FORWARD LOOKING STATEMENTS

Certain statements made in this Report on Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Eastern Light Capital, Incorporated (the "Company") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions relating to the foregoing and involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

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 condensed 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 six months ended June 30, 2009 and 2008 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 NYSE Amex (formerly known as the American Stock Exchange).

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 became self-administered and self-advised.

The transition agreement with the Former Manager required the Company to remove the name "Capital Alliance" from the Trust's name by June 30, 2008 and from CAFC's name by April 30, 2007. On April 20, 2007, the Company's 100% owned taxable subsidiary changed its name from Capital Alliance Funding Corporation ("CAFC") to WrenCap Funding Corporation ("WCFC"). On July 2, 2008, the Trust changed its name from Capital Alliance Income Trust, LTD ("CAIT") to Eastern Light Capital, Incorporated (the "Trust").

The current real estate market is characterized by both credit uncertainty and expected declines in residential property valuations. Due to these conditions the Company has focused on debt reduction in lieu of new investments in residential mortgages. The current conditions are expected to extend through calendar year 2009. The Company has made additional investments in marketable securities and is reviewing its current investment policies to include other REIT permissible assets. Since May 1, 2007, WCFC has traded exchange listed marketable securities.

The recent financial crisis has affected the Company's business by diminishing the credit quality of existing borrowers and lowering existing property values. The Company has actively managed the risk inherent from these conditions by modifying existing notes so as to avoid foreclosing on properties in a declining market. The Company expects that these efforts will help maintain the performance of the portfolio as borrowers will be more capable and motivated to satisfy their obligations.

The Company's residential loan portfolio continues to harbor unacceptable levels of non-performing assets. Loan delinquencies reduce current revenues until the non-performing loans are monetized and their proceeds re-invested. 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.

As of January 1, 2008, the Trust had real estate owned ("REO") of $1,804,826 and approximately 37% of the mortgage loan portfolio were non-performing assets (as measured by mortgage payments delinquencies in excess of 60 days). Due to the partial financing of the mortgage loan portfolio with debt, REO and non-performing mortgage loans were approximately 72% of total shareholder equity and approximately 204% of common shareholder equity. As of June 30, 2008, the Trust had REO for sale of approximately $3,378,714 and approximately 50% of the mortgage loan portfolio is non-performing assets. REO and non-performing mortgage loans increased to approximately 87% of total shareholder equity and approximately 243% of common shareholder equity.

As of January 1, 2009, the Trust had real estate owned ("REO") of $2,596,494 and approximately 61% of the mortgage loan portfolio were non-performing assets (as measured by mortgage payments delinquencies in excess of 60 days). Due to the partial financing of the mortgage loan portfolio with debt, REO and non-performing mortgage loans were approximately 61% of total shareholder equity and approximately 134% of common shareholder equity. As of June 30, 2009, the Trust has REO for sale and investment of approximately $3,042,602 and approximately 42% of the mortgage loan portfolio is non-performing assets. REO and non-performing mortgage loans were approximately 66% of total shareholder equity and approximately 218% of common shareholder equity.

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 2006, 2007 and 2008, the Trust incurred taxable losses. On account of these losses, dividend payments were curtailed. 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.

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.

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 as contained in the Company's 2008 Form 10-K as filed with the SEC on April 15, 2009. 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. There have been no material changes in our critical accounting policies as disclosed in our 2008 Form 10-K.

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.

During 2008, the repayment of mortgage notes receivable and the monetization of non-performing assets reduced institutional borrowings by $1,636,644 to approximately $2,000,000. The existing $7,000,000 credit facility had a scheduled maturity of November 14, 2008 but the lending institution was taken over by the FDIC on November 7, 2008. During the six months ended June 30, 2009, the Company negotiated with the FDIC to eliminate its institutional borrowings. On May 12, 2009, the Company successfully completed its negotiations with the FDIC for $1,600,000, resulting in a gain of approximately $400,000 in our second quarter ending June 30, 2009.

The Company is reviewing its current investment policies to include other REIT permissible assets in addition to residential mortgage loans. Since May 1, 2007, WCFC has traded exchange listed marketable securities. The Company may consider relinquishing its REIT status to enhance shareholder value.

Loan Origination. During 2008 and the six months ended June 30, 2009, 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, contacting delinquent borrowers, and in the event of unremedied defaults performing other administrative duties including supervising foreclosures.

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.

Loan Portfolio and Allowance for Loan Losses. As of June 30, 2009, the Company's loan portfolio included 15 loans totaling $4,640,674 of which four loans totaling $1,955,002 representing 42% of the loan portfolio were delinquent over two payments. In assessing the collectibility of these delinquent mortgage loans, management has established a loan loss reserve of $525,000, if it is necessary to foreclose upon the mortgage loans.

As of December 31, 2008, the Company's loan portfolio included 19 loans totaling $5,460,948 of which 10 loans totaling $3,353,673 representing 61% of the loan portfolio were delinquent over two payments. In assessing the collectibility of these delinquent mortgage loans, management has established a loan loss reserve of $720,000, if it is necessary to foreclose upon the mortgage loans.

The Company has only issued 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 June 30, 2009 and December 31, 2008.

As of June 30, 2009, the following table summarizes the Company's outstanding repayment obligations:

                                                      Amount of Commitment Expiration Per Period
        Maximum Other                                 ------------------------------------------
 Commercial Commitments (a)           Total Amounts   Less than     1 - 3      4 - 5     After 5
     as of June 30, 2009                Committed      1 year       years      years      years
------------------------------        -------------   ---------   --------     -----     -------
Margin Loan                             $245,191      $245,191        0          0          0
Lease Commitment                        $135,300      $ 66,000     $69,300       0          0
Standby Repurchase Obligations             0              0           0          0          0
Total Commercial Commitments            $380,491      $311,191     $69,300       0          0

(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.

RESULTS OF OPERATIONS

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

Three months ended June 30, 2009 and 2008. Revenues for the second quarter increased to $128,185 as compared to $125,048 for the same period in the prior year. The slight increase in revenue was due to the increase in rental income of $34,700 and other income of $16,064 which was offset by a decrease in interest income of $47,627. The decrease in interest income was the result of a smaller loan portfolio while the increase in rental income was the result of an increase in real estate investments.

Expenses for the three months ended June 30, 2009 increased to $325,779 as compared to $94,799 for the same period in the prior year. The increase in expenses during the second three months of 2009 resulted from an increase in the provision for loan losses of $132,006 and operating expenses of real estate owned of $57,735. These increases are the result of the prior year's downward adjustments to loan loss reserves whereas the real estate owned increase is due to rising costs and an increased number of foreclosed assets.

Six months ended June 30, 2009 and 2008. Revenues for the first six months decreased to $206,598 as compared to $366,054 for the same period in the prior year. The decrease in revenue is due to the decrease in interest income of $237,172. The interest income declines are due to a smaller loan portfolio while the increase in rental income of $65,481 is due to the increase in real estate investments.

Expenses for the six months ended June 30, 2009 increased to $655,972 as compared to $353,267 for the same period in the prior year. The increase in expenses during the first six months of 2009 resulted from an increase in the provision for loan losses of $111,303 and operating expenses of real estate owned increased $123,210. These increases are the result of the prior year's downward adjustments to loan loss reserves whereas the real estate owned increase is due to rising costs and an increase in the number of foreclosed assets.

LIQUIDITY AND CAPITAL RESOURCES

Management believes that the cash flows from operations, mortgage loans that are paid off, real estate owned that is sold, credit facilities that may be obtained during 2009 and, if necessary, the limited sale of investment mortgages will be sufficient to meet the liquidity needs of the Company's businesses for the next twelve months.

Six months ended June 30, 2009 and 2008. As of January 1, 2009 and 2008, the Trust had $1,974,687 and $962,190 of cash and cash equivalents, respectively. During the six month period ended June 30, 2009, cash and cash equivalents decreased by $1,734,014. During the six month period ended June 30, 2008, cash and cash equivalents increased by $1,342,009. After taking into effect the various transactions discussed below, cash and cash equivalents at June 30, 2009 and 2008 were $240,673 and $2,304,199.

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

Net cash provided by (used in) operating activities during the six months ended June 30, 2009 and 2008 was $119,915 and ($207,547), respectively. During the first six months of 2009, net income provided $74,466, a change in other liabilities provided $240,640 and the allowance for doubtful accounts used ($74,464). During the first six months of 2008, net income provided $11,366, a change in other liabilities used $144,983 and the provision for loan losses used ($56,509).

Net cash (used in) provided by investing activities for the six months ended June 30, 2009 and 2008 was ($191,481) and $3,169,556 respectively. During the first six months of 2009, net investments in marketable securities used ($296,753) while mortgage notes receivable provided $175,172. During the first six months of 2008, proceeds from the sale of real estate owned provided $1,769,825 and mortgage notes receivable provided $1,327,732.

Net cash (used in) financing activities during the six months ended June 30, 2009 and 2008 was ($1,662,448) and ($1,620,000), respectively. During the first six months of 2009, the repayment of bank loans used ($1,605,184). During the first six months of 2008, net payments of bank loans used cash of ($1,620,000).