As Filed with the Securities and Exchange Commission on May 20, 2002
==============================================================================
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB

                                   (Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                       For the period ended March 31, 2002

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

          For the transition period from ____________ to _____________


                       COMMISSION FILE NUMBER: 033-15096-D

                             -----------------------

                             MILESTONE CAPITAL, INC.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


           COLORADO                                              84-1111224
 ------------------------------                               -----------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                               39 Plymouth Street
                               Fairfield, NJ 07004
                     --------------------------------------
                    (Address of principal executive offices)

                                 (973) 808-5770
                            -------------------------
                           (Issuer's Telephone Number)


     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of March 31, 2002, the
registrant had 80,990,575 shares of common stock, no par value, issued and
outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]


================================================================================

<PAGE>





                     MILESTONE CAPITAL, INC. AND SUBSIDIARY



                                                                            PAGE
                                                                            ----
Part I - Financial Information

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheet at March 31, 2002
          (Unaudited)                                                         3

          Condensed Consolidated Statements of Operations
          Three Months Ended March 31, 2002 and 2001 (Unaudited)              4

          Condensed Consolidated Statement of Changes in Stockholders'
          Equity Three Months Ended March 31, 2002 (Unaudited)                5

          Condensed Consolidated Statements of Cash Flows
          Three Months Ended March 31, 2002 and 2001 (Unaudited)              6

          Notes to Condensed Consolidated Financial Statements                7

Item 2.   Management's Discussion and Analysis or Plan of Operation           10


Part II - Other Information

Item 1.   Legal Proceedings                                                   13

Item 2.   Changes in Securities                                               13

Item 6.   Exhibits and Reports on Form 8-K                                    13

          Signatures                                                          14

                                       2

<PAGE>


                          PART I FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


                     Milestone Capital, Inc. and Subsidiary

                      Condensed Consolidated Balance Sheet
                                 March 31, 2002
                                   (Unaudited)



                                     ASSETS
                                     ------

Current assets:
     Cash                                                          $    123,750
     Mortgage loans held for sale                                       210,039
     Prepaid expenses and other receivables                              81,034
                                                                   ------------
         Total current assets                                           414,823

Property and equipment, net                                             893,922
Other assets                                                             59,442
                                                                   ------------

         Totals                                                    $  1,368,187
                                                                   ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
     Borrowings under warehouse line of credit                     $    208,000
     Accounts payable and accrued expenses                              584,715
     Notes payable (including related party of $85,000)                 110,000
     Convertible debt, net of debt discount of $33,750                   66,250
     Current portion of capital lease obligations                        77,108
                                                                   ------------
         Total current liabilities                                    1,046,073

Other liabilities                                                        41,492
Capital lease obligations, net of current portion                        24,754
                                                                   ------------
         Total liabilities                                            1,112,319
                                                                   ------------

Commitments and contingencies

Stockholders' equity:
     Preferred stock, no par value; 5,000,000 shares authorized;
         none issued and outstanding                                       --
     Common stock,  no par value; 500,000,000 shares authorized;
         80,990,575 shares issued and outstanding                     7,333,232
     Additional paid-in capital                                       3,638,864
     Unearned compensation                                             (531,987)
     Stock subscription receivable                                     (106,675)
     Accumulated deficit                                            (10,077,566)
                                                                   ------------
              Total stockholders' equity                                255,868
                                                                   ------------

              Totals                                               $  1,368,187
                                                                   ============


See Notes to Condensed Consolidated Financial Statements.

                                       3

<PAGE>


                     Milestone Capital, Inc. and Subsidiary

                 Condensed Consolidated Statements of Operations
                   Three Months Ended March 31, 2002 and 2001
                                   (Unaudited)



                                                       2002            2001
                                                   ------------    ------------
Revenue:
    Broker fee income                              $    400,116    $     87,786
    Loan origination and processing                      52,966          33,987
    Gain on sale of loans                                72,939
    Interest                                             17,558           2,146
                                                   ------------    ------------
       Totals                                           543,579         123,919
                                                   ------------    ------------

Operating expenses:
    Direct                                               94,007         153,375
    General and administrative                        1,578,275       1,078,119
    Interest                                              9,507           8,733
                                                   ------------    ------------
       Totals                                         1,681,789       1,240,227
                                                   ------------    ------------

Loss from operations                                 (1,138,210)     (1,116,308)
Other interest expense                                   65,750            --
                                                   ------------    ------------

Net loss                                           $ (1,203,960)   $ (1,116,308)
                                                   ============    ============


Basic loss per common share                        $       (.01)   $       (.03)
                                                   ============    ============


Basic weighted average common shares outstanding     79,140,078      37,078,472
                                                   ============    ============


See Notes to Condensed Consolidated Financial Statements.

                                       4

<PAGE>
<TABLE>
<CAPTION>


                                          Milestone Capital, Inc. and Subsidiary

                            Condensed Consolidated Statement of Changes in Stockholder's Equity
                                             Three Months Ended March 31, 2002
                                                        (Unaudited)



                                     Series A Convertible            Series B Convertible
                                       Preferred Stock                 Preferred Stock                Common Stock
                                ----------------------------    ----------------------------   ---------------------------
                                    Shares         Amount          Shares          Amount         Shares         Amount
                                ------------    ------------    ------------    ------------   ------------   ------------
<S>                                <C>          <C>              <C>            <C>              <C>          <C>
Balance, January 1, 2002             515,441    $      5,154      14,638,558    $    146,385     37,644,154   $     75,288

Effects of reverse acquisi-         (515,441)         (5,154)    (14,638,558)       (146,385)    25,215,765      6,122,975
tion

Conversion of convertible
   notes                                                                                         12,783,897        620,046

Sale of shares of common
   stock                                                                                          4,356,184        214,000

Issuance of common stock
   to officers in exchange
   for services                                                                                     890,575        267,173

Effects of beneficial con-
   version features and
   issuance of common
   stock in connection with
   convertible debentures                                                                           100,000         33,750

Forgiveness of salaries

Cancellation of stock options

Amortization of unearned
   compensation

Net loss
                                ------------    ------------    ------------    ------------   ------------   ------------

Balance, March 31, 2002                 --      $       --              --      $       --       80,990,575   $  7,333,232
                                ============    ============    ============    ============   ============   ============


See Notes to Condensed Consolidated Financial Statements.

                                                             5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                   Milestone Capital, Inc. and Subsidiary

                      Condensed Consolidated Statement of Changes in Stockholder's Equity
                                       Three Months Ended March 31, 2002
                                                  (Unaudited)
                                                  (Continued)


                                 Additional
                                  Paid-in         Unearned      Subscription     Accumulated
                                  Capital       Compensation     Receivable        Deficit         Total
                                ------------    ------------    ------------    ------------    ------------
<S>                             <C>             <C>             <C>             <C>             <C>
Balance, January 1, 2002        $  9,377,225    $   (580,707)   $   (101,675)   $ (8,873,606)   $     48,064

Effects of reverse acquisi-
tion                              (5,971,436)

Conversion of convertible
   notes                                                                                             620,046

Sale of shares of common
   stock                                                              (5,000)                        209,000

Issuance of common stock
   to officers in exchange
   for services                                                                                      267,173

Effects of beneficial con-
   version features and
   issuance of common
   stock in connection with
   convertible debentures             65,750                                                          99,500

Forgiveness of salaries              170,500                                                         170,500

Cancellation of stock options         (3,175)          3,175

Amortization of unearned
   compensation                                       45,545                                          45,545

Net loss                                                                          (1,203,960)     (1,203,960)
                                ------------    ------------    ------------    ------------    ------------

Balance, March 31, 2002         $  3,638,864    $   (531,987)   $   (106,675)   $(10,077,566)   $    255,868
                                ============    ============    ============    ============    ============


See Notes to Condensed Consolidated Financial Statements.

                                                   5(Con't)
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                      Milestone Capital, Inc. and Subsidiary

                                  Condensed Consolidated Statements of Cash Flows
                                    Three Months Ended March 31, 2002 and 2001
                                                    (Unaudited)



                                                                                          2002           2001
                                                                                       -----------    -----------
Operating activities:
    <S>                                                                                <C>            <C>
    Net loss                                                                           $(1,203,960)   $(1,116,308)
    Adjustments to reconcile net loss to net cash used in operating activities:
       Depreciation and amortization                                                        90,784         53,741
       Issuance of common stock to consultant in connection with reverse acquisition       221,250
       Forgiveness of current year salaries                                                128,833
       Charges to interest expense associated with beneficial conversion feature            65,750
       Amortization of unearned compensation                                                45,545
       Issuance of shares in exchange for services                                         267,173
       Changes in operating assets and liabilities:
          Mortgage loans held for sale                                                   1,459,361
          Prepaid expenses and other receivables                                            26,588         10,819
          Other assets                                                                          65          6,146
          Borrowings under warehouse line of credit                                     (1,455,600)
          Accounts payable and accrued expenses                                            153,505         72,081
          Other liabilities                                                                  2,178          9,829
                                                                                       -----------    -----------
              Net cash used in operating activities                                       (198,528)      (963,692)
                                                                                       -----------    -----------

Investing activities - purchases of property and equipment                                                (14,387)
                                                                                                      -----------

Financing activities:
    Proceeds from issuance of convertible debentures                                       100,000
    Payments of notes payable                                                                             (94,388)
    Proceeds from notes payable                                                             25,000
    Payments under capital lease obligations                                               (17,979)       (17,509)
    Net proceeds from sale of common stock                                                 209,000
    Proceeds from sales of Series B preferred stock                                                        90,001
    Payments of stock subscription receivable                                                           1,014,997
                                                                                       -----------    -----------
              Net cash provided by financing activities                                    316,021        993,101
                                                                                       -----------    -----------

Net increase in cash                                                                       117,493         15,022
Cash, beginning of period                                                                    6,257         15,050
                                                                                       -----------    -----------

Cash, end of period                                                                    $   123,750    $    30,072
                                                                                       ===========    ===========

Supplemental disclosure of noncash investing and financing activities: Common
    stock related transactions:
       Conversion of convertible debt and accrued interest thereon into shares
          of common stock                                                              $   620,046
                                                                                       ===========

       Issuance of common stock in connection with convertible debentures              $    33,750
                                                                                       ===========

       Issuance of common stock in settlement of dividends on Series A
          preferred stock                                                                             $    20,000
                                                                                                      ===========

    Series B preferred stock related transactions:
       Issuance of shares in exchange for prior years' salaries                                       $    45,000
                                                                                                      ===========

       Issuance of shares in settlement of loan from related party                                    $   190,000
                                                                                                      ===========

    Other noncash investing and financing activities:
       Forgiveness of prior year salaries                                              $    41,667
                                                                                       ===========


See Notes to Condensed Consolidated Financial Statements.

                                                         6
</TABLE>

<PAGE>


                     Milestone Capital, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


Note 1 - Organization and business:
               Milestone Capital, Inc. ("Milestone") was a development stage
               company that was originally founded in 1987 in the State of
               Colorado as Shield Enterprises, Inc. ("Shield") for the purpose
               of merging with or acquiring other businesses. In 1989, Shield
               completed an initial public offering and, in 1990, completed a
               merger with Milestone, a Delaware corporation organized for the
               purpose of investing in and providing managerial services to
               developing companies. From late 1995 until January 1998, when
               Milestone entered into the development stage for purposes of
               merging with or acquiring other businesses, it was dormant. For
               each of the three years ended December 31, 2001, Milestone did
               not generate any significant revenue or expenses in connection
               with its operations and was an inactive "shell company" whose
               common shares were publicly traded.

               On January 3, 2002, Milestone entered into an exchange agreement
               (the "Exchange") with Elite Agents, Inc. ("Elite"), a licensed
               Title II loan correspondent mortgage banker. As of January 3,
               2002, Milestone had, effectively, 8,000,000 shares of no par
               common stock outstanding. As of that date, Milestone issued
               72,000,000 shares of common stock of which 67,643,816 shares of
               common stock were used to acquire all of the: (i) 37,644,154
               shares of common stock outstanding, (ii) 515,441 shares of Series
               A preferred stock outstanding (converted into 2,577,207 shares of
               common stock concurrent with the Exchange), (iii) 14,638,558
               shares of Series B preferred stock outstanding (converted into
               14,638,558 shares of common stock concurrent with the Exchange)
               and (iv) 12,783,897 shares of common stock issued in connection
               with the conversion of convertible debentures of $615,290 and
               accrued interest thereon of $4,756 concurrent with the Exchange.
               As a result of the Exchange, Elite became a wholly-owned
               subsidiary of Milestone, and Milestone had 80,000,000 shares of
               common stock outstanding of which 72,000,000, or 90%, is owned by
               the stockholders of Elite and 8,000,000 shares, or 10%, is owned
               by the former stockholders of Milestone. Since the stockholders
               of Elite became the owners of the majority of the outstanding
               common shares of Milestone after the Exchange, the Exchange was
               treated as a "purchase business combination" and a "reverse
               acquisition" for accounting purposes in which Milestone was the
               legal acquirer and Elite was the accounting acquirer.

               As a result, the assets and liabilities of the accounting
               acquirer continue to be recorded at their historical carrying
               values; however, common stock and additional paid-in capital have
               been adjusted as of January 3, 2002 to reflect the no par value
               of the shares of the legal acquirer, Milestone.

               The "Company" as used herein refers to Elite prior to January 3,
               2002, the date of the Exchange and Milestone together with Elite
               subsequent to that date.

               In the opinion of management, the accompanying unaudited
               condensed consolidated financial statements reflect all
               adjustments, consisting of normal recurring accruals, necessary
               to present fairly the financial position of the Company as of
               March 31, 2002, its results of operations and cash flows for the
               three months ended March 31, 2002 and 2001, and its changes in
               stockholders' equity for the three months ended March 31, 2002.
               Pursuant to the rules and regulations of the United States
               Securities and Exchange Commission (the "SEC"), certain
               information and disclosures normally included in financial
               statements prepared in accordance with accounting principles
               generally accepted in the United States of America have been
               condensed in or omitted from these consolidated financial
               statements unless significant changes have taken place since the
               end of the most recent fiscal year. Accordingly, these unaudited
               condensed consolidated financial statements should be read in
               conjunction with the audited financial statements as of December
               31, 2001 and for the year then ended and the notes thereto (the
               "Audited Financial Statements") and the other information
               included in the Company's Form 8-K/A filed with the SEC on March
               19, 2002 and in its Annual Report on Form 10-KSB for the year
               ended December 31, 2001 that was previously filed with the SEC.

               The results of the Company's operations for the three months
               ended March 31, 2002 are not necessarily indicative of the
               results of operations to be achieved for the full year ending
               December 31, 2002.

                                       7

<PAGE>


                     Milestone Capital, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


Note 2 - Basis of presentation:
               The accompanying condensed consolidated financial statements have
               been prepared assuming that the Company will continue as a going
               concern. As of March 31, 2002, the Company had a cash balance of
               $124,000 and a working capital deficiency of $631,000. In
               addition, the Company had negative cash flows from operations of
               $199,000 during the three months ended March 31, 2002. Management
               believes it is probable that the Company will continue to incur
               negative cash flows from operating activities through at least
               June 30, 2002 and that the Company will need to obtain additional
               equity or debt financing to be able to sustain its operations
               until it can achieve profitability.

               Management believes that the commercial success and profitability
               of the Company will depend on its ability to expand its
               operations and achieve recognition as a national financing
               company. To date the Company has focused solely on mortgage
               lending. During 2000 and through the first half of 2001, the
               Company sought to expand its operations by providing mortgage
               origination services at existing real estate agency offices.
               During the second half of 2001, the Company also sought to
               provide mortgage origination services through accountants,
               financial planners and other financial services firms. Employees
               at branch offices have direct access to the loan origination
               process through the Company's web site and related support
               software and database information. In addition, management has
               begun the process of looking to expand its mortgage banking
               activities through the acquisition of other established mortgage
               bankers, and is seeking to expand the variety of lending
               activities in which it engages including, but not limited to,
               equipment financing and leasing.

               To enable the Company to sustain its operations through at least
               March 31, 2003 and, ultimately, complete its marketing and
               development program and achieve profitability, management plans
               to seek additional financing for the Company through sales of
               debt and equity securities.

               Management cannot assure that the Company will be able to obtain
               necessary additional debt or equity financing and, accordingly,
               management cannot assure that the Company will be able to sustain
               its operations through at least March 31, 2003.

               The accompanying condensed consolidated financial statements do
               not include any adjustments related to the recoverability and
               classification of assets or the amount and classifications of
               liabilities that might be necessary should the Company be unable
               to continue as a going concern.


Note 3 - Net earnings (loss) per common share:
               The Company presents "basic" earnings (loss) per common share
               and, if applicable, "diluted" earnings per common share pursuant
               to the provisions of Statement of Financial Accounting Standards
               No. 128, "Earnings per Share". Basic earnings (loss) per common
               share is calculated by dividing the income or loss applicable to
               common stock by the weighted average number of common shares
               outstanding during each period. As of March 31, 2002, the Company
               had 8,253,600 of potentially dilutive securities.


Note 4 - Convertible debentures and other interest expense:
               As of the date of the Exchange, the Company had outstanding
               $615,290 of convertible debentures and $4,756 of accrued interest
               thereon. Concurrent with the Exchange, the convertible notes and
               accrued interest were converted into 13,193,583 shares of common
               stock.

               During the three months ended March 31, 2002, the Company began
               the process of attempting to raise up to $1,150,000 of additional
               financing through the sale of convertible debentures ("Additional
               Debentures"). The Additional Debentures bear interest at 10%, can
               be converted at any time at the option of the holder or the
               Company into shares of the Company's common stock at $.20 per
               share and mature March 1, 2003; however, the maturity date may be

                                       8

<PAGE>


                     Milestone Capital, Inc. and Subsidiary

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


               extended for six months at the discretion of the Company. In
               addition, holders of the Additional Debentures receive one share
               of common stock for each dollar of Additional Debentures
               purchased. During the three months ended March 31, 2002, the
               Company sold $100,000 of Additional Debentures. In connection
               with the sale of the Additional Debentures, the Company issued
               100,000 shares of common stock with a fair value of $33,750. The
               fair value of the shares was initially recorded as an increase to
               common stock and the corresponding debt discount reduced the
               carrying value of the Additional Debentures. The debt discount
               will be amortized to interest expense over the term of the
               Additional Debentures.

Note 4 - Convertible debentures and other interest expense (concluded):
               The fair value of the Company's common stock at the time the
               Additional Debentures were sold exceeded the conversion price.
               Such excess constitutes a beneficial conversion feature or right
               for which the value is measured by the difference between the
               aggregate conversion price and the fair value of common stock
               into which the securities are convertible. Accordingly, the
               beneficial conversion feature attributable to the issuance of the
               Additional Debentures had a fair value of $68,750 which equaled
               the excess of the aggregate proceeds the purchasers of Additional
               Debentures would have received if they converted the Additional
               Debentures and sold the 500,000 shares of common stock (the
               amount of shares that would have been received if conversion
               occurred at the date of purchase of the respective Additional
               Debentures) for approximately $168,750 based on the fair market
               value at the date of purchase. The charge to interest expense may
               not exceed the principal amount of the related debt. Accordingly,
               the Company recorded a charge of $65,750 to interest expense and
               a corresponding increase in additional paid-in capital for the
               beneficial conversion rights as the Additional Debentures were
               convertible upon issuance.

Note 5 - Stockholders' equity:
               Sales and issuances of common stock:
                  During the three months ended March 31, 2002, the Company sold
                  4,356,184 shares of common stock for consideration of $214,000
                  and received proceeds of $209,000 and a stock subscription
                  receivable of $5,000. In addition, the Company issued 890,575
                  shares of common stock to officers of the Company in exchange
                  for expenses of $43,750.  The fair value of the shares at the
                  date of grant was $267,173.  Accordingly, we reorganized a
                  charge of $267,173 during the three months ended March 31,
                  2002 for the fair value of the shares issued.

               Forgiveness of officer salaries:
                  During the three months ended March 31, 2002, officers of the
                  Company forgave aggregate salaries of $170,500 of which
                  $128,833 was earned during the three months ended March 31,
                  2002 and $41,667 was earned prior to January 1, 2002.

Note 6 - Legal proceedings
                  The company is party to a lawsuit arising in the ordinary
                  course of business.  While the ultimate result of the lawsuit
                  cannot be predicted with certainty, management does not expect
                  that this matter will have a material adverse effect on the
                  financial position, results of operations or cash flows of the
                  Company.

                                       9

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

General

On January 3, 2002, Milestone completed a share exchange transaction (the
"Exchange Transaction") with EliteAgents, Inc. ("EliteAgents"), whereby
Milestone issued shares of its Common Stock to the shareholders of EliteAgents
in exchange for all of the issued and outstanding ownership interests in
EliteAgents. EliteAgents was originally incorporated in New Jersey in 1999 under
the name MortgageBANC, Inc. as a New Jersey Correspondent Mortgage Banker, with
the name changed to QuickFinance, Inc. and then to EliteAgents, Inc. in March
2000. In February 2002, EliteAgents amended its Articles of Incorporation to
change its name to EliteAgents Mortgage Services Inc. As a result of the
Exchange Transaction, EliteAgents is a wholly owned operating subsidiary of
Milestone.

Significant Transactions

In the first quarter of 2002, we entered into a letter of intent to purchase
Velos Capital Corp., an equipment lessor, for stock and cash. Negotiations and
due diligence relating to this transaction are in progress. We are also pursuing
the acquisition of other equipment lessors. We believe that purchasing and
combining the operations, customer relations and sales force strengths of one or
more of these companies will help to establish a presence for us in the
equipment leasing market.

Results of Operations

2001 was the first full year in which we utilized our current sales distribution
model and Web-based technology in our loan origination business, and we
continued this activity in the first quarter of 2002. During 2001, we increased
our user base to include business professional such as accountants, financial
planners and insurance agents in addition to real estate professionals, and we
benefited from this broadened user base during the first quarter of 2002. Our
sales and marketing strategy going forward is to focus on various types of
business professionals who may have clients in need of either purchase or
refinance mortgages. We believe that expanding our user base beyond real estate
professionals to other types of business professionals will help us increase our
volume of purchase mortgages and maintain a higher ratio of purchase mortgage
business when compared to refinance mortgage business.

In addition, recruiting experienced mortgage professionals and loan officers
will be crucial to our success. Through our experiences, we have determined that
experienced mortgage professionals and loan officers are more likely to be
successful in providing ongoing account management to our business
professionals, which we believe is essential to maintaining and increasing sales
volume with a given account. Account management consists primarily of reminding
our users of the value-added service we may provide our users and their clients,
as well as educating them on new products we may offer, such as leasing
services. In addition, experienced mortgage professionals are also able to
generate their own loan originations. For these reasons, we plan to focus on
hiring experienced mortgage professionals to work as salespeople. As the
mortgage industry is returning to lower volumes of activity during 2002 after
the record volume of mortgage transactions during 2000 and 2001, and as our
business model gains awareness in the marketplace, we anticipate that we will
become more effective in recruiting experienced mortgage professionals. Our
ability to recruit experienced mortgage professionals will continue to be a
critical component of our success.

In the first quarter of fiscal year 2002, our loan originations increased by
374% to $28.9 million from $6.1 million in the first quarter of fiscal year
2001. Our net loss from operations for the first quarter of fiscal year 2002 was
($1,138,210) compared to a net loss from operations of ($1,116,308) in the first
quarter of fiscal 2001, an increase of 2%. For the first quarter of fiscal year
2002, revenues increased 339% to $543,579 from $123,919 in the first quarter of
2001. Total operating expenses increased by 36% to ($1,681,789) for the first
quarter of 2002 from ($1,240,227) in the first quarter of 2001.

We generate revenue primarily from (i) loan origination and broker fees, (ii)
net gain on the sale of mortgage loans in the secondary market and (iii)
interest income received on mortgage loans during the period in which we
warehouse loans pending their sale in the secondary market. Loan origination
fees, net gain on the sale of mortgage loans and interest income are largely
transaction oriented and volume driven. We did not engage in the warehousing of
mortgage loans until the fourth quarter of 2001.

We currently broker more than 80% of our loans to more than 20 lenders. As we
become more experienced in managing our warehouse line of credit, we expect that
we will increase the volume of loans that we fund through the line of credit.

                                       10

<PAGE>


Loan Origination and Broker Fee Income. We recognize fees from purchase mortgage
loan originations at closing if the loan is brokered by us instead of warehoused
by us. Loan origination income showed an increase of 272% to $453,082 in fiscal
first quarter 2002 from $121,773 in fiscal first quarter 2001.

Gains on Sale of Mortgage Loans. When we warehouse loans, we seek to sell those
loans in the secondary markets. Our gains and losses from the sale of mortgage
loans are affected by several factors including (i) competitive market forces
affecting our pricing structure at the time of origination, (ii) interest rate
increases or decreases between the time that we commit to originate or purchase
loans and the time that we commit to sell the loans in the secondary markets,
(iii) price subsidies and (iv) the recognition of gains relating to originated
mortgage servicing rights. Our net gain on the sales of mortgage loans from our
loan warehousing operations was $72,939 in the first quarter of 2002. We did not
engage in the practice of warehousing loans during the first quarter of 2001.

Net Interest Income. Net interest income consists primarily of the difference
between the interest income received on mortgage loans and the interest that we
pay on the short-term bank borrowings used to finance mortgage loans prior to
the sale of the loan into the secondary market. The conditions that affect net
interest income from period to period include the relationship between
prevailing mortgage rates and short-term borrowing rates, the mix of fixed-rate
and adjustable rate mortgage loans held for sale and the average holding period
before the loans are sold. Net interest income in the first quarter of 2002
increased to $17,558 from $2,146 in the first quarter of 2001.

The major components of our total expenses are (i) compensation (including
commissions) and benefits, and (ii) general and administrative expenses. Total
operating expenses for the fiscal first quarter of 2002 increased by 36% to
($1,681,789) from ($1,240,227) in the fiscal first quarter of 2001. Payments of
commissions for loan originations increased by 157% to ($138,489) for the first
quarter of 2002 from ($53,892) for the first quarter of 2001. Non-commission
employee compensation decreased by 5% to ($504,756) for the first quarter of
2002 from ($531,727) for the first quarter of 2001.

We incurred one-time expenses of $270,503 relating to the Exchange Transaction.
Of this amount, $221,985 was attributed to consulting fees and was paid out in
1,272,325 shares of our unregistered common stock.

We also incurred non-cash interest expense of $65,750 from the sale of
convertible debentures. The fair value of our common stock at the time the
convertible debentures were sold exceeded the conversion price. Such excess
constitutes a beneficial conversion feature or right for which the value is
measured by the difference between the aggregate conversion price and the fair
value of common stock into which the securities are convertible. Accordingly,
the beneficial conversion feature attributable to the issuance of the
convertible debentures had a fair value of $68,750 which equaled the excess of
the aggregate proceeds the purchasers of convertible debentures would have
received if they converted the convertible debentures and sold the 500,000
shares of common stock (the amount of shares that would have been received if
conversion occurred at the date of purchase of the respective convertible
debentures) for approximately $168,750 based on the fair market value at the
date of purchase. The charge to interest expense may not exceed the principal
amount of the related debt. Accordingly, we recorded a charge of $65,750 to
interest expense and a corresponding increase in additional paid-in capital for
the beneficial conversion rights, as the convertible debentures were convertible
upon issuance.

Equipment Leasing

We are currently planning to expand our business operations into the equipment
leasing market. We plan to provide leasing services to small and medium-sized
customers beginning in the second quarter of 2002. This is part of our overall
strategy of utilizing our sales distribution model (consisting of a direct sales
force and sales through network sites) in multiple markets. The Web-based
leasing software system that we are developing internally will use many of the
same features as the Web-based technology used in our loan origination business.
In connection with this expansion, we are currently engaged in negotiations to
acquire one or more leasing services companies, which we expect will accelerate
the growth of this division.


Income Taxes

We have incurred net operating losses since inception and, therefore, we have
not incurred any income taxes. We have a net operating tax loss carry forward of
approximately $7,000,000 of which we can use only $520,000 per year.

Disclosure About Market Risk

We manage many risks in the normal course of business. However, we consider
interest rate risk to be one of the most significant market risks that could
materially impact our financial position and results of operations. The
movements in interest rates affect the value of capitalized mortgage servicing
rights, the mortgage inventory held for sale, volume of loan production and
total net interest income earned.

Liquidity and Capital Resources

As of March 31, 2002, we had a cash balance of $123,750 and a working capital
deficiency of $631,000. Our management believes that we may continue to incur
negative cash flows from operating activities for the foreseeable future. To
control spending, we have implemented several expense control measures. In
the fourth quarter of the 2001 fiscal year, all employees' salaries were reduced
from 5% to 15%. The current operating expenses, pre-commissions, are
approximately $280,000 per month. Funds amounting to over 15% of our current
operating expenses are being used to pay down past bills incurred for
professional services and for equipment. For Milestone Capital to continue its
business operations, increase sales production and engage

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in marketing efforts, with a goal of generating positive net income on a monthly
basis, it will be necessary for us to immediately obtain additional funding and
to continue to control expenses. However, there can be no assurance that we will
be able to obtain additional capital on terms acceptable to us.

During the first fiscal quarter of 2002, we engaged in two capital raising
initiatives. In February 2002, we closed an offering of unregistered common
stock of Milestone from which we raised $214,000 through the sale of 4,356,184
shares. The shares issued in this transaction were exempt from registration
requirements pursuant to the exemption from registration contained in Rule 506
of Regulation D of the Securities Act of 1933 as amended to date. On March 1,
2002, we initiated an offering of up to $1.15 million in unregistered
convertible debentures to accredited investors. The convertible debentures bear
interest at 10% per year and can be converted at any time at the option of the
holder into shares of our unregistered common stock at $0.20 per share. The
convertible debentures mature on March 1, 2003, provided, however, that at our
discretion we may extend the maturity date for six months. In addition, holders
of the convertible debentures receive one share of our unregistered common stock
for each $1.00 of convertible debentures purchased. As of March 31, 2002, we
have raised $100,000 from this offering. The notes and shares issued in this
offering were exempt from registration requirements pursuant to the exemption
from registration contained in Rule 506 of Regulation D of the Securities Act of
1933 as amended to date. The proceeds of these raises will be used to fund
operating expenses, increase advertising and marketing in the mortgage division,
and launch the equipment leasing division.

If we complete the acquisition of one or more leasing companies, we intend to
acquire those companies with our Common Stock and a minimal amount of cash. We
expect that the operation of these leasing companies will be cash-flow positive
and will not require significant additional capital resources.

We have renewed our warehouse line of credit with The Provident Bank, and the
line of credit will expire on March 31, 2003.

Inflation

Inflation may significantly affect our ability to originate loans. Interest
rates typically increase during periods of high inflation and decrease during
periods of low inflation. Generally, the mortgage banking industry, and in
particular the refinance mortgage industry, has experienced increased
origination volume in response to low interest rates, and loan originations,
particularly refinance mortgage originations, have generally decreased during
periods of high interest rates.

Special Cautionary Notice Regarding Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-QSB
contains forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in "Management's Discussion and Analysis or Plan of Operation" as well as in
this Quarterly Report generally. You should carefully review the risks described
in this Quarterly Report as well as the risks described in our Annual Report on
Form 10-KSB filed on April 1, 2002. In addition, when used in this Quarterly
Report, the words "anticipates," "plans," "believes," "intends," "estimates,"
and "expects" and similar expressions are generally intended to identify
forward-looking statements. Such statements are subject to a number of risks and
uncertainties. Our actual results, performance or achievements could differ
materially from the results expressed in, or implied by us or these
forward-looking statements. We undertake no obligation to revise these
forward-looking statements to reflect any future events or circumstances.

Cautionary Statements

We continue to be subject to certain factors that could cause our results to
differ materially from expected and historical results. You should carefully
review the risks described in this Quarterly Report as well as the risks
described in our Annual Report on Form 10-KSB filed on April 1, 2002.

                           PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We were named as a third party defendant in a lawsuit on February 1, 2002. One
of our former employees is suing the landlord of the property that we lease in
New Jersey for injuries she sustained in a fall in the parking lot. The landlord
is in turn suing us for any damages the landlord is required to pay to the
former employee in the event that damages are awarded to the former employee. We
believe that the suit is without merit and that we have sufficient insurance in
place to cover any damages that we may be assessed.

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<PAGE>


ITEM 2.  CHANGES IN SECURITIES

During the first fiscal quarter of 2002, we engaged in two capital raising
initiatives. In February 2002, we closed an offering of unregistered common
stock of Milestone from which we raised $214,000 through the sale of 4,356,184
shares. The shares issued in this transaction were exempt from registration
requirements pursuant to the exemption from registration contained in Rule 506
of Regulation D of the Securities Act of 1933 as amended to date. On March 1,
2002, we initiated an offering of up to $1.15 million in unregistered
convertible debentures to accredited investors. The convertible debentures bear
interest at 10% per year and can be converted at any time at the option of the
holder into shares of our unregistered common stock at $0.20 per share. The
convertible debentures mature on March 1, 2003, provided, however, that at our
discretion we may extend the maturity date for six months. In addition, holders
of the convertible debentures receive one share of our unregistered common stock
for each $1.00 of convertible debentures purchased. As of March 31, 2002, we
have raised $100,000 from this offering. The notes and shares issued in this
offering were exempt from registration requirements pursuant to the exemption
from registration contained in Rule 506 of Regulation D of the Securities Act of
1933 as amended to date. The proceeds of these raises will be used to fund
operating expenses, increase advertising and marketing in the mortgage division,
and launch the equipment leasing division.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K:

     (a)     Exhibits
                   None

     (b)     Reports on Form 8-K
                   There were two reports on Form 8-K filed during the fiscal
             quarter period ended March 31, 2002. A Form 8-K was filed on
             January 18, 2002, and a Form 8-K/A was filed on March 19, 2002.

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                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            MILESTONE CAPITAL, INC.


Date:  May 20, 2002                         By:  /s/  Charles J. DeMory
                                            ---------------------------------
                                                      Charles J. DeMory, Sr.,
                                                      Chairman, Chief Executive
                                                      Officer and President


Date: May 20, 2002                          By:  /s/  John Mangel III
                                            ---------------------------------
                                                      John Mangel III,
                                                      Chief Financial Officer
                                                      and Executive Vice
                                                      President

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