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~~March 3031, ~~2010~~2011

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

Commission File Number: 001-12941

EASTERN LIGHT CAPITAL, INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

Delaware	94-3240473
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer 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, including Area Code)

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		NYSE Amex

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

None

(Title of Class)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o

Indicate by check mark whether the has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T Section 232.405, during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b02 of the Exchange Act.

	Large accelerated filer: o	Accelerated filer: o
	Non-accelerated filer: o	Smaller reporting company: x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of September 30, 2010, the registrant has approximately 351,482 shares of common stock outstanding.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION (UNAUDITED)
ITEM 1	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Condensed Consolidated Financial Statements	4-1116
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1217-1520
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	1520
ITEM 4	CONTROLS AND PROCEDURES	1520
	PART II – OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	1620
ITEM 1A	RISK FACTORS	1620
ITEM 1B	UNRESOLVED STAFF COMMENTS	1620
ITEM 2	CHANGES IN SECURITIES	1620
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	1721
ITEM 4	SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS	1721
ITEM 5	OTHER INFORMATION	1721
ITEM 6	EXHIBITS AND REPORTS ON FORM 8-K	1721
	SIGNATURES	1822

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.

EASTERN LIGHT CAPITAL, INCORPORATED

Condensed Consolidated Balance Sheets

March 31, 2011 and 2010

(unaudited)

	September 30, 2010			December 31, 2009
	March 31, 2011			December 31, 2010
ASSETS
Cash and cash equivalents	$	~~375~~589,~~053~~944		$	~~227~~269,~~944~~911
Marketable securities		~~181~~175			~~147~~191
Accounts receivable		271,697			524,717
Investments		190,000			190,000
Allowance for doubtful accounts		-			(453,974	)
Prepaid expenses		27,500			7,500
Net accounts receivable		271,697			70,743
Accounts receivable		76,821			61,686
Allowance for doubtful accounts		-			-
Net accounts receivable		76,821			61,686
Notes receivable:
Mortgage notes receivable		1,~~054~~038,~~832~~234			21,~~690~~046,~~737~~284
Allowance for loan losses		(20,000	)		(~~310~~20,000	)
Net notes receivable		1,~~034~~018,~~832~~234			21,~~380~~026,~~737~~284
Real estate owned		43,~~248~~448,~~486~~746			64,~~714~~048,~~174~~746
Other assets		2826,~~383~~272			3729,~~987~~128
Total assets	$	5,~~958~~377,~~632~~692		$	95,~~431~~633,~~732~~446
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Senior mortgage debt	$	2,112,947		$	42,~~487~~112,~~940~~947
Other liabilities		90114,~~289~~943			~~232~~195,~~032~~286
Total liabilities		2,~~203~~227,~~236~~890			42,~~719~~308,~~972~~233
Stockholders’ equity
Preferred stock, $.01 par value;1,600,000 shares authorized;
213,820 shares issued and outstanding at June 30, 2010
213,820 shares issued and outstanding at December 31, 2010					2,138
and December 31, 2009		2,138			2,138
Additional paid in capital - preferred stock		-			5,509,728
Additional paid in capital - preferred stock		5,509,728			5,509,728
Less treasury stock: 16,919 preferred shares at
June 30, 2010 and December 31, 2009 at cost		(229,179	)		(229,179	)
December 31, 2010 at cost		-			(229,179	)
Common stock, $.01 par value; 2,000,000 shares authorized;
500,432 shares issued and outstanding at June 30, 2010
746,558 shares issued and outstanding at March 31, 2011 and
and December 31, 2009		5,005			5,005
500,432 shares issued and outstanding at December 31, 2010					5,005
Additional paid in capital - common stock		914,~~415~~695,~~696~~922			9,~~408~~415,~~747~~696
Less treasury stock: 148,950 and 148,550 common shares at
Less treasury stock: 148,950 common shares at
June 30, 2010 and December 31, 2009 at cost		(1,829,141	)		(1,827,698	)
March 31, 2011 and December 31, 2010 at cost		(1,829,141	)		(1,829,141	)
Accumulated other comprehensive loss		(542	)		(576	)
Accumulated other comprehensive income		(548	)		(532	)
Accumulated deficit		(9,~~118~~723,~~309~~897	)		(89,~~156~~548,~~405~~502	)
Total stockholders’ equity		3,~~755~~149,~~396~~802			43,~~711~~325,~~760~~213
Total liabilities and stockholders’ equity	$	5,~~958~~377,~~632~~692		$	95,~~431~~633,~~732~~446

See accompanying notes to condensed consolidated financial statements.

EASTERN LIGHT CAPITAL, INCORPORATED

Condensed Consolidated Statements of Operations

for the Three Months Ended March 31, 2011 and 2010

(unaudited)

	Three Months Ended						Nine Months Ended
	Three Months Eneded
	September 30						September 30
	March 31
	2010			2009			2010			2009
	2011			2010
REVENUES
Interest income	$	3218,~~816~~875		$	6531,~~298~~167		$	~~93,610~~		$	~~187,827~~
Rental income		1228,~~500~~250			3817,~~800~~350			~~31,950~~			~~104,281~~
Other income		2881			~~10,287~~255			~~5,297~~			~~29,235~~
Total revenues		4548,~~318~~006			~~114~~48,~~385~~772			~~130,857~~			~~321,343~~
EXPENSES
Interest expense on loans		-			2,746			-			24,169
Provision for loan losses		---			10,000
Senior mortgage expense		20,533			41,693			86,822			128,494
Expenses of real estate owned		1,645			43,714
Provision for loan losses		-			-			12,710			54,794
Impairment of real estate owned		---			57,645
Provision for (recovery of) doubtful accounts		-			1,062			-			17,297
Wages and salaries		78,244			94,463
Expenses of real estate owned		1,513			168,449			36,844			197,479
Non-income taxes		34,223			1,750
Impairment of real estate owned		-			-			257,645			-
General and administrative		133,103			70,426
Wages and salaries		95,122			106,865			287,766			332,177
Total expenses		247,215			277,998
General and administrative		117,947			104,936			281,797			327,313
LOSS FROM OPERATIONS		(199,209	)		(229,226	)
Total expenses		235,116			425,751			963,583			1,081,723
Gain (loss) on sale of real estate owned		23,814			---
LOSS FROM OPERATIONS		(189,798	)		(311,366	)		(832,726	)		(760,380	)
Gain (loss) on securities transactions		---			(36,131	)
Gain (loss) from retirement of debt		-			-			-			400,000
Gain (loss) on investments		---			---
Gain (loss) on sale of real estate owned		(120,426	)		(173,402	)		(93,048	)		(173,400	)
Total other income (loss), net		23,814			(36,131	)
Gain (loss) on securities transactions		-			(44,234	)		(36,131	)		10,923
NET INCOME (LOSS)	$	(175,395	)	$	(265,357	)
Gain (loss) on investments		-			58,400			-			126,721
PREFERRED DIVIDENDS		---			---
Total other income (loss), net		(120,426	)		(159,236	)		(129,179	)		364,244
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	(175,395	)	$	(265,357	)
NET INCOME (LOSS)	$	(310,224	)	$	(470,602	)	$	(961,905	)	$	(396,136	)
NET INCOME (LOSS) PER COMMON SHARE - BASIC	$	(0.29	)	$	(0.76	)
PREFERRED DIVIDENDS		-			-			-			-
NET INCOME (LOSS) PER COMMON SHARE - DILUTED	$	(0.29	)	$	(0.76	)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	(310,224	)	$	(470,602	)	$	(961,905	)	$	(396,136	)
DIVIDENDS PAID PER PREFERRED SHARE	$	-		$	-
NET INCOME (LOSS) PER COMMON SHARE - BASIC	$	(0.88	)	$	(1.33	)	$	(2.74	)	$	(1.10	)
DIVIDENDS PAID PER COMMON SHARE	$	-		$	-
NET INCOME (LOSS) PER COMMON SHARE - DILUTED	$	(0.88	)	$	(1.33	)	$	(2.74	)	$	(1.10	)
DIVIDENDS PAID PER PREFERRED SHARE	$	-		$	-		$	-		$	-
DIVIDENDS PAID PER COMMON SHARE	$	-		$	-		$	-		$	-

See accompanying notes to condensed consolidated financial statements.

EASTERN LIGHT CAPITAL, INCORPORATED

Condensed Consolidated Statements of Cash Flows

for the Three Months Ended March 31, 2011 and 2010

(unaudited)

	Nine Months Ended
	Three Months Ended
	September 30
				March 31
	2010			2009
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(~~961~~175,~~905~~395	)	$	(~~396~~265,~~136~~357	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		~~69,280~~-			3511,~~686~~895
Realized gain on sale of REO		(84,656	)		-
Deferred carry cost		-			(12,143	)
Retirement of debt		-			(400,000	)
Realized loss on sale of REO		(23,814	)		-
Stock based compensation expense		~~6,950~~-			46,~~507~~949
Provision for loan losses		~~12,710~~-			5410,~~794~~000
Change in allowance for doubtful accounts		~~(453,974~~-	)		~~(101,527~~-	)
Impairment of real estate owned		~~1,032,645~~-			~~200~~57,~~000~~645
Realized loss on sale of marketable securities		-			~~137,644~~-
Change in accounts receivable		253,020			184,507
Change in operating assets and liabilities
Change in other assets		9,604			(7,105	)
Change in prepaid expenses		(20,000	)		-
Change in in other liabilities		(141,743	)		4,141
Change in accounts receivable		(15,135	)		1,636
Net cash used in operating activities		(258,069	)		(283,489	)
Change in other assets		2,856			2,970
Change in other liabilities		(19,124	)		(68,384	)
Net cash used in operating activities		(250,612	)		(254,789	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from marketable securities		-			~~74,894~~-
Proceeds from sale of real estate owned		4,011,176			76,411
Proceeds from real estate owned		562,595			-
Capital improvements on REO		(12,015	)		-
Purchase of investments		-			-
Principal collected on mortgage notes receivable		359,461			187,070
Capital improvements on real estate owned		-			(12,015	)
Net cash provided by investing activities		4,358,622			338,375
Principal collected on mortgage notes receivable		8,050			10,239
Net cash provided by (used in) investing activities		570,645			(1,776	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of senior mortgage loans payable		~~(3,952,001~~-	)		-50,000
Payments of Company loans payable		-			(1,605,184	)
Issuance of Common Stock		-			-
Purchase of treasury stock		(1,443	)		(63,080	)
Issuance of Common Stock - APIC		-			-
Net cash used in financing activities		(3,953,444	)		(1,668,264	)
Payments of Company loans payable		-			-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		147,109			(1,613,378	)
Purchase of treasury stock		-			(1,443	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		227,944			1,974,687
Net cash provided by financing activities		-			48,557
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	375,053		$	361,309
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		320,033			(208,008	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		269,911			227,944
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	589,944		$	19,936
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest and Senior mortgage expense	$	87,377		$	29,353
Cash paid for interest and senior mortgage interest expense	$	-		$	555
Cash paid for taxes	$	1,~~782~~600		$	~~13,238~~150
NON-CASH INVESTING AND FINANCING ACTIVITIES
Foreclosures, net of reserves	$	~~2,381,286~~-		$	~~2,568,120~~-
Assumption of senior debt upon foreclosure	$	-		$	-
Write-offs of uncollectible loans	$	-		$	-
Conversion of preferred stock to common stock	$	5,282,687		$	-

See accompanying notes to condensed consolidated financial statements.

EASTERN LIGHT CAPITAL, ~~INCORPORATED~~INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~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 2, 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. 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. (“Former Manager”). On December 29, 2006, the Former Manager was terminated and the Company became self-administered and self-advised.

As of January 1, 2011, the Trust’s net Preferred Stock shares outstanding were 196,901. On February 12, 2011, both the common and preferred stockholders approved the conversion of the Series A Preferred Stock into Common Stock. The conversion was subsequently approved by the Company’s Board of Directors, filed with the Delaware Secretary of State, and the NYSE Amex approved the listing of 246,126 additional common shares. As of March 31, 2011, there were 597,608 net common shares outstanding.

In the opinion of the management of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the consolidated financial information included therein. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Form 10-K for the fiscal year ended December 31, 2010 filed with the Securities and Exchange Commission. The results of operations for the three month period ended March 31, 2011 are not necessarily indicative of the operating results to be expected for the full year.

2.	Basis of presentation and summary of significant accounting policies

These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2009 as reported in the Company’s Form 10-K filed pursuant to 15d-2 with the Securities and Exchange Commission.

Principles of consolidation. The condensed consolidated financial statements include the accounts of the Trust and its wholly owned subsidiary, WCFC. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of accounting. The Company prepares its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission. 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 results for the interim period. The results of operations for the three and nine months ended September 30, 2010, are not necessarily indicative of the results to be expected for the full year.

Use of estimates. The preparation of condensed 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~~dates of the ~~condensed~~ consolidated financial statements and the reported amounts of revenues and expenses during the reporting ~~period~~periods. Actual results could differ from those estimates. The most significant estimates are the allowance for loan losses and the valuation of real estate owned.

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~~Marketablesecurities ~~securities~~ are classified as either trading or available-for-sale ~~securities~~. Trading securities represent investments in exchange listed securities that are bought and held principally for the purpose of selling them in the near term. Available-for-sale securities represent investments in exchange listed securities which the Trust intends to hold for an indefinite period of time.

the Trust intends to hold for an indefinite period of time.

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 on the interest method. Rental income is recognized as it is earned.

EASTERN LIGHT CAPITAL, ~~INCORPORATED~~INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~Unaudited)

2. Basis of presentation and summary of significant accounting policies (continued)

~~Foreclosure accounting~~Investments. The Company ~~has~~purchased ~~adopted~~an ~~ASC~~investment ~~360-10-35-37~~in ~~through~~a 35privately –held 43corporation toduring ~~account for real estate assets acquired by foreclosure (“Real Estate Owned” or “REO”)~~2010. The ~~REO~~investment isamounted ~~recorded~~to $190,000 at ~~the~~March ~~lesser of its fair value reduced by estimated disposal costs (brokerage~~31, ~~title~~2011 and ~~other~~December ~~dispositions~~31, ~~costs) or actual costs~~2010. ~~Actual~~ ~~costs~~The ~~include~~investment ~~the~~is ~~Company’s~~accounted ~~mortgage~~for ~~note~~under ~~receivable~~the ~~balance,~~cost ~~accrued~~method ~~interest,~~as the ~~estimated~~Company ~~senior~~has ~~mortgage~~no ~~obligation~~significant ~~and~~influence ~~unpaid~~over ~~interest at~~ the ~~time of foreclosure~~corporation.

~~Fair~~Allowance ~~Value~~for ~~Measurements~~doubtful accounts. ~~The~~Management reviews its accounts receivable periodically and the Company ~~has~~establishes ~~adopted~~an ~~ASC~~allowance ~~Topic~~for receivables ~~820,~~that ~~Fair~~may ~~Value~~not ~~Measurements~~be collectible. ~~ASC~~ ~~Topic~~Management ~~820~~exercises ~~establishes~~judgment ain ~~framework~~establishing ~~for~~the ~~measuring~~allowance ~~fair~~and ~~value~~the ~~and~~Company’s ~~expands~~actual ~~disclosure~~losses ~~requirements~~may ~~for~~differ ~~fair~~from ~~value~~the ~~measurements~~estimate.

Fair Value Measurements The Company determines the fair values of its assets and liabilities based on the fair value hierarchy established in ASC Topic 820. The standard describes three levels of inputs that may be used to measure fair value (Level 1, Level 2 and Level 3). Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data.

~~Stock-based~~Mortgage ~~compensation~~notes receivable. ~~During~~Mortgage notes receivable are carried at their origination value less any amortized principal. Management regularly reviews the ~~nine~~asset ~~months~~securing ~~ended~~the ~~September~~mortgage ~~30,~~as ~~2010~~well ~~and~~as ~~2009,~~the noborrower’s ~~option~~payment ~~awards~~history ~~were~~and ~~issued~~ability to repay the mortgage.

~~Reclassifications~~Real estate owned. ~~Certain~~ ~~2009~~Real ~~amounts~~estate ~~may~~owned ~~have~~results ~~been~~from ~~reclassified~~foreclosure of mortgage notes receivable and at time of foreclosure is recorded at the lower of carrying amount plus any senior indebtedness or fair value of the property minus estimated costs to ~~conform~~sell. Management may elect to lease foreclosed real estate owned in lieu of immediately marketing it for sale. Subsequent to foreclosure, the ~~2010~~foreclosed ~~presentation~~asset value is periodically reviewed and adjusted to fair value if a decline has occurred. ~~Such~~Income ~~reclassifications~~and ~~had~~expenses norelated ~~effect~~to onreal ~~reported~~estate ~~net~~owned ~~income~~are ~~(loss)~~recorded oras rental income, ~~(loss)~~interest ~~per~~expense ~~share~~and operating expenses of real estate owned and are included in the consolidated statements of operations. Depreciation is taken on the leased real estate owned.

~~Taxes~~Revenue recognition. ~~The~~Interest ~~Trust~~income ~~has~~is ~~elected~~recorded toon bethe ~~taxed~~accrual asbasis aof ~~REIT~~accounting ~~under~~in ~~the~~accordance ~~Internal~~with ~~Revenue~~the ~~Code~~terms of ~~1986,~~the asloans. Management ~~amended~~reviews (the ~~"Code").~~likelihood Athat ~~REIT~~a isloan ~~generally~~will ~~not~~be ~~subject~~repaid towhen ~~federal~~the ~~income~~payment ~~tax~~of onprincipal ~~taxable~~or ~~income~~interest ~~which~~ is ~~distributed~~delinquent toover ~~its~~two ~~stockholders,~~payments. For ~~provided~~these ~~that~~delinquent atloans, ~~least~~Management ~~90%~~may ofestablish ~~taxable~~an ~~income~~allowance isfor ~~distributed~~loan ~~and~~losses ~~provided~~to ~~that~~protect ~~certain~~against ~~other~~principal ~~requirements~~losses ~~are~~in ~~met.~~the ~~Certain~~loan ~~assets~~portfolio ofand ~~the~~an ~~Company~~allowance ~~that~~for ~~produce~~doubtful ~~non-qualifying~~accounts ~~income~~to ~~are~~protect ~~held~~against inlosses ~~taxable~~from ~~REIT~~accrued ~~subsidiaries~~interest. ~~Unlike~~If ~~other~~the ~~subsidiaries~~mortgage’s ofcollateral ais ~~REIT,~~considered ~~the~~insufficient ~~income~~to ofsatisfy athe ~~taxable~~outstanding ~~REIT~~balance, ~~subsidiary~~after isestimated ~~subject~~foreclosure toand ~~federal~~selling ~~and~~costs, ~~state~~additional ~~income~~interest ~~taxes~~is not accrued. Loan ~~Even~~origination asincome aand ~~REIT,~~extension ~~the~~fees ~~Company~~are ~~may~~deferred beand ~~subject~~recognized toover ~~certain~~the ~~state~~remaining ~~and~~life ~~local~~of ~~taxes~~the onloan ~~its~~as interest income ~~and~~on ~~property,~~the ~~and~~interest tomethod. ~~federal~~Rental income ~~and~~is ~~excise~~recognized ~~taxes~~as onit ~~its~~is ~~undistributable taxable income~~earned.

Allowance for loan loss reserve. Management reviews its loan loss provision regularly and the Company maintains an allowance for losses on mortgage notes receivable at an amount that management believes is sufficient to protect against potential losses inherent in the loan portfolio. 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 value of underlying collateral, past loan loss experience, borrower economic resources, trends in loan delinquency and other factors that warrant recognition in providing for an adequate loan loss allowance. The Company’s actual losses may differ from the estimate. Notes receivable deemed uncollectible are written off. The Company does not accrue interest income on impaired loans.

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 (loss) 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.

Concentration of credit risk. The Company holds mortgage notes receivable that are secured by deeds of trust on residential properties of which 90% are located in California. This concentration of credit may pose a risk to the value of the loan portfolio due to changes in the economy or other conditions of the geographical area.

Recently issued accounting pronouncements. In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance of Credit Losses.” This ASU requires significant new disclosures about the allowance for credit losses and the credit quality of financing receivables. The requirements are intended to enhance transparency regarding credit losses and the credit quality of loan and lease receivables by disclosing an evaluation of (i) the nature of credit risk inherent in the entity’s portfolio of financing receivables, (ii) how that risk is analyzed and assessed in arriving at the allowance for credit losses and (iii) the changes and reasons for those changes in the allowance for credit losses. Under this statement, allowance for credit losses and fair value are to be disclosed by portfolio segment, while credit quality information, impairment receivables and nonaccrual status are to be presented by class of financing receivable. Disclosure of the nature and extent, the financial impact and segment information of trouble debt restructurings will also be required. The disclosures are to be presented at the level of disaggregation that management uses when assessing and monitoring the portfolio’s risk and performance. ASU 2010-20 will be effective for the Company’s consolidated financial statements as of December 31, 2010, as it relates to disclosures required as of the end of a reporting period. Disclosures that relate to activity during a reporting period will be required for the Company’s consolidated financial statements that include periods beginning on or after January 1, 2011.

EASTERN LIGHT CAPITAL, ~~INCORPORATED~~INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~Unaudited)

2. Basis of presentation and summary of significant accounting policies (continued)

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. As of March 31, 2011 and December 31, 2010, one loan representing approximately 12% of the loan portfolio is a deed of trust on a residential property not in California.

Stock-based compensation. The Company measures the cost of a recipient’s services received in exchange for an award of an equity instrument based on the award's fair value on the grant date and recognizes the cost over the period during which the recipient is required to provide service in exchange for the award, generally the vesting period.

Earnings (Loss) Per Share. In accordance with ASC No. 260 “Earnings Per Share,” the Company presents both basic and diluted earnings (loss) per share. Basic earnings (loss) per share excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares outstanding for the period. Diluted earnings (loss) 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 (higher) earnings (loss) per share amount. At March 31, 2011, options to purchase shares of common stock below their fair market value trading price are not considered in the diluted earnings per share calculation due to their anti-dilution effect.

The Company presents both basic and diluted earnings per share. Basic earnings per share excludes dilution and is computed by dividing net income (loss) 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 of other contracts to issued common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower earnings per share amount.

Income Taxes. The Trust has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). A REIT is generally not subject to federal income tax on taxable income which is distributed to its stockholders, provided that at least 90% of taxable income is distributed and provided that certain other requirements are met. Certain assets of the Company that produce non-qualifying income are held in taxable REIT subsidiaries. Unlike other subsidiaries of a REIT, the income of a taxable REIT subsidiary is subject to federal and state income taxes. 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. For three months ended March 31, 2011 and 2010, the Company expensed $34,193 and $150, respectively, for payment of such taxes. Since 2005, the Company incurred taxable losses, also known as Net Operating Losses (“NOL”). NOL’s may allow the Company to retain future taxable income equal to the cumulative amount of its NOL balance. The Internal Revenue Service waives mandatory dividend payments until prior year’s allowable NOLs are recovered.

The Company has evaluated its current tax positions and has concluded that as of March 31, 2011, the Company does not have any significant uncertain tax positions for which a liability would be necessary.

Reclassifications. Certain 2010 amounts may have been reclassified to conform to the 2011 presentation. Such reclassifications had no effect on reported net income (loss) or income (loss) per share.

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (Unaudited)

2. Basis of presentation and summary of significant accounting policies (continued)

Recently accounting pronouncements. In July 2010, the FASB issued ASU 2010-20, Disclosures about the Credit quality of Financing Receivables and the Allowance for Credit Losses. This ASU requires significant new disclosures about the allowance for credit losses and the credit quality of financing receivables. The requirements are intended to enhance transparency regarding credit losses and the credit quality of loan and lease receivables by disclosing an evaluation of (i) the nature of credit risk inherent in the entity’s portfolio of financing receivables, (ii) how that risk is analyzed and assessed in arriving at the allowance for credit losses and (iii) the changes and reasons for those changes in the allowance for credit losses. Under this statement, allowance for credit losses and fair value are to be disclosed by portfolio segment, while credit quality information, impaired financing receivables and nonaccrual status are to be presented by class of financing receivables. Disclosure of the nature and extent, the financial impact and segment information of troubled debt restructurings will also be required. The disclosures are to be presented at the level of disaggregation that management uses when assessing and monitoring the portfolio’s risk and performance. ASU 2010-20 became effective for the Company’s financial statements as of December 31, 2010, as it relates to disclosures required as of the end of a reporting period. Disclosures that relate to activity during a reporting period became effective for the Company’s financial statements that include periods beginning on or after January 1, 2011.

On April 5, 2011, the FASB issued ASU 2011-12, A Creditor’s Determination of Whether Restructuring is a Troubled Debt Restructuring, providing guidance to lenders for evaluating where a modification or restructuring of a loan as a Troubled Debt Restructuring (TDR). ASU 2011-12 provides expanded guidance on whether: 1) the lender has granted a “concession” and 2) whether the borrower is experiencing “financial difficulties.” The ASU is effective for the first interim or annual period beginning after June 15, 2011 (i.e. the third quarter of 2011) and is required to be applied retroactively for all modifications and restructuring activities in 2011. This ASU ends the FASB’s deferral of the additional disclosures about TDR activities required by ASU 2010-20.

3.	Marketable securities

Available-for-sale securities are reported at fair value with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income (loss). For the three ~~and~~months ~~nine month periods~~ ended ~~September~~March 3031, ~~2010~~2011, the ~~gain and (~~loss) in accumulated other comprehensive ~~(loss)~~income ~~was~~is $~~(7) and $(8), respectively~~16. Trading securities are reported at fair value with realized and unrealized gains and losses reported in the statements of operations. Available-for-sale securities consist of exchange traded REIT securities whereas trading securities consist of exchange traded non-REIT securities. Both accounts utilize exchange listed derivative securities to enhance performance and to hedge against risk. The trading account also shorts exchange listed securities, including derivative securities.

As of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010, the trading securities accounts balance were $0, and the available for sale securities account balance was $~~181~~175 and $~~147~~191, respectively. 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 statements of operations.

The accounts utilize margin borrowings and are separately maintained. The equity balance in the account is sufficient to offset the risk from a potential margin call. As of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010, both the trading securities account and the available-for-sale securities account had no borrowings. The interest rate in the trading account is the current Federal Funds rate plus 1.50% and is payable monthly. The interest in the available-for-sale margin account is the current Prime Rate plus 4.00% and is payable monthly.

4.	Accounts receivable

Accounts receivable ~~consist~~consists of accrued interest on mortgage notes receivable, ~~and~~ other amounts due from borrowers and a receivable from a custodial account. As of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010, ~~the~~ accounts receivable ~~balance~~were ~~was~~ $~~271~~76,~~697~~821 and $~~524~~61,~~717~~686, respectively. ~~In September, a fully reserved account receivable and related reserve were written off.~~ As of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010, Management believes that an allowance for doubtful accounts of $0 ~~and $453,974, respectively~~ is adequate protection against the collectability of the ~~receivable,~~receivables as well as the costs associated with possible legal action.

~~5. Mortgage notes receivable~~7

~~Reconciliation~~EASTERN ofLIGHT ~~the~~CAPITAL, ~~mortgage notes receivable balances follows:~~INC.

	Nine months Sept 30, 2010			Twelve months Dec. 31, 2009
Balance, beginning of period	$	2,690,737		$	5,460,948
Additions during period:
Originations		---			---
Deductions during period:
Collections of principal		(27,377	)		(53,252	)
Repayments		(332,084	)		(146,860	)
Write-offs of uncollectible loans		---			---
Foreclosures		(1,276,444	)		(2,570,099	)
Balance, as reported in Consolidated Balance Sheet	$	1,054,832		$	2,690,737

EASTERN LIGHT CAPITAL, INCORPORATED

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~Unaudited)

5.	Mortgage notes receivable

~~Mortgage~~Reconciliation ~~notes~~of ~~receivable~~the ~~are~~mortgage ~~stated~~notes atreceivable ~~their~~balances ~~outstanding~~for ~~principal balance. Interest on~~ the ~~mortgages~~periods isended ~~due~~March ~~monthly and principal is usually due as a balloon payment at loan maturity. As of September 30~~31, ~~2010,~~2011 ~~there were two (2) loans totaling $23,318 of principal~~ and ~~$0 of interest that were delinquent over 60 days. As of~~ December 31, ~~2009,~~2010 there were three (3) loans totaling $1,064,984 of principal and $5,016 of interest that were delinquent over 60 days. These loans do not accrue interest in agreement with the Company’s policy on revenue recognition.follows:

Mortgage notes that have been modified from their original terms are evaluated to determine if the loan meets the definition of troubled debt restructuring. As of September 30, 2010 and December 31, 2009, there were no loan modifications that affected the recognition of revenue or required the Company to recognize impairment of a mortgage note receivable.

	Three months March 31, 2011			Twelve months Dec. 31, 2010
Balance, beginning of period	$	1,046,284		$	2,690,737
Additions during period:
Originations		---			---
Deductions during period:
Collections of principal		(8,050	)		(35,925	)
Repayments		---			(332,084	)
Write-offs of uncollectible loans		---			---
Foreclosures		---			(1,276,444	)
Balance, as reported in Balance Sheet	$	1,038,234		$	1,046,284

AsThe mortgage notes receivable represent home equity loans secured by deeds of ~~September~~trust ~~30,~~on ~~2010~~one-to-four ~~and~~unit ~~December~~residential ~~31,~~real ~~2009,~~estate. ~~the~~The Company ~~had~~is nosubject ~~impaired~~to ~~loans~~the ~~and~~risks ~~one~~inherent ~~loan~~in ~~with~~lending aincluding ~~carrying~~the ~~value~~risk of ~~$302,710~~borrower ~~which~~default ~~was~~and ~~considered~~bankruptcy. ~~impaired,~~Mortgage ~~respectively~~notes receivable are stated at the principal outstanding. Interest ~~Management~~on ~~has~~the ~~reserved~~mortgages is due monthly and unamortized principal is usually due as a balloon payment at loan ~~loss~~maturity. ~~allowance~~For ~~sufficient~~the tothree ~~absorb~~months ~~losses~~ended ~~that~~March ~~may~~31, ~~result~~2011 ~~from~~and during 2010, no mortgage ~~note~~notes receivable ~~foreclosures~~were modified.

As of March 31, 2011, the mortgage notes receivable portfolio totaled $1,038,234 with an average loan size of $129,779, an average weighted yield of 7.90%, a weighted average adjusted maturity of 21 months and a weighted average combined loan-to-value ratio of 61% (based upon the collateral’s appraisal value at funding). First deeds of trust comprised 81% of the portfolio’s dollar value and second deeds of trust comprised 19%. As of December 31, 2010, the mortgage notes receivable portfolio totaled $1,046,284 with an average loan size of $130,786, an average weighted yield of 8.04%, a weighted average adjusted maturity of 23 months and a weighted average combined loan-to-value ratio of 61% (based upon the collateral’s appraisal value at funding). First deeds of trust comprised 81% of the portfolio’s dollar value and second deeds of trust comprised 19%. The mortgage loans are concentrated in California.

Geographical Distribution:

The following table sets forth the geographical distribution of the Trust’s Mortgage Investment Business servicing portfolio as of March 31, 2011 and December 31, 2010:

	March 31, 2011				Dec. 31, 2010
State	Number of loans		$-% of Portfolio		Number of loans		$-% of Portfolio
CA		7		88%		7		88%
Other		1		12%		1		12%
Totals:		8		100%		8		100%

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (Unaudited)

5.	Mortgage notes receivable (continued)

The following table sets forth loan credit quality information as of March 31, 2011 and December 31, 2010:

	March 31, 2011			Dec. 31, 2010
	Loans	Principal	Percent	Loans	Principal	Percent
First trust deeds	5	$ 840,565	81%	5	$ 848,513	81%
Second trust deeds	3	197,669	19%	3	197,771	19%
Third trust deeds	0	---	0%	0	---	0%
Total secured loans	8	1,038,234	100%	8	1,046,284	100%
Liens due other lenders at loan closing		702,029			702,029
Total debt		$1,740,263			$1,748,313
Appraised property value at loan closing		$3,456,900			$3,456,900
Percent of total debt to appraised values (LTV) at loan closing (1)		50.34%			50.58%

(1)

Based on appraised values and liens due other lenders at loan closing. The loan to value computation does not take into account subsequent increases or decreases in security property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders by payments or interest accruals, if any. Property values likely have changed, particularly over the last three years, and the portfolio’s current loan to value ratio likely is higher than this historical ratio.

The following table sets forth mortgage notes receivable information summarized by property type as of March 31, 2011 and December 31, 2010:

	March 31, 2011				Dec. 31, 2010
	Loans	Principal		Percent	Loans	Principal		Percent
Single family	8		$1,038,234	100%	8		$1,046,284	100%
Multi-family	0		---	0%	0		---	0%
Commercial	0		---	0%	0		---	0%
Land	0		---	0%	0		---	0%
Total secured loans	8		$1,038,234	100%	8		$1,046,284	100%

Single family properties include owner-occupied and non-owner occupied single family homes (1-4 unit residential buildings), condominium units, and townhouses. From time to time, loan originations in one sector or property type become more active due to prevailing market conditions. The current concentration of the Company’s loan portfolio is single family detached homes. No condominium loans were outstanding as of March 31, 2011 and December 31, 2010.

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (Unaudited)

5.	Mortgage notes receivable (continued)

The following table sets forth scheduled loan maturity information summarized by year as of March 31:

	March 31, 2011
	Loans	Principal		Percent
2011	3		$347,691	34%
2012	2		319,844	31%
2013	0		---	0%
2014	0		---	0%
2015	0		---	0%
Thereafter	2		345,199	33%
Total future maturities	7		1,012,734	98%
Matured at March 31, 2011	1		25,500	2%
Total secured loans	8		$1,038,234	100%

It is the Company’s experience that loans may be repaid or refinanced before, at or after the contractual maturity date. For matured loans, the Company may continue to accept payments while pursuing collection of amounts owed from borrowers. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts.

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (Unaudited)

5.	Mortgage notes receivable (continued)

The following is a summary of the Trust’s mortgage notes receivable balance at March 31, 2011:

Principal outstanding	Interest rate	Final maturity date	Monthly payment	Lien Priority	Face amount of mortgage(s)	Carrying amount of mortgage(s)	Amount of delinquent principal (Note A)

Individual loans greater than $499,999:	---	---	---	---	---	---	---
Loans from $400,000-$499,999	---	---	---	---	---	---	---
Loans from $300,000-$399,999	6.25 %	0 months	$2,000	1st	359,000	324,372	---
Loans from $200,000-$299,999	6.375% to 8%	10 to 286 months	$5,435	1st	632,243	492,875	---
Loans from $100,000- 199,999	---	---	---	---	---	---	---
Loans up to $99,999	7.00% to 12.125%	0 to115 months	$2,713	1st & 2nd	407,377	220,987	23,318
Total Mortgage Notes Receivable at March 31, 2011					$ 1,398,620	$1,038,234	$ 23,318

(A) Delinquent loans are loans where the monthly interest payments in arrears are more than 60 days overdue. As of March 31, 2011, there were two (2) loans totaling $23,318 of principal that were delinquent. Interest has not been accrued on these delinquent loans.

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (Unaudited)

5.	Mortgage notes receivable (continued)

The following is a summary of the Trust’s mortgage notes receivable balance at December 31, 2010:

Principal outstanding	Interest rate	Final maturity date	Monthly payment	Lien Priority	Face amount of mortgage(s)	Carrying amount of mortgage(s)	Amount of delinquent principal (Note A)

Individual loans greater than $499,999:	---	---	---	---	---	---	---
Loans from $400,000-$499,999	---	---	---	---	---	---	---
Loans from $300,000-$399,999	6.25 %	1 month	$2,000	1st	359,000	325,294	---
Loans from $200,000-$299,999	6.375% to 8%	13 to 289 months	$5,435	1st	632,243	499,901	---
Loans from $100,000- 199,999	---	---	---	---	---	---	---
Loans up to $99,999	7.00% to 12.125%	0 to118 months	$2,713	1st & 2nd	407,377	221,089	23,318
Total Mortgage Notes Receivable at December 31, 2010					$ 1,398,620	$1,046,284	$ 23,318

(A) Delinquent loans are loans where the monthly interest payments in arrears are more than 60 days overdue. As of December 31, 2010, there were two (2) loans totaling $23,318 of principal that were delinquent. Interest has not been accrued on these delinquent loans.

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (Unaudited)

6.	Allowance for loan losses

The allowance for loan losses is primarily based on the fair value of the related collateral, since all loans subject to this ~~measurement~~estimate are collateral dependent. Management believes a $20,000 ~~and $310,000 allowance for~~ loan ~~losses~~loss ~~are~~reserve is adequate toprotection ~~protect~~ against potential losses inherent in the mortgage notes ~~receivables~~receivable balances as of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009, respectively~~2010. Actual losses may differ from the estimate.

A reconciliation of the allowance for loan losses for the periods ended March 31, 2011 and December 31, 2010 follows:

	Nine months Sept. 30, 2010			Twelve months Dec. 31, 2009
	Three months March 31, 2011			Twelve months Dec. 31, 2010
Provision for loan losses	$	~~12,710~~---		$	~~164~~12,~~794~~709
Write-offs of uncollectible loans (net)		~~(302,710~~---	)		(~~574~~302,~~794~~709	)
Total adjustments to allowance		~~(290,000~~---	)		(~~410~~290,000	)
Balance, beginning of period		~~310~~20,000			~~720~~310,000
Balance, as reported in Consolidated Balance Sheet	$	20,000		$	310,000
Balance, end of period	$	20,000		$	20,000

7.	Real estate owned

~~Real~~As ~~estate~~of ~~owned~~December ~~includes~~31, ~~real~~2010, ~~estate~~the ~~acquired~~Company ~~through~~owned ~~foreclosure~~six ~~and~~properties. During is2011, ~~stated~~the atcompany ~~the~~sold ~~lower~~one property. As of ~~the~~March ~~recorded~~31, ~~investment~~2011, in the ~~loan~~Company orowned atfive ~~the~~properties. ~~property's~~As ~~estimated~~of ~~fair~~March ~~value~~31, ~~less~~2011 ~~estimated~~and ~~costs~~December to31, ~~sell~~2010, ~~as applicable. Costs relating to~~ the ~~development~~senior ~~and~~mortgage’s ~~improvement~~principal ofbalances ~~real estate owned~~ are ~~capitalized~~$2,112,947. ~~whereas~~Management ~~costs~~may ~~relating~~elect to ~~holding~~lease ~~the~~real ~~property~~estate ~~are~~assets ~~expensed.~~in ~~Real~~lieu ~~estate~~of ~~owned~~immediately ismarketing ~~either~~real ~~held~~estate ~~for~~owned ~~sale~~assets or for ~~investment~~sale. ~~As a property's status changes, reclassifications may occur.~~

AsA ofreconciliation ~~January 1, 2009, the Company owned five properties. During 2009, the Company foreclosed on four properties. As~~ of ~~December 31, 2009,~~ the ~~Company~~real estate owned ~~nine~~account ~~properties~~shows ~~with~~its acash ~~reported value of $6,714,174~~ and ~~senior~~non-cash ~~liens~~activities ~~of $4,487,940. Six properties were held~~ for sale with a reported value of $3,861,755 and senior mortgage liens of $2,489,563. Three properties were held for investment with a reported value of $2,852,419 and senior mortgage liens of $1,998,377. During the ~~nine~~periods ~~months~~ ended ~~September~~March 3031, ~~2010,~~2011 ~~the Company foreclosed on three properties, wrote off one property,~~ and ~~had~~December ~~five properties sell. The Company’s six properties are held for sale and have a reported value of $4~~31,~~248,486~~ ~~and senior liens of $2,112,947.~~2010:

	Three months March 31, 2011			Twelve months Dec. 31, 2010
Balance, beginning of period	$	4,048,746		$	6,714,174
Additions:
Foreclosed mortgage notes, net of reserve (non-cash)		---			1,276,444
Assumptions of senior debt upon foreclosure, net of repayments		---			545,025
Capital improvements		---			12,015
Deductions:
Repayment of senior debt		---			---
Write-downs of property (non-cash)		(61,219	)		(457,645	)
Proceeds from sale of real estate owned (net of closing costs)		(562,595	)		(3,926,520	)
Gain (loss) on real estate owned		23,814			(93,048	)
Depreciation .		---			(21,699	)
Balance, end of period	$	3,448,746		$	4,048,746

~~EASTERN~~8. ~~LIGHT~~Fair ~~CAPITAL,~~Value ~~INCORPORATED~~Measurements

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2011:

	March 31, 2011		Level 1		Level 2		Level 3
Asset:
Marketable securities – Available for sale	$	175	$	175		---		---
Mortgage notes receivable (non-recurring)		---		---		---		---
Real estate owned (non-recurring)		---		---		---		---
Total	$	175	$	175	$	---	$	---

EASTERN LIGHT CAPITAL, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~Unaudited)

78. ~~Real~~Fair ~~estate~~Value ~~owned~~Measurements (continued)

AThe ~~reconciliation~~following oftable presents information about the ~~real~~Company’s ~~estate~~assets ~~owned~~and ~~follows~~liabilities that are measured at fair value on a recurring basis as of December 31, 2010:

	Nine months Sept. 30, 2010			Twelve months Dec. 31, 2009
	2010			Level 1			Level 2		Level 3
Balance, beginning of period	$	6,714,174		$	5,086,781
Asset:
Add: Foreclosed mortgage notes, (net of reserve)		2,381,286			4,135,468
Marketable securities – Available for sale	$	191		$	191			---		---
Add: Investments		12,015			71,900
Mortgage notes receivable (non-recurring)		---			---			---		---
Less: Write-downs of property (non-cash)		(1,032,645	)		(2,269,128	)
Real estate owned (non-recurring)	$	1,903,437			---			---	$	1,903,437
Less: REO Sold		(3,926,520	)		---
Total	$	1,903,628		$	191		$	---	$	1,903,437
Less: Depreciation of real estate held for investment .		(69,280	)		(47,581	)
Change in deferred carrying costs .		169,456			(263,266	)
Balance, as reported in Consolidated Balance Sheet	$	4,248,486		$	6,714,174

8. Senior Mortgage Debt

Senior mortgage debt is the estimated financing liability attached to a real estate asset acquired by the foreclosure of the Company’s junior financing. The senior mortgage debt’s balance and terms are often unavailable at the time of foreclosure. Because the Company is not the legal borrower, the senior mortgage debt’s agents assert that this information can not be disclosed on account of the borrower’s privacy rights. Different jurisdictions often have different privacy regulations and disclosure of the legal borrower’s obligations is complicated by competing, if not conflicting jurisdictional claims of the note, property, borrower, servicing agent, senior debt owner, new property owner and federal regulations.

The Company must also proceed cautiously in disclosing its position as the new property owner to the senior mortgage debt’s owner or agents. Many notes have acceleration clauses that may be activated by transfer, sale or foreclosure on the property. Although California law is generally written to prevent a senior mortgage debt from acceleration on account of foreclosure, every situation is different and the costs of defending the notes accelerated maturity could easily exceed the potential recovery from monetizing the foreclosed asset’s estimated residual equity. Due to the frequency of senior loan modifications and the frequency of misleading or inaccurate information provided by former owners or agents, the Company does not provide the individual terms or balances of its REO senior mortgage debt.

9. Fair Value Measurements

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, 2010:

	Sept. 30, 2010		Level 1		Level 2		Level 3
Asset:
Marketable securities – Available for sale	$	181	$	181		---		---
Mortgage notes receivable (non-recurring)		---		---		---		---
Real estate owned (non-recurring)	$	1,903,437		---		---	$	1,903,437
Total	$	1,903,618	$	181	$	---	$	1,903,437

The following methods and assumptions were used to estimate the fair value of assets and liabilities:

Cash and cash equivalents. The carrying amounts reported in the balance sheets approximate fair value due to the short term nature of these accounts.

Available-for-sale and trading securities (included in marketable securities). These investments are reported on the balance sheets based on quoted market prices.

EASTERN LIGHT CAPITAL, INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

9. Fair Value Measurements (continued)

Mortgage notes receivable. The fair value of non-impaired loans is estimated based upon projected cash flows discounted at the estimated current interest rates at which similar loans would be made. The applicable amount of the allowance for loan losses along with accrued interest and advances related thereto should also be considered in evaluating the fair value versus the carrying value. For loans in which a specific allowance is established based on the fair value of the collateral, the Company records the loan as nonrecurring Level 2 if the fair value of the collateral is based on an observable market price or a current appraised value. If an appraised value is not available or the fair value of the collateral is considered impaired below the appraised value and there is no observable market price, the Company records the loan as nonrecurring Level 3.

Real estate owned. At the time of foreclosure, real estate owned is recorded at the lower of the recorded investment in the loan, plus any senior indebtedness, or at the property’s estimated fair value, less estimated costs to sell, as applicable. The Company reports the REO as nonrecurring Level 2, if during the reporting period the fair value of the collateral is reduced based upon on an observable market price or a current appraised value. If during the reporting period there is no observable market price, the Company reports the REO as nonrecurring Level 3. The Company periodically compares the carrying value of real estate to expected undiscounted future cash flows for the purpose of assessing the recoverability of the recorded amounts. If the carrying value exceeds future undiscounted cash flows, the assets are reduced to estimated fair value.

10Senior mortgage debt and loan commitments. The ~~Preferred~~carrying amount equals fair value. All amounts, ~~common~~including ~~and~~interest ~~treasury~~payable, ~~stock~~are subject to immediate repayment.

The Preferred Shareholders are entitled to a dividend preference in an amount equal to an annualized return on the adjusted net capital contribution of Preferred Shares at each dividend record date during such year (or, if the Directors do not set a record date, as of the first day of the month)9. ~~The~~Senior ~~annualized~~Mortgage 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. The preferred dividend preference is non-cumulative.Debt

~~After~~Senior ~~declaring~~mortgage ~~dividends~~debt ~~for~~is athe ~~given~~estimated ~~year~~financing liability attached to ~~the~~a ~~Preferred~~real ~~Shareholders~~estate inasset acquired by the ~~amount~~foreclosure of the ~~dividend~~Company’s ~~preference,~~junior nofinancing. ~~further~~The ~~dividends~~senior ~~may~~mortgage bedebt’s ~~declared~~balance onand terms are often unavailable at the ~~Preferred~~time ~~Shares~~of ~~for~~foreclosure. Because the ~~subject~~Company ~~year,~~is ~~until~~not the ~~dividends~~legal ~~declared~~borrower, onthe ~~each~~senior ~~Common~~mortgage ~~Share~~debt’s ~~for~~agents assert that ~~year~~this ~~equals~~information ~~the~~can ~~dividend~~not ~~preference~~be ~~for~~disclosed ~~each~~on ~~Preferred~~account ~~Share~~of ~~for~~the ~~such~~borrower’s ~~year~~privacy rights. ~~Any~~ ~~additional~~Different ~~dividends~~jurisdictions ~~generally~~often ~~will~~have bedifferent ~~allocated~~privacy ~~such~~regulations ~~that~~and disclosure of the ~~amounts~~legal ofborrower’s ~~dividends~~obligations ~~per~~is ~~share~~complicated toby competing, if not conflicting jurisdictional claims of the ~~Preferred~~note, ~~Shareholders~~property, borrower, servicing agent, senior debt owner, new property owner and federal regulations.

~~Common~~The ~~Shareholders~~Company ~~for~~must also proceed cautiously in disclosing its position as the ~~subject~~new ~~year~~property ~~are~~owner ~~equal. The~~to ~~Preferred~~the ~~Shareholder~~senior mortgage debt’s ~~additional~~owner ~~dividends,~~or ifagents. Many ~~any~~notes have acceleration clauses that may be activated by transfer, ~~are~~sale or ~~non-cumulative~~foreclosure on the property. ~~Preferred~~Although ~~Shareholders~~California ~~are~~law ~~entitled~~is generally written to ~~receive~~prevent ~~all~~a ~~liquidating~~senior ~~distributions~~mortgage ~~until~~debt ~~they~~from ~~have~~acceleration ~~received~~on anaccount ~~amount~~of ~~equal~~foreclosure, toevery ~~their~~situation ~~aggregate~~is ~~adjusted~~different ~~net~~and ~~capital~~the ~~contribution. Thereafter,~~costs ~~Common~~of ~~Shareholders~~defending ~~are~~the ~~entitled~~notes toaccelerated ~~all~~maturity ~~liquidation~~could ~~distributions~~easily ~~until~~exceed the ~~aggregate~~potential ~~adjusted~~recovery ~~net~~from ~~capital~~monetizing ~~contributions~~the foreclosed asset’s estimated residual equity. Due to the frequency of ~~all~~senior ~~Common~~loan ~~Shares~~modifications ~~have~~and ~~been~~the ~~reduced~~frequency toof ~~zero. Any~~misleading ~~subsequent~~or ~~liquidating~~inaccurate ~~distributions~~information ~~will~~provided beby ~~allocated~~former ~~among~~owners ~~Common~~or ~~Shareholders~~agents, ~~and~~the ~~Preferred~~Company ~~Shareholders~~does ~~pro~~not ~~rata~~provide the individual terms or balances of its REO senior mortgage debt.

The Preferred Shares are redeemable by a shareholder, subject to the consent of the Board of Directors, annually on June 30 for written redemption requests received by May 15 of such year. 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 paid14

~~for~~EASTERN ~~redemption~~LIGHT ~~of such Preferred Shares is the adjusted net capital contribution plus unpaid accrued dividends~~CAPITAL, divided by the aggregate net capital contributions plus 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 outstandingINC.

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. The Bylaws provide that 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.

EASTERN LIGHT CAPITAL, INCORPORATED

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~Unaudited)

10. ~~Preferred,~~Related ~~common~~party ~~and treasury stock (continued)~~transactions

AsOn ofMarch ~~January 1~~26, 2010, the ~~Trust’s~~Company ~~net~~entered ~~Preferred~~into ~~Stock~~a ~~outstanding~~stockholder ~~shares~~loan ~~were~~in ~~196,901. During~~ the ~~first~~amount ~~nine months~~ of ~~2010~~$50,000. noThe ~~Preferred~~loan’s ~~Stock~~interest ~~shares~~rate ~~were~~was ~~purchased~~9.99%. AsThe ofborrowing ~~September~~was ~~30,~~repaid ~~2010,~~on ~~the~~May ~~Trust’s net Preferred Stock outstanding shares were 196~~4,~~901~~ 2010.

~~As of January 1, 2010, the Trust’s net Common Stock outstanding shares were 351,882~~11. ~~During the first nine months of 2010, 400 shares of~~ Common ~~Stock were purchased~~ and notreasury ~~options were exercised. As of September 30, 2010, the Trust’s net Common Stock outstanding shares were 351,482.~~stock

11The Trust has the power to redeem or prohibit the transfer of a sufficient number of Common Shares or the exercise of warrants and/or options that would result in a violation of the Trust’s shareholding requirements. The ~~Related~~Bylaws ~~party~~provide ~~transactions~~that only with the explicit approval of the Trust’s Board of Directors may a stockholder own more than 9.8% of the total outstanding shares.

OnAs ~~March~~of 26January 1, ~~2010~~2011, the ~~Company~~Trust’s ~~Chairman~~net ~~and~~Preferred ~~Chief~~Stock ~~Executive~~shares ~~Officer~~outstanding ~~provided~~were ~~the~~196,901. ~~Company~~On aFebruary ~~$50~~12,~~000~~ ~~loan.~~2011, ~~The~~both ~~loan~~the ~~had~~common aand ~~simple~~preferred ~~interest~~stockholders ~~rate~~approved the conversion of 9the Series A Preferred Stock into Common Stock.~~99%~~ ~~per~~The ~~annum,~~conversion was ~~pre-payable~~subsequently atapproved ~~any~~by ~~time~~the Company’s Board of Directors, filed with the Delaware Secretary of State and ~~had~~the aNYSE ~~term~~Amex approved the listing of 55246,126 ~~days.~~additional ~~The~~common ~~loan~~shares. ~~was~~As ~~paid~~of inMarch ~~full~~31, on2011, ~~May~~there 4were 597,608 ~~2010~~net common shares outstanding.

12.	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 ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010:

	2010			2009
	2011			2010
Numerator:
Net income (loss)	$	(~~961~~175,~~905~~395	)	$	(~~396~~265,~~136~~357	)
Preferred dividends		-			-
Net income (loss) available to common stockholders	$	(~~961~~175,~~905~~395	)	$	(~~396~~265,~~136~~357	)
Denominator: Basic weighted average shares		351,482			360,221
Denominator:
Basic weighted average shares		597,608			351,315
Dilutive effect of options		-			-
Diluted weighted average shares		~~351~~597,~~482~~608			~~360~~351,~~221~~315
Basic earnings per common share	$	(20.7429	)	$	(10.1076	)
Diluted earnings per common share	$	(20.7429	)	$	(10.1076	)

13. ~~Wages~~Legal proceedings and ~~Benefits~~contingencies

~~Every~~Legal January 1, full time employees with at least 12 months of full time employment qualify for a Company sponsored Simple IRA. Employee contributions are governed by Internal Revenue Code limitations. The Company contributes up to 3.0% of the employee’s annual compensation, but not in excess of the lesser of the employee’s contribution or the maximum IRS employer’s contribution. Employer contributions vest upon funding.proceedings

~~14.~~The ~~Legal~~Company ~~Proceedings~~is involved in one legal proceeding as of March 31, 2011.

During January 2010, a former ~~mortgage~~borrower ~~holder~~ filed an appeal of a previously dismissed case. The former ~~mortgage~~borrower ~~holder~~continued ~~continues~~ to allege that the Company made a fraudulent loan ~~to him~~ by cross collateralizing two separate properties. The cross collateralization was necessary to grant the borrower the desired loan amount, since there was insufficient equity in the primary property ~~used~~offered as collateral ~~for the loan~~. The ~~Company~~appeal ~~believes~~was ~~the~~dismissed ~~former~~in ~~mortgage~~the ~~holder’s~~first ~~action~~quarter isof ~~without merit and is seeking a dismissal~~2011.

During ~~May~~June 2010, the Company was named as a defendant in a complaint alleging ~~fraudulent~~damages ~~transfer~~for ofmultiple ~~mortgage~~violations ~~loans~~associated ~~and~~with ~~aiding~~ELC’s ~~and~~foreclosure ~~abetting~~on ~~fraud~~improved real estate encapsulating the plaintiff’s unimproved real estate interest in a Deed of Trust. The Company believes ~~that~~ the plaintiff’s actions are without merit and will seek dismissal of all complaints and reimbursement for reasonable legal costs and fees.

10 EASTERN LIGHT CAPITAL, INC.

EASTERN LIGHT CAPITAL, INCORPORATED

Notes to Condensed Consolidated Financial Statements

March 31, 2011 (~~unaudited~~Unaudited)

1413. Legal ~~Proceedings~~proceedings and contingencies (continued)

~~The~~Noncompliance ~~Company~~with ~~believes~~Exchange ~~that~~Listing ~~the plaintiff’s actions are without merit and will seek dismissal of all complaints and reimbursement for reasonable legal costs and fees.~~Requirement

~~During~~The ~~the~~NYSE ~~third~~Amex ~~quarter~~continued listing standard requires total stockholder equity of ~~2010~~$6,000,000. aThe ~~former~~NYSE ~~officer~~Amex ofhas allowed the Company ~~alleged~~until ~~wrongful~~November ~~termination~~7, 2011 to secure compliance. ~~The~~While ~~Board~~the ofCompany ~~Directors~~is ~~has~~working ~~reviewed~~towards ~~these~~compliance, ~~allegations~~there ~~and~~is ~~determined~~no ~~they~~assurance ~~are~~that ~~unfounded~~it will be able to satisfy the $6,000,000 stockholder equity standard or that the NYSE Amex will not accelerate the compliance date.

~~15. Subsequent Events~~16

During the fourth quarter of 2010, a $250,000 receivable was paid in full.

On November 5, 2010, the NYSE Amex extended ELC's November 8, 2010 compliance listing deadline until December 15, 2010 for the Company’s conversion of its Series A Preferred Stock into Common Stock. A second compliance listing requirement that on or before November 7, 2011 ELC attains total common share book value of at least $6,000,000 remains unchanged.

PART I – ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

Certain statements made in this Quarterly 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 involving the continued expansion of business. 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~~Annual 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 Eastern Light Capital, Incorporated (the “Trust”) and WrenCap Funding Corporation (“WCFC”). Management’s discussion and analysis of the results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010 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~~publicly ~~on the NYSE Amex (formerly known as the American Stock Exchange)~~traded.

During the fourth quarter of 2006, the Company’s shareholders voted to terminate the outside manager (“Former Manager”) and initiate internal management. 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 to Eastern Light Capital, Incorporated.

The ~~transition~~current ~~agreement~~real ~~with~~estate ~~the~~market ~~Former~~is ~~Manager~~characterized ~~required~~by ~~the~~both ~~Company~~a tolack ~~remove~~of ~~the~~available ~~name~~credit ~~“Capital~~and ~~Alliance”~~declining ~~from~~residential ~~the~~property ~~Trust’s~~valuations. Due ~~name~~to bythese ~~June~~conditions ~~30, 2008 and from~~ the ~~Trust~~Company’s ~~taxable~~focus ~~subsidiary’s~~on ~~name~~selling byreal ~~April~~estate ~~30,~~owned ~~2007.~~(“REO”) Onis ~~April~~highly ~~20, 2007, the subsidiary changed its name to WrenCap Funding Corporation~~challenging. OnThe ~~July~~current 2,conditions ~~2008,~~are ~~the~~expected ~~Trust changed its name~~ to ~~Eastern~~extend ~~Light~~through ~~Capital,~~calendar ~~Incorporated~~year 2011.

~~The~~Mortgage ~~current~~investment ~~real~~loans ~~estate~~are ~~market~~reported isas ~~characterized~~mortgage bynotes ~~uncertainty~~receivable inand held until prepayment, maturity or foreclosure. As of March 31, 2011, the ~~availability~~Mortgage Investment Business portfolio totaled $1,038,234, consisting of ~~credit~~8 ~~and~~loans, of which 2 loans totaling $23,318 or 2% of the ~~expected~~portfolio ~~trend~~loan invalue ~~residential~~were ~~property~~delinquent ~~valuations~~over 60 days. ~~Due~~ toAs ~~these~~of ~~uncertainties~~May 15, 2011, none of the ~~Company~~delinquent ~~has~~loans ~~focused~~was onbrought ~~debt~~current ~~reduction~~or inpaid ~~lieu~~off and two loans totaling $23,318 or 2% of ~~new~~the ~~investments~~March in31, ~~residential~~2011 ~~mortgages~~portfolio balance remained delinquent. ~~The~~As ~~current~~of ~~conditions~~March ~~are~~31, ~~expected~~2011, tothe ~~remain~~Trust inheld ~~place~~five ~~for~~properties anas ~~undetermined~~real ~~period~~estate for sale. On ~~occasion~~During 2011, the Company ~~may~~is ~~make~~focusing ~~investments~~on inliquidating ~~marketable~~its ~~securities,~~REO ~~REIT~~assets. ~~permissible~~The monetization of REO assets, ~~and~~is ~~other~~an ~~income~~important ~~producing~~source ~~investments~~of liquidity for the Company in 2011.

The recent financial crisis has affected the Company’s business by diminishing the credit quality of existing borrowers, lowering residential property values and increasing borrower delinquencies. These factors have led to increased foreclosures and real estate owned (“REO”) balances. 17

~~Mortgage investments are reported as mortgage notes receivable and held until prepayment, maturity, sale, or foreclosure.~~ As of ~~September~~December 3031, 2010, the ~~mortgage~~Mortgage Investment Business portfolio totaled $1,~~054~~046,~~832~~284, consisting of 8 loans, of which 2 loans totaling $23,318 or 2% of the portfolio loan value were delinquent over 60 days. As of ~~September~~December 3031, 2010, the Trust held six properties ~~totaling $4,248,486~~ as ~~REO.~~real Aestate ~~residential~~for ~~equity value of $2,135,539 is attributable to four REO’s~~sale. Residual equity value is the recorded asset value in excess of the REO’s senior mortgage debt. Two REO’s are recorded at their senior mortgage debt balance of $1,427,849, have no residual equity value and are not expected to produce a gain or a loss upon disposition.

As of December 31, 2009, the mortgage portfolio totaled $2,690,737 consisting of 13 loans, of which 3 loans totaling 1,064,984 or 39% of the portfolio loan value were delinquent. As of December 31, 2009, the Trust held nine properties totaling 6,714,174 as REO.

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. Since 2006, the Trust has 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. Although the Board of Directors is inclined to retain future taxable income until the cumulative NOL is fully utilized, this issue will require additional review and analysis.

During December 2010 the Trust plans to hold a special shareholder meeting to vote upon the conversion of Series A Preferred Stock into Common Stock. The purpose of the Preferred Stock to Common Stock conversion is to simplify the Company’s capital structure. The Company does not believe that it can maintain consistent profitability as a publicly listed entity without additional equity capital. A simpler capital structure may allow the Company to raise additional equity capital. Additional information is provided in the Preliminary Schedule 14A filed with the Securities and Exchange Commission (“SEC”). The Company is working to finalize a Definitive Schedule 14A for the special shareholder meeting.

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 ~~2009~~2010 Form 10-K as filed with the SEC on April 1415, ~~2010~~2011. 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 to the critical accounting policies as disclosed in ~~2009~~2010 Form 10-K.

Operating Strategy.

Mortgage investment loans are reported as mortgage notes receivable and are held until prepayment, maturity, sale, 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. 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, instead of ~~focusing on~~ residential mortgage loans. The Company may also consider relinquishing its REIT status to enhance shareholder value.

Loan Origination. During ~~2009~~2010 and the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011, the Company did not make or acquire any new loans. Prospectively, loans may be internally originated or acquired from unaffiliated third parties.

Asset Management. Asset management is mortgage loan servicing and 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 ~~September~~March 3031, ~~2010~~2011, the Company’s loan portfolio included 8 loans totaling $1,~~054~~038,~~832~~234 of which two loans totaling $23,318 representing 2% 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 $20,000, if it is necessary to foreclose upon the mortgage loans.

As of December 31, ~~2009~~2010, the Company’s loan portfolio included 138 loans totaling $21,~~690~~046,~~737~~284 of which 32 loans totaling $123,~~064,984~~318 representing 392% of the loan portfolio were delinquent over two payments. In assessing the collectibility of these delinquent mortgage loans, management had established a loan loss reserve of $~~310~~20,000, if it is necessary to foreclose upon the mortgage loans.

The Company may issue loan commitments on a conditional basis and will fund such loans upon removal of all conditions. The Trust did not have any commitments to fund loans as of ~~September~~March 3031, ~~2010~~2011 and December 31, ~~2009~~2010.

~~As of September 30, 2010, the following table summarizes the Company’s outstanding repayment obligations:~~18

Maximum Other Commercial Commitments (a) As of September 30, 2010	Total Amounts Committed	Amount of Commitment Expiration Per Period
		Less than 1 year	1 - 3 years	4 - 5 years	After 5 years
Margin Loan	-	-	-	-	-
Lease Commitment	$77,813	$71,192	$6,621	-	-
Standby Repurchase Obligations	-	-	-	-	-
Total Commercial Commitments	$77,813	$71,192	$6,621	-	-

(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 ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010. Revenues for the ~~third~~first quarter decreased to $4548,~~318~~006 as compared to $~~114~~48,~~385~~772 for the same period in the prior year. The decrease in revenue was due to a decrease in interest income of $3212,~~482~~292 and aan ~~decrease~~increase in rental income of $2610,~~300~~900. The decrease in interest income was the result of a smaller loan portfolio. The ~~decrease~~increase in rental income was the result of ~~increased~~renting ~~vacancies~~out tomore ~~facilitate REO sales~~properties. During the three months ended ~~September~~March 3031, ~~2010~~2011, one REO sold. During the three months ended ~~September~~March 3031, ~~2009~~2010, no REO sold.

Expenses for the third quarter decreased $~~190~~30,~~635~~783 to $~~235~~247,~~116~~215 as compared to $~~425~~277,~~751~~998 for the same period in the prior year. The decrease in expenses primarily resulted from a decrease of $~~166~~10,~~936~~000 in ~~REO~~provisions ~~expenses~~for loan losses. Wages and salaries decreased $1116,~~743~~219 from $~~106~~94,~~865~~463 to $9578,~~122~~244 in the current period due to fewer employees and reduced bonuses.

Nine months ended September 30, 2010 and 2009. Revenues for the first nine months decreased $190,486 to $130,857 as compared to $321,343 for the same period in the prior year. The decrease in revenue is due to the decrease in interest income of $94,217 due to a smaller loan portfolio and a lower weighted average interest rate. The decrease in rental income of $72,331 from $104,281 to $31,950 is due to increased vacancies to facilitate REO sales. During the nine months ended September 30, 2010, six REOs sold. During the nine months ended September 30, 2009, no REOs sold.

Expenses for the nine months ended September 30, 2010 decreased $118,140 to $963,583 compared to $1,081,723 for the same period in the prior year. During the first nine months of 2010, there was an increase in REO impairment costs of $257,645. Approximately $250,000 of the REO impairment expenses is attributable to the estimated decline in the fair market value of a luxury REO. The rest of the 2010 nine month expenses declined resulting in a net decrease. Expenses of real estate owned declined $160,635 due to reduced maintenance, interest expenses declined $24,169 due to the repayment of all Company borrowings in 2009 (the Company has senior mortgage debt from foreclosures that is being served), provisions for loan losses declined $42,084 from due to generally more stable market conditions in non-luxury residential home prices, wages and salaries declined $44,411 due to fewer employees and reduced bonuses, and general and administrative expenses declined $45,516 due to normal expenditure fluctuation.

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 ~~2010~~2011 and the sale of investment mortgages will be sufficient to meet the liquidity needs of the Company’s business for the next twelve months.

~~Nine~~LIQUIDITY ~~months~~AND ~~ended~~CAPITAL ~~September~~RESOURCES ~~30,~~FOR ~~2010~~THE ~~and~~THREE ~~2009.~~MONTHS AsENDED ofMARCH ~~January 1~~31, 2010 and 2009, the Trust had $227,944 and $1,974,687 of cash and cash equivalents, respectively. During the nine month period ended September 30, 2010, cash and cash equivalents increased by $147,109. During the nine month period ended September 30, 2009, cash and cash equivalents decreased by $1,613,378. After taking into effect the various transactions discussed below, cash and cash equivalents at September 30, 2010 and 2009 were $375,053 and $361,309, respectively.2011

~~The~~As ~~following~~of ~~summarizes~~January 1, 2011, the ~~changes~~Trust inhad ~~net~~$269,991 of cash ~~provided~~and bycash ~~(used~~equivalents. ~~in)~~After ~~operating~~taking ~~activities~~into effect the various transactions discussed below, ~~net~~cash and cash ~~provided~~equivalents byat (March 31, 2011 were $589,944. The following summarizes the changes in net cash used in) ~~investing~~operating activities, and net cash provided by ~~(used~~investing ~~in) financing~~ activities.

~~Net~~The ~~cash~~principal ~~(used~~source ~~in)~~of ~~operating activities during~~ the ~~nine~~Trust’s ~~months~~increased ~~ended~~liquidity ~~September 30, 2010 and 2009~~ was ~~($258,069) and ($283489), respectively. During the first nine months of 2010, net cash used~~ from ~~operating~~investing activities was primarily the result of the ($961,905) net loss for the period, but offset by $1,032,645 of non cash REO impairment expenses and a 253,020 decline in accounts receivable, while a decrease in allowance for doubtful accounts used $453,974. ~~During~~The the first nine months of 2009, the net cash provided by operating activities came from a number of sources. Net income used ($396,136), provision for loan losses provided $54,794, realized marketable securities transactions provided $137,883, reduced accounts receivable provided $184,268 and the primary use of cash was aoperating ~~($400,000) non cash gain from the retirement of Company debt at a discount~~activities.

Net cash ~~provided~~used ~~from~~by ~~investing~~the operating activities ~~for~~during the ~~nine~~year ~~months~~ ended ~~September~~March 3031, ~~2010~~2011 ~~and 2009~~ was $4250,~~358,622 and $338,375, respectively~~612. ~~During~~Net ~~the~~cash ~~first~~used ~~nine~~from ~~months~~operating ofactivities ~~2010,~~was primarily the ~~proceeds~~result ~~from~~of ~~REO~~the ~~transactions provided~~ $4175,~~011,176~~395 ~~and~~net ~~proceeds~~loss ~~from~~for ~~mortgage~~the ~~notes~~quarter. ~~receivable~~Other ~~principal~~uses ~~payments provided $359~~included,~~461.~~ ~~During~~a ~~the~~change ~~first~~in ~~nine~~prepaid ~~months~~expenses ofused ~~2009~~$20,000, ~~investments~~a change in ~~marketable~~accounts ~~securities~~receivable ~~provided~~used $7415,~~894~~135, ~~REO~~and ~~proceeds~~a ~~provided~~change ~~$76,411,~~in ~~while~~other ~~principal~~liabilities ~~collected~~used ~~from mortgage notes receivable generated~~ $~~187~~19,~~070~~124.

Net cash ~~(used~~of ~~in) financing activities during the nine months ended September 30~~$570,645 ~~2010 and 2009~~ was ~~($3,953,444)~~provided ~~and~~by ~~($1,668,264)~~investing ~~respectively~~activities. ~~During~~ ~~the~~Proceeds ~~first~~from ~~nine~~real ~~months~~estate ofowned ~~2010,~~provided ~~the senior mortgage debt payable used (~~$3562,~~952,001).~~595 ~~During~~and ~~the~~principal ~~first~~collected ~~nine~~on ~~months~~mortgage ofnotes ~~2009,~~receivable ~~the~~provided ~~repayment of Company bank loans used ($1~~8,~~605,184)~~050.

No cash was used or provided by financing activities.

LIQUIDITY AND CAPITAL RESOURCES FOR THE THREE MONTHS ENDED MARCH 31, 2010

As of January 1, 2010, the Trust had $227,944 of cash and cash equivalents. After taking into effect the various transactions discussed below, cash and cash equivalents at March 31, 2010 were $19,936. The following summarizes the changes in net cash used in operating activities, and net cash used by investing activities and net cash provided in financing activities.

The Trust’s liquidity decreased in the three months ended March 31, 2010. The principal source of the Trust’s liquidity was from financing activities and the primary use of cash was operating and investing activities.

Net cash used in operating activities during the period ended March 31, 2010 was $254,789. Net cash used from operating activities was primarily the result of the net loss for the quarter.

Net cash of $1,776 was used by investing activities. Capital improvements on real estate owned used $12,015, and Principal collected on mortgage notes receivable provided $10,239.

Net cash provided in financing activities was $48,557. Payments of senior mortgage loans payable of $50,000 and treasury stock purchases of $1,443 were the uses of cash from financing activities.

PART I – ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is not required to provide the information required by this item as it is a smaller reporting company.

PART I – ITEM 4

CONTROLS AND PROCEDURES

(A) Evaluation of Disclosure Controls and Procedures. Based on management's evaluation (with the participation of our CEO and Principal Accounting Officer), as of the end of the period covered by this report, our CEO and Principal Accounting Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(B) Changes in Internal Control over Financial Reporting. There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

~~During~~Legal ~~January~~Proceedings ~~2010,~~are adescribed ~~former~~in ~~mortgage~~Note ~~holder~~13 ~~filed an appeal of a previously dismissed case. The former mortgage holder continues~~ to ~~allege that~~ the ~~Company~~Condensed ~~made~~Consolidated aFinancial ~~fraudulent~~Statements ~~loan~~which tois ~~him~~included ~~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~~Form ~~property~~10-Q ~~used~~under ~~as collateral for~~ the ~~loan.~~caption ~~The~~“Legal ~~Company~~Proceedings ~~believes the former mortgage holder’s action is without merit~~ and ~~is seeking a dismissal of all complaints and reimbursement for reasonable costs and fees~~Contingencies”.

During May 2010 the Company was named as a defendant in a complaint alleging fraudulent transfer of mortgage loans and aiding and abetting fraud. The Company believes that the plaintiff’s actions are without merit and will seek dismal of all complaints and reimbursement for reasonable legal costs and fees.

During June 2010 the Company was named as a defendant in a complaint alleging damages for multiple violations associated with ELC foreclosure on a parcel adjacent to and encapsulating the plaintiff’s interest in a Deed of Trust. The Company believes that the plaintiff’s actions are without merit and will seek dismal of all complaints and reimbursement for reasonable legal costs and fees.

During the third quarter of 2010, a former officer of the Company alleged wrongful termination. The Board of Directors has reviewed the veracity of these allegations and determined them to be unfounded.

ITEM 1A RISK FACTORS

The Company is not required to provide the information required by this item as it is a smaller reporting company.

ITEM 1B UNRESOLVED STAFF COMMENTS

~~During the second quarter of 2010 the Company received a Securities and Exchange Commission (“SEC”) comment letter after a review of its Form 10-K for the year end December 31, 2009~~None. The Company provided an initial response. The SEC had additional comments on Form 10-Q for the three months ended March 31, 2010 and the Company responded. The Company is awaiting the SEC’s response.

ITEM 2 CHANGES IN SECURITIES

NoOn ~~common~~February ~~shares~~12, ~~were~~2011, ~~purchased~~the ~~for~~Common ~~treasury~~and ~~stock~~Preferred ~~during~~stockholders approved the ~~three~~conversion ~~month~~of ~~period~~the ~~ended~~Series ~~September~~A ~~30,~~Preferred ~~2010~~Stock into Common Stock. NoThe ~~preferred~~conversion ~~shares~~was ~~were~~subsequently ~~purchased~~approved ~~for~~by ~~treasury~~the ~~stock~~company’s ~~during~~Board of Directors, filed with the ~~three~~Delaware ~~month~~Secretary ~~period~~of ~~ended~~State ~~September~~and 30the NYSE Amex approved the listing of 246,126 ~~2010~~additional common shares.

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ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

~~None~~On February 12, 2011, both the Common and Preferred shareholders approved a shareholder proposal to convert each Series A Preferred Shares into 1.25 Common Shares. The results of the shareholder vote follows:

	For		Against		Abstain
Common		177,138		200		792
Preferred		136,592		17,854		625

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:

· ~~July~~February 1, ~~2010~~2011 due to the press release announcing ~~results~~that of the ~~annual~~ shareholder ~~meeting~~voting ~~held~~period onwas ~~June 30, 2010~~extended.

· ~~August~~February 214, ~~2010~~2011 due to the ~~Company~~press ~~receiving~~release aof ~~letter~~February ~~from~~11, ~~the~~2011 ~~NYSE~~announcing ~~Amex~~the ~~Accepting~~shareholders ~~Eastern~~approval ~~Light's~~of ~~Plan~~the toPreferred ~~Meet~~Stock ~~Continued Listing Standards on July 30, 2010~~conversion.

· ~~August~~February 2517, ~~2010~~2011 ~~due~~announcing tothat ~~the~~Eastern ~~press~~Light ~~release~~Capital ofhas ~~August~~received ~~24,~~an ~~2010~~extension ~~announcing~~to ~~financial~~fulfill ~~results~~a ~~for~~NYSE ~~the~~Amex ~~second~~compliance ~~quarter~~listing ~~of 2010~~requirement.

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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

Date: November 29, 2010	/s/ Richard J. Wrensen
Date: May 23, 2011	/s/ Richard J. Wrensen
	Richard J. Wrensen
	President, Chief Executive Officer and Chief Financial Officer



	/s/ Andrea Barney
	Andrea Barney
	Principal Accounting Officer and Controller

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Filing Compare · EASTERN LIGHT CAPITAL, INC.