You've definitely had experience with the tools and runtime.  You may have implemented/prototyped a bunch of code.  Your have a pretty good idea about your data model.    You have a webserver/app server/datastore "sort of" running in a development environment and on your "live" site.  But you may decide throw away everything you've prototyped/implemented at this point.  However, the architecture, design, tools, runtime, and process should start to settle down.  However, all team members may not yet be able to bring up a development environment and the process kinks may not yet be worked out.

For this milestone, you'll provide a one page write up of what you have working, what is going well, and issues that you are having.