in any future offering will depend on market conditions and other
factors beyond the Company's control, the Company cannot predict or estimate the
amount, timing or nature of its future offerings. Thus, the common stockholders
bear the risk of any future offerings reducing the market price of the Company's
common stock.

                                       21
<PAGE>

     The Company may fail to qualify for continued listing on the American Stock
Exchange ("AMEX").

Due to changes in the ownership and profitability of the Company and the
evolving listing requirements of exchange traded companies, the Company's common
stock may not continue to qualify for AMEX listing. Without listing on the AMEX
or another national exchange, the Company's common share price may incur reduced
liquidity and a reduced transaction price.

ITEM 1B       UNRESOLVED STAFF COMMENTS

None

ITEM 2     CHANGES IN SECURITIES

5,500 common shares and 0 preferred shares were purchased for treasury stock
during the nine month period ended September 30, 2008.

ITEM 3     DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4     SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

The 2008 Annual Shareholder meeting was held on July 2, 2008 as the previously
scheduled meeting date of June 25, 2008 was adjourned to allow additional
shareholders to participate in the shareholder vote. The following table
summarizes the results of the vote by proposal.
<TABLE>
<CAPTION>

Proposal One: Election of Directors
-----------------------------------
<S>                                         <C>                       <C>
    Results for Mr. Wrensen            FOR: 409,189         WITHHOLD: 33,616
    Results for Mr. Grainer            FOR: 390,513         WITHHOLD: 48,828

Proposal Two: Corporate Name Change
-----------------------------------
    Preferred Shareholders             FOR: 112,522         AGAINST: 2,307      ABSTAIN: 2,509
    Common Shareholders                FOR: 283,915         AGAINST: 41,950     ABSTAIN: 9,366
</TABLE>

Messrs. Wrensen and Grainer were re-elected as Directors and the name change was
approved.

ITEM 5     OTHER INFORMATION

None

ITEM 6     EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     Exhibit No.

     3.1      Certificate of Incorporation and Amendment No. 1 (1)
     3.2      Bylaws of the Registrant (1)
     3.3      Certificate of Amendment of Certificate of Incorporation (3)
     4.1      Form of Stock Certificate of Common Shares of the Registrant (2)
     10.2     Form of Indemnity Agreement between the Registrant and its
              Directors and Officers (1)
     24.7     Power of Attorney of Richard J. Wrensen (4)
     31.1     Sarbanes Certification of Richard J. Wrensen
     31.2     Sarbanes Certification of Andrea Barney
     32.1     Sarbanes Certification

(1)  These exhibits were previously contained in Registrant's Registration
     Statement filed on Form S-11 with the Commission on September 9, 1996, and
     are incorporated by reference herein.

(2)  These exhibits were previously contained in Amendment No. 1 to the
     Registrant's Registration Statement filed on Form S-11 with the Commission
     on January 15, 1997, and are incorporated by reference herein.

(3)  These exhibits were previously contained in Form 10-Q for the period ending
     June 30, 1997 filed with the Commission on August 14, 1997, and are
     incorporated by reference herein.

(4)  This exhibit was previously contained in Form 10-K for the period ending
     December 31, 1998 filed with the Commission on April 10, 1999, and is
     incorporated by reference herein.

(b)  Reports on Form 8-K.

     Form 8-K was filed on:

     o    August 14, 2008 due to the press release of August 14, 2008 announcing
          2008's second quarter Earnings.

     o    October 7, 2008 due to the press release of October 6, 2008 discussing
          the stock's price volatility.




                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       22
<PAGE>

                                  SIGNATURES


     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 hereunto duly authorized.


                       EASTERN LIGHT CAPITAL, INCORPORATED


Dated: November 13, 2008

                                            /s/  Richard J. Wrensen
                                            -----------------------
                                            Richard J. Wrensen
                                            President, Chief Executive Officer
                                            and Chief Financial Officer





                                       23
<PAGE>