|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|UNITED
      STATES
|-------------------

SECURITIES AND
EXCHANGE COMMISSION

Washington,
D.C. 20549 _____________



|FORM
      10-K
|---------------

ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)

OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR
ENDEDMARCH 31,
2007 COMMISSION FILE NO.
1-16349

INVESTORS CAPITAL HOLDINGS, LTD.

(Exact name of registrant in its charter)





|MASSACHUSETTS                                                                                                                                         
       04-3284631
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(State or other jurisdiction
of                                                                                                                             (I.R.S.Employer

incorporation or
organization)                                                                                                                        Identification
No.)



|
|



|
|

230 Broadway
East

Lynnfield, Massachusetts 01940

(781) 593-8565

(Address, including zip code, and telephone number, including area
code,

of Registrant's principal executive offices)



SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:



|Title of Each
      Class                                                                                          
      Name of Each Exchange on Which RegisteredCommon Stock,
      $0.01 par
      value                                          
                              
                  
               The American Stock
      Exchange
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|
|

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:



|None
      (Title of class)
|---------------------------

Indicate by check
mark whether the registrant (1) has 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 { }

Indicate by check
mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. {
}

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Indicate by check
mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act). Yes{ } No {X}

The aggregate market
value of the shares of the registrant's common equity held by non-affiliates,
computed by reference to the price at which the common equity was last sold, as
of the last business day of the registrant's most recently completed second
fiscal quarter, was $9,285,870.

As of June 22, 2007,
there were outstanding 6,220,967 shares of the $0.01 par value per share Common
Stock of the registrant.



|Documents
      Incorporated by Reference
|-----------------------------------------

Certain portions of
the registrant's definitive proxy statement for the Annual Meeting of
Stockholders to be held on August 23, 2007 are incorporated by reference in
Items 10 through 14 of Part III of this Annual Report on Form 10-K.



|www.investorscapital.com
|------------------------



|Investor
      Relations Contact: Robert Foney
|----------------------------------------------

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|THE
      COMPANY
|-----------------

Investors Capital
Holdings, Ltd. and its wholly-owned subsidiaries are often referred to in this
report, both individually and collectively, as the "Company" or with terms such
as "we", "us", "our" and the like. When being referred to individually without
reference to the other components of the Company, Investors Capital Holdings,
Ltd. and its wholly-owned subsidiaries, Investors Capital Corporation, Eastern
Point Advisors, Inc., ICC Insurance Agency, Inc., and Investors Capital Holdings
Securities Corporation, are often referred to in this report as "ICH", "ICC",
"EPA", ICC Insurance and ICH Securities, respectively.



|FORWARD-LOOKING STATEMENTS
|--------------------------

The statements,
analyses, and other information contained herein relating to trends in our
operations and financial results, the markets for our products, the future
development of our business, and the contingencies and uncertainties to which we
may be subject, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," "will,"
"should," "may," and other similar expressions, are "forward-looking statements"
under the Private Securities Litigation Reform Act of 1995. Such statements are
made based upon management's current expectations and beliefs concerning future
events and their effects on the Company. Our actual results may differ
materially from the results anticipated in these forward-looking
statements.

These
forward-looking statements are subject to risks and uncertainties including, but
not limited to, the risks discussed in Part I, Item 1A - Risk Factors.

Readers are also
directed to other descriptions and discussions of risks and uncertainties that
may be found in this report and other documents filed by the Company with the
United States Securities and Exchange Commission (the SEC). We specifically
disclaim any obligation to update or revise any forward-looking information,
whether as a result of new information, future developments, or
otherwise.

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|PART
    I
|----------



|ITEM 1.
      BUSINESSOVERVIEW
|------------------------------

Incorporated in
1995, ICH is a financial services holding company that operates primarily
through its subsidiary, ICC, in two segments of the financial services
industry:

- Broker-dealer servicesin support of
  trading and investment in securities such as corporate stocks and bonds, U.S.
  Government securities, municipal bonds, mutual funds, variable annuities and
  variable life
  insurance, including provision of market information, internet trading and
  portfolio tracking facilities and
  records management, and
- Investment advisory services, including asset
  management of individual client accounts and, until the third quarter of
  our fiscal year ended March 31, 2006, management of two retail mutual
  funds.

Financial
information pertaining to the Company for the fiscal years ended March 31, 2007,
2006 and 2005 is included in Part II of this document including, without
limitation, selected financial data in Item 6 and financial statements and
supplementary data in Item 8 thereof. See Part II, Item 8, Footnote 13 Segment
Information for information concerning each of the segments of the Companys
business with respect to the fiscal years ended March 31, 2007, 2006 and 2005,
including revenues from external customers, a measure of profit or loss, and
total assets.



|BROKER-DEALER SERVICESInvestors
      Capital Corporation
|---------------------------------------------------------

Investors Capital
Corporation ("ICC") is a securities broker-dealer that is registered with the
National Association of Securities Dealers ("NASD"), the Securities and Exchange
Commission ("SEC"), the Municipal Securities Rule Making Board ("MSRB") and the
Securities Investor Protection Corporation ("SIPC"). Headquartered in Lynnfield,
Massachusetts, the wholly-owned subsidiary of ICH also is duly registered and
doing business as a broker-dealer in all 50 states, the Commonwealth of Puerto
Rico and the District of Columbia. ICC makes available multiple investment
products and provides support, technology and back-office services to a network
of approximately 675 independent registered representatives ("representatives").
Commissions derived from the provision of services and products to ICC's
registered representatives represented approximately 97.4% of the Company's
total revenues for the fiscal year ended March 31, 2007.



| | Broker-Dealer Representatives
| | -----------------------------

Our representatives
sell investment products that are securities under federal and state law.
Accordingly, they are required to qualify and register as representatives with
our broker-dealer subsidiary under federal and state law. Depending upon their
activities, they also may be required to qualify and register as investment
adviser representatives. Our in-house training programs for representatives
emphasize the long-range aspects of financial planning and investment products.
We believe that the continuing education and support we provide to our
registered representatives enables them to better inform and serve their
clients.

Continuing to add
productive registered representatives is an integral part of our growth
strategy. We seek to recruit primarily experienced registered representatives
who focus on assisting their clients in attaining their long-range financial
goals. Once recruited, we focus on enhancing our representatives' professional
knowledge, skills and value to their clients. During the fiscal year ended March
31, 2007, our average revenue per registered representative increased more than
27.87% to $115,530 compared to the

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

previous fiscal year, more than offsetting a 8.04% decrease in the number
of representatives in our national network.

In addition to a
variety of valuable products and services, we offer prospective representatives
an attractive commission payout and, if desired, the independence of owning and
operating their own offices. Approximately 20 of our independent representatives
work in Company-provided regional investment centers (see -- Investment Center
Model, below). The remainder of our representatives generally pay substantially
all of the costs associated with their offices and operations, while we
concentrate on providing technical, regulatory, supervisory, compliance and
other support services to our independent investment professionals. This allows
expansion of our operations with relatively minimal capital outlay.



| | Compensation to Representatives
| | -------------------------------

Commission payouts
to our registered representatives are negotiated and currently average 83.26% of
the gross dealer concession generated from the sale of securities. Pursuant to
the terms of our agreements with our registered representatives, and as
permitted by current NASD rules, we provide our representatives, or their named
beneficiaries, with continuing commissions on pre-existing business in the event
of their retirement from the securities industry or death. Representatives grant
to us the right to offset against commissions certain losses we may sustain as a
result of their actions, omissions and errors. Our agreements with our
representatives are terminable by either party with 15 days prior written
notice, and do not contain either a confidentiality or non-compete provision.



| | Support
      to Representatives
| | --------------------------------

We provide a variety
of services and products to our representatives to enhance their professionalism
and productivity.

Technology Resources.Advanced
technology, including client and corporate websites, enable our representatives
and their clients to perform many tasks on-line, including:

- Opening
  of new accounts
- Monitoring of existing accounts
- Updating
  of client accounts
- Initiating and executing trading activities
- Viewing
  and downloading commission data
- Locating
  and exploring financial products
- Downloading client data
- Researching reports or inquiries on companies, securities and other
  pertinent financial topics

Approved
Investment Products.We allow our
representatives to offer a wide variety of approved investment products to their
clients that are sponsored by well-respected, financially sound companies. We
believe that this is critical to the success of our registered representatives
and the Company. We follow a selective process in determining approved products
to be offered to clients by our representatives, and we periodically review the
product list for continued maintenance or removal of approved status.

Marketing.We provide
advertising and public relations assistance to our representatives that enhance
their profile, public awareness, and professional stature in the public's eye,
including NASD-approved marketing materials, corporate and product brochures and
client letters.

Supervision/Compliance.We maintain strong
broker-dealer and investment adviser compliance programs. In addition to an
eighteen-member home office staff that includes two dedicated compliance
attorneys, we retain experienced field supervisors in NASD-recognized Offices of
Supervisory Jurisdiction across the country that are charged with compliance
responsibilities for defined groups of registered representatives including, in
particular, newly-affiliated representatives. By positioning these

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

compliance individuals in the field, we are able to more closely
supervise and monitor the activities of our representatives to enhance their
compliance with applicable laws, rules and regulations. Our compliance efforts
are further enhanced by in-house computer systems and programs, including
routine internal audits to ensure our compliance with anti-money laundering
standards and other regulations under the USA Patriot Act.

Our representatives
seek and value assistance in the area of compliance. Keeping in step with the
latest industry regulations, our compliance department provides to our
representatives, among other things:

- Advertising and sales literature review
- Field
  inspections, followed up with written findings and recommendations
- Weekly
  faxes and monthly conference calls on selected compliance topics
- Assistance with customer complaints and regulatory inquiries
- Workshops, seminars and in-house publications on various compliance
  matters
- Regional
  and national meetings
- Interpretation of rules and regulations and general compliance
  training

Clearing. We utilize the
services of a clearing firm to clear our transactions on a fee-for-service
basis. Our clearing firm processes most of the non-check and application
securities transactions for our account and the accounts of our clients.
Services of our clearing firm include billing and credit extension as well as
control, receipt, custody and delivery of customer securities and funds. We pay
a transaction charge for these services, relying on the operational capacity and
the ability of our clearing firm for the orderly processing of security
transactions. Engaging the processing services of a clearing firm exempts us
from the application of certain capital reserve requirements and other complex
regulatory requirements imposed by federal and state securities laws.



| | Broker-Dealer Revenue
| | ---------------------

Commission revenue
generated by ICC during the last three fiscal years was derived from the
following activities:

|                                                              |  | Fiscal Year
      Ended March 31,
|------------------------------------------------------------- |  | ---------------------------------
|Source of
      Commission Revenue                            |  | 2007                             
|                                                             
|Sale of mutual
      funds and unit investment trusts1:       |  | 20%                              
|Sale of
      variable annuities and variable life insurance: |  | 39%                              
|Sale of
      individual stocks and bonds:                    |  | 24%                              
|Sale of direct
      participation programs:                  |  | 16%                              
|Other
      activities:                                       |  | 1%                               
|                                                              |  |                                  
|Total                                                         |  | 100%                             

Direct participation
programs predominantly involve equity investments in limited partnerships and
real estate investment trusts ("REITS"). The increase in sales of this product
type was directly correlated to the performance of the oil and gas programs and
the real estate market since REITS and oil & gas programs make up 91.5% of
this revenue category. As with other broker dealer products, sales commissions
on REITS and oil and gas programs are comprised of a gross dealer concession on
the invested amount.

Commission revenue from our mutual funds and variable annuity products
continues to make up most of the revenue source; however, this relationship may
not continue as our revenue mix becomes more diversified.

We believe there may
be a trend in the future for commissions from stocks and bonds, as a percentage
of total commissions, to increase due to our continued efforts to recruit
representatives who are duly licensed to execute securities trades for their
clients.

1Sale of mutual funds includes both sales of mutual funds through direct
check and application and sales from our trading platform.

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|INVESTMENT ADVISORY SERVICES
|----------------------------

Historically since
its inception in 1995, Eastern Point Advisors, Inc. ("EPA") served as our
dedicated investment adviser subsidiary, providing investment advisory services
to the investing public through its advisory service programs. These programs,
which featured EPA-managed portfolios of load and no-load mutual funds, variable
and /or individual securities, were provided to the public through as many as
100 investment adviser representatives. Extensive legal, data processing and
other support services were provided by ICC to EPA in support of these
activities in order to minimize duplication within EPA of needed administrative
capabilities that were already possessed by ICC.

The involvement of
two separate entities in servicing a single business line resulted in management
overlap and other inefficiencies that, in addition to increasing costs,
complicated compliance with internal oversight and regulatory filing
requirements. Further, these arrangements hindered the full implementation of
ICCs emerging state-of-the-art trading and asset management technology platform
to provide superior asset management services to representatives and their
customers, such as portfolio performance reporting and account
rebalancing.

To address these
structural problems, management determined to transition the bulk of EPAs
advisory services to ICC, which commenced operations as a registered investment
adviser in November 2003 doing business as Investment Capital Advisory Services
(ICA). The transfer of EPA-managed assets to ICA management was commenced in
fiscal year ended 2004 and completed in fiscal year ended 2006.

Additionally, ICA
has been encouraging movement away from centralized delivery of advisory
services to a more personalized delivery system that emphasizes close,
technology-enabled interaction between independent representative and customer
that can lead to more agile decision making and enhanced customer satisfaction
and program participation. In support of this new business model, ICA has
focused on recruiting additional registered investment adviser representatives
and increasing the qualifications, technical competence and motivation of
existing representatives. As of March 31, 2007, ICA had 365 registered
investment advisors, for a 4.58% increase over the year earlier
complement.

The success of these
initiatives is reflected in the fact that the market value of assets under
management by the Company as of March 31, 2007 rose to $515 million,
representing a 627.9% increase over the market value three years earlier. The
maximum annual fee charged for by ICA for these services is 2.9% of market
value, which is paid by the customer in quarterly installments. Revenue from ICA
and EPA asset management services totaled $6.77 million for the fiscal year
ended March 31, 2007, or approximately 8.45% of total Company revenues for that
period.

Currently, EPAs
business operations are limited to third party service agreements assisting in
the conversion of investor representatives to the current ICA business model.
EPA no longer has any licensed representatives other than its
principals.



| | Retail
      Mutual Funds
| | -------------------------

The Company ceased
its mutual fund management services, which had been provided by EPA, during the
third quarter of our fiscal year ended March 31, 2006. Management believed the
risk/reward equation was beginning to shift away from the reward side as a
result of increased costs to maintain our two funds, the Eastern Point Advisors
Capital Appreciation Fund (previously named the Twenty Fund) and the Eastern
Point Advisors Rising Dividend Growth Fund. Primarily, these increased costs
were related to legal costs to meet new reporting and compliance requirements.
In addition, management believed that providing mutual fund management services
was straying from our core business of recruiting and providing quality customer
service and technology to our independent financial representatives.

On October 24, 2005
Eastern Point Advisors, Inc. ("EPA"), a wholly-owned subsidiary of ICH, entered
into a definitive agreement with Dividend Growth Advisors, LLC ("DGA") pursuant
to which EPA

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

agreed to terminate its Investment Advisory Agreement with Eastern Point
Advisors Funds Trust (the "Trust") effective October 18, 2005 to permit the
appointment by the Trust of DGA to supersede EPA as the Trust's investment
adviser. EPA had served since 1999 as investment adviser for the Funds, which
are sponsored by the Trust, and DGA had provided investment advisory services to
the Trust since 2004 pursuant to a subcontract with EPA. DGA entered into a new
advisory agreement directly with the Trust.



| | Investment Advisor
Representatives
| | ----------------------------------

Each of our
investment adviser representatives must satisfy the state licensing requirements
in the states in which they operate prior to their clients utilizing our
investment advisory services. As of March 31, 2007 approximately 365 independent
investment adviser representatives registered with the various state securities
departments were affiliated with ICA.



| | Asset
      Allocation Strategy
| | -------------------------------

Registered
investment advisers (RIAs) often provide advisory services through our
representative-directed program where the asset allocation is performed directly
by the independent representative. 2,958 investors participated in this program
as of March 31, 2007, while 1,028 investors participated in our other advisory
services programs where asset allocation is performed by ICA as the
adviser.

Our asset allocation
strategy is based on the principle that, by investing in a combination of asset
classes, risk may be reduced while seeking enhanced returns. Combining asset
classes that typically do not fluctuate in tandem may lower the volatility of
the customer's investment portfolio while providing the potential for increased
long-term returns. The Company utilizes the following steps in implementing our
asset allocation strategy for each individual customer:

- We
  determine the customer's risk tolerance, investment goals, age, time horizon,
  investment experience and financial and personal circumstances using detailed
  questionnaires that are completed during
  personal interviews. Based upon these data, we recommend an overall
  investment
  allocation consisting of a suggested percentage of stocks, bonds, cash and/or
  other investment products.
- Should
  the customer agree with the recommended overall investment allocation, we then
  select what we believe to be appropriate investment vehicles for the
  particular customer from a universe of mutual
  funds, variable annuities and individual securities and other
  investment products.
- Following implementation of the recommended portfolio, we monitor
  portfolio performance, communicate the
  model's performance to the client quarterly, and make portfolio changes
  based upon performance, the customer's financial situation, goals and risk
  tolerance and other relevant factors.



| | Fee-Based
      Compensation Structure
| | --------------------------------------

In conformity with
the requirements of the Investment Advisers Act of 1940, compensation for our
investment advisory services consists of an annual fee calculated as a
percentage of total assets under management rather than a transaction-based
commission or performance fee.



|INVESTMENT CENTERS
|------------------

The Company operates
retail investment centers in Topsfield and Braintree, Massachusetts; Bedford,
New Hampshire; Manhattan, New York and Miami, Florida. Unlike the arrangement
the Company has with its typical independent contractor representative, the
Company funds the overhead operational cost of the investment centers and staffs
the locations with registered representatives. The investment center
representatives are typically on a lower payout schedule intended to offset the
overhead costs incurred by

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|INVESTORS CAPITAL HOLDINGS LTD -
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|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

the Company. The Companys continued investment in this business model is
contingent on achieving sustained growth and acceptable profit
margins.



|INSURANCE
      OPERATIONS
|--------------------------

In certain states a
licensed insurance entity is required in order for ICC representatives to sell
life insurance and annuity products to their clients. Accordingly, the Company
operates ICC Insurance Agency, Inc., a wholly-owned subsidiary of ICH that is
duly licensed for such purposes in all states in which such licensing is
required. All revenue realized by this entity flows through as revenue to the
ICC segment.



|ICH
      SECURITIES
|--------------------

In March 2005
Investors Capital Holdings Securities, Inc., ("ICH Securities") was formed as a
wholly-owned subsidiary of ICH to hold cash for tax benefit purposes at the
state level.



|OUR
      STRATEGY
|------------------

Key elements to achieve our corporate objectives include:

- Increase brand awareness; expand business presence.We plan to increase our brand recognition to
  attract new clients and representatives. We are executing a
  comprehensive marketing plan to attract more clients and experienced representatives,
  build market awareness, educate the
  investing public and maintain customer loyalty through direct marketing,
  advertising through our marketing department, use of our web site, various public
  relations programs, web and live seminars,
  print advertising, radio, and television.
- Provide
  value-added services to our clients.We provide our
  clients with access to a pool of well- trained
  representatives, access to up-to-date market and other financial information,
  and direct access
  to our trade desk that is online with various stock exchanges and
  institutional buyers and sellers. We will
  also continue to provide trading before and after traditional market hours to
  our clients.
- Create
  technologically innovative solutions to satisfy client needs.We continue to pursue additional
  technologies to service the rapidly evolving financial services industry. We
  are enhancing our web site to augment our clients ability to trade equity
  securities efficiently via the Internet, to
  monitor on-line the history and current status of their accounts at any time,
  and to access financial and other pertinent information. Also, we have
  developed personalized Internet web sites for our
  representatives to provide their clients, through the use of passwords
  and firewalls, a secure and private interface directly to our proprietary
  web site. This allows these clients to perform
  market research, buy and sell securities on-line, monitor their accounts
  and utilize financial calculators.
- Provide
  technological solutions to our representatives. We believe that
  it is imperative that we continue to
  possess state-of-the-art technology so that our employees and independent
  registered representatives can effectively facilitate, measure and record business
  activity in a timely, accurate and
  efficient manner. By continuing our commitment to provide a highly
  capable technology platform to process business, we believe that the Company
  can achieve economies of scale
  and potentially reduce the need to hire additional personnel.
- Expand
  our product and service offering through strategic relationships.We continue to pursue business alliances
  to increase trading volume, capitalize on cross-selling opportunities,
  create additional markets for our asset management programs and mutual fund
  sales, take advantage of emerging market
  trends, create operational efficiencies and further enhance our name
  recognition.

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|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

However, we have no present agreements, plans, arrangements or
understandings regarding any acquisitions and have not identified any specific
criteria that such acquisitions must meet.



|COMPETITION
|-----------

Our competitors vary
in size, scope and breadth of services offered. We encounter direct competition
from numerous established full-commission and discount brokerage firms that have
electronic brokerage services and full research capabilities. We also encounter
competition from insurance companies with securities brokerage subsidiaries,
financial institutions, mutual fund sponsors and others, including in particular
those who utilize financial planning representatives who bear their own office
expenses.

Many competitors
have greater financial, technical, marketing and other resources, offer a wider
range of services and financial products, and have greater name recognition and
more extensive client bases.

We believe that our
ability to compete in the broker-dealer and investment advisory segments of our
business depends upon many factors both within and outside our control,
including:

- Our
  ability to attract and retain a network of experienced investment
  professionals
- The
  effectiveness, ease of use, performance and features of our technology and
  services and overall client satisfaction
- The
  price and quality of our services
- The
  volatility and performance of financial markets and the world economy
- Our
  ability to service our clients effectively and efficiently
- Our
  reputation in the financial services industry
- Our
  ability to foster compliance with applicable laws and regulations by employees
  and independent representatives



|OUR
      PROCESSCheck and
      Application
|--------------------------------------------

The majority of
transactions are conducted through a check and application process where a
client check and an investment companys product application is delivered to us
for processing. Our review includes principal review and submission to the
investment company or clearing firm.



| | Online
      Trading
| | --------------------

Through the use of
our remote electronic-entry trading platform, registered representatives can
efficiently submit a wide range of equity trades online. The trades are reviewed
by our principal and our clearing firm before processing.



| | Bond
      Trading
| | ------------------

The Companys
fixed-income trading desk uses a network of regional and primary dealers to
execute trades across a broad array of fixed-income asset classes. The desk also
utilizes several dealer-only electronic services that allow the desk to offer
inventory and to efficiently execute trades.



| | Asset
      Allocation
| | ----------------------

Asset Allocation
services are available through ICA, the Companys federally-registered
investment adviser subsidiary. The allocation services, for the most part, are
executed through our online trading platform. Other allocation services are
performed with the fund company directly.



|HOW WE
      ARE REGULATED
|--------------------------

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



| | Broker-Dealer Regulation
| | ------------------------

The securities
industry is subject to extensive regulation under both federal and state law.
The SEC is the federal agency responsible for administering the federal
securities laws that apply to broker-dealers. ICC is a broker-dealer registered
with the SEC. In addition to complying with the voluminous and complex rules set
out in the Securities Exchange Act of 1934 and the rules promulgated thereunder,
every registered broker-dealer that conducts business with the public is
required to be a member of and subject to the rules of NASD or NYSE.

NASD has established
conduct rules for securities transactions among broker-dealers and private
investors, trading rules for the over-the-counter markets and operational rules
for its member firms. NASD conducts examinations of member firms, investigates
possible violations of the federal securities laws and its own rules and
conducts disciplinary proceedings involving member firms and associated
individuals. NASD administers qualification testing for all securities
principals and registered representatives for its own account and on behalf of
the state securities authorities. We are also subject to regulation under state
law. We are currently registered as a broker-dealer in all 50 states, Puerto
Rico and the District of Columbia.

The SEC and other
regulatory bodies in the United States have rules with respect to net capital
requirements that affect our broker-dealer subsidiary. These rules are designed
to ensure that broker-dealers maintain adequate capital in relation to their
liabilities, types of securities business conducted and the size of their
customer business. These rules have the effect of requiring that a substantial
portion of a broker-dealer's assets be kept in cash or highly liquid
investments. Failure to maintain the required net capital may subject a firm to
suspension or revocation of its registration with the SEC and suspension and
expulsion by the NASD and other regulatory bodies, and ultimately may require
its liquidation. The rules could restrict underwriting, trading activities, our
ability to withdraw capital, pay dividends, pay interest on and repay the
principal of any debt, among other matters.



| | Registered Investment Adviser
Regulation
| | ----------------------------------------

The Investment
Advisers Act of 1940 (the "Advisers Act"), and the rules promulgated thereunder,
regulate the registration and compensation of investment advisers. Investment
advisers are deemed to be fiduciaries for their clients and, as such, are held
to a high standard of conduct. Investment advisers are subject to a similar
level of oversight by the SEC and the various states as are broker-dealers.
Investment advisers are required to register with the SEC and/or appropriate
state regulatory agencies, are required to periodically file reports, and are
subject to periodic or special examinations. Rules promulgated under the
Advisers Act govern many aspects of the investment advisory business, such as
advertisements by investment advisers and the custody or possession of funds or
securities of a client. Most states require registration by investment advisers
unless an exemption is available and impose annual registration fees. Some
states also impose minimum capital requirements. There can be no assurance that
compliance with existing and future requirements and legislation will not be
costly and time consuming or otherwise adversely impact our business in this
area.



| | Regulations Applicable to the Use of the
  Internet
| | ---------------------------------------------------

Due to the
established popularity and use of the Internet and other online services,
various regulatory authorities are considering laws and/or regulations with
respect to the internet or other online services covering issues such as user
privacy, pricing, content copyrights and quality of services. In addition, the
growth and development of the market for online commerce may prompt more
stringent consumer protection laws that may impose additional burdens on those
companies conducting business online.

The recent increase
in the number of complaints by online traders could lead to more stringent
regulations of online trading firms and their practices by the SEC, NASD and
other regulatory agencies. The applicability to the Internet and other online
services of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes and personal privacy is also
uncertain

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

and may take years to resolve. Finally, as our services are available
over the Internet in multiple states, and as we have numerous clients residing
in these states, these jurisdictions may claim that we are required to qualify
to conduct business as a foreign corporation in each such state. While ICC
currently is registered as a broker-dealer in all 50 states, Puerto Rico and the
District of Columbia, we are qualified to conduct business as a foreign
corporation in only a few states. Failure by our company to qualify as a
broker-dealer in other jurisdictions or as an out-of-state or "foreign"
corporation in a jurisdiction where it is required to do so could subject us to
taxes and penalties for the failure to qualify. Our business could be harmed by
any new legislation or regulation, the application of laws and regulations from
jurisdictions whose laws do not currently apply to our business or the
applications of existing laws and regulations to the Internet and other online
services.



|EMPLOYEES
|---------

As of March 31,
2007, we had 113 full-time employees, the majority of whom are located at our
principal office in Lynnfield, Massachusetts. No employee is covered by a
collective bargaining agreement or is represented by a labor union. We consider
our employee relations to be excellent. We also enter into independent
contractor arrangements on an as-needed basis to assist with various aspects of
our business including programming and developing proprietary technologies.



|AVAILABLE
      INFORMATION
|---------------------------

The Company is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the Commission). Such reports, proxy statements and other
information filed with the Commission by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at 100 F Street,
N.E., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission located athttp://www.sec.gov.

Our website address
is http://www.investorscapital.com. We make available free of charge on or
through our website, our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. The information found on our website
is not part of this or any other report we file with or furnish to the SEC. All
such documents are also available in print at no charge to any shareholder who
requests them in writing to Robert Foney, Manager Corporate Communications, 230
Broadway East, Lynnfield, MA 01940.



|ITEM 1A. RISK
      FACTORS
|---------------------------

An investment in ICH
common stock involves risk. Current and prospective investors should consider
carefully the following risk factors, in addition to the other information
contained in this and other reports and documents filed by us with the SEC,
including documents incorporated herein by reference, before making investment
decisions concerning ICH common stock. There may be additional risks of which we
are currently unaware, or which we currently consider immaterial. Any of these
risks could have a material adverse effect on our financial condition, our
results of operations and the value of our common stock.



|Market
      for our Stock
|--------------------------

The price
of our common stock may continue to be volatile.Our common
stock historically has been thinly traded due, in part, to the fact that only
about 1.8 million shares are held by non-affiliates of the Company. The market
price of our common stock has fluctuated substantially in the past including
during

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

the last twelve months. The price of our common stock may be subject to
fluctuations in the future in response to operating results, regulatory and
other legal proceedings, general market movements and other factors. In
addition, the stock market in recent years has experienced price and volume
fluctuations that often have been unrelated or disproportionate to the operating
performance of companies. These fluctuations, as well as other factors including
general economic and market conditions, may adversely affect the market price of
our common stock.



|Financial
      Markets
|-----------------------

Aspects
of our business are volatile and affected by factors beyond our control.Our business depends heavily on the conditions of the financial and
securities markets, which in turn are affected by domestic and foreign economic
conditions generally. These conditions, which can be impacted by a variety of
factors such as business trends, actual and proposed legislation, political
considerations, inflation, interest rates, and the popular perceptions of the
health of the economy, are outside of our control, and therefore inject
significant amounts of uncertainty and volatility into our business and
financial results.

Any
market decline could adversely affect our revenues and
earnings.Because our revenues and earnings are derived from investments made by
consumers, a substantial market decline or other event, such as the September
11, 2001 attacks, that negatively impacts the investment decisions made by
consumers can have a substantial adverse effect on our operations, business
results and stock price.

Assets
under management, which impact revenue, may be subject to significant
fluctuations.Our investment
advisory fees are calculated as percentages of assets under management. A
decline in securities prices or in the sale of investment products, whether due
to recession or other damaging economic or political event, would likely reduce
asset management fee income. Financial market declines or adverse changes in
interest rates would generally negatively impact the level of assets under
management by the Company and, consequently, our revenue and net
income.



|Performance & Competition
|-------------------------

We face
vigorous competition.The
financial industry segments in which the Company and its subsidiaries operate
are highly competitive, and many of our current and potential competitors have
considerably greater financial, technical, marketing and other resources than
are available to us and may offer a broader range of products or operate in more
markets. Some operate in a different regulatory environment which may give them
certain competitive advantages in the investment products and portfolio
structures that they offer. If we are required to lower our fees in order to
remain competitive, our net income could be significantly reduced because some
of our expenses are fixed, especially over shorter periods of time, and others
would not decrease as much as the resulting decrease in revenues.

We
compete in our investment advisory operations based upon investment performance.The Company competes with other providers of investment advisor services
primarily based on our investment performance. If we fail to deliver excellent
performance for our clients, both in the short and long term, we will likely
experience diminished investor interest and a diminished level of assets under
management. Further, some institutions have proprietary products and
distribution channels that make it more difficult for us to compete with them.
If current or potential customers decide to use one or more of our competitors,
we could face a significant decline in market share, assets under management,
revenues and net income.



|Regulation
|----------

As a
public company, we are subject to complex legal and accounting requirements that
require us to incur substantial expense and expose us to risk of
non-compliance.As a public
company, we are subject to numerous legal and accounting requirements imposed by
federal law, such as the Securities Exchange Act of 1934 and the Sarbanes-Oxley
Act of 2002, as well as oversight by such entities as the SEC, the American
Stock Exchange and the Public Company Accounting Oversight Board. The cost
of

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

compliance with many of these requirements is substantial, not only in
absolute terms, but in relation to the overall scope of the operations of our
business. Failure to comply with these requirements can have numerous adverse
consequences including, such as our inability to file required reports on a
timely basis, loss of market confidence, delisting of our securities and/or
governmental or private actions against us. We cannot assure you that we will be
able to comply with all of these requirements in the future or that the cost of
such compliance will not prove to be a substantial competitive disadvantage
vis-avis our competitors.

As a
provider of financial services, we are subject to substantial governmental
regulation.As a broker-dealer
and investment adviser, our business is subject to a variety of federal
securities laws, and rules and regulations promulgated thereunder, including the
Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Advisers Act of 1940 and the U.S. Patriot Act of 2001. In addition, we are
subject to significant regulation and oversight by, among others, the SEC, NASD
and state broker-dealer, investor advisory and insurance regulators. The
principal purpose of such regulation typically is protection of the public,
rather than protection of creditors and stockholders of financial services
companies, and efforts taken to comply with such regulation is a costly but
necessary burden on companies engaged in the financial services industry.
Changes in these legal, regulatory, accounting, tax and compliance requirements
could have a significant effect on our operations and results, including, but
not limited to, increased expenses and reduced investor interest in investment
products and services offered by us.

Any
failure to maintain adequate internal controls could result in regulatory
sanctions that could result in substantial fines and restrictions on our ability
to make money.In the past our
subsidiary broker-dealer, due to an accounting error, found itself inadvertently
out compliance with its required net capital reserve, requiring an unanticipated
capital infusion from ICH. While no regulatory action was taken against us in
this instance, any failure to maintain adequate accounting procedures and
internal controls could result in regulatory sanctions being applied against us
that could require us to pay substantial fines and severely restrict or even
terminate our ability to make money.

Any
failure by our independent investment professionals to comply with regulatory
requirements may cause us to incur losses or suffer substantial harm to our
business and operations.Our investment
professionals are required by law to be licensed with our subsidiaries as
registered broker-dealer representatives and/or investment adviser
representatives. Pursuant to these requirements, these investment professionals
are subject to our supervision in the area of compliance with applicable federal
and state securities laws, rules and regulations, as well as the rules and
regulations of self-regulatory organizations such as the NASD. The violation of
any regulatory requirements by us or our investment professionals could
jeopardize our broker-dealer or investment adviser license and could subject us
to fines, liability to customers, censure or even loss of license. As an
example, an administrative complaint brought by the Massachusetts Securities
Division, that alleged failure by ICC to adequately supervise sales of
equity-indexed annuities by certain of its independent representatives, recently
resulted in a settlement that included an obligation to pay at least $1 million
in fines and customer restitutions, censure and a comprehensive review of our
compliance and corporate governance systems and processes. Although we
constantly strive to strengthen our already robust compliance procedures, there
can be no assurance that there will not be further such administrative
proceedings with equal or greater material adverse effect on our financial
position and results of operations.



|Legal
      Proceedings
|-----------------------

The
financial services industry is subject to an increasing risk of legal
proceedings.Many aspects of our
business subject us to substantial risks of potential liability to customers and
enforcement proceedings by state and federal regulators. Participants in the
securities industry face an increasing amount of litigation and arbitration
proceedings. Dissatisfied clients regularly make claims against securities firms
for negligence, fraud, unauthorized trading and suitability, among other claims.
Acts of fraud by independent representatives and others are often difficult to
detect and deter, and we cannot assure investors that our risk management
procedures and controls will prevent losses from fraudulent activity.

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

There can be no assurance that the defense and resolution of such claims
will not have a material adverse impact on our financial condition and results
of operations.

Actual or
alleged fraud and misconduct by investment professionals and employees has
resulted in, and exposes us to an ongoing potential for, litigation and
regulatory sanctions that could substantially harm our business and results of
operations.Employees and investment professionals constantly expose us to the risk
of significant losses as a result of employee errors, professional misconduct
and fraud. Such misconduct could include binding us to transactions that exceed
authorized limits or present unacceptable risks, or hiding from us unauthorized,
unsuccessful or improper activities. It is not always possible to deter employee
or independent contractor misconduct, and the precautions we take to prevent and
detect this activity may not be effective in all cases.

We are
routinely involved in legal proceedings that can burden our resources and pose
an ongoing risk of adverse dispositions that could negatively impact our
earnings and profits.By the nature of our
business, we are continually involved with various judicial, regulatory and
arbitration proceedings concerning matters arising in connection with the
conduct of our business. At March 31, 2007, the Company was co-defendant with
independent representatives in several arbitration and/or other legal
proceedings with claims totaling approximately $3.2 million. Although we
currently have insurance that may limit our exposure in these cases, if we are
found liable in material amounts in these or other legal proceedings, such
eventuality may result in restricting the availability and/or increasing the
cost of insurance against such risks and may have a significant adverse effect
on our earnings and profits.

Consumer
fraud could harm our earnings and profits by requiring us to expend time and
money and exposing us to financial loss and the potential for arbitration or
other legal proceedings.We
are constantly exposed to the risk of significant losses as a result of customer
fraud. Activities such as authorizing trades and not accepting those trades if
anticipated stock movement is not achieved, paying for transactions with bad
funds, or improperly stating investment experience, net worth and income amount
and tolerance for risk, could result in the expenditure of Company resources as
well as exposure to potential losses through arbitration or other legal
proceedings.



|Operations & Infrastructure
|---------------------------

Our
operations and infrastructure, and those of service providers upon which we
rely, may malfunction or fail.Our business is
highly dependent on our ability to process, on a daily basis, a large number of
transactions, using both in-house and out-sourced systems such as those
maintained by our third-party clearing firm. The inability of these systems to
accommodate ever increasing volumes of transactions could constrain our ability
to expand our business. If any of these systems do not operate properly or are
disabled, or if there are other shortcomings or failures in our internal
processes, people or systems, we could suffer impairments, financial loss, a
disruption of our business, liability to clients, regulatory intervention or
reputational damage. We also face the risk of disruption in the infrastructure
that supports our business, such as power grids and communications networks.

Any
change in our clearing firm could result in our inability to process
transactions in a timely manner which could adversely affect our business
operations and profits.Our
current clearing agreement is with Pershing LLC, an affiliate of The Bank of New
York Company, Inc., which processes most non-check and application securities
transactions for our account and the accounts of our customers. We also rely on
our clearing firm for our Internet equity securities trading activities, which
is a growing portion of our business. Our agreement with Pershing may be
terminated by either party on ninety days written notice. A change in our
clearing firm could result in the inability of our customers to transact
business in a timely manner due to delays and errors in the transfer of their
accounts, which, on a temporary basis, could affect our earnings and
profits.



|Organization
|------------

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Managements ownership of our common stock assures their control of
corporation actions requiring a shareholder vote.Chairman Ted
Charles, individually, and the Company's executive officers as a whole,
beneficially own in the aggregate a majority of the Company's common stock.
Accordingly, they are able to determine the outcome of virtually all corporate
actions requiring approval by the stockholders of the Company, including,
without limitation, the election of directors and the approval of the sale of
the Company or its assets.

Any loss
of our senior management could adversely affect our business and financial
condition through the loss of significant business relationships that may not be
easily recreated.Our success is
largely dependent on the skills, experience and performance of Theodore E.
Charles, our chairman, chief executive officer and president whose long-term
relationships with our investment professionals and product sponsors has been
and continues to be a driving force behind our success, and Timothy B. Murphy,
our executive vice president, treasurer and chief financial officer as well as
the president of our broker-dealer subsidiary. The loss of Messrs. Charles
and/or Murphy or other senior management could have an adverse effect on our
business, financial condition and results of operations.

Any loss
of key personnel could adversely affect our business.Except for
our CEO and CFO, our key employees do not have employment contracts, and
generally can terminate their employment at any time. Similarly, our independent
representatives are not contractually prevented from terminating their
affiliation with us at will. There can be no assurance that we will be able to
retain or replace key in-house personnel or independent investment
professionals. The loss of key personnel or independent representatives could
damage our reputation and make it more difficult to retain and attract new
employees, representatives or clients. A net loss of high-producing independent
representatives could result in decreases in transactional fees as well as fees
based on assets under management. On the other hand, replacement of any of key
human resources may entail an increase in compensation costs that would decrease
our net income.

We will continue to endeavor to understand, evaluate and, when possible,
manage and control these and other business risks.

ITEM 1B. UNRESOLVED
STAFF COMMENTS



| | Not applicable.
| | ---------------

EXECUTIVE
OFFICERS OF THE REGISTRANT

The following sets
forth, as of June 29, 2007, certain information with respect to each of the
executive officers of ICH:

Theodore
E. Charles, age 64, principal
executive officer. A founder of Investors Capital Holdings, Mr. Charles has
served as the Companys chairman of the board, chief executive officer and
president since its inception in 1995. Mr. Charles also has served as the chief
executive officer of our subsidiaries, Investors Capital Corporation (ICC) and
Eastern Point Advisors, Inc (EPA) since their founding in 1994 and 1995,
respectively. Mr. Charles served on the Board of Directors of Revere Savings
Bank of Massachusetts from 1997 to 2001 and served on the Advisory Board of
Danvers Savings Bank from 2001 to 2003. Mr. Charles currently holds various
securities licenses, including series 6, 63, 7 and 24, has been a member of the
Financial Planning Association since 1985 and formerly served as Chairman of the
Shareholder Advisory Board of Life USA Insurance Company. Mr. Charles is
currently on the Board of Easter Seals of Massachusetts.

Timothy
B. Murphy, age 42, principal
financial officer and principal accounting officer. A founder of the Company,
Mr. Murphy has served as executive vice president, treasurer and chief financial
officer of the Company since its inception, and as president of its
subsidiaries, ICC and EPA, since their respective inceptions. He entered the
securities industry in 1991 as an operations manager in the Boston regional
office of Clayton Securities. By 1994, he was serving as compliance officer of
Baybanks Brokerage and

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

a vice president of G.R. Stuart & Company, another brokerage firm.
Mr. Murphy holds various securities licenses including series 4, 7, 24, 27, 53,
63 and 65.

Steven C.
Preskenis, age 37. Mr.
Preskenis has served as Chief Operating Officer of ICC, and has performed
similar policy-making functions for ICH, since February 2006. Mr. Preskenis, who
joined the Company in August 2000 as a compliance attorney, also has served as
General Counsel of ICC, and has performed similar functions for ICH, since March
2003, and has served as Secretary of ICH since September 2005. Prior to joining
ICC in August 2000, Mr. Preskenis served as an Alternative Dispute Resolution
attorney with John Hancock Life Insurance Company commencing in 1998. Mr.
Preskenis is a member of the Massachusetts Bar and a graduate of Suffolk
University Law School. Mr. Preskenis currently holds securities licenses,
including series 7 and 24.



|ITEM 2.
      PROPERTIES.
|-------------------------

Our principal
executive offices, comprised of several office condominiums, are located in a
9,068 square foot facility at 230 Broadway, Lynnfield, MA. The Company also
maintains an investment center in a 2,132 square foot facility at 218 Boston
Street, Topsfield, MA. Both of these properties are leased from entities owned
and controlled by the CEO and principal stockholder of ICH for a combined annual
rent of $271,271. The Company believes the annual rent amounts are consistent
with current market rates for comparable space in the same geographic areas.
These leases were renewed and modified on April 1, 2007 and will expire on March
31, 2012.

The Company leases
additional executive offices in a 3,346 square foot facility at Six Kimball
Lane, Lynnfield, MA for $70,266 per year, and 7 other offices totaling
approximately 9,300 square feet from unrelated parties for annual rents totaling
$258,536. These leases expire from 2007 to 2011.

These properties,
which are essentially fully used (other than the Miami office) by both the ICC
and ICA segments of our business, are deemed by management to be adequate for
current business purposes.



|ITEM 3. LEGAL
      PROCEEDINGS.MASSACHUSETTS PROCEEDINGS
|---------------------------------------------------------

By administrative
complaint dated November 16, 2005, the Securities Division (the "Division") of
the Secretary of the Commonwealth of Massachusetts (the "State") brought an
adjudicatory proceeding (the Massachusetts Proceedings) against ICC alleging
violation of ICCs supervisory obligations under State securities laws in
connection with certain past sales of equity-indexed annuities. The complaint
alleges, among other things, that ICC failed to properly supervise associated
persons, thereby allowing allegedly unsuitable sales of these insurance
products. The complaint, which seeks an order instructing ICC to cease such
violations and to pay an unspecified administrative fine, also requests that
ICC's registration as a securities broker-dealer in Massachusetts be suspended
or revoked, that the firm be censured, and that it be ordered to fairly
compensate purchasers of the insurance products for any losses attributable to
wrongdoing by ICC.

On December 19, 2006
ICH and ICC entered into an agreement with the Division settling the
Massachusetts Proceedings and a concurrent investigation into relationships
between ICH and its subsidiaries, on the one hand, and Investors Marketing
Services, Inc. (IMS) and IMS Insurance Agency, Inc. (IMS Insurance) on the
other. IMS is owned by Ted Charles, ICHs Chairman and CEO, and his spouse. IMS
is a wholesaler of fixed insurance products, and a provider of fulfillment
services, including graphic design work for ICCs marketing brochures and ICH
annual reports. IMS Insurance is an insurance agency owned by Mr. Charles
spouse.

IMS participates
without charge in ICC-hosted conferences where opportunities exist to provide
insurance-related training and education to ICC representatives as well as to
market and promote fixed insurance products and services. ICC also encourages
its representatives to place fixed insurance

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

business with IMS Insurance. Management believes that, in many instances,
IMS Insurance offers superior services and commission arrangements to ICC and
its insurance producers. When insurance is placed by ICC representatives through
ICHs subsidiary, ICC Insurance Agency, Inc. (ICC Insurance), IMS typically is
utilized by ICC Insurance to provide administrative and other
transaction-related services in return for an override.



| | In settling these proceedings, ICC
agreed:
| | ------------------------------------------

- to cease
  and desist from violations of State securities laws,
- to pay a
  $500,000 administrative fine,
- to offer
  to reimburse losses and costs incurred by Massachusetts persons aged 75 or
  older (the eligible purchasers) in connection with the surrender, no later than
  December 31, 2007, of any equity-indexed
  annuities purchased through ICC or its representatives during 2004 or 2005,
  and to offer an additional payment to ensure that no amount invested in a
  surrendered EIA yielded less
  than 3%;
- to pay
  an additional administrative fine equal to the extent, if any, that ICCs
  surrender-related payments
  total less than $500,000, and
- to be
  censured by the Division.

In addition, ICC and
ICH agreed to retain and act upon the advice of an independent consultant who
would review and make recommendations with respect to ICC and ICH policies and
procedures that are related to the various violations and failures alleged by
the Division in these matters. The consultants initial recommendations have
been received and are being reviewed by the Company. These recommendations
include, among other things, improvements in:

- the
  supervisory regime for independent representatives, particularly relating to
  our Offices of Supervisory
  Jurisdiction (OSJs)
- systems
  and procedures regarding the use, screening and archiving of emails
- recordkeeping
- risk
  management procedures
- the
  makeup, purview, operations and evaluation of the Board of Directors and its
  committees
- corporate governance guidelines and procedures

The cost of
implementing the consultants recommendations, as and when finally agreed upon
by the parties to the settlement, is not determinable to this time, but is not
expected to be material to the financial condition or results of operations of
the Company.

ICC and ICH will not
be permitted to utilize proceeds from insurance policies to cover payments that
will be made pursuant to the settlement.

Of the 63 eligible
purchasers, four accepted our reimbursement offers and were paid a total of
$24,824 through March 31, 2007, and three additional eligible purchasers
accepted offers and were paid a total of $14,896 thereafter up to the filing of
this Form 10-K. As of the filing of this Form 10-K, six further eligible
purchasers have verbally indicated that they will be accepting offers totaling
approximately $302,000 (of which approximately $140,000 is expected to be paid
out in July 2007), although written confirmation of same has yet to be received
by the Company.

No response has been received from the remaining eligible purchasers
other than by a relative of a decedent. Management has determined that the
likelihood of any further offers being accepted by eligible purchasers by the
December 31, 2007 cutoff date and, if so, the total cost thereof, is too remote
and/or indeterminate at this time to justify accruals for such costs additional
to the portion of $500,000 that has not yet been paid out. Accordingly, $0.48
million was accrued for such purposes as of March 31, 2007. We will continue to
assess our legal accrual resulting from the Massachusetts Settlement, and we
will record additional accruals as needed in the future if and to the extent, if
the likelihood of such costs, will exceed $500,000.

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Legal fees paid to
defend these matters have reduced ICH earnings by an average of more than
$120,000 per month from November 2005, when the administrative proceeding were
instituted, and March 31, 2007. No significant further legal fees are expected
to be incurred with respect to the proceedings or their settlement.

Although the censure
of ICC by the Division cannot be taken as a positive event, the Company at this
time is not able to predict the practical consequences thereof.



|OTHER
      LEGAL PROCEEDINGS
|-----------------------------

The Company operates
in a highly litigious and regulated business and, as such, is a defendant or
codefendant in various lawsuits and arbitrations additional to the Massachusetts
Proceedings that are incidental to our securities business. The Company is
vigorously contesting the allegations of the complaints in these cases and
believes that there are meritorious defenses in each. Counsel is unable to
respond concerning the likelihood of an outcome, whether favorable or
unfavorable, because of inherent uncertainty routine in these matters. For the
majority of pending claims, the Company's errors and omissions (E&O) policy
limits the maximum exposure in any one case to between $75,000 and $100,000 and,
in certain of these cases, the Company has the contractual right to seek
indemnity from related parties. Management, in consultation with counsel,
believes that resolution of pending litigation will not have a material adverse
effect on the consolidated financial results of the Company.

ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.

No matter was
submitted to a vote of security holders of ICH during the fourth quarter of the
fiscal year covered by this report.



|PART
      II
|-------------

ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.



|MARKET
      INFORMATION
|------------------------

ICH's common stock
has been trading on The American Stock Exchange (AMEX) under the symbol "ICH"
since February 8, 2001. Prior to such date, there was no established public
trading market for the common stock. As of June 22, 2007, there were 6,220,967
shares outstanding and 176 registered holders thereof.

The following table
presents the high and low closing prices for the common stock of ICH on the AMEX
for the periods indicated.

|                                                |  | High  |  | Low  
|----------------------------------------------- |  | ----- |  | -----
|Fiscal
      2007                               |  |       |  |      
|January 1,
      2007 through March 31, 2007    |  | $6.45 |  | $5.08
|October 1,
      2006 through December 31, 2006 |  | $6.05 |  | $4.55
|July 1, 2006
      through September 30, 2006   |  | $6.45 |  | $3.51
|April 1, 2006
      through June 30, 2006       |  | $4.17 |  | $3.13
|                                               
|Fiscal
      2006                               |  |       |  |      
|January 1,
      2006 through March 31, 2006    |  | $3.24 |  | $2.20
|October 1,
      2005 through December 31, 2005 |  | $4.01 |  | $3.00
|July 1, 2005
      through September 30, 2005   |  | $4.53 |  | $3.71
|April 1, 2005
      through June 30, 2005       |  | $4.99 |  | $4.03

Page 19

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|CASH
      DIVIDENDS
|--------------------

Investors Capital
Holdings, Ltd. paid dividends on its common stock of $.02 and $0.04/share on May
16, 2005 and June 15, 2006, respectively, to shareholders of record on May 2,
2005 and May 12, 2006, respectively.

Future dividend
decisions will be based on, and affected by, a number of factors, including the
operating results and financial requirements of the Company and the impact of
regulatory restrictions. For further information regarding restrictions on our
ability to transfer funds to our shareholders, see Part I, Item 1. Business 
How We Are Regulated and Part II, Item 7. Management's Discussion and
Analysis--Liquidity and Capital Resources in this Form 10-K.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION
PLANS

|                    |  |                           |  |                           |  | Number of
  securities        
|------------------- |  | ------------------------- |  | ------------------------- |  | ------------------------------
|                    |  | Number of securities      |  |                           |  | remaining available
    for   
|                    |  | to be issued              |  | Weighted-average          |  | future issuance
  under       
|                    |  | upon exercise of          |  | exercise price of         |  | equity compensation
    plans 
|                    |  | outstanding option,       |  | outstanding options,      |  | (excluding
  securities       
|Plan category       |  | warrants and
      rights |  | warrants and
      rights |  | reflected in column
      (a))
|                    |  | (a)                       |  | (b)                       |  | (c)                           
|                   
|Equity compensation |  |                           |  |                           |  |                               
|plans approved by   |  |                           |  |                           |  |                               
|security holders    |  | 121,989                   |  | 3.41                      |  | 596,365                       
|                   
|Equity compensation |  |                           |  |                           |  |                               
|plans not approved  |  |                           |  |                           |  |                               
|by security holders |  | 150,000                   |  | $1.00                     |  | none                          
|                   
|Total               |  | 271,989                   |  | $2.08                     |  | 596,365                       

See Footnote 16 
Benefit Plans to the Registrants Financial Statements, contained in Part II,
Item 8 of this Form 10-K, for a description of the material features of each
compensation plan under which equity securities of the Registrant are authorized
for issuance that was adopted without the approval of security
holders.



|PERFORMANCE GRAPH
|-----------------

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN

AMONG INVESTORS CAPITAL HOLDINGS, LTD., STANDARD & POORS 500 INDEX
AND DOW
JONES FINANCIAL SERVICES INDEX

The chart below
compares the five-year cumulative total return, assuming the reinvestment of
dividends, on Investor Capital Holdings, Ltd. common stock (ICH) with that of
the Standard & Poors 500 Index (SP 500) and the Dow Jones Financial Services
Index (IYG). This graph assumes $100 was invested on March 31, 2002, in each of
Investors Capital Holdings, Ltd. common stock and the indicated
indices.

Note: stock price
performance shown in the graph below should not be considered indicative of
potential future stock price performance.

Page 20

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



The following table
sets forth certain selected historical consolidated financial data. The selected
income statement data for each of the three years ended March 31, 2007, 2006 and
2005 and balance sheet data as of March 31, 2007 and 2006 have been derived from
our audited consolidated financial statements and related notes included
elsewhere in this Form 10-K and should be read in conjunction with those
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations, also included elsewhere in this Form 10-K.
The following selected income statement data for the years ended March 31, 2004
and 2003 and balance sheet data as of March 31, 2005, 2004 and 2003 are derived
from our audited consolidated financial statements not included herein. The
following selected consolidated financial data have been prepared in accordance
with accounting principals generally accepted in the United States of
America.

Page 21

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                                      |  |              |  | For the Years
      Ended March 31, |  |                 |  |            
|------------------------------------- |  | ------------ |  | ----------------------------------- |  | --------------- |  | -----------
|                                      |  | 2007         |  | 2006                                |  | 2005            |  | 2004       
|Income Statement Data:                |  |              |  |                                     |  |                 |  |            
|Total revenues                        |  | $80,053,028  |  | $68,002,428                         |  | $55,165,534     |  | $48,964,074
|Operating (loss) income               |  | ($1,714,356) |  | $870,966                            |  | $888,142        |  | $1,400,331 
|Net (loss) income                     |  | ($1,084,066) |  | $449,638                            |  | $619,109        |  | $790,413   
|Net Income (loss) per share, basic    |  | -$0.18       |  | $0.08                               |  | $0.11           |  | $0.14      
|Net income (loss) per share , diluted |  | -$0.18       |  | $0.08                               |  | $0.10           |  | $0.14      
|Weighted average common shares        |  |              |  |                                     |  |                 |  |            
|outstanding, basic                    |  | 5,928,238    |  | 5,766,686                           |  | 5,735,287       |  | 5,720,843  
|Weighted average common shares        |  |              |  |                                     |  |                 |  |            
|outstanding, diluted                  |  | 6,100,855    |  | 5,911,029                           |  | 5,922,204       |  | 5,877,075  
|Cash dividends declared per share     |  | $0.04        |  | $0.02                               |  | -               |  | -          
|                                      |  |              |  |                                     |  | As of March 31, |  |            
|                                      |  | 2007         |  | 2006                                |  | 2005            |  | 2004       
|Balance Sheet Data:                   |  |              |  |                                     |  |                 |  |            
|Total assets                          |  | $16,890,200  |  | $15,325,827                         |  | $14,109,638     |  | $13,388,879
|Long-term obligations                 |  | $2,128,151   |  | $723,324                            |  | $1,150,668      |  | $400,160   
|Shareholders' equity                  |  | $10,255,538  |  | $10,586,083                         |  | $10,182,783     |  | $9,404,939 
|Shares outstanding                    |  | 6,205,536    |  | 5,790,361                           |  | 5,753,463       |  | 5,727,713  
|Equity per share                      |  | $1.65        |  | $1.83                               |  | $1.77           |  | $1.64      

ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management's
discussion and analysis reviews our consolidated financial condition as of March
31, 2007 and 2006, the consolidated results of operations for the years ended
March 31, 2007, 2006 and 2005 and, where appropriate, factors that may affect
future financial performance. The discussion should be read in conjunction with
the consolidated financial statements and related notes included elsewhere in
this Form 10-K. Unless context requires otherwise, as used in this Management's
Discussion and Analysis (i) the "current period" means the fiscal year ended
March 31, 2007, (ii) the "prior period" means the fiscal year ended March 31,
2006, (iii) an increase or decrease compares the current period to the prior
period, and (iv) all non-comparative amounts refer to the current
period.



|FORWARD-LOOKING STATEMENTS
|--------------------------

The reader is urged
to read the information contained in the "Forward-Looking Statements" and Risk
Factors sections at the beginning of this report for a discussion of the use of
forward-looking statements in this report as well as risks and uncertainties in
attempting to predict our future performance based upon such statements.



|OVERVIEW
|--------

We are a financial
services holding company that, primarily through our subsidiaries, provides
broker-dealer, investment advisory, insurance and related services. We operate
in a highly regulated and competitive industry that is influenced by numerous
external factors such as economic conditions, marketplace liquidity and
volatility, monetary policy, global and national political events, regulatory
developments, competition and investor preferences. Our revenues and net
earnings may be either enhanced or diminished from period to period by one or
more external factors.

Page 22

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|OUR
      BUSINESS
|------------------

The Company operates
primarily through its subsidiary, ICC/ICA, in the broker-dealer and investment
advisory services segments of the financial services industry.



| | Broker-Dealer Services
| | ----------------------

The Company provides
broker-dealer services in support of trading and investment by its
representatives customers in corporate equity and debt securities, U.S.
Government securities, municipal securities, mutual funds, variable annuities
and variable life insurance, including provision of market information, internet
trading, portfolio tracking facilities and records management.



| | Investment Advisory Services
| | ----------------------------

The Company provides
investment advisory services, including asset allocation and portfolio
rebalancing, for its representatives customers. In the past, investment
advisory services were performed by both ICC and EPA. To avoid the duplication
of effort involved in supporting two advisory services entities, the Company has
consolidated its investment advisor services in ICC d/b/a ICA.



| | Recruitment and Support of
Representatives
| | ------------------------------------------

A key component of
our business strategy is to recruit more established and productive
representatives who generate revenues in higher margin services and products.
Additionally, we assist our existing representatives to develop and expand their
business by providing to them a variety of support services and a diversified
range of investment products for their clients. The Company focuses on providing
substantial added value to our representatives that enables them to be more
productive, particularly in high margin lines such as advisory services and
trading/brokerage.

Support provided to
assist representatives in pursuing consistent and profitable sales growth takes
many forms, including: hi-tech trading systems, targeted financial assistance
and a network of communication links with investment product companies such as
regional and national conventions that provide forums for interaction to improve
product knowledge, sales and client satisfaction. A newly formed business
development unit will focus on providing representatives with programs and tools
to grow their businesses both through new client acquisition and the advancement
of their existing client relationships. These programs are also designed to
enhance our ability to attract and retain new, productive
representatives.



|OUR
      PROCESSCheck and
      Application
|--------------------------------------------

The majority of
transactions are conducted through a check and application process whereby a
check and an investment company's product application is delivered to us for
processing. This includes principal review and submission to the investment
company or clearing firm. Investments in technology have allowed the firm to
move from a process that was previously paper intensive to a process that is
virtually paper free. This has shortened the transaction cycle, reduced errors
and created greater efficiencies. The firm continues its investment in
technologies that will provide more efficient processes resulting in improved
productivity.



| | Online
      Trading
| | --------------------

Registered
representatives can efficiently submit a wide range of security investments
online through the use of our remote electronic-entry trading
platform.

Page 23

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



| | Bond
      Trading
| | ------------------

The Company's
fixed-income trading desk uses a network of regional and primary dealers to
execute trades across a broad array of fixed-income asset classes. The desk also
utilizes several dealer-only electronic services that allow the desk to offer
inventory and to execute trades. Our fixed income traders work with our
representatives to develop portfolios for clients. This area has seen growth as
interest rates have risen and more investors have become interested in
retirement income.



| | Asset
      Allocation
| | ----------------------

Asset Allocation
services are made available through ICA, the Company's registered investment
advisor subsidiary. Our services include the design, selection and rebalancing
of investments on behalf of our advisers clients in addition to providing the
tools, services and guidance that enable our advisers to provide these
investment services directly to their clients. These services, for the most
part, are conducted through our online trading platform. Other allocation
services are performed directly by the fund company.



|CRITICAL
      ACCOUNTING POLICIES
|----------------------------------



| | In
      General
| | ----------------

Our consolidated
financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America. The Company believes that of
its significant accounting policies (detailed in Footnote 2 to the Companys
Consolidated Financials Statements contained herein), those dealing with
valuation of securities and other assets, revenue recognition and allowance for
doubtful accounts receivable involve a particularly high degree of judgment and
complexity. Our accounting policies require estimates and assumptions that
affect the amounts of assets, liabilities, revenues and expenses reported in the
consolidated financial statements. Due to their nature, estimates involve
judgment based upon available information. Actual results or amounts could
differ from estimates and the difference could have a material effect on the
consolidated financial statements. Therefore, understanding these policies is
important to understanding the reported results of operations and the financial
position of the Company.



| | Off 
      Balance Sheet Risk
| | ------------------------------

We execute
securities transactions on behalf of our customers. If either the customer or a
counter-party fails to perform, we, by agreement with our clearing broker, may
be required to discharge the obligations of the non-performing party. In such
circumstances, we may sustain a loss if the market value of the security is
different from the contract value of the transaction. We seek to control
off-balance sheet risk by monitoring the market value of securities held or
given as collateral in compliance with regulatory and internal guidelines.
Pursuant to such guidelines, our clearing firm requires that we reduce positions
when necessary. We also complete credit evaluations where there is thought to be
credit risk.



| | Reserves
| | --------

The Company records
reserves related to legal proceedings in "accrued expenses" in the consolidated
balance sheet. The determination of these reserve amounts requires significant
judgment on the part of management. Management considers many factors including,
but not limited to: the amount of the claim; the amount of the loss in the
client's account; the basis and validity of the claim; the possibility of
wrongdoing on the part of an employee or representative of the Company; previous
results in similar cases; and legal precedents. Each legal proceeding is
reviewed with counsel in each accounting period and the reserve is adjusted as
deemed appropriate by management. Any change in the reserve amount is recorded
in the consolidated financial statements and is recognized as a charge/credit to
earnings in that period. The assumptions of management in determining the
estimates of reserves may be incorrect and the actual costs upon disposition of
a legal proceeding could be greater or less than the reserved amount.

Page 24

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|RISK
      MANAGEMENT
|---------------------

Risk is an inherent
part of the Company's business and activities. Risk management is critical to
the Company's financial strength and profitability and requires robust auditing,
constant communications, judgment and knowledge of financial trends and the
economy as a whole.

Senior management
takes an active role in the risk management process. The principal risks
involved in the Company's business activities are market, operational,
regulatory and legal.



| | Market
      Risk
| | -----------------

Market risk is the
risk attributable to common macroeconomic factors such as gross domestic
product, employment, inflation, interest rates, budget deficits and consumer
sentiment. Consumer and producer sentiment is critical to our business. The
level of consumer confidence determines their willingness to spend, especially
in the financial markets. It is this willingness to spend in the financial
markets that is key to our business. A shift in spending in this area could
negatively impact us. However, senior management is constantly monitoring these
economic trends in order to enhance our product line to offset any potential
negative impact.



| | Operational Risk
| | ----------------

Operational risk
refers to the risk of loss resulting from the Company's operations, including,
but not limited to, improper or unauthorized execution processing of
transactions, deficiencies in the Company's technology or financial or financial
operating systems and inadequacies or breaches in the Company's control
processes. Managing these risks is critical, especially in a rapidly changing
environment with increasing transaction volume. Failure to manage these risks
could result in material financial loss to the Company. To mitigate these risks,
the Company had developed specific policies and procedures designed to identify
and manage operational risk. These policies and procedures are reviewed and
updated on a continuing basis to ensure that this risk is minimized.



| | Regulatory and Legal Risk
| | -------------------------

Regulatory and legal
risk includes non-compliance with applicable legal and regulatory requirements
and the risk of a large number of customer claims that could result in adverse
judgments against the Company. The Company is subject to extensive regulation in
all jurisdictions in which it operates. In this regard, the Company has
instituted comprehensive procedures to address issues such as regulatory capital
requirements, sales and trading practices, use of and safekeeping of customer
funds, credit granting, collection activities, money-laundering and record
keeping. However, as evidenced by the bringing of the now-settled Massachusetts
Proceedings and other legal proceedings (see Part I, Item 3  Legal
Proceedings), there can be no assurances that such compliance procedures will
prevent future regulatory and legal proceedings, the outcomes and consequences
of which cannot now be reasonably foreseen or quantified.



| | Effects
      of Inflation
| | --------------------------

The Company's assets
primarily are liquid in nature and not significantly affected by inflation.
Management believes that the replacement cost of property and equipment will not
materially affect operating results. However, the rate of inflation affects our
expenses, including employee compensation and benefits, communications and
occupancy, which may not be readily recoverable through charges for services
provided.

KEY INDICATORS OF FINANCIAL PERFORMANCE

Management
periodically reviews and analyzes our financial performance across a number of
measurable factors considered to be particularly useful in understanding and
managing our business. Key

Page 25

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

metrics in this process include average production per representative,
top line commission and advisory services revenues, gross margins, operating
expenses, legal costs, earnings per share, and average revenue per
representative.

FISCALYEARENDEDMARCH31, 2007
COMPARED TOFISCALYEARENDEDMARCH31,
2006:

AVERAGE PRODUCTION PER REPRESENTATIVE

Management believes
that upgrading the overall quality of our independent representatives is a key
to achieving robust growth in revenues and net income. Our experience has been
that increasing the average technical qualifications and business practices of
our representatives not only generates more revenue, but assists in limiting the
cost of overhead functions and representative errors or misconduct. We strive to
continually improve the overall quality of our force of representatives
by:

- recruiting higher quality new representatives,
- terminating lower quality representatives, and
- assisting existing representatives to improve their skills and
  practices.

A key metric that we
use to assess the average quality of our representatives is average revenue
generated per representative.

Average revenue per
representative increased by 27.87%, reflecting managements continuing emphasis
on recruiting established and successful representatives. We look forward to a
continuation of this trend as we maintain our efforts to increase the average
productivity of our existing sales force and to recruit representatives who are
already successful but seek a higher level of service than they experience from
their existing brokerage firms.

|                                |  | Fiscal Year
      Ended |  | Fiscal Year
      Ended |  |                  |  |                          
|------------------------------- |  | ----------------------- |  | ----------------------- |  | ---------------- |  | -------------------------
|                                |  | March 31,
      2007    |  | March 31,
      2006    |  | Incease/decrease |  | %
      Increase/decrease
|Revenue:                        |  |                         |  |                         |  |                  |  |                          
|Commission                      |  | $70,273,816             |  | $60,028,731             |  | $10,245,085      |  | 17.07%                   
|Advisory                        |  | $6,767,136              |  | $5,147,907              |  | $1,619,229       |  | 31.45%                   
|Other fee income                |  | $941,969                |  | $1,142,454              |  | -$200,485        |  | -17.55%                  
|                               
|                                |  | $77,982,921             |  | $66,319,092             |  | $11,663,829      |  | 17.59%                   
|                               
|Number of
      Representatives |  | 675                     |  | 734                     |  | -59              |  | -8.04%                   
|                               
|Average Revenue
      Per Rep   |  | $115,530                |  | $90,353                 |  | $25,177          |  | 27.87%                   
|                               
|                               
|RESULTS
      OF OPERATIONS     |  |                         |  |                         |  |                 

Page 26

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                                           |  |                            |  |                            |                          |                  |        | Percent of
      Revenue |       | Percent
      Change
|------------------------------------------ |  | -------------------------- |  | -------------------------- | ------------------------ | ---------------- | ------ | ------------------------ | ----- | --------------------
|                                           |  | Year Ended
      March 31, |  | Year Ended
      March 31, |                          | 2007             |        | 2006                    
|                                           |  | 2007                       |  | 2006                       |                          | 2005             |        | 2007                     |       | 2006                
|Revenues:                                  |  |                            |  |                            |                          |                  |        |                          |       |                     
|Commission                                 |  | $       70,273,816         |  | $       60,028,731         |                          | $     48,660,052 |        | 87.79%                   |       | 88.27%              
|Advisory                                   |  | 6,767,136                  |  | 5,147,907                  |                          | 3,702,556        |        | 8.45%                    |       | 7.57%               
|Other fee
      income                     |  | 941,969                    |  | 1,142,454                  |                          | 1,189,737        |        | 1.18%                    |       | 1.68%               
|Marketing
      revenue                    |  | 1,258,944                  |  | 1,013,828                  |                          | 1,140,098        |        | 1.57%                    |       | 1.49%               
|Other
      income(1)                      |  | 811,163                    |  | 669,508                    |                          | 473,091          |        | 1.01%                    |       | 0.99%               
|                                           |  | _________                  |  | _________                  |                          | _________        |        |                          |       |                     
|Total
      Revenue                        |  | 80,053,028                 |  | 68,002,428                 |                          | 55,165,534       |        | 100.00%                  |       | 100.00%             
|                                           |  | _________                  |  | _________                  |                          | _________        |        |                          |       |                     
|                                          
|Commission and advisory fees               |  | 64,926,784                 |  | 54,609,596                 |                          | 44,025,004       |        | 81.10%                   |       | 80.31%              
|Gross
      Profit                         |  | 15,126,244                 |  | 13,392,832                 |                          | 11,140,530       |        | 18.90%                   |       | 19.69%              
|Operating
      Expenses:                  |  |                            |  |                            |                          |                  |        |                          |       |                     
|Advertisement and marketing                |  | 874,862                    |  | 895,658                    |                          | 763,192          |        | 1.09%                    |       | 1.32%               
|Communications                             |  | 489,185                    |  | 603,964                    |                          | 536,386          |        | 0.61%                    |       | 0.89%               
|                                           |  |                            |  |                            |                          |                  |        |                          |       |                     
|                                          
|Total
      Selling Expenses               |  | 1,364,047                  |  | 1,499,622                  |                          | 1,299,578        |        | 1.70%                    |       | 2.21%               
|Compensation and benefits                  |  | 8,604,346                  |  | 6,344,945                  |                          | 5,713,028        |        | 10.75%                   |       | 9.33%               
|Regulatory, legal and professional         |  | 4,795,947                  |  | 2,965,689                  |                          | 1,527,256        |        | 5.99%                    |       | 4.36%               
|Occupancy(2)                               |  | 995,985                    |  | 695,003                    |                          | 616,718          |        | 1.24%                    |       | 1.02%               
|Other
      administrative expenses        |  | 1,044,500                  |  | 968,825                    |                          | 1,055,368        |        | 1.30%                    |       | 1.42%               
|Interest
      expense(3)                  |  | 35,775                     |  | 47,782                     |                          | 40,440           |        | 0.04%                    |       | 0.07%               
|                                           |  |                            |  |                            |                          |                  |        |                          |       |                     
|Total
      Administrative Expenses        |  | 15,476,553                 |  | 11,022,244                 |                          | 8,952,810        |        | 19.33%                   |       | 16.21%              
|                                           |  | _________                  |  | _________                  |                          | _________        |        |                          |       |                     
|Total
      Operating Expenses             |  | 16,840,600                 |  | 12,521,866                 |                          | 10,252,388       |        | 21.04%                   |       | 18.41%              
|                                           |  | _________                  |  | _________                  |                          | _________        |        |                          |       |                     
|                                          
|Operating
      (Loss) Income              |  | (1,714,356)                |  | 870,966                    |                          | 888,142          |        | -2.14%                   |       | 1.28%               
|                                          
|(Loss)
      Income before taxes           |  | (1,714,356)                |  | 870,966                    |                          | 888,142          |        | -2.14%                   |       | 1.28%               
|(Benefit)
      Provision for income taxes |  | (630,290)                  |  | 421,328                    |                          | 269,033          |        | -0.79%                   |       | 0.62%               
|                                           |  |                            |  |                            |                          |                  |        |                          |       |                     
|Net
      (Loss) Income                    |  | $      (1,084,066)         |  | $        
    449,638      | $        
       619,109 |                  | -1.35% |                          | 0.66% |                     
|                                           |  | _________                  |  | _________                  | _________                |                  |        |                          |       |                     

|1. | The amount
      shown for Other income for 2006 is $23,560 higher than as stated in the
      Companys Form 10-K for the fiscal year ended March 31, 2006 due to
      reclassification to Other income of a gain on the sale of an asset from a
      separate line item under Other Expenses.     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | The amount
      shown for Occupancy for 2005 is $31,072 higher than as stated in the
      Companys Form 10-K for the fiscal year ended March 31, 2006 due to
      reclassification to Occupancy of write-offs upon the disposal of equipment
      from a separate line item under Other Expenses.
|  
|3. | Interest
      expense was previously reported in the Companys Form 10-K as other
      expense after income or loss from operations and before income or loss
      before taxes for the comparative periods March 31,2006 and
  2005.                                                              
|  

Page 27

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|REVENUES
|--------

Revenues rose $12.05 million, or 17.72%, to $80.05 million, led by a
$10.25 million or 17.07% increase in commissions and a $1.62 million or 31.45%
increase in advisory services revenue. While we are gratified by continued
growth in high margin lines of business, such as trading and advisory services,
we also value the diversification of our brokerage revenues sources provided by
even greater growth, compared to trading services, in revenues from mutual
funds, variable annuities and direct participation programs. Much like a
diversified client portfolio, management believes a diversified revenue stream
provides a degree of protection from market risk.



| | Commissions
| | -----------

Commissions from
variable annuities increased by $4.5 million, or 19.87% and encompassed 44.15%
of an overall $10.3 million increase in commission revenue. Commissions from
direct participation programs, which predominantly include REITs (Real Estate
Investment Trusts) and oil and gas programs, increased by $3.1 million or 36.72%
..

|                               |  | Fiscal Year
      Ended |  |                    |  | Percentage                  |  | Percentage       
|------------------------------ |  | ----------------------- |  | ------------------ |  | --------------------------- |  | -----------------
|                               |  | March
      31,         |  | Increase/decrease  |  | of
      Total              |  | Increase/decrease
|                               |  | 2007                    |  | 2006               |  | 2007 vs.
      2006         |  | Increase/decrease
|                               |  |                         |  |                    |  |                             |  |                  
|                              
|Commission
      Revenue:      |  |                         |  |                    |  |                             |  |                  
|Variable Annuities             |  | $27,288,899             |  | $22,766,073        |  | $         
       4,522,826 |  | 44.15%           
|Trading (brokerage)1           |  | 21,559,947              |  | 18,457,135         |  | 3,102,812                   |  | 30.29%           
|Mutual Funds                   |  | 9,409,256               |  | 8,665,442          |  | 743,814                     |  | 7.26%            
|Direct Participation Programs  |  | 11,534,198              |  | 8,436,466          |  | 3,097,732                   |  | 30.24%           
|Other                          |  | 481,516                 |  | 1,703,615          |  | (1,222,099)                 |  | -11.93%          
|                              
|Total
      Commission Revenue |  | $
      70,273,816      |  | $
      60,028,731 |  | $        
      10,245,085  |  | 100.00%          

1. Revenue designated as Trading (brokerage) includes revenue from mutual
funds sold through our trading platform.

Commissions from
variable annuities continue to comprise the largest component of commission
revenue. Commissions in direct participation programs grew primarily as a result
of increased sales volume in the oil and gas programs. Over recent periods,
trading revenue generally has maintained its share of the revenue as commissions
from brokerage comprises the second largest component of commission revenue for
the current period.

Supporting this
historical trend is our recruitment and retention of representatives who conduct
transactional business as well as utilization of our clearing firms trading
platform to enable us to conduct more brokerage business in an efficient
fashion. The recent trend of higher growth in fee-based advisory services
compared to commission-based services reflects concerted efforts by management
to grow revenues in the higher margin advisory services area.



| | 
| | 

Page 28

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Advisory Fees

Advisory services typically provide significantly higher margins than
traditional non-trading broker-dealer products such as variable annuities and
mutual funds. See " - Gross Margins". Accordingly, we have been encouraging our
representatives to transition more of their non-trading business to advisory
services. Although we do not dictate the nature or extent of advisory services
our Representatives provide for their clients, we continue to make concerted
efforts to attract them to our proprietary advisory services programs through
education, seminars, trade shows and direct telemarketing.

Fees from our
rep-directed asset-managed A-MAP program, where asset allocation and other
investment advisory services are provided directly by our independent
representatives, continue to be the leading source of revenue in this category.
Revenues from this program, which have been contributing an increasing
proportion of advisory services revenue, grew by $1.53 million or 51.98% to
$4.46 million compared to $2.93 million for the prior period. Supported by our
Net Exchange Pro and Pershing direct on-line mainframe trading platforms, this
program is popular with our representatives because of the opportunities it
provides to deliver to their clients superior asset management services at a
potentially lower cost, and the potential for increased overall investment
performance. Resulting transactional cost savings have been passed on to our
representatives clients in the form of lower fees for improved
service.



| | Other Fee
      Income
| | ----------------------

Other fee income,
primarily comprised of licensing and financial planning fees, decreased by
17.55% when comparing the current period to the prior period. This decrease
stems mostly from less licensing revenues because of fewer registered
representatives.



| | Marketing
      Revenue
| | -----------------------

Net marketing
revenues increased by 24.18% due to the increase in marketing support as a
result of increased sales in the sponsorship companys products.



| | Other
      Income
| | ------------------

Other income,
consisting primarily of interest and dividends and gains/losses on investments,
increased by 21.16% .The majority of the increase came from interest earned on
account balances due to an increase in the average daily balance in our trading
accounts.



|
|

Page 29

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|GROSS
      MARGIN           |  |                            |  |                    |  |                 |  | Gross Margin
      Retention |  | % of Total
      Gross Margin |  |                 |  |        
|---------------------------- |  | -------------------------- |  | ------------------ |  | --------------- |  | ---------------------------- |  | ----------------------------- |  | --------------- |  | -------
|                             |  |                            |  | Gross
      Margin |  |                 |  |                              |  | Year
      Ended              |  |                 |  |        
|                             |  | Year Ended
      March 31, |  |                    |  | March
      31, |  |                              |  |                               |  | March
      31, |  |        
|                             |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|                             |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|                             |  | 2007                       |  | 2006               |  | 2005            |  | 2007                         |  | 2006                          |  | 2005            |  | 2007   
|Commission:                  |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|Check
      & Application    |  | $6,207,794                 |  | $4,950,592         |  | $4,467,235      |  | 12.90%                       |  | 12.01%                        |  | 13.20%          |  | 41.04% 
|Trading                      |  | 4,133,912                  |  | 3,638,391          |  | 2,050,086       |  | 19.17%                       |  | 19.71%                        |  | 14.40%          |  | 27.33% 
|Insurance
      Products     |  | 225,654                    |  | 281,489            |  | 342,978         |  | 99.13%                       |  | 95.77%                        |  | 98.30%          |  | 1.49%  
|Underwriting                 |  | 25,387                     |  | 6,907              |  | 17,766          |  | 10.00%                       |  | 10.00%                        |  | 15.30%          |  | 0.17%  
|Advisory
      Services: (1) |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|A-Map
      (rep direct)     |  | 1,064,767                  |  | 703,866            |  | n/a             |  | 23.89%                       |  | 24.00%                        |  | n/a             |  | 7.04%  
|Other                        |  | 746,296                    |  | 1,301,535          |  | n/a             |  | 1.89%                        |  | 13.50%                        |  | n/a             |  | 4.93%  
|                             |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|Total                        |  | 1,811,063                  |  | 2,005,401          |  | 1,647,048       |  | 25.78%                       |  | 37.50%                        |  | 42.60%          |  | 11.97% 
|                             |  | ________                   |  | ________           |  | _______         |  | _____                        |  | ______                        |  | _____           |  | _____  
|                             |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|Licensing                    |  | 743,477                    |  | 911,692            |  | 1,004,307       |  | 100%                         |  | 100.00%                       |  | 100.00%         |  | 4.92%  
|Marketing                    |  | 1,258,945                  |  | 1,013,828          |  | 1,140,098       |  | n/a                          |  | n/a                           |  | n/a             |  | 8.32%  
|Other
      income           |  | 720,012                    |  | 584,532            |  | 471,012         |  | n/a                          |  | n/a                           |  | n/a             |  | 4.76%  
|                             |  |                            |  |                    |  |                 |  |                              |  |                               |  |                 |  |        
|Total
      Gross Margin     |  | $15,126,244                |  | $13,392,832        |  | $11,140,530     |  | 18.90%                       |  | 19.70%                        |  | 20.20%          |  | 100.00%
|                             |  | ________                   |  | ________           |  | _______         |  | _____                        |  | ______                        |  | _____           |  | _____  

(1) Management during fiscal year end March 31, 2005 tracked all advisory
services as one aggregate for gross margin reporting purposes .In fiscal year
ended March 31, 2006 management switched to tracking the A-Map rep direct
program separately from other advisory services programs.



Gross margin rose by
$1.76 million or 13.1% to $15.13 million for the current period primarily due to
a $1.26 million or 25.4% increase in gross margin derived from our check and
application programs. Also contributing to this rise was a $0.50 million or
13.62% increase from trading.



| | Check and
      Application
| | ---------------------------

The increase in
gross margin from our check and application business came directly from an
increase in sales volume of the variable annuity and direct participation
components. As a result of a $7.62 million increase in sales from these product
types, we achieved an increase of approximately $0.98 million in our profit
margin in comparing the current period to the prior period. Please refer to the
above commission revenue chart.

Profit margins from mutual fund sales, variable annuity sales, direct
participation programs and other

Page 30

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

check and application distribution programs generated $6.21 million or
nearly 41.04% of the total gross margin compared to $4.95 million or 37.03%
during the prior period. As reflected in the above gross margin table, margin
from our check and application distribution programs comprised the greatest
portion of our overall profit margin, with profit margin from trading being the
next leading component among our principal categories. Investments in technology
have allowed us to process this additional volume without adding a commensurate
level of staff.



| | Advisory
      Services
| | -----------------------

The Companys
continued emphasis on the A-MAP, our rep-directed asset managed program, is
clearly reflected in our gross margin table as gross margin increased by $0.36
million or 51.27% . This gross margin improvement resulted directly from growth
in assets under management in the program which, in managements opinion, is due
primarily to lower fees, improved services and increased awareness of this
program.

Managements primary
focus in the advisory services program has been to increase assets under
management in the belief that it will generate an increase in the overall profit
margin in advisory services even though the percentage retention rate may
decrease as a result of lower fee rates. Although our retention rate from
advisory services decreased compared to the prior period, it continues to exceed
the rates generated by most of the other products and services we and our
representatives provide. See Gross Margin Table, above. Managements emphasis
on delivering our A-MAP program is reflected in the gross margin table with a
concomitant $0.56 million, or 42.66%, decrease in gross margin in Other Advisory
Services including the older wrap fee programs.



| | Trading
      Services
| | ----------------------

Trading Services
profit margin increased by $0.50 million or 13.62% due primarily to a $0.38
million increase in the margin from our fees on account balances. These fees
contribute directly to our profit margin as they require no commission payout.
In addition, there was a $0.12 million increase in gross margins from trading
activities that required a commission payout.

As a result of the
$0.38 million increase to our profit margin from non-commissionable fees on
account balances, our payouts as a percentage of total trading revenue remained
relatively flat for the comparative periods; however, payouts, as a percentage
of commissionable trading, increased. Although our margin retention decreased
slightly from 19.71% in the prior period to 19.17% in the current period,
trading services remain the second largest component of revenue contributing to
our gross margin.

Despite a slight
downward trend, the percentage retention rates generated by trading services and
advisory services continue to exceed those generated by our check and
application business. We intend to continue recruiting representatives who are
duly licensed and otherwise capable of offering trading and advisory services to
their clients.



| | Payout
      and Retention Rates
| | --------------------------------

Payouts to our
independent representatives combined with other advisory and trading services
costs, as a percentage of revenue generated by them, increased to 83.3% compared
to 82.3% for the prior period. The corresponding decrease in our overall
retention rate from 17.7% to 16.7% reflects a continuing transitioning of our
sales force to higher producing representatives that command correspondingly
higher payout rates (see Part I, Item I  Our Process) which was partially
offset by a net increase in fees that do not generate payouts. In addition to
selling more products through our check and application distribution programs,
higher quality representatives have the potential to positively influence our
overall retention rate because they are licensed to sell more of the higher
margin products such as trading and advisory services.

Page 31

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Management carefully
monitors our retention rates; however, we have chosen to focus more on total
dollars retained. Management believes that, on average, increased payout rates
earned by higher producing representatives will be more than offset by greater
overall contributions to margin and increased firm profitability.

Management is
continuing their efforts to improve margin contribution by recruiting and
retaining sophisticated Representatives who are duly licensed to offer a variety
of brokerage and advisory products and services that generate higher commission
retention rates than those obtained from check and application products. We
experienced higher margins from trading as a result of ticket charges and fees
pertaining to increases in account balances that flow entirely to the profit
margin. With respect to advisory services, we receive fees on asset account
balances that flow directly to the firm. Refer to Note 1 -- "Revenue Recognition
- Advisory Fees" to our Condensed Consolidated Financial Statements.



|OPERATING
      EXPENSES
|------------------------

Operating expenses,
which experienced a $4.32 million or 34.49% increase, are discussed in detail
below.



| | Compensation and Benefits
| | -------------------------

The largest
component of operating expenses is compensation and benefits, which increased by
$2.26 million or 35.61% . General salaries, which grew by 21.78%, accounted for
$0.93 million of the increase. In addition, we experienced a $0.23 million
increase in compensation paid to officers resulting from bonuses. Another
significant contribution to the increase was a $0.76 million increase in stock
compensation in the form of restricted stock awards to employees, directors,
consultants and independent representatives. The increase in general salaries
resulted primarily from the hiring and retention of 30 additional personnel in
such functions as:

- Trading
  and Operations -- to continue to provide an increasingly higher level of
  service to our sophisticated
  representative force as a differentiator in the face of increasing
  competition,
- Compliance -- to meet the growing needs within the industry for
  internal control, quality supervision and
  continuing education to our independent representatives, as well as to
  reduce legal and settlement expenses,
- Representative recruitment -- to enhance our ability to recruit higher
  quality representatives,
- Legal
  Department -- to help reduce the need for traditionally more expensive outside
  counsel, and to provide additional services to our representatives and
- Other
  general administrative areas.



| | Regulatory, Legal and
Professional
| | ----------------------------------

Regulatory, Legal
and Professional expenses increased by $1.83 million or 61.71% . The largest
component of this increase was a $1.46 million increase in legal fees and
settlement costs associated with the Massachusetts Proceedings referred to in
footnote 15 to our Consolidated Financial Statements and described in detail in
Part I, Item 3. Legal Proceedings. We have taken and will continue to take
measures calculated to limit our ongoing exposure to legal proceedings arising
from our operations. In this regard, there was a $0.15 million decrease compared
to the prior period in legal fees and settlement costs associated with
litigation other than the Massachusetts Proceedings. Management believes,
although there can be no assurances, that the Massachusetts Proceedings will
prove to be atypical, in terms of financial impact, of legal proceedings that
will be generated in the future in connection with our on-going
operations).

The Companys legal expenses, other than those associated with the
Massachusetts Proceedings,

Page 32

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

decreased for the comparative period. Management believes this result is
directly attributable to the Companys risk-based management approach that seeks
to minimize risk by improving the quality of its associated registered
representatives while committing resources to educate and train our sales force,
efficiently and accurately process their business, and appropriately supervise
their business activities.

The Company's legal
accrual increased by $0.67 million to $1.10 million as of March 31, 2007 from
$0.43 million as of March 31, 2006 as a result of the settlement in the
Massachusetts Proceeding. The Company also had various arbitration claims filed
against it that warranted an additional accrual increase. As we operate in an
increasingly litigious industry embedded with regulation, we will continue to
invest significant resources to reduce the likelihood of future litigation
exposure by promoting accuracy, ensuring sound operational techniques and
applying appropriate compliance measures.



| | Advertising
| | -----------

Advertising,
including related marketing expenses, decreased by $0.02 million or 2.32%,
primarily reflecting decreased spending on officer travel.



| | Communications
| | --------------

Communications
expenses decreased by $0.11 million or 19.0%, primarily due to a decrease in
printing and website costs offset by an increase in telephone expenses. The
costs savings in printing expenses were achieved by communicating to our
prospective representatives by emailing our product literature instead of direct
mailing. The Company's website is currently used to target new revenue streams
by providing access to information through the website and other Internet
publications. Communication efforts and related expenses, which also include
investor/public relations, conference, and telephone, have historically been
positively correlated with the overall growth of our business. Our website and
newsletter, "The Capitalist", have become effective media to communicate to
qualified Representatives for recruitment purposes.



| | Occupancy
| | ---------

Occupancy expenses
increased by $0.30 million or 43.31% primarily as a result of opening Investment
Centers in Braintree, MA, Manhattan, NY and Bedford, NH and a new Business
Center in Miami, FL. Furthermore, we leased additional space for senior
management and our marketing department at a separate Lynnfield, MA location.
The Company also experienced an increase in depreciation due to acquiring
additional fixed assets in the form of new computers for the additional staff,
leasehold improvements and additional furniture and fixtures for the home office
in Lynnfield, MA to accommodate the increased number of employees.



| | Other
      Administrative
| | --------------------------

Other administrative
expenses, which include various insurance, postage, office and computer-related
expenses, increased slightly by $0.08 million or 7.81% . Management continues to
mount a concerted effort to reduce general office and postage expenses through
several cost saving methods.



|Interest
      Expense
|----------------------

Interest expense decreased by 25.13% reflecting less margin balances in
our firm accounts when comparing the current period to the prior
period.

Page 33

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|OPERATING
      AND NET LOSSES
|------------------------------

The fact that the
Company registered operating and net losses during the current period, compared
to the operating and net profit during the prior period, can be attributed
primarily to expenses related to the Massachusetts Proceedings and resulting
settlement that totaled approximately $2.20 million during the current period.
See Part I, Item 3. Legal Proceedings.

Despite a 15.23%,
20.22% and 12.94% increase in gross profit over the prior year for the fiscal
years ended March 31, 2005, 2006 and 2007, respectively, the Company has
experienced a negative trend in earnings during this same overall period. The
trend is attributable to increases in total operating expenses of 23.73%, 22.14%
and 34.49% for the comparable periods. These operating expense increases have
been driven primarily by significant increases in compensation and benefits and
in professional fees and legal settlement costs.

In order to remain
competitive, the Company has increased the number of home office staff by 36%
over the two year period ended March 31, 2007. Central to this staff
enhancement, was the hiring of additional compliance staff, which typically are
among the higher-paid of our employees. In addition, salary increases have been
necessary to attract and retain higher quality employees so that service levels
to our field force are constantly improved. Improvements in our service levels
are believed to enhance our current representatives productivity and our
ability to attract quality new representatives which, in turn, is believed to be
a driving force behind the increase in gross profit experienced over the past
three years.

The growth in the
number of employees has corresponded with a significant cost increase during the
same period in our 100% Company-funded employee health care program in addition
to various office and infrastructure expenses in order to house and support the
additional employees necessary to remain competitive during the period.
Additionally, the Company has committed considerable resources to retaining its
key managers and employees in the form of its shareholder approved equity
incentive plans. Stock grants authorized under the 2005 plan were made to
certain key employees during fiscal year ended March 31, 2007 at considerable
expense to the Company.

Professional (legal
and audit) fees and legal settlement costs have also increased significantly
over the last three fiscal years and have contributed above all other operating
expenses to the negative earnings trend noted above. In addition to an adverse
2005 civil court verdict experienced by the Company resulting from commercial
litigation unrelated to its core business, the Company incurred material legal
costs in the fiscal years ended March 31, 2006 and 2007 as a result of its
prolonged and vigorous defense of a November 2005 Administrative complaint filed
against it by the Securities Division of the Secretary of the Commonwealth of
Massachusetts (the Massachusetts Proceedings). The Company eventually settled
this matter at considerable additional expense. Although there can be no
assurance, management believes that the expense of litigating and settling the
Massachusetts Proceedings will prove to be atypically high compared to legal
proceedings that may be expected to continue to be brought against the Company
in the future in the litigious and highly regulated environment in which we
operate. For further details regarding the Massachusetts Proceeding and other
legal proceedings, see Part I, Item 3.  Legal Proceedings and Note 15-
Litigation in this Form 10-K.

But for the cost of
the Massachusetts Proceedings and settlement, management believes that the
aforementioned negative earnings trend would not have continued during the
fiscal years ended March 31, 2006 and 2007. Further, although there can be no
assurances, management believes that there is no present reason to expect the
historical negative earnings trend to continue as a result of costs incurred in
matters of this type.

Fiscal Year
Ended March 31, 2006 Compared with Fiscal Year Ended
March31, 2005:

Results reported for
the fiscal years ended March 31, 2006 and 2005 are comparatively discussed below
to the extent that explanations for comparative variances in results for these
two fiscal years differ from

Page 34

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

the explanations given above for variances in the results for the fiscal
years ended March 31, 2007 and 2006.



|REVENUES
|--------

Our revenues rose
$12.84 million, or 23.3%, to $68.00 million despite the effects on the economy
of increases in interest rates and energy prices. Revenues from commissions
increased by $11.37 million or 23.4% for the current period compared to the
prior period. Advisory services revenue also increased by $1.45 million or 39.0%
between the same comparative periods. The significant increase in our revenues
reflects general revenue growth in the diversified investment sector of the
financial services industry as well as other factors discussed below.

Revenue growth
continues to be supported by our efforts in recruiting sophisticated and
experienced representatives who are qualified and likely to engage in brokerage
and investment advisory services. We had a 19.82% increase in recruitment of new
representatives during the fiscal year ended March 31, 2006 compared to the
prior year. Revenue growth from these new recruits generated a $2.20 million or
90.80% increase in corresponding revenues.

Revenues of $1.22
million or 55.29% of this $2.20 million increase, and 44.16% of all current
period revenues from representatives, were derived from trading or brokerage
services. Our progress in recruiting representatives who are qualified and
likely to engage in trading services have resulted in a 145.78% increase for the
year ended March 31, 2006 compared to the fiscal year ended March 31,
2005.

|Recruiting Statistics                                                        |  | Year Ended March 31, |  | Change       |  | Percent Change
|---------------------------------------------------------------------------- |  | -------------------- |  | ------------ |  | --------------
|                                                                             |  | 2006                 |  | 2005         |  | 2006 vs. 2005 
|                                                                            
|Product Type                                                                 |  |                      |  |              |  |               
|Mutual Funds, Variable Annuities, Direct
      Participation Programs, Other |  | $  2,186,700         |  | $  1,293,029 |  | $    893,671  
|Trading Services(brokerage)                                                  |  | 2,054,522            |  | 835,935      |  | 1,218,587     
|Advisory Services                                                            |  | 390,164              |  | 298,421      |  | 91,743        
|                                                                             |  |                      |  |              |  |               
|                                                                            
|Total                                                                        |  | $4,631,386           |  | $2,427,385   |  | $2,204,001    
|                                                                             |  | __________           |  | _________    |  | __________    
|                                                                            



Commissions

Commissions from
variable annuities and trading made up the largest increase in commission
revenue. Variable annuities and trading commissions represented $7.68 million or
67.53%, of the increase during the current period when compared to the prior
period. Also, commissions from direct participation programs, which
predominantly include REITs (Real Estate Investment Trusts) and oil and gas
programs increased by $2.71 million or 47.28% .

|                                                                                                                               |  |                  |  | Commission
      Revenue   |  |                    |  |                        |  |                       
|------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- |  | -------------------------- |  | ------------------ |  | ---------------------- |  | ----------------------
|                                                                                                                               |  |                  |  |                            |  |                    |  |                        |  | percentage            
|                                                                                                                               |  |                  |  |                            |  |                    |  | percent of
      total |  | increase 2006
      vs
|Product
      Type                                                                                                             |  | 2006             |  | 2005                       |  | 2006 vs
      2005 |  | Increase               |  | 2005                  
|Variable
      Annuities                                                                                                       |  | $     22,766,073 |  | $        
      19,300,208 |  | $        3,465,865 |  | 30.49%                 |  | 17.96%                
|Trading
      (brokerage)1                                                                                                     |  | 18,457,135       |  | 14,245,778                 |  | 4,211,357          |  | 37.04%                 |  | 29.56%                
|Mutual
      Funds                                                                                                             |  | 8,665,442        |  | 7,874,316                  |  | 791,126            |  | 6.96%                  |  | 10.05%                
|Direct
      Participation Programs                                                                                            |  | 8,436,466        |  | 5,728,231                  |  | 2,708,235          |  | 23.82%                 |  | 47.28%                
|Other                                                                                                                          |  | 1,703,615        |  | 1,511,519                  |  | 192,096            |  | 1.69%                  |  | 12.71%                
|                                                                                                                               |  | _________        |  | _________                  |  | _________          |  | _________              |  | ________              
|Total
      Commission Revenue                                                                                                 |  | 60,028,731       |  | 48,660,052                 |  | $
      11,368,679 |  | 100.00%                |  | 23.36%                
|                                                                                                                               |  | _________        |  | _________                  |  | _________          |  | _________              |  | ________              
|                                                                                                                              
|1. Revenue
      designated as Trading (brokerage) includes revenue from mutual funds sold
      through our trading platform. |  |                 

Although commissions
from variable annuities comprise the largest component of commission revenue,
the Companys revenue base has been shifting toward the brokerage area, which
represented 37.04% of the total increase in commission revenues. An increasing
number of our representatives conduct their

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

business in brokerage accounts which, in turn, improves our
margins.

The trend towards brokerage reflects a concerted effort on our part to
recruit sophisticated representatives with series 7 licenses who utilize our
brokerage platform. As a result of the shift toward brokerage products, the
Company experienced higher overall profit margins from sales of the resulting
product mix during the current period compared to the prior period. See  Gross
Margins below.



| | Advisory
      Fees
| | -------------------

Advisory services
typically provide significantly higher margins than traditional broker-dealer
products such as variable annuities and mutual funds. See   Gross Margins.
Accordingly, we have been encouraging our representatives to convert more of
their business to advisory services. Although we do not control which advisory
services our representatives provide for their clients, we continue to make
concerted efforts to attract them to our proprietary advisory services programs
through seminars, trade shows and direct telemarketing.

Fees from our
rep-directed asset-managed program, A-MAP, where asset allocation and other
investment advisory services are provided directly by our independent
representatives, continue to be the leading source of revenue in this category.
Revenues from this program grew by $1.03 million or 61.5% to $2.71 million
compared to $1.68 million the prior period. Supported by our Net Exchange Pro
and Pershing direct mainframe trading platforms, this program is becoming
increasingly popular with our representatives because of the opportunities it
provides to deliver to their clients superior asset management services at a
potentially lower cost and the potential for increased overall market
performance.

Revenues from our
fund-managed F-MAP or separately managed S-MAP accounts, where investment
advisory services are provided by EPA and ICA instead of our independent
representatives, increased by $0.50 million or 42.8% between the comparative
periods. Over recent quarters revenues from the fund-managed category have
slightly declined due to the termination of accounts where asset values have
fallen below a minimum level. Also, management has not been aggressively
marketing this program compared to the rep-directed asset-managed program and
S-MAP program.

Revenues from
asset-managed programs where investment services are provided by outside
advisors, decreased slightly for the year ended March 31, 2006. EPA, and more
recently, ICA have been continuing to direct their marketing efforts away from
these third party management programs and more toward their internal,
proprietary asset-managed models. EPA and ICA have been providing sales,
marketing, trading platform and other technical support to our representatives
to enable them to deliver improved investment advisory services.

Revenues from
advisory services provided to mutual funds decreased by $.07 million when
compared to the prior period, reflecting the termination during the current year
of the Companys management agreement pursuant to which it had been providing
advisory services to mutual funds. Our mutual funds constituted only $0.25
million or 6.8% of the total advisory services revenue category for the year
ended March 31, 2005, and $0.18 million or 3.6% for the fiscal year ended March
31, 2005.

Our current success
to our advisory services program recently has been a result of an enhanced
online platform that we offer to our representatives, enabling them to perform
their services of asset allocation in a more cost effective way. In addition,
these savings have been passed on to the client, resulting in lower fees charged
for an improved service.



| | Other Fee
      Income
| | ----------------------

Other fee income
decreased by $0.05 million or 4.00%, resulting mostly from a $0.18 million
decrease in administrative fees for providing regulatory services to our
representatives in connection with annual renewals of their NASD licenses and
errors and omissions (E&O) policy enrollment. Most of this variance stems
from the timing in the collection of an (E&O) adjustment during the first
quarter for year

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|INVESTORS CAPITAL HOLDINGS LTD -
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|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

ended March 31, 2005. There was no (E&O) adjustment for year ended
March 31, 2006.

Offsetting the
above-mentioned decrease was a $0.09 million increase in financial planning fees
from sophisticated representatives providing portfolio strategy for their
clients asset-managed accounts. In addition, we experienced a $0.10 million
dollar increase in other administrative fees to cover the increase in compliance
costs for the maintenance of books and records.

Finally, there was a
$0.06 million decrease in administration fees on asset-managed accounts as a
result of the termination of several of these accounts when asset balances fell
below minimum levels.



| | Marketing
      Revenue
| | -----------------------

Net marketing
revenues decreased by $0.13 million or 11.1%, reflecting a $0.23 million
increase in the cost to host our annual national convention held in Boston in
October 2005 and our Diamond Achiever conference in March 2006. Offsetting this
decrease was a $0.87 million dollar increase in marketing support revenues from
several fund companies based on increases in sales volume of their products. We
also saw a $0.02 million increase in marketing support revenues from our
regional meetings and sales of ancillary items such as apparel, bags, hats with
our logo and blast email services.



| | Other
      Income
| | ------------------

Other income,
consisting primarily of interest and dividends and gains or losses on
investments, increased by $0.17 million for the comparative current period to
the prior period. The majority of the increase came primarily from interest
earned on account balances due to the increase in daily average balance in our
trading accounts.



|GROSS
      MARGINS
|-------------------

Gross margin rose by
$2.23 million or 20.0% to $13.40 million for the current period primarily due to
a $1.60 million or 77.5% increase in gross margin derived from trading over the
prior period.



| | Trading
| | -------

The increase in
gross margin from trading reflects an increase in brokerage commissions and a
reduction in clearing charges due to increased sales volume, increased
commission retention rates, and more fee income within corporate accounts.

Contributing to this
improvement in gross margins from trading was a $0.38 million increase in the
margin from our trails and from money market on account balances and a $1.22
million contribution from net trading commissions. The primary increase in gross
margins from trading commission is derived from a $1.10 million increase in net
trade commissions from lower producing / payout representatives. The combined
effect of these factors was an increase in our average payout retention in
brokerage services from 24.6% in the prior period to 30.7% in the current period
which, in turn, contributed to an increase in our gross trading margin from
14.40% to 19.71% . Please refer to Gross Margin Table above.

Other factors
contributing to the increase in gross margin from trading was that there was a
$0.21 million trading error in April of 2004 that was realized in fiscal 2005 as
well as investments in personnel and technology to expand and upgrade the
capabilities of our trading and operations department that enabled us to more
efficiently service the increase in trading volume. Through our efforts we are
continuing to recruit more capable and experienced representatives who can offer
a broader range of brokerage products which have a greater profit margin
compared to the normal mutual fund and variable annuity products (see
Commissions, above).



| | Advisory
      Services
| | -----------------------

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|INVESTORS CAPITAL HOLDINGS LTD -
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|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Advisory services
profit margin increased by $0.36 million or 21.80% for the current period to the
prior period. The majority of the profit margin in advisory services stems from
our rep-directed asset-managed programs that make it possible for
representatives managing client accounts to trade directly online using our
automated trading platform. Resulting increases in the representative's trading
volume effectively increase the Company's commission revenues and gross margin.
Additionally, by processing more transactions at a stable fixed cost, our
enhanced trading technology fosters economies of scale that control operating
expenses required to process the increased trade volume.

Although we
experienced an increase in profit margin from advisory services during the
comparative period, our retention rate decreased from 42.6% to 37.5% . There
were a couple of factors contributing to this retention percentage decrease.
Advisory fee rates derived from rep-directed business declined slightly,
reflecting decreases in the commission retention rate for client accounts whose
balances reached levels that trigger automatic retention rate reductions. Also,
as a result of terminating the management agreement associated with the mutual
funds we no longer receive any advisory fees from that revenue component which
directly contributed to our margin

Although our retention rate from advisory services decreased compared to
the prior period, this category on a percentage-retention basis still retains a
higher profit margin than most of the other products or services we and our
representatives provide. (See Gross Margin Table, above).



| | Mutual
      Funds, Variable Annuities, Etc.
| | --------------------------------------------

Profit margins from
mutual fund sales, variable annuity sales, direct participation programs and
other check and application distribution programs contributed $4.95 million or
37.03% of the total gross margin compared to $4.47 million or 40.10% during the
prior period. As presented in the previous gross margin table, margin from our
check and application distribution programs comprised the greatest contribution
to our overall profit margin; however, trading achieved the largest percentage
increase for the comparative period of March 31, 2006 versus March 31, 2005.



|COMMISSION EXPENSES
|-------------------

Commission payouts
to our independent representatives, as a percentage of commissioned revenues,
remained virtually steady at 82.3% for this fiscal year ended March 31, 2006
versus 82.2% for the fiscal year ended March 31, 2005. Management is continuing
efforts to improve commission retention rates by refining our business model to
emphasize the recruitment and retention of sophisticated representatives. These
individuals can offer a variety of brokerage and advisory products and services
that give us better commission retention rates than those obtained from mutual
funds and variable annuities. We experienced higher margins from trading as a
result of ticket charges and fees pertaining to increases in account balances
that flow entirely to the profit margin. From advisory services we receive fees
on the asset balance in the account that go directly to the firm. Refer to the
revenue recognition policy.



|OPERATING
      EXPENSES
|------------------------

Operating expenses,
which experienced a $2.27 million or 22.1% increase for the year ended March 31,
2006, are discussed in detail below:



| | Compensation and benefits
| | -------------------------

The largest
component of operating expenses is compensation and benefits which increased by
$0.63 million or 11.1% during the current period. This is substantially below
the absolute and percentage growth rates achieved in revenues and gross margins.
This change includes primarily an increase in general salaries of $0.67 million
offset by a decrease in officers salary of $.07 million primarily as a result
of the resignation of EPAs president during our fiscal quarter ended June 30,
2005. There was also a $0.08 million decrease in stock option compensation due
to a reduction in the value of stock options distributed based on the
Black-Scholes Method of option valuation for the comparative years
ended

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|INVESTORS CAPITAL HOLDINGS LTD -
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|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|March 31, 2006 versus March 31,
2005.
|-------------------------------------

The Company
sustained a $0.11 million increase in compensation expenses from 401(k)
contributions, health insurance and payroll taxes in the current period versus
the prior period. This increase along with the increase in general salaries
primarily was the result of the hiring of 18 additional personnel. The Company
went from having 65 full time employees at March 31, 2005 to 83 full time
employees at March 31, 2006 to support continued growth of the
Company.

There was a $0.23
million increase in additional personnel expense that was needed to support the
increase in business from the trading and operations sector. Resources were
committed to ensure that the Company continues to provide quality customer
service to our sophisticated representative force. Also, $0.4 million of
addition expense was incurred in connection with the hiring of additional
personnel in the area of compliance. Resources were devoted in this area to meet
the growing needs within the industry of providing an adequate framework of
internal control, quality supervision and continuing education to our
independent representative force.



| | Regulatory, legal and
professional
| | ----------------------------------

Regulatory, legal
and professional expenses increased by $1.44 million or 94.2% . The largest
component of this increase was a $0.87 million or 264% increase in non-in-house
legal fees, $0.74 million of which was incurred in connection with the
Massachusetts Proceedings described in detail in Part I, Item 3 Legal
Proceedings. An additional $0.13 million of this increase arose from other
actions that management believes, with advice of counsel, are of the exposures
likely to be presented by our ongoing operations.

There were $0.31
million in legal settlements from dealings uncommon to our business that
contributed to the $0.54 million increase in lawsuit settlement expenses. We
also experienced a $0.23 million dollar increase in lawsuit settlements arising
from transactions conducted in the normal course of business.

We increased our
accruals for legal expenses from $0.25 million for the prior period to $0.43
million for the current period. Please refer to Footnote 15 to the Condensed
Consolidated Financial Statements. In addition, since we operate in an industry
embedded with regulation, we will continue to invest significant resources to
reduce the likelihood of future litigation by promoting accuracy, ensuring sound
operational techniques and providing appropriate compliance measures.

Finally, we
experienced a $0.04 million increase in accounting expenses, primarily
audit-related, while regulatory and professional expenses remained essentially
flat for the comparative periods.



| | Advertisement and Marketing
| | ---------------------------

Advertising expenses
increased overall by $0.13 million or 17.36% due to a change in the overall
marketing approach in our recruitment process. Management determined that it was
more effective to communicate to a potential representative force with general
marketing materials. As a result of this marketing strategy, general marketing
expenses increased by $0.09 million offset by a $0.05 million decline in
advertising expenses (magazines, brochures). Also there was $0.10 million dollar
increase in meals and entertainment as a result of the officers of the Company
continuing to meet potential representatives.



| | Communications
| | --------------

Communications
expenses increased by $0.07 million or 12.6%, primarily due to increases in
printing and website expenses approximating $0.02 million and $0.04 million,
respectively. These costs were incurred to target new revenue streams by
providing access to information through the Internet and other publications.
Communication efforts and related expenses, which also include investor/public
relations, conference, and telephone, have historically been positively
correlated with the overall growth of our

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|INVESTORS CAPITAL HOLDINGS LTD -
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|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

business. Our website and newsletter The Capitalist have become
effective medium to communicate to potential qualified representatives for
recruitment purposes.



| | Occupancy
| | ---------

Occupancy expenses
increased by $0.11 million or 18.70% primarily as a result from $0.04 million in
added costs for rent and condominium fees and a $0.04 million increase in
depreciation. In the current period we added two new investment centers in
Braintree, Massachusetts and New York, New York. We acquired additional fixed
assets in new computers for the additional staff, leasehold improvements and
additional furniture and fixtures to the home office in Lynnfield, Massachusetts
to accommodate the increase in number of employees.



| | Other
      Administrative
| | --------------------------

Other administrative
expenses, which include various insurance, postage, office and computer-related
expenses, decreased by $0.09 million or 8.20% . The Company experienced a $0.08
million increase in office expenses related primarily to the opening of a new
recruitment office in Miami, Florida and the cost of a full year of operations
of our Los Angeles, California recruitment office. Increases in other
administrative expenses also included $.01 million of additional office supply
expense, a $0.03 million increase in bank charges resulting from a heavy volume
credit card transactions to process representative license renewals, a $0.02
million increase in other taxes due to the prior years adjustment regarding
sales and use tax, and a $0.01 million increase in donations.

Offsetting those
increases, computer maintenance services declined by $0.07 million reflecting a
greater reliance on in-house staff to service our computer systems and maintain
our website. Postage decreased by $0.02 million as a result of paying
commissions through Electronic Funds Transmission (EFT) and providing commission
reports to our representatives over our website versus mailing out their check
and commission statement. Also, the Company utilized the United States Post
Office for overnight deliveries, which is less expensive than other parcel
couriers.

Other declines in
office related expenses were from mutual fund expenses which experienced a $0.08
million decline due to the termination of the management agreement for the
mutual funds, and a $0.07 million decline in bad debt expenses from the write
off of bad debt related to loans extended to our representatives. No loans were
written off during the fiscal year ended March 31, 2006.

Interest Expense

Interest expense increased by 18.16 % in comparing the prior period to
the current period.This was primarily due from interest on margin balances on
firm accounts and from interest on short term obligations.



|OPERATING
      INCOME
|----------------------

Operating income
decreased by $0.02 million or 1.93% due to an increase in operating expenses of
22.1% . The most significant contributors to the increase in operating expenses
were $0.74 million in legal fees in the Massachusetts Proceedings and an
additional $1.05 million in legal fees and settlements incurred in other legal
proceedings that the Company believes in the aggregate will prove to be
atypically heavy when compared with legal related expenses incurred in the
course of future operations.

We will continue to
make substantial investments in our selling and administrative services
capabilities, including additions to management, personnel and service
infrastructure, as part of a concerted strategy to increase revenues and
profitability. Management firmly believes that a sustained focus on enhancing
our state-of-the-art business platform will facilitate accelerated recruitment
of independent representatives that are focused on growing revenues,
particularly in high margin lines such as advisory and trading services. As part
of this effort, the Company continues to invest in an automated trading system
that enables sophisticated representatives to enhance client base and
activity.

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|NET
      INCOME
|----------------

Net income decreased by approximately $0.17 million or 27.40%, or $0.03
per basic and $0.02 per diluted share, due to a decrease in operating income and
a related increase in the provision for income taxes due to deferred tax items.
The decrease in operating income is a result of incurring more operating
expenses, primarily legal expenses, proportionate to the increase in revenues
and profit margins compared to the fiscal year ended March 31, 2005. In partial
offset, we experienced a $0.02 million gain on the sale of an asset during the
current period. See Footnote 3 to our Consolidated Financial Statements. There
was no such gain in the prior period; however, there was a $0.03 million dollar
loss on early disposal of computer equipment.



|LIQUIDITY
      AND CAPITAL RESOURCES
|-------------------------------------

The Company believes
that achieving its return on equity goals requires the efficient use of capital.
We have financed our operations primarily with internally generated cash flow.

Cash inflows
historically have come primarily from the Companys core broker-dealer and
investment advisory services which, in recent years, have proven profitable
except during the most recent fiscal year when financial results were reduced by
$2.20 million in costs associated with the Massachusetts Proceedings (see Part
I, Item 3. Legal Proceedings). This historic profitability typically has
followed an annual cycle of relatively average profitability during the first
and third fiscal quarters, relatively low profitability during the second fiscal
quarter (when several representatives and their clients are on summer vacation),
and relatively high profitability during the fourth fiscal quarter (when several
representatives and their clients start a new business and investment year).

In addition to the
annual profitability cycle, negative fluctuations and general uncertainty in
financial markets can have a negative impact on cash flow. The Company works to
minimize this impact by aggressively recruiting sophisticated representatives
who can offer diversified products that continue to meet the needs of their
clients despite changing market conditions.

The Company takes a
proactive approach to minimizing or even preventing the occurrence of other
events that may lead to unexpected cash outflows, including lawsuits, trade
errors and fines from regulatory agencies such as the NASD or the SEC. A key to
this approach is ensuring that adequate controls over our operations and those
of our representatives are implemented and periodically updated. As part of this
effort, substantial resources have been committed to enhancing the capabilities
of our compliance team, whose tasks include assuring that our representatives
give proper weight to the circumstances and interests of their clients when
recommending investment options. The Company also allocates resources to stay
current with the many rules and regulations applicable to our business by
assisting in the education and training of our sales representatives and
staff.

As of March 31,
2007, cash and cash equivalents totaled $5.50 million as compared to $7.72
million as of March 31, 2006. Working capital as of March 31, 2007 was $5.32
million as compared to $8.04 million as of March 31, 2006. The ratio of current
assets to current liabilities was 1.80 to 1 as of March 31, 2007 as compared to
2.70 to 1 as of March 31, 2006, principally due to cash disbursements of $1.72
million over the course of the current period resulting from the Massachusetts
Proceedings and settlement.

Operations used
$0.11 million in cash for the year ended March 31, 2007 as compared to $0.22
million of cash used for the year ended March 31, 2006.

In comparing cash
flow from operating activities for fiscal year ended March 31, 2007 to fiscal
year ended March 31, 2006, we can see that cash flow decreased by $1.53 million
as a result of a net loss of $1.08 million for the current period versus net
income of $0.45 million in the prior period. The $1.72 million used in the
Massachusetts Proceedings and settlement more than accounted for the swing in
cash flow from operating activities.

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|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Also during the
current period we incurred stock based compensation in the form of restricted
stock that is a $0.76 million year ended non-cash add back adjustment in
comparing the current to the prior period. We also had additional cash flow
increases of $1.40 million from incurred liabilities, including $0.48 million of
expense accruals related to the Massachusetts Proceedings and settlement.
Finally, deferred taxes reduced cash flow by $0.64 million.

Cash outflows from
investing activities for the current period totaled $2.74 million of which $0.92
million resulted from purchasing equipment as well as technology and leasehold
improvements. In addition, we invested $1.73 million in US Treasury Bills and
Notes.

As part of our
financing activities we paid a $0.25 million cash dividend on June 29, 2006 to
shareholders of record as of June 15, 2006. In addition, we incurred a short
term note obligation to finance insurance premiums which increased cash flow by
$0.74 million.

As of March 31,
2006, cash and cash equivalents totaled $7.72 million as compared to $8.62
million as of March 31, 2005. Working capital as of March 31, 2006 was $8.04
million as compared to $9.08 million as of March 31, 2005. The ratio of current
assets to current liabilities was 2.70 to 1 as of March 31, 2006 as compared to
3.31 to 1 as of March 31, 2005.

Operations used
$0.22 million in cash for the year ended March 31, 2006 as compared to providing
$0.82 million cash for the year ended March 31, 2005. Cash flow from operations,
in comparing the current period to the prior period, decreased by $1.04 million
as a result of several factors. We experienced a $0.17 million decrease in net
income. We had a cash flow decrease of $1.54 million from our trade receivables
and a $0.40 million decrease in accounts receivable asset held for sale. We
also had a $0.17 decrease in loan grants to registered representatives to help
grow their businesses.

Also comparing cash
flow from operations for the year ended March 31, 2006 to the year ended March
31, 2005, we experienced a $0.78 million cash flow increase from income taxes, a
$0.33 million decrease from current payables in accounts payable and accrued
expenses and a $0.74 million increase resulting from commission payables.

Cash outflows from
investing activities for the year ended March 31, 2006 comprised $0.65 million
of which $0.41 million was for purchasing equipment as well as technology and
leasehold improvements. Also, we had a $0.15 million cash outflow for an
investment through a private placement.

Finally, as part of
our financing activities we paid a $0.12 million cash dividend on May 16, 2005
to shareholders of record as of May 2, 2005, offset by $0.09 million received in
financing debt for our insurance premiums.

Cash disbursements
for legal-related matters during the year ended March 31, 2007 totaled $2.62
million including $1.72 million for legal fees relating to the Massachusetts
Proceedings and $0.50 million for the initial payment pertaining to the
settlement of the Massachusetts Proceedings. Subsequent to the March 31, 2007
there will be at least an additional $0.50 million to be paid to the eligible
purchasers of equity indexed annuities and/or the State of Massachusetts under
the terms of the consent agreement. Management at this time does not foresee
such future cash out flows exceeding $0.50 million that will impact our future
cash position. Payments to eligible purchasers since December of 2006 have
totaled $.04 million to the date of this Form 10-K. See Part I, Item 3. Legal
Proceedings.

Management believes,
although there can be no assurances, that the current period net cash outflow
--which reflects unusually burdensome expenditures to defend and settle the
Massachusetts Proceedings --will not be indicative of future cash outflow
trends. The scale of the financial damage resulting from the Massachusetts
Proceedings has been atypical of legal proceedings that the Company has
experienced to date and, in managements estimation, will prove to be atypical
of legal proceedings that may be expected to occur in the future. Whether or not
managements expectations will come to fruition may in no small measure depend
on the degree to which we succeed, through a continually evolving and robust
compliance regime, in assuring that the firm and its independent representatives
operate in conformity

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|INVESTORS CAPITAL HOLDINGS LTD -
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|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

with the many laws, rules and regulations pertaining to our broker-dealer
and investment advisory operations.

The unprecedented
disbursements during the fiscal year ended March 31, 2007 associated with the
Massachusetts Proceedings have had a significant negative impact on our
brokerage firm's net capital ratio. The SEC Uniform Net Capital Rule (Rule
15c3-1) requires that ICC, our broker-dealer subsidiary, maintain net capital of
$100,000 and a ratio of aggregate indebtedness to net capital (a net capital
ratio) not to exceed 15 to 1. Under the rule, indebtedness generally includes
all money owed by a company, and net capital includes cash and assets that are
easily converted into cash. SEC rules also prohibit "equity capital" (which,
under the net capital rule, includes subordinated loans) from being withdrawn,
cash dividends from being paid and other specified actions of similar effect
from being taken, if, among other specified contingencies, the Companys net
capital ratio would exceed 10 to 1 or if we would have less than 120% of our
minimum required net capital. As of March 31, 2007, ICC had net capital of $1.05
million (i.e., an excess of $0.52 million) and a 7.59 to 1 net capital ratio as
compared to net capital of approximately $0.96 million (i.e., an excess of $0.53
million) and a 6.63 to 1to 1 net capital ratio as of March 31, 2006.

In December 2006,
ICH infused $1.3 million in capital to ICC to offset the cash drain resulting
from the Massachusetts Proceedings and settlement. The Company's legal accrual
increased considerably to $1.10 million as of March 31, 2007 from $0.43 million
as of March 31, 2006 primarily as a result of the settlement of the
Massachusetts Proceedings. The Company also had other various arbitrations filed
against it that warranted a portion of the accrual increase.

During the current
period the increase in our legal accrual impacted ICC's net capital ratio and
excess net capital. The Company does not consider this to be a trend and does
not currently anticipate that similar accrual increases will be a recurring
necessity. See Footnote 5 to our Consolidated Financial Statements.

The Company
currently has ample cash to cover additional accruals and disbursements
resulting from these proceedings. Despite these legal proceedings, that
increased our legal accrual, the Company remains focused on committing the
resources necessary for continued growth.

During the fiscal
year ended March 31, 2006 in its former role as investment adviser to the
Eastern Point Advisors Funds Trust family of mutual funds, Company disbursements
to pay fund expenses that exceeded their respective caps averaged $0.08 million
per quarter. As previously noted, the Company agreed to terminate its management
contract with the Trust and, accordingly, the Company received a net cash flow
infusion of $0.18 million for the year ended March 31, 2006 versus a $0.39
million cash flow outlay for the year ended March 31, 2005. See Part I, Item 1 
Retail Mutual Funds

For the year ended
March 31, 2005, cash inflows from operating activities primarily came from net
income, which contributed $0.62 million as well as the collection of $0.38
million of accounts receivable and $0.59 million from current liabilities in
accrued expenses and accounts payable. Cash flows decreased by $0.68 million
primarily from $1.02 million in payments of income taxes. Cash flows also
decreased by $0.19 million for payment of commissions and $0.18 million for
loans to representatives to help them grow their business. Finally we had a cash
outflow of $0.15 million to the NASD to pay a note in full.

ICC made a business
decision in the fiscal year ended March 31, 2003 to conclude an NASD
investigation into supervisory procedures relating to the period of January,
2000 through July, 2002. While we considered disputing the allegations in a
formal proceeding, we estimated the cost of doing so to be prohibitive.
Furthermore, we sought to avoid disruption of our operations. Accordingly, while
neither admitting nor denying the allegations, we consented to a number of
findings in order to resolve the matter in its initial stages. Repayment of the
resulting settlement note to NASD did not have a material effect on cash flow at
any time during the current period as the note was fully paid on August 19,
2004. The Company has implemented and maintains an adequate system of
supervisory and regulatory procedures and does not foresee any material
deficiencies in the future in this regard.

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

From investing
activities we had cash outflows of $0.27 million for equipment and technology.
As part of financing activities we had a cash flow decrease of $0.04 million.
This was the result of a $0.07 million payment on a note to finance our
insurance premiums offset by $0.03 million in proceeds from options being
exercised.

|CONTRACTUAL OBLIGATIONS                    
|-------------------------------------------
|                                           
|Contractual
      Obligations              
|                                           
|Short- term loans and notes
      payable1,
|lines of credit and other short-
      term
|borrowings                                 
|Operating leases2                          
|                                           
|Total                                      

1. Refer to
Note 11 of the Notes to Consolidated Financial Statements for information
regarding short- term loans and notes payable.

2. Refer to
Note 14 of the Notes to Consolidated Financial Statements for information
regarding operating leases.

ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk is
present in our business due to, among other things, price changes in equities,
changes in interest rates, and credit ratings in debt instruments. This risk
relates both to financial instruments we hold as investments and those we hold
for trading purposes.

As of March 31,
2007, we held U.S. Treasury bonds with an amortized value totaling $1,738,842.
Although we intend to hold these bonds to maturity, if we determined to
liquidate our position in these bonds prior to maturity, the proceeds from their
sale would depend on fluctuations in their market value that reflect, among
other things, fluctuations in prevailing interest rates. See Note 6 
Investments to our Consolidated Financial Statements.

We own an equity
position in the Rising Dividend Fund with a market value of $176,078 as of March
31, 2007. The value of this position fluctuates daily.

Market risk is
present in our normal business activity as a result of our involvement as
principal in the execution of trading activity and delivery of fixed and
variable investment products. Securities inventories are exposed to risk of loss
in the event of unfavorable price movements. Securities positions are marked to
market on a daily basis. Market-making activities are client-driven, with the
objective of meeting client needs while earning a positive spread. As of March
31, 2007, we held in inventory for trading purposes securities valued at
$206,530. We conduct our business as a brokerage and advisory firm clearing
through another broker dealer on a fully disclosed basis to minimize our market
risk. In our view, exposure to market risk, trading volatility and illiquidity
of securities held from time to time in the firms inventory accounts could
potentially have a material adverse effect on our financial position.

Additional
information pertaining to market risk is contained in Part II, Item 7.
"Managements' Discussion and Analysis of Financial Condition and Results of
Operations -- Risk Management" of this Form 10-K.

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.

Page 44

---



|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of
Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Investors Capital Holdings,
Ltd. And Subsidiaries



|Lynnfield, MA
|-------------

We have audited the
accompanying consolidated balance sheet of Investors Capital Holdings, Ltd. and
subsidiaries (the Company) as of March 31, 2007 and the related consolidated
statements of operations, changes in stockholders equity, and cash flows for
the one year period ended March 31, 2007. These financial statements and
schedule are the responsibility of the Companys management. Our responsibility
is to express an opinion on these consolidated financial statements based on our
audits. The financial statements of Investors Capital Holdings, Ltd. and
subsidiaries for the two years ended March 31, 2006 and 2005 were audited by
other auditors whose reports dated May 17, 2006, and May 11, 2005, respectively,
expressed unqualified opinions on those financial statements.

We conducted our
audits in accordance with the auditing standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstance, but not for the purpose of expressing an
opinion on the effectiveness of the Company internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of the Company at March
31, 2007 and the consolidated results of their operations and their cash flows
for the year ended March 31, 2007, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.



|/s/ UHY
      LLP
|-----------------



|Boston, MassachusettsJune 29,
      2007
|----------------------------------------



|F-1
|---

Page 45

---



|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Report of
Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Investors Capital Holdings,
Ltd. and Subsidiaries



|Lynnfield, MA
|-------------

We have audited the
accompanying consolidated balance sheet of Investors Capital Holdings, Ltd. and
subsidiaries as of March 31, 2006 and the related consolidated statements of
operations, stockholders equity, and cash flows for each of the two years in
the period ended March 31, 2006. Our audits also included the financial
statement schedule listed in the Index at Item 15. These financial statements
and schedule are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.

We conducted our
audits in accordance with the auditing standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstance, but not for the purpose of expressing an
opinion on the effectiveness of the Company internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position the Company at March 31,
2006 and 2005 and the consolidated results of their operations and their cash
flows for the two years in the period ended March 31, 2006, in conformity with
accounting principles generally accepted in the United States of America.



|/s/ Brown
      & Brown, LLP
|----------------------------



|Boston, MassachusettsMay 17,
      2006
|---------------------------------------

Page 46

---





|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                                                                                                    | INVESTORS CAPITAL HOLDINGS, LTD. AND
      SUBSIDIARIES |            |                            
|--------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ---------- | ---------------------------
|                                                                                                    | CONSOLIDATED BALANCE SHEETS                             |            |                            
|                                                                                                   
|                                                                                                    |                                                         | March 31,  |                            
|                                                                                                    |                                                         | 2007       |                            
|Assets                                                                                              |                                                         |            |                            
|                                                                                                   
|Current Assets                                                                                      |                                                         |            |                            
|                                                                                                   
|Cash and cash equivalents                                                                           | $     
       5,498,259                                 |            | $          
      7,718,682
|Deposit with clearing organization,
      restricted                                                |                                                         | 175,000    |                            
|Accounts receivable                                                                                 |                                                         | 4,336,234  |                            
|Note receivable-sale of asset
      (current)                                                       |                                                         | 8,561      |                            
|Loans receivable from registered
      representatives(current)                                     |                                                         | 470,492    |                            
|Prepaid income taxes                                                                                |                                                         | 35,078     |                            
|Marketable securities, at market
      value                                                        |                                                         | 206,530    |                            
|Investment (short term)                                                                             |                                                         | 745,315    |                            
|Prepaid expenses                                                                                    |                                                         | 482,882    |                            
|                                                                                                    |                                                         | __________ |                            
|                                                                                                    |                                                         | 11,958,351 |                            
|                                                                                                   
|Property and equipment,
      net                                                                   |                                                         | 1,396,793  |                            
|                                                                                                   
|Long Term Investments                                                                               |                                                         |            |                            
|Loans receivable from registered
      representatives                                              |                                                         | 191,305    |                            
|Note Receivable-sale of asset                                                                       |                                                         | 747,617    |                            
|Equity Investments,at cost                                                                          |                                                         | 190,000    |                            
|Investments                                                                                         |                                                         | 1,169,606  |                            
|Cash surrender value life insurance
      policies                                                  |                                                         | 275,201    |                            
|                                                                                                    |                                                         | __________ |                            
|                                                                                                    |                                                         | 2,573,729  |                            
|Other Assets                                                                                        |                                                         |            |                            
|Other assets                                                                                        |                                                         | 72,199     |                            
|Deferred tax asset, net                                                                             |                                                         | 889,128    |                            
|                                                                                                    |                                                         | __________ |                            
|                                                                                                    |                                                         | 961,327    |                            
|                                                                                                   
|TOTAL ASSETS                                                                                        | $     16,890,200                                        |            | $      15,325,827          
|                                                                                                    | __________                                              |            | __________                 
|                                                                                                   
|Liabilities and Stockholders'
      Equity                                                          |                                                         |            |                            
|                                                                                                   
|Current Liabilities                                                                                 |                                                         |            |                            
|                                                                                                   
|Accounts payable                                                                                    | $       
      773,636                                  |            | $        
       775,774   
|Accrued expenses                                                                                    |                                                         | 1,871,694  |                            
|Notes payable                                                                                       |                                                         | 838,358    |                            
|Unearned revenues                                                                                   |                                                         | 100,363    |                            
|Commissions payable                                                                                 |                                                         | 3,049,900  |                            
|Income taxes payable                                                                                |                                                         | -          |                            
|Securities sold, not yet purchased, at
      market value                                           |                                                         | 711        |                            
|                                                                                                    |                                                         |            |                            
|__________                                                                                          |                                                         | _________ 
|                                                                                                    |                                                         | 6,634,662  |                            
|Long-Term Liabilities                                                                               |                                                         |            |                            
|                                                                                                   
|Total liabilities                                                                                   | $    6,634,662                                          |            | $      4,739,744           
|                                                                                                    |                                                         |            |                            
|                                                                                                   
|Commitments and contingencies (Note
      14)                                                       |                                                         |            |                            
|                                                                                                   
|Stockholders'
      Equity:                                                                         |                                                         |            |                            
|                                                                                                   
|Common stock, $.01 par value,
      10,000,000                                                      |                                                         |            |                            
|shares
      authorized;6,209,421                                                                   |                                                         |            |                            
|in 2007; 5,794,246 issued and
      5,790,361 outstanding in 2006 .                                 |                                                         | 62,094     |                            
|Additional paid-in
      capital                                                                    |                                                         | 9,721,749  |                            
|Retained earnings                                                                                   |                                                         | 468,506    |                            
|less: Treasury stock, 3,885
      shares at cost                                                    |                                                         | (30,135)   |                            
|Accumulated other comprehensive
      income                                                        |                                                         | 33,324     |                            
|                                                                                                    |                                                         |            |                            
|                                                                                                   
|                                                                                                   
|Total stockholders'
      equity                                                                    |                                                         | 10,255,538 |                            
|___________                                                                                         |                                                         | __________
|TOTAL LIABILITIES AND
      STOCKHOLDERS'                                                           |                                                         |            |                            
|EQUITY                                                                                              | $ 16,890,200                                            |            | $ 15,325,827               
|                                                                                                    | ___________                                             |            | __________                 
|                                                                                                   
|The
      accompanying notes are an integral part of these consolidated financial
      statements. |                                                         |            |                            

Page 47

---





|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|INVESTORS
      CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES    |  |                                      |  |                               |  |                             
|---------------------------------------------------------- |  | ------------------------------------ |  | ----------------------------- |  | ----------------------------
|CONSOLIDATED
      STATEMENTS OF INCOME                    |  |                                      |  |                               |  |                             
|                                                           |  |                                      |  | YEARS
      ENDED             |  |                             
|                                                           |  |                                      |  | March
      31,               |  |                             
|                                                           |  | 2007                                 |  | 2006                          |  | 2005                        
|Revenues:                                                  |  |                                      |  |                               |  |                             
|Commission                                                 |  | $
      70,273,816                   |  | $
      60,028,731            |  | $
      48,660,052          
|Advisory
      fees                                        |  | 6,767,136                            |  | 5,147,907                     |  | 3,702,556                   
|Other fee
      income                                     |  | 941,969                              |  | 1,142,454                     |  | 1,189,737                   
|Marketing
      revenue                                    |  | 1,258,944                            |  | 1,013,828                     |  | 1,140,098                   
|Other
      income                                         |  | 811,163                              |  | 669,508                       |  | 473,091                     
|                                                           |  |                                      |  |                               |  |                             
|Total
      revenue                                        |  | 80,053,028                           |  | 68,002,428                    |  | 55,165,534                  
|Commission and
      advisory fees                         |  | 64,926,784                           |  | 54,609,596                    |  | 44,025,004                  
|                                                           |  |                                      |  |                               |  |                             
|Gross
      profit                                         |  | 15,126,244                           |  | 13,392,832                    |  | 11,140,530                  
|                                                           |  |                                      |  |                               |  |                             
|Operating
      expenses:                                  |  |                                      |  |                               |  |                             
|Advertisement
      and marketing                          |  | 874,862                              |  | 895,658                       |  | 763,192                     
|Communications                                             |  | 489,185                              |  | 603,964                       |  | 536,386                     
|                                                           |  |                                      |  |                               |  |                             
|Selling
      expenses                                     |  | 1,364,047                            |  | 1,499,622                     |  | 1,299,578                   
|                                                           |  |                                      |  |                               |  |                             
|Compensation
      and benefits                            |  | 8,604,346                            |  | 6,344,945                     |  | 5,713,028                   
|Regulatory,
      legal and professional                   |  | 4,795,947                            |  | 2,965,689                     |  | 1,527,256                   
|Occupancy                                                  |  | 995,985                              |  | 695,003                       |  | 616,718                     
|Other
      Admistrative expenses                          |  | 1,044,500                            |  | 968,825                       |  | 1,055,368                   
|Interest
      expense                                     |  | 35,775                               |  | 47,782                        |  | 40,440                      
|                                                           |  |                                      |  |                               |  |                             
|Administrative
      expenses                              |  | 15,476,553                           |  | 11,022,244                    |  | 8,952,810                   
|                                                           |  |                                      |  |                               |  |                             
|Total operating
      expenses                             |  | 16,840,600                           |  | 12,521,866                    |  | 10,252,388                  
|                                                           |  |                                      |  |                               |  |                             
|Operating
      (loss) income                              |  | (1,714,356)                          |  | 870,966                       |  | 888,142                     
|(Loss) income
      before taxes                           |  | (1,714,356)                          |  | 870,966                       |  | 888,142                     
|(Benefit)Provision for income taxes                        |  | (630,290)                            |  | 421,328                       |  | 269,033                     
|                                                           |  |                                      |  |                               |  |                             
|Net (loss)
      income                                    |  | $                
       (1,084,066) |  | $             
      449,638  |  | $          
       619,109  
|                                                           |  |                                      |  |                               |  |                             
|Earnings per
      common share                            |  |                                      |  |                               |  |                             
|Basic earnings
      per common share:                     |  | $                          (0.18)    |  | 0.08                          |  | 0.11                        
|                                                           |  |                                      |  |                               |  |                             
|Diluted
      earnings per common share:                   |  | $                          (0.18)    |  | $                 
      0.08 |  | $                
      0.10
|                                                           |  |                                      |  |                               |  |                             
|Share
      Data:                                          |  |                                      |  |                               |  |                             
|Weighted
      average shares used in basic earnings per   |  |                                      |  |                               |  |                             
|common share
      calculations                            |  | 5,928,238                            |  | 5,766,686                     |  | 5,735,287                   
|Plus:Incremental shares from assumed exercise
      of     |  |                                      |  |                               |  |                             
|stock
      options                                        |  | 172,617                              |  | 144,343                       |  | 186,917                     
|                                                           |  |                                      |  |                               |  |                             
|Weighted
      average shares used in diluted earnings per |  |                                      |  |                               |  |                             
|common share
      calculations                            |  | 6,100,855                            |  | 5,911,029                     |  | 5,922,204                   
|                                                           |  |                                      |  |                               |  |                             

Page 48

---





|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|INVESTORS
      CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES         
|----------------------------------------------------------------
|-------------------------------------------------               
|CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|----------------------------------------------------------      
|Years Ended
      March 31, 2007, 2006 and 2005                 
|---------------------------------------------                   
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|Balance at
      March 31, 2004                                 
|                                                                
|Stock based
      compensation                                  
|Comprehensive
      income:                                     
|Net income                                                      
|Other
      Comprehensive Income:                               
|Unrealized (losses) on
      securities:                        
|unrealized
      holding (losses) arising during                
|period no tax
      effect                                      
|Less:
      reclassification adjustment for gain                
|                                                                
|Other
      Comprehensive Income                                
|                                                                
|Comprehensive Income                                            
|                                                                
|Balance at
      March 31, 2005                                 
|Stock based
      compensation                                  
|Comprehensive
      income:                                     
|Net income                                                      
|Other
      Comprehensive Income:                               
|Unrealized gain on
      securities:                            
|Unrealized
      holding gains arising during                   
|period no tax
      effect                                      
|no
      reclassification adjustment required                   
|                                                                
|Other
      Comprehensive Income                                
|                                                                
|Comprehensive Income                                            
|                                                                
|Dividend payment to shareholders                                
|Balance at
      March 31, 2006                                 
|                                                                
|Stock based
      compensation                                  
|Comprehensive
      income:                                     
|Net (loss)                                                      
|Other
      Comprehensive Income:                               
|Unrealized gain on
      securities:                            
|Unrealized
      holding gains arising during                   
|period no tax
      effect                                      
|no
      reclassification adjustment required                   
|                                                                
|Other
      Comprehensive Income                                
|                                                                
|Comprehensive Loss                                              
|                                                                
|Dividend payment to shareholders                                
|                                                                
|Balance at
      March 31,2007                                  
|                                                                

Reclassification disclosure:

There was no reclassification adjustment required for an unrealized gain
of $13,617 on available-for-sale securities for the year ended March 31,
2007.

There was no reclassification adjustment required for an unrealized gain
of $19,707 on available-for-sale securities for the year ended March 31,
2006.

Net unrealized losses on available-for-sale securities for the year ended
March 31, 2005 were $385. Such amount has been adjusted to $12,157 to reflect a
reclassification of the gain of $11,772 on the sale of a security, with no tax
effect, when the asset was sold.



| | The accompanying notes are an integral part of these consolidated
      financial statements.
| | ---------------------------------------------------------------------------------------------

Page 49

---





|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|Years Ended
      March 31, 2007, 2006 and 2005                                                     |  |                     |  |                   |  |                  
|--------------------------------------------------------------------------------------------------- |  | ------------------- |  | ----------------- |  | -----------------
|                                                                                                    |  | 2007                |  | 2006              |  | 2005             
|                                                                                                   
|Cash flows
      from operating activities:                                                         |  |                     |  |                   |  |                  
|                                                                                                   
|Net (loss)
      income                                                                             |  | $
      (1,084,066) |  | $
      449,638   |  | $
      619,109  
|Adjustments to
      reconcile net (loss) income to net cash                                        |  |                     |  |                   |  |                  
|provided by
      (used in) operating activities:                                                   |  |                     |  |                   |  |                  
|Depreciation
      and amortization                                                                 |  | 296,900             |  | 213,214           |  | 172,153          
|Amortization
      U.S Treasury Bills                                                               |  | (11,967)            |  | -                 |  | -                
|Realized
      (gain) on securities                                                                 |  | -                   |  | -                 |  | (11,772)         
|Change in
      deferred taxes                                                                      |  | (640,814)           |  | (98,843)          |  | (79,750)         
|Stock based
      compensation                                                                      |  | 759,568             |  | 29,529            |  | 45,640           
|Stock option
      compensation                                                                     |  | 96,100              |  | 15,814            |  | 97,841           
|Change in
      marketable securities                                                               |  | (183,503)           |  | (19,841)          |  | (75,095)         
|Loss on
      disposal of equipment                                                                 |  | -                   |  | -                 |  | 31,072           
|Income (loss)
      on investment                                                                   |  | (3,312)             |  | 3,373             |  | (990)            
|Market
      adjustment cash surrender value life insurance
    policy                              |  | (2,443)             |  | 896               |  | -                
|Charge to
      commission expense (forgivable loans)                                               |  | 66,865              |  | -                 |  | -                
|Bad Debt on
      Account Receivable from the Funds                                                 |  | -                   |  | -                 |  | 46,336           
|                                                                                                   
|Change in
      operating assets and liabilities                                                    |  |                     |  |                   |  |                  
|Decrease
      (increase) in accounts receivable                                                    |  | (172,576)           |  | (1,160,199)       |  | 377,578          
|(Increase) in
      accounts receivable asset held for sale                                         |  | -                   |  | (398,128)         |  | -                
|(Decrease)
      Increase in prepaid expenses and other assets                                      |  | (270,549)           |  | (7,445)           |  | 40,596           
|Loans
      receivable from registered representatives                                              |  | (126,421)           |  | (351,096)         |  | (181,839)        
|(Increase)
      decrease prepaid income taxes                                                      |  | (35,078)            |  | 100,889           |  | (100,889)        
|Decrease in
      loans receivable from officers                                                    |  | -                   |  | -                 |  | 64,400           
|(Decrease)
      increase in taxes payable                                                          |  | (198,026)           |  | 198,026           |  | (582,721)        
|(Decrease)
      Increase in accounts payable                                                       |  | (2,138)             |  | (22,948)          |  | 442,940          
|Increase in
      accrued expenses                                                                  |  | 789,084             |  | 283,930           |  | 149,159          
|Increase
      (decrease) in commissions payable                                                    |  | 617,304             |  | 547,256           |  | (192,856)        
|Increase
      (Decrease) in unearned revenues                                                      |  | (4,416)             |  | (1,996)           |  | 106,775          
|(Payments) on
      NASD settlement note                                                            |  | -                   |  | -                 |  | (148,679)        
|Net cash (used
      in) provided by operating activities                                           |  | $
      (109,488)   |  | $
      (217,931) |  | $
      819,008  
|                                                                                                   
|                                                                                                   
|Cash flows
      from investing activities:                                                         |  |                     |  |                   |  |                  
|                                                                                                   
|Purchases of
      property and equipment                                                           |  | $
      (921,195)   |  | $
      (414,514) |  | $
      (271,107)
|Purchase of
      Investment in unconsolidated affiliate                                            |  | -                   |  | -                 |  | (56,006)         
|(Payments)
      Cash surrender value life insurance policy                                         |  | (90,886)            |  | (90,886)          |  | -                
|Purchase of
      Investment in private placement                                                   |  | -                   |  | (150,000)         |  | -                
|Sale of
      Investment available for sale                                                         |  | -                   |  | -                 |  | 55,954           
|Investments in
      United States Treasury Bills                                                   |  | (1,726,875)         |  | -                 |  | -                
|                                                                                                   
|Net cash used
      in investing activities                                                         |  | $
      (2,738,956) |  | $
      (655,400) |  | $
      (271,159)
|                                                                                                   
|                                                                                                   
|The
      accompanying notes are an integral part of these consolidated financial
      statements. |  |                     |  |                   |  |                  

Page 50

---



|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|INVESTORS
      CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                                             |             |  |           |  |          
|--------------------------------------------------------------------------------------------------- | ----------- |  | --------- |  | ---------
|CONSOLIDATED
      STATEMENTS OF CASH FLOWS -- (CONTINUED)                                          |             |  |           |  |          
|                                                                                                   
|                                                                                                    | 2007        |  | 2006      |  | 2005     
|Cash flows
      from financing activities:                                                         |             |  |           |  |          
|proceeds from
      Note Payable                                                                    | 743,785     |  | 85,140    |  | (69,566) 
|payment of
      dividends                                                                          | (245,217)   |  | (115,628) |  | -        
|Exercise of
      stock options                                                                     | 129,453     |  | 4,240     |  | 27,411   
|Net cash
      provided by (used in) financing activities                                           | 628,021     |  | (26,248)  |  | (42,155) 
|Net(decrease)
      increase in cash and cash equivalents                                           | (2,220,423) |  | (899,579) |  | 505,694  
|Cash and cash
      equivalents, beginning of year                                                  | 7,718,682   |  | 8,618,261 |  | 8,112,567
|                                                                                                   
|Cash and cash
      equivalents, end of year                                                        | 5,498,259   |  | 7,718,682 |  | 8,618,261
|                                                                                                    |             |  | ________  |  | ________ 
|Supplemental
      disclosures of cash flow information:                                            |             |  |           |  |          
|Interest
      paid                                                                                 | 35,775      |  | 47,782    |  | 40,440   
|Income taxes
      paid                                                                             | 373,825     |  | 212,256   |  | 1,020,000
|Supplemental
      Disclosure of Non-Cash Flow Information                                          |             |  | 747,617   |  |          
|Financing sale
      accounts receivable "Mutual Fund Management
    Agreement"                     |             |  |           |  |          
|The
      accompanying notes are an integral part of these consolidated financial
      statements. |             |  |           | 

Page 51

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

Years Ended March 31, 2007, 2006 and 2005



|NOTE 1 -
      NATURE OF OPERATIONS
|-----------------------------------

Incorporated in July 1995, Investors Capital Holdings, Ltd. ("ICH") is a
holding company whose wholly-owned subsidiaries assist a nationwide network of
independent registered representatives ("Representatives") in providing a
diversified line of financial services to the public including securities
brokerage, investment advice, asset management, financial planning and
insurance. Our subsidiaries include the following:

- Investors Capital Corporation ("ICC") is duly registered under the
  Securities Exchange Act of 1934, the Investment Advisers Act of 1940 and applicable state law to provide
  broker-dealer and investment advisory services in all
  fifty states, the District of Columbia and Puerto Rico. ICC maintains a
  nationwide network of independent
  financial representatives who are licensed to provide these services through
  ICC under the regulatory purview
  of the Securities and Exchange Commission (the SEC), the National
  Association of Securities Dealers (the NASD) and state securities regulators. ICC
  clears its public customer accounts on a fully disclosed
  basis through a clearing broker. ICC does business as an investment adviser
  under the name Investors Capital Advisors (ICA).
- Eastern
  Point Advisors, Inc. ("EPA") is an Investment Adviser registered with SEC
  under the Securities Exchange
  Act of 1934. In the past EPA was the primary provider of investment
  advisory/asset management
  services now being rendered by ICA. In addition, until October 2005 EPA served
  as advisor to two mutual funds. Currently EPA facilitates the availability of
  advisory services provided by third- parties,
  only.
- ICC
  Insurance Agency, Inc. facilitates the sale of insurance and annuities by
  ICCs representatives.
- Investors Capital Holdings Securities Corporation ("ICH Securities") is
  a Massachusetts securities corporation that
  was formed in March 2005 primarily to hold cash, cash equivalents, interest
  income and dividend income for ICH.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies of the Company are summarized below
to assist the reader to better understand the consolidated financial statements
and other data contained herein.



|BASIS OF
      PRESENTATION:
|----------------------------

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, ICC, EPA, ICC Insurance Agency, Inc., and ICH
Securities. All significant inter-company items and transactions have been
eliminated in the consolidation.



|USE OF
      ESTIMATES AND ASSUMPTIONS:
|---------------------------------------

The preparation of 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, if
any, at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.



|RECLASSIFICATIONS:
|------------------

Certain amounts in 2005 and 2006 were reclassified to provide comparison
with 2007 classifications.



|REVENUE
      RECOGNITION:
|--------------------------

Company revenue recognition policies are summarized below. These policies
are maintained in compliance with SEC Staff Accounting Bulletin ("SAB") 104
"Revenue Recognition in Financial Statements".

Page 52

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Mutual
Funds/Variable Annuities.Revenue from the
sale of mutual funds and variable annuities is recognized as of the date the
check and application is accepted by the investment company.

Trading.The Company earns commissions through stock purchases and sale
transactions, mutual fund purchases, government and corporate bonds
transactions, fee-based managed accounts, and ticket charges. The Company also
earns revenue in the form of 12b-1 fees and interest on account balances. The
earnings process is substantially complete at trade date in accordance with the
rules of the NASD and SEC.

The Company also receives credit for clearing charge adjustments that are
netted against any clearing charges the Company may incur for the period. These
adjustments are recognized as income in the period received unless otherwise
noted by the clearing firm.

Unrealized gains and losses are recorded at the time that the Company
reconciles its trading positions with the market value. The unrealized gains or
losses are adjusted to market until the position is settled or the trade is
cancelled.

Advisory
Fees.Our managed accounts advisory fees are based on the amount of assets
managed per agreement between the adviser and the advisers client. These
revenues are recorded quarterly as and when billed, and any portion remaining
uncollected at the end of the subsequent quarter is charged against earnings at
that time.

The Company ceased providing advisory services to mutual funds effective
October 18, 2005. Prior thereto, advisory fees relating to the management of
mutual funds were based on average daily net fund assets as specified in the
Companys advisory agreement and disclosed in the funds prospectuses. These
fees were recognized monthly based on the fund Trustees administrative fee
report detailing the amounts that were earned for the month. The Company elected
to waive certain of these fees to allow for one of the funds to maintain its cap
on administrative expenses. Per agreement with the trustee of the funds, the
waived fees were subject to a three-year recovery period, at the end of which
any uncollected fees have been permanently waived and, consequently, charged
against earnings. The Companys successor as fund adviser has agreed to pay to
the Company all such waived amounts with interest. See Note 4. Note
Receivable.

Administration Fees.Administration fees
for services rendered to its representatives respecting annual NASD license
renewals and E&O insurance are recognized as revenue upon registration of
the representative with NASD and listing of the registered representative with
the E&O insurance carrier. The funds received from the registered
representative are initially recorded as unearned revenue. The amounts, if any,
collected in excess of the E & O insurance premium and/or fees due NASD are
recognized as revenue.

Marketing
Revenue.Revenue from
marketing associated with product sales is recognized quarterly based on
production levels. Marketing event revenues are recognized at the commencement
of the event offset by its costs.



|CASH AND
      CASH EQUIVALENTS:
|--------------------------------

For purposes of reporting cash flow, cash and cash equivalents includes
cash in checking and savings accounts, cash at a clearing broker-dealer and
short-term investments with original maturities of 90 days or less.



|CUSTOMER
      ACCOUNTS:
|------------------------

The Company's customer accounts are reported by the various custodians on
a fully disclosed basis.



|FINANCIAL
      INSTRUMENTS:
|----------------------------

The financial instruments of the Company are reported in the consolidated
balance sheets at market or fair value, or at carrying amounts that approximate
fair value because of the short maturity of the instruments, except loans
receivable. The fair value for loans receivable are estimated using discounted
cash flow analyses, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.



|MARKETABLE SECURITIES:
|----------------------

The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for certain
investments in debt and equity securities". SFAS No. 115 requires companies to
classify their short-term investments as trading, available-for-sale, or
held-to-maturity. The Company's marketable securities consist of fixed income
instruments and mutual funds and have been classified by management as trading.
Accordingly, realized and unrealized gains and losses at year-end are included
in the earnings of the Company. The fair market value of these securities was
determined based on quoted market prices.

The Company conducts its principal trading through two designated trading
accounts. One of these accounts is used to facilitate fixed income trading on a
same day buy-sell basis. The second account is used to facilitate fixed income
trading for representatives and may carry positions overnight. These securities
are normally held in the account for no longer than 30 days and are recorded at
fair market value.



|PROPERTY
      AND EQUIPMENT:
|-----------------------------

Page 53

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Furniture, equipment, leasehold improvements and software are stated at
cost. Maintenance and repairs are charged to operations as incurred.
Depreciation is provided utilizing the straight-line method over the shorter of
either their estimated useful lives or lease term, if applicable. For software
and equipment we use a 5-year straight-line method and for furniture and
fixtures we use a 7-year straight-line method.



|ADVERTISING:
|------------



| | The Company expenses all promotional costs as
  incurred.
| | ---------------------------------------------------------



|INCOME
      TAXES:
|-------------------

The Company uses the asset and liability method to account for income
taxes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of the existing assets and liabilities and their respective tax
bases and operating loss carry-forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which the temporary differences are expected to be realized or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The Company management has not recorded a
valuation allowance against the deferred tax assets as management believes it is
more likely than not that they will be realized.



|EARNINGS
      PER SHARE:
|-------------------------

The Company reports net income per share in accordance with the SFAS No.
128, "Earnings per share". Diluted earnings per share do not include the effect
of stock options as it has an anti-dilutive effect on EPS (See Note 16). In
accordance with SFAS No. 128, basic and diluted net income per common share was
determined by dividing net income by the weighted average number of common
shares outstanding during the period.



|STOCK
      BASED COMPENSATION:
|-------------------------------

The Company applied Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock option plans. The following table illustrates the
effect on net income had the Company adopted the fair value based model of
accounting for stock-based employee compensation for all periods presented:

|                                  |  | Fiscal Year
      Ended M arch 31,
|--------------------------------- |  | ----------------------------------
|                                  |  | 2006                              
|Net income, as
      reported     |  | $
      449,638                   
|                                  |  |                                   
|Deduct: Total
      stock-based   |  |                                   
|employee
      compensation       |  |                                   
|expense
      determined under    |  |                                   
|fair value
      based method for |  |                                   
|all awards, net
      of related  |  |                                   
|tax
      effects                 |  | -                                 
|                                  |  |                                   
|Pro forma net
      income        |  | 449,638                           
|                                  |  |                                   
|Earnings per
      share:         |  |                                   
|Basic - as
      reported         |  | $
      0.08                      
|Basic - pro
      forma           |  | $
      0.08                      
|Diluted - as
      reported       |  | $
      0.08                      
|Diluted - pro
      forma         |  | $
      0.08                      

On April 1, 2006 the Company adopted SFAS No. 123R,Share Based
Payment.which requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the financial statements based on
their fair value over the requisite service period. Pro forma disclosure is no
longer an alternative.

The Companys adoption of this statement did not have a material impact
on the Consolidated Financial Statements since we adopted the fair value
recognition provisions of SFAS No. 123 effective September 28, 2002 using the
modified prospective application transition method within the provisions of SFAS
No. 148, Accounting For Stock-Based Compensation-Transition and Disclosure.

Page 54

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

For fiscal year ended March 31, 2007, there was no stock option
compensation expense. The pro forma expense calculated using the Black-Scholes
option pricing model did not exceed the cumulative expense previously disclosed
for fiscal years ended prior to March 31, 2005. This was also the case for the
previously reported pro forma disclosures for fiscal years ended March 31, 2006
and 2005.

On June 12, 2006 320,000 restricted shares of stock were granted to
employees under the 2005 Equity Incentive Plan, of which 151,250 shares vested
immediately and the remaining 168,750 shares will vest over a five year period.

Refer to Note 16 - Benefit Plans to view dividends, volatility,
risk-free interest rate, and expected life for outstanding employee options.



|SEGMENT
      REPORTING:
|------------------------

The Company makes disclosures about products and services, geographic
areas, and major customers in accordance with SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information."



|RECENTLY
      ISSUED ACCOUNTING STANDARDS:
|-------------------------------------------

In June 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" (FIN 48), which clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with SFAS No. 109, "Accounting for Income Taxes." FIN 48
establishes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. This interpretation also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The Company is currently evaluating the
impact the adoption of this interpretation will have on its consolidated
financial statements.

In June 2006, the Emerging Issues Task Force issued EITF 06-5,
"Accounting for Purchases of Life Insurance - Determining the Amount That Could
Be Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting for
Purchases of Life Insurance". This EITF discusses whether a policyholder should
consider any additional amounts included in the contractual terms of the
insurance policy other than the cash surrender value in determining the amount
that could be realized under the insurance contract in accordance with Technical
Bulletin 85-4 and whether a policyholder should consider the contractual ability
to surrender all of the individual-life policies (or certificates in a group
policy) at the same time in determining the amount that could be realized under
the insurance contract in accordance with Technical Bulletin 85-4. The Task
Force reached a tentative conclusion that EITF 06-5 should be effective for
fiscal years beginning after December 15, 2006. The Company is currently
evaluating the impact, if any, of EITF 06-5 on its consolidated financial
statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements." This new standard provides guidance for using fair value to
measure assets and liabilities. The FASB believes SFAS No. 157 also responds to
investors' requests for expanded information about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value, and the effect of fair value measurements on earnings. SFAS No. 157
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value but does not expand the use of fair value in any new
circumstances. SFAS No. 157 will become effective for the Company as of January
1, 2008. The Company is continuing to evaluate the provisions of this standard
and is not certain of the potential impact at this time.

In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities ("SFAS 159"), which provides companies with an option to report
selected financial assets and liabilities at fair value. The objective of SFAS
159 is to reduce both complexity in accounting for financial instruments and the
volatility in earnings caused by measuring related assets and liabilities
differently. SFAS 159 establishes presentation and disclosure requirements
designed to facilitate comparisons between companies that choose different
measurement attributes for similar types of assets and liabilities and to more
easily understand the effect of the companys choice to use fair value on its
earnings. SFAS 159 also requires entities to display the fair value of the
selected assets and liabilities on the face of the balance sheet. SFAS 159 does
not eliminate disclosure requirements of other accounting standards, including
fair value measurement disclosures in SFAS 157. This Statement is effective as
of the beginning of an entitys first fiscal year beginning after November 15,
2007. Early adoption is permitted as of the beginning of the previous fiscal
year provided that the entity makes that choice in the first 120 days of that
fiscal year and also elects to apply the provisions of Statement 157. Adoption
of SFAS 159 is not expected to have a material impact on the Companys results
of operations or financial position.

ACCOUNTS RECEIVABLE  ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Our policies for determining whether a receivable is considered
uncollectible are as follows.

Loans to
representatives. We perform
periodic credit evaluations and provide allowance based on our assessment of
specifically identified unsecured receivables and other factors, including the
representative's payment history. Once it is determined that it is both probable
that a loan has been impaired and the amount of loss can reasonably be
estimated, the portion of the loan balance estimated to be uncollectible is so
classified and written off.

Advisory
fees from our mutual funds.Effective October
18, 2005, the Company no longer provided advisory services to mutual funds.
Prior thereto, as disclosed in the respective mutual funds' prospectuses, the
Company attempted to recoup waived

Page 55

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

advisory service fees within a three-year period. If management believed
that the likelihood of collecting that receivable within the three-year period
was doubtful, the Company provided for an allowance. Determinations whether to
write off such fees were made annually. By agreement, the Company is entitled to
payment of all uncollected waived advisory fees by the successor fund
adviser.

Trade
receivables.As prescribed by the
SEC, trade receivables usually settle within three days. If a trade error
results, the Company will pursue remedies to collect on that trade error. The
Company does not record a receivable resulting from a trade error that is in
litigation or whose outcome is otherwise not reasonably determinable. In such a
case, the Company applies any proceeds from settlements or insurance against any
trade losses incurred.



|VALUATION
      OF SECURITIES AND OTHER ASSETS:
|-----------------------------------------------

Substantially all financial instruments are reflected in the consolidated
financial statements at fair value or amounts that approximate fair value. These
include cash; cash equivalents; securities purchased under agreements to resell;
deposits with clearing organizations; securities owned; and securities sold but
not yet purchased. In accordance with FAS 115, certain financial instruments are
classified as trading and available for sale. The realized gains and losses are
recorded in the income statement in the period in which the transactions
occurred. The related unrealized gains and losses are reflected in other
comprehensive income depending on the underlying purpose of the instrument.
Where available, the Company uses prices from independent sources such as listed
market prices, or broker or dealer price quotations. Fair values for certain
derivative contracts are derived from pricing models that consider current
market and contractual prices for the underlying financial instruments or
commodities, as well as time value and yield curve or volatility factors
underlying the positions. In addition, even where the value of a security is
derived from an independent market price or broker or dealer quote, certain
assumptions may be required to determine the fair value. For instance, the
Company generally assumes that the size of positions in securities that the
Company holds would not be large enough to affect the quoted price of the
securities if the Company were to sell them, and that any such sale would happen
in an orderly manner. However, these assumptions may be incorrect and the actual
value realized upon disposition could be different from the current carrying
value.



|CAPITALIZED SOFTWARE:
|---------------------

We capitalize certain software development costs that meet established
criteria for costs of computer systems developed or obtained for internal use.
No costs have been incurred to develop and market software externally. All
software that has been purchased for internal use has been capitalized and
depreciated over five years.

All costs for hosting our website have been charged over the period of
benefit. All costs incurred in the operating stage have been expensed as soon as
we incur them unless these costs have enhanced our website. All website costs
for enhancements and upgrades have been capitalized during the application and
development stage and amortized over a five year period.

NOTE 3  LOANS TO REGISTERED REPRESENTATIVES

ICC has granted loans to certain registered representatives with the
stipulation that the loans will be forgiven if the representatives remain
licensed with the Company for an agreed upon period of time, generally one to
five years, and/or meet specified performance goals. Upon forgiveness, the loans
are charged to commission expense for financial reporting purposes. Loans
charged to commission expense totaled $66,865 for the fiscal year ended March
31, 2007. There was no charge to commission expense for years ended March 31,
2006 and 2005.

Other loans to registered representatives are not subject to a
foregiveness contingency. These loans, as well as loans that have failed the
foregiveness contingency, are repaid to the Company by deducting a portion of
the representatives commission payouts throughout the commission cycle until
the loans are paid off.

Interest charged on these loans to representatives range from 3% to 8%
annually.

The Company writes off any loans that are deemed uncollectible after
performing periodic credit evaluations. There were no loans written off to
commission expense for the fiscal years ended March 31, 2007, 2006, and
2005.

For further detail, please refer to Note 1 - Accounts Receivable-
Allowance for Doubtful Accounts.

Page 56

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                  |  | Year Ended
      March 31, |  |           
|----------------- |  | -------------------------- |  | ----------
|                  |  | 2007                       |  | 2006      
|Forgiveable Loans |  | $  331,023                 |  | $  265,245
|Other Loans       |  | 330,774                    |  | 336,996   
|                  |  |                            |  |           
|Total Loans       |  | $  
      661,797          |  | $ 
602,241
|                  |  |                            |  |           



|NOTE 4 -
      NOTE RECEIVABLE
|------------------------------

On October 24, 2005, the Company entered into a definitive agreement (the
Transition Agreement) with Dividend Growth Advisors, LLC (DGA). Pursuant to
the Transition Agreement, the Company agreed to terminate its Investment
Advisory Agreement with Eastern Point Advisors Funds Trust (the Trust)
effective October 18, 2005 to permit the appointment by the Trust of DGA to
supersede the Company as the Trusts investment advisor. The Company had served
since 1999 as Investment Advisor for the Funds, which are sponsored by the
Trust, and DGA had provided investment advisory services to the Trust since 2004
pursuant to a subcontract with the Company. DGA entered into a new advisory
agreement directly with the Trust.

Under the terms of the Transition Agreement and an associated promissory
note, the receivable owed by the Funds to the Company was assigned to DGA and
DGA agreed to pay the Company an amount equal to the total of all fees that the
Company had waived or remitted to a fund in the Trust through October 18, 2005.
In addition, DGA has agreed to pay the Company 10 basis points on the assets
raised by the Companys broker dealer ICC at the effective time of transition,
October 18, 2005 subject to mark to market adjustments. These fees are to be
paid to the Company on a quarterly basis. Although these payments are part of
the agreement between DGA and the Trust, they are not part of the terms of the
note and are deemed totally separate.

The note provides for a principle amount of $747,617, quarterly payments
of interest accruing thereon at a 5.5% annual rate, and a full payment on or
before October 31, 2010. Prepayments are permitted without penalty.



|NOTE 5 -
      NET CAPITAL
|--------------------------

The Company's wholly owned subsidiary, ICC, is subject to SEC regulations
and operating guidelines that require ICC to maintain a specified amount of net
capital, as defined, and a ratio of aggregate indebtedness to net capital, as
defined, not exceeding 15 to 1.

ICC's net capital as computed under SEC Uniform Net Capital Rule
(Rule15c3-1) was $1,054,702 at March 31, 2007, which resulted in excess net
capital of $521,335 over the required net capital of $533,367. The ratio of
aggregate indebtedness to capital at March 31, 2007 was 7.59 to 1.

ICC's net capital as computed under SEC Uniform Net Capital Rule (Rule
15c3-1) was $957,424 at March 31, 2006, which resulted in excess net capital of
$534,402 over the required net capital of $423,022. The ratio of aggregate
indebtedness to capital at March 31, 2006 was 6.63 to 1.

NOTE 6 - SECURITIES OWNED AND SOLD, NOT YET PURCHASED

Securities owned and sold, not yet purchased, consist of
available-for-sale securities and investment securities at market
values.

The carrying amount of investment securities at market values are as
follows:

Page 57

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                                 |  | March 31,
      2007 |  |                     |  | 
|-------------------------------- |  | -------------------- |  | ------------------- |  | 
|                                
|                                 |  |                      |  | Sold, Not
      Yet |  | 
|                                 |  | Owned                |  | Purchased           |  | 
|                                
|Corporate
      equity           |  | $
      257          |  | -                   |  | 
|Corporate
      bonds            |  | 91,774               |  | -                   |  | 
|Municipal
      bonds            |  | 61,940               |  | -                   |  | 
|Mortgage backed
      securities |  | 48,691               |  | -                   |  | 
|Mutual
      funds               |  | -                    |  | 711                 |  | 
|Certificate of
      Deposit     |  | 3,868                |  | -                   |  | 
|                                 |  |                      |  |                     |  | 
|                                 |  | $
      206,530      |  | $
      711         |  | 
|                                 |  |                      |  |                     |  | 
|                                
|                                
|                                 |  | March 31,
      2006 |  |                     |  | 
|                                
|                                 |  |                      |  | Sold, Not
      Yet |  | 
|                                 |  | Owned                |  | Purchased           |  | 
|                                
|Corporate
      equity           |  | $
      2,042        |  | $
      50,432      |  | 
|Corporate
      bonds            |  | 15,024               |  | -                   |  | 
|Municipal
      bonds            |  | 7,768                |  | -                   |  | 
|Mortgage backed
      securities |  | 45,481               |  | -                   |  | 
|Mutual
      funds               |  | 422                  |  | 954                 |  | 
|Certificate of
      Deposit     |  | 1,995                |  | -                   |  | 
|Treasury
      bonds             |  | 970                  |  | -                   |  | 
|                                 |  |                      |  |                     |  | 
|                                
|                                
|                                 |  | $
      73,702       |  | $
      51,386      |  | 
|                                 |  |                      |  |                     |  | 



|NOTE 7 -
      INVESTMENTS
|--------------------------

Securities not
readily marketable include investment securities (a) for which there is no
market on a securities exchange or no independent publicly quoted market, (b)
that cannot be publicly offered or sold unless registration has been effected
under the Securities Act of 1933, or (c) that cannot be offered or sold because
of other arrangements, restrictions, or conditions applicable to the securities
or to the Company. At March 31, 2007 the Company recorded its private equity
holdings at cost of $190,000. For the comparative year 2006, the Company
recorded its private equity holdings at cost of $190,000. The Company, during
the respective periods in accordance with Accounting Principles Board No. 18
"The Equity Method of Accounting for Investments in Common Stock" (APB 18), did
not exercise significant influence over these equity investments.

The Company had investments in U.S Treasury Notes being held to maturity
in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities. These investments are presented at an amortized value as
follows:

|Purchase
      Date |  | Purchase
      Price |  | Interest Rate
      /Maturity Date /Coupon Date           |  | Face
      Value  |  | Amortized
      Cost |  | Interest
      Date 
|------------------- |  | -------------------- |  | --------------------------------------------------------- |  | ----------------- |  | -------------------- |  | --------------------
|7/12/2006           |  | $
      242,745      |  | US TREAS NOTES
      3.000% 11/15/07 B/E DTD 11/15/02 N/C |  | $
      250,000   |  | $
      246,594      |  | May 15, Nov
      15
|7/12/2006           |  | 246,650              |  | US TREAS NOTES
      3.625% 04/30/07 B/E DTD 04/30/05 N/C |  | 250,000           |  | 249,695              |  | Apr 30, Oct
      31
|7/12/2006           |  | 246,035              |  | US TREAS NOTES
      3.625% 06/30/07 B/E DTD 06/30/05 N/C |  | 250,000           |  | 249,025              |  | Jun 30, Dec
      30
|7/12/2006           |  | 248,525              |  | US TREAS NOTES
      4.875% 04/30/08 B/E DTD 04/30/06 N/C |  | 250,000           |  | 249,088              |  | Apr 30, Oct
      31
|7/12/2006           |  | 249,727              |  | US TREAS NOTES
      5.125% 06/30/08 B/E DTD 06/30/06 N/C |  | 250,000           |  | 249,865              |  | Jun 30, Dec
      30
|9/28/2006           |  | 250,732              |  | US TREAS NOTES
      4.875% 08/31/08 B/E DTD 08/31/06 N/C |  | 250,000           |  | 250,520              |  | Feb 28, Aug
      28
|11/3/2006           |  | 242,461              |  | US TREAS NOTES
      3.125% 10/15/08 B/E DTD 10/15/03 N/C |  | 250,000           |  | 244,055              |  | Apr 15, Oct
      15
|                    |  | $
      1,726,875    |  | Balance @
      3/31/07                                   |  | $
      1,750,000 |  | $
      1,738,842    |  |                     

On September 08, 2006, The Eastern Point Advisors Capital Appreciation
Fund merged with The Eastern Point Advisors Rising Dividend Fund to become The
Rising Dividend Growth Fund. As of March 31, 2007 the Company held a 0.30%
ownership interest in The Rising Dividend Growth Fund, which had a fair market
value of $176,079.

Page 58

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

As of March 31, 2006, the Company held a 2.6% ownership interest in The
Eastern Point Advisors Capital Appreciation Fund, which had a fair market value
of $94,767.

As of March 31, 2006, the Company held a 0.17% ownership interest in the
Eastern Point Advisors Rising Dividend Fund, which had a fair market value of
$64,383.

NOTE 8 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND
CONCENTRATIONS OF CREDIT RISK

The Company is
engaged in various trading and brokerage activities whose counterparties
primarily include the general public. In the event counterparties do not fulfill
their obligations, the Company may be exposed to risk. Securities sold, but not
yet purchased, represent obligations of the Company to purchase the security in
the market at the prevailing prices to the extent that the Company does not
already have the securities in possession. Accordingly, these transactions
result in off-balance sheet risk when the Company's satisfaction of the
obligations exceeds the amount recognized in the balance sheet. The risk of
default depends on the creditworthiness of the counterparty of the issuer of the
instrument. It is the Company's policy to review, as necessary, the credit
standings of each counterparty with which it conducts business. Commissions
receivables from one source were 15.2% and 21.30% of total receivables for the
years ended March 31, 2007 and 2006, respectively.

At March 31, 2007, the carrying amount of the Company's cash and cash
equivalents was $5,498,259. Of the bank statement balance, $100,000 was covered
by federal depository insurance and $4,813,724 was covered by the Depositors
Insurance Fund of Massachusetts. The Company's cash and cash equivalents as of
March 31, 2007 also include $1,319,573 at its clearing broker-dealer of which
$500,000 was fully insured by the Securities Investor Protection Corporation
(SIPC).

At March 31, 2006, the carrying amount of the Company's cash and cash
equivalents was $7,718,682. Of the bank statement balance, $100,000 was covered
by federal depository insurance and $5,468,507 was covered by the Depositors
Insurance Fund of Massachusetts. The Company's cash and cash equivalents as of
March 31, 2006 also include $2,886,093 at its clearing broker-dealer of which
$500,000 was fully insured by the Securities Investor Protection Corporation
(SIPC).



|NOTE 9 -
      TRANSACTIONS WITH RELATED PARTIES
|------------------------------------------------

ICH has arrangements with several related parties pertaining to a variety
of transactions. These transactions are incurred in the normal course of
business.

ICH was paid management fees of $2,376,742, $1,130,463 and $1,324,733 for
the years ended March 31, 2007, 2006 and 2005 respectively, from its
subsidiaries ICC and EPA. During fiscal year ended March 31, 2005, 90% of these
fees, which are based on ICH direct operating expenses, were allocated to ICC
and 10% allocated to EPA. For the quarter ended March 31, 2006 and the fiscal
year ended March 31, 2007 management modified these arrangements to assess 100%
of these fees to ICC in view of the transition of ongoing operations of
EPA.

At March 31, 2007, ICH was owed $1,403,431 by ICC and $33,899 by EPA for
inter-company fund transfers and 100% allocation of the income tax owed for the
controlled group ICH as the parent from its operating subsidiaries EPA and ICC.
At March 31, 2006, ICH was owed $1,660,651 from ICC; however, ICH owed EPA
$877,029 for the same items mentioned above, primarily from the use of income
tax benefits generated from the net operating losses of EPA.

The Company leases office space from the Arlsburg Trust, the trustee of
whom is the principal stockholder of the Company, and Investors Realty, LLC, the
principal member of whom is the principal stockholder of the Company. Rent
expense for these leases amounted to $271,271, $248,471 and $225,671 for the
years ending March 31, 2007, 2006 and 2005, respectively.

Two former members of the Board of Directors were also registered
representatives and received compensation related to commissions or consulting
fees in the fiscal year ended March 31, 2005 of $117,292.

Loans Receivable from Registered Representatives typically consist of
promissory notes that bear interest at the rates ranging from 3% to 10% per
annum and are payable within 12 or 36 months of the date of the note in weekly
installments. The notes are secured by various pledges of brokerage accounts
and/or personal assets of the registered representatives. As of March 31, 2007
and 2006 these loans amounted to $661,797 and $602,241, respectively.

Investors Marketing Services, Inc. is jointly owned by the Company's
principal stockholder and his spouse. This entity performs a fulfillment
function for subsidiaries of the Company by preparing, collating and mailing
registration kits to registered representatives, and creates graphics and other
artwork for various marketing materials produced for these subsidiaries. It also
provides assembly, shipping and postage of literature pertaining to the
subsidiaries. For the years ended March 31, 2007, 2006 and 2005 the cost paid
for these services was $65,816, $55,498 and $33,723, respectively.

The Company typically engages in transactions with a related party, IMS
Insurance Agency, Inc. (IMS Insurance), in connection with the promotion and
servicing of fixed insurance products produced by the Companys independent
representatives. Payments made by the Company to IMS Insurance, when combined
with payments received by the Company

Page 59

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

from IMS Insurance, totaled $4,942, $108,436 and $63,313 respectively,
for the fiscal years ended March 31, 2007, 2006 and 2005.

Accounts receivable at March 31, 2005 included an amount due to EPA from
the Eastern Point Advisors Capital Appreciation Fund (the "Fund") of $102,483.
As compensation for services that EPA performs on behalf of the Fund, EPA
receives a monthly investment advisory fee calculated at the annual rate of 1.5%
of the Fund's exercised daily net assets. EPA has voluntarily agreed to waive
its advisory fees or reimburse other Fund expenses so that the Fund's annual
operating expenses will not exceed 5.00% for Class A shares and 5.75% for Class
C shares, of the average daily net assets of the respective class. The waiver
may be terminated by EPA at any time. EPA has three years to recoup any expenses
it pays for on behalf of the Fund; otherwise the receivable relating to the
current fiscal year in which it is deemed unrecoverable is charged against
earnings by EPA. On November 1, 2004, the Fund had modified the ceiling on its
annual operating expenses from 5.00% to 2.5% on Class A shares and to 3.25% from
5.75% on its class C shares.

In addition, The Eastern Point Advisors Rising Dividend Growth Fund
("ICRDX") owed EPA $158,029 as of March 31, 2005 for reimbursement of expenses
(not to exceed 1.65% for Class A shares and 2.75% for class C shares).
Additionally, both funds owed EPA for legal fees incurred on each of their
behalf throughout the fiscal year March 31, 2005 in the amount of
$97,538.

As disclosed in the Eastern Point Advisors Funds Trust prospectus, we
have three years to recoup any payments that we may advance on behalf of the
funds. During the fiscal years ended March 31, 2005 receivables resulting from
such advances were determined to be uncollectible within the three year recovery
period as follows: March 31, 2005 $46,336.

The $46,336 was written off at March 31, 2005 as management concluded
that this receivable was not going to be collected at the end of the recovery
period ending September 30, 2005.There were no write offs of receivables
pertaining to these funds during fiscal years ended March 31,2007 and March
31,2006 as EPA sold the rights to manage and service these funds effective
October 18,2005.

See "Note 2 - Summary of Significant Accounting Policies - Account
Receivable Allowance for Doubtful Accounts".

|        |  |         |  |                 |  | The Capital Appreciation
      Fund   |  |                        
|------- |  | ------- |  | --------------- |  | ------------------------------------- |  | -----------------------
|2007    |  | 2006    |  | 2005            |  | Reimbursable
      Fund               |  |                        
|Amount  |  | Amount  |  | Amount          |  | Year
      End                        |  | Expiration
      Date  
|$
    - |  | $
    - |  | $
    -         |  | 2002                                  |  | September
      30,2005
|-       |  | -       |  | 17,786          |  | 2003                                  |  | September
      30,2006
|-       |  | -       |  | -               |  | 2004                                  |  | September
      30,2007
|-       |  | -       |  | 84,697          |  | 2005                                  |  | September
      30,2008
|        |  |         |  |                 |  |                                       |  |                        
|$
    - |  | $
    - |  | $
      102,483 |  |                                       |  |                        
|        |  |         |  |                 |  |                                       |  |                        
|       
|        |  |         |  |                 |  | The Rising Dividend Growth
      Fund |  |                        
|2007    |  | 2006    |  | 2005            |  | Reimbursable
      Fund               |  |                        
|Amount  |  | Amount  |  | Amount          |  | Year
      End                        |  | Expiration
      Date  
|$
    - |  | $
    - |  | $
      38,057  |  | 2004                                  |  | September
      30,2007
|-       |  | -       |  | 119,972         |  | 2005                                  |  | September
      30,2008
|        |  |         |  |                 |  |                                       |  |                        
|$
    - |  | $
    - |  | $
      158,029 |  |                                       |  |                        
|        |  |         |  |                 |  |                                       |  |                        

The 2003 Reimbursable Fund Year End amount outstanding of $17,786 for The
Capital Appreciation Fund consists of waived advisory fees for which management
has completely recovered in 2005.

The receivable amounts escalated to $237,239 from the Capital
Appreciation Fund and $475,310 from The Rising Dividend Growth Fund, during
fiscal year ended March 31, 2006. The expiration date to collect the majority of
the receivable from these funds was September 30, 2008; however, as is disclosed
in Note 4, on October 24, 2005, the Company sold all of its rights to manage the
mutual funds described above for $747,617 and will no longer be receiving the
advisory fees derived from the management of these funds.



|
|

Page 60

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|NOTE 10 -
      PROPERTY AND EQUIPMENT, NET
      Property and equipment
      consisted of the following at March 31:                  |  |                                    |  |                                                      |  |             |  |           |  |              
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- |  | ---------------------------------------------------- |  | ----------- |  | --------- |  | -------------
|                                                                                                                                        |  |                                    |  |                                                      |  |             |  | 2007      |  |              
|                                                                                                                                       
|Equipment                                                                                                                               |  |                                    |  |                                                      |  | $ 1,272,197 |  | $ 804,554 |  |              
|Furniture and fixtures                                                                                                                  |  |                                    |  |                                                      |  | 370,944     |  |           |  | 223,959      
|Leasehold improvements                                                                                                                  |  |                                    |  |                                                      |  | 617,979     |  |           |  | 362,482      
|Computer Software                                                                                                                       |  |                                    |  |                                                      |  | 230,299     |  |           |  | 179,229      
|                                                                                                                                        |  |                                    |  |                                                      |  |             |  |           |  |              
|                                                                                                                                        |  |                                    |  |                                                      |  |             |  | 2,491,419 |  | 1,570,224    
|Accumulated depreciation and
      amortization                                                                                         |  |                                    |  | (1,094,626)                                          |  | (797,726)   |  |          
|                                                                                                                                        |  |                                    |  |                                                      |  |             |  |          
|                                                                                                                                       
|Property, equipment,computer software
      net                                                                                         |  | $ 1,396,793                        |  | $ 772,498                                            |  |            
|                                                                                                                                        |  |                                    |  |                                                      |  |            
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|NOTE 11 -
      NOTES PAYABLE                                                                                                           |  |                                    |  |                                                      |  |             |  |           |  |              
|At March 31, 2007 and 2006 notes payable
      consisted of debt to finance insurance premiums. These notes are
      referenced in the |  |                                   
|table below:                                                                                                                            |  |                                    |  |                                                      |  |             |  |           |  |              
|March 31,                                                                                                                               |  | Lender                             |  | Premium                                              |  |             |  | Principal |  | Interest Rate
|                                                                                                                                        |  | First insurance Funding,
    Corp. |  | Directors and officers,Liability,Fidelity
      Bond |  | $ 91,748    |  | 7.19%     |  | 08-Dec-07    
|                                                                                                                                        |  | First insurance Funding,
    Corp. |  | Errors & Omissions                                   |  |             |  | 746,610   |  | 5.75%        
|                                                                                                                                        |  |                                    |  |                                                      |  |             |  |           |  |              
|2007                                                                                                                                    |  |                                    |  |                                                      |  |             |  | $ 838,358 |  |              
|                                                                                                                                        |  |                                    |  |                                                      |  |             |  |           |  |              
|2006                                                                                                                                    |  | First insurance Funding,
    Corp. |  | Directors and officers,Liability,Fidelity
      Bond |  | $ 94,573    |  | 6.95%     |  | 8-Nov-06     

For the comparative years ended March 31, 2007 and March 31, 2006 there
was no long term debt outstanding.



Page 61

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|NOTE 12 -
      INCOME TAXES
      The provision (benefit) for income taxes is as follows for the
      years ended March 31:
      Current: |  | 2007              |  | 2006          |  | 2005          |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ------------- |  | ------------- |  | 
|Federal                                                                                                                                      |  | $        
      - |  | $     407,620 |  | $     335,333 |  | 
|State                                                                                                                                        |  | 1,543             |  | 112,551       |  | 103,531       |  | 
|                                                                                                                                             |  |                   |  |               |  |               |  | 
|                                                                                                                                             |  | 1,543             |  | 520,171       |  | 438,864       |  | 
|                                                                                                                                             |  |                   |  |               |  |               |  | 
|                                                                                                                                            
|Deferred:                                                                                                                                    |  |                   |  |               |  |               |  | 
|Federal                                                                                                                                      |  | (501,123)         |  | (75,525)      |  | (129,766)     |  | 
|State                                                                                                                                        |  | (130,710)         |  | (23,318)      |  | (40,065)      |  | 
|Increase in valuation allowance                                                                                                              |  | -                 |  | -             |  | -             |  | 
|                                                                                                                                             |  |                   |  |               |  |               |  | 
|                                                                                                                                             |  | (631,833)         |  | (98,843)      |  | (169,831)     |  | 
|Total Income Taxes                                                                                                                           |  | $ (630,290)       |  | $     421,328 |  | $     269,033 |  | 
|                                                                                                                                             |  |                   |  |               |  |               |  | 

Deferred income
taxes are the result of timing differences between book and taxable income and
consist primarily of deferred compensation, legal accruals, unrealized gains,
mutual fund start up costs and differences between depreciation expenses for
financial statement purposes versus tax return purposes.

Net deferred tax assets (liabilities) within each tax jurisdiction
consisted of the following at:

|        |  | March
      31, 2007
|------- |  | --------------------
|        |  | Asset               
|Federal |  | $759,605            
|State   |  | 213,011             
|        |  |                     
|Total   |  | 972,616             
|       
|        |  |                     
|        |  | Asset               
|Federal |  | 254,782             
|State   |  | 78,663              
|        |  |                     
|Total   |  | $333,445            
|        |  |                     

The following is a summary of the significant components of the Company's
deferred tax assets and liabilities:

Page 62

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                                       
|---------------------------------------
|                                       
|                                       
|                                       
|                                       
|Deferred tax
      assets(liabilities):
|Mutual Fund Start Up Costs             
|Deferred compensation                  
|Accrued legal                          
|Unrealized gain                        
|Depreciation and other                 
|Net Operating Losses                   
|                                       
|                                       
|Total Deferred Tax Assets              
|                                       

The total income tax provision (benefit) differs from the income tax at
the statutory federal income tax rate due to the following:

|                                           |  | Years Ended
      March 31,
|------------------------------------------ |  | ---------------------------
|                                           |  | 2007                       
|                                          
|Tax at U.S. statutory rate                 |  | (582,881)                  
|State taxes,net of federal
      benefit   |  | (117,050)                  
|Unallowable expenses                       |  | 33,525                     
|Other adjustments(2)                       |  | 36,116                     
|Change in valuation allowance              |  | -                          
|                                           |  |                            
|                                          
|(Benefit) provision for income
      taxes |  | (630,290)                  
|                                           |  |                            

|1. | In the
      corresponding table in our Form 10-K for the fiscal year ended March 31,
      2006, fiscal 2005 federal and state taxes were inadvertently netted and
      presented as a single line item and, similarly, fiscal 2005 unallowable
      expenses was inadvertently combined with other adjustments. These errors
      have been corrected in this table.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Other
      Adjustments are additional state taxes and return to provision adjustments
      related to permanent items.                                                                                                                                                                                                                                                 
|  







---



|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------





|NOTE 13 -
      SEGMENT INFORMATION
|-----------------------------------





The Company accounts for inter-segment services and transfers as if the
services or transfers were to third parties, that is, at current market prices.
The Company's reportable segments are strategic business units that offer
different services. They are managed separately because each business requires
distinct marketing strategies and varied technological and operational
support.

The Company's reportable segments include investment services offered
through ICC and asset management services offered through ICA, including
securities, insurance, financial planning and related services. ICC earns
commissions as a broker for its customers in the purchase and sale of securities
on major exchanges. Asset management services generate recurring annual revenue
from fees received on the management of customer accounts.

EPA had provided money management services to a variety of investors (see
Part 1, Item 1, Investment Advisory Services of our Form 10-K for the fiscal
year ended March 31, 2006) and, until October 18, 2005, provided asset
management and portfolio design services to two mutual funds. ICAs primary
mission is to offer clients investment advisory and asset management procedures
grounded on sound investment principles of asset allocation, performance
monitoring and portfolio rebalancing.

Under the guidelines of FAS 131 Disclosures about Segments of an
Enterprise and Related Information, commencing with the quarter ended December
31, 2005, management began reporting its segments on a management approach
whereby our business is organized into segments reflecting the way we make
operating decisions and assess performance. Accordingly, ICA is now reported as
part of the asset management services segment. Segments are currently reported
based upon the services provided, whereas they were previously segmented
according to legal entity.

In presenting segment data, all corporate overhead items are allocated to
the segments, and inter-segment revenue, expense, receivables and payables are
eliminated. Currently it is impractical to report segment information using
geographical concentration.

Assets are allocated among ICH and its subsidiaries based upon legal
ownership and the services provided. Total period-end assets are presented in
this Note 13 on a stand-alone basis, i.e., without inter-company eliminations.
Corporate items and eliminations are presented in the following table for the
purpose of reconciling the stand-alone asset amounts to total consolidated
assets.

|                                             | Years Ended March 31,
|-------------------------------------------- | ---------------------
|                                             | 2007                 
|                                            
|Inter-company eliminations                   | $ 1,437,330          
|Classification items (stand
      alone)     | -                    
|Deferred income taxes                        | 2,676                
|Income Taxes                                 | -                    
|                                             |                      
|                                            
|Total Corporate items and
      eliminations | $ 1,440,006          
|                                             |                      

Page 64

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

NOTE 13 - SEGMENT INFORMATION CONTINUED-

|                                                               |  |              |  | Years Ended March 31, |  |            
|-------------------------------------------------------------- |  | ------------ |  | --------------------- |  | -----------
|                                                               |  | 2007         |  | 2006                  |  | 2005       
|Non-interest revenues:                                         |  |              |  |                       |  |            
|ICC,brokerage services                                         |  | $72,336,349  |  | $62,070,480           |  | $50,871,854
|EPA,ICA asset management services                              |  | 6,922,808    |  | 5,329,859             |  | 3,880,590  
|ICH investments (loss) gain                                    |  | -            |  | (4,135)               |  | 12,763     
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $79,259,157  |  | $67,396,204           |  | $54,765,207
|                                                               |  |              |  |                       |  |            
|                                                              
|Revenues from transaction with other operating
      segments: |  |              |  |                       |  |            
|ICC,brokerage services                                         |  | $2,169,965   |  | $983,910              |  | $ 1,196,277
|EPA,ICA asset management services                              |  | 206,777      |  | 146,553               |  | 128,456    
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $2,376,742   |  | $1,130,463            |  | $1,324,733 
|                                                               |  |              |  |                       |  |            
|                                                              
|Interest and dividend income,net:                              |  |              |  |                       |  |            
|ICC,brokerage services                                         |  | $614,353     |  | $404,990              |  | $236,175   
|EPA,ICA asset management services                              |  | 59,000       |  | 21,026                |  | 950        
|ICH                                                            |  | 3,622        |  | 9,447                 |  | 151,612    
|ICH Securities                                                 |  | 116,894      |  | 147,201               |  | 11,590     
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $793,870     |  | $582,664              |  | $400,327   
|                                                               |  |              |  |                       |  |            
|                                                              
|Depreciation
      and amortization expenses:                  |  |              |  |                       |  |            
|ICC,brokerage
      services                                   |  | $294,137     |  | $205,905              |  | $163,318   
|EPA,ICA asset
      management services                        |  | 2,763        |  | 7,309                 |  | 8,835      
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $296,900     |  | $213,214              |  | $172,153   
|                                                               |  |              |  |                       |  |            
|                                                              
|Income tax
      provision (benefit):                          |  |              |  |                       |  |            
|ICC,brokerage
      services                                   |  | $(990,948)   |  | $208,600              |  | $289,921   
|EPA,ICA asset
      management services                        |  | 378,957      |  | 310,812               |  | (38,678)   
|ICH                                                            |  | (18,299)     |  | (98,084)              |  | 17,790     
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $(630,290)   |  | $421,328              |  | $269,033   
|                                                               |  |              |  |                       |  |            
|                                                              
|Income
      (loss) :                                          |  |              |  |                       |  |            
|ICC,brokerage
      services                                   |  | $(2,017,665) |  | $348,720              |  | $335,629   
|EPA,ICA asset
      management services                        |  | 844,159      |  | 214,392               |  | 125,306    
|ICH                                                            |  | (27,435)     |  | (260,605)             |  | 146,584    
|ICH
      Securities                                           |  | 116,875      |  | 147,131               |  | 11,590     
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $(1,084,066) |  | $449,638              |  | $619,109   
|                                                               |  |              |  |                       |  |            
|                                                              
|Period end
      total assets:                                 |  |              |  |                       |  |            
|ICC,brokerage
      services                                   |  | $13,122,098  |  | $10,082,597           |  | $9,429,559 
|EPA,ICA asset
      management services                        |  | 890,731      |  | 1,917,164             |  | 770,263    
|ICH                                                            |  | 2,364,728    |  | 1,503,104             |  | 1,459,207  
|ICH
      Securities                                           |  | 1,952,649    |  | 3,400,774             |  | 4,753,643  
|Corporate items
      and eliminations                         |  | (1,440,006)  |  | (1,577,812)           |  | (2,303,034)
|                                                               |  |              |  |                       |  |            
|                                                              
|Total                                                          |  | $16,890,200  |  | $15,325,827           |  | $14,109,638
|                                                               |  |              |  |                       |  |            

Page 65

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



| | NOTE 14 -
      COMMITMENTS AND CONTINGENCIES
| | ---------------------------------------------

The Company is obligated under various lease agreements covering offices
and equipment. These agreements are considered to be operating leases in
accordance with the requirements under FASB 13 "Accounting for Leases". The
terms of the leases expire between fiscal year 2008 and 2012. Options to renew
for additional terms are included under the lease agreements. The total minimum
rental due in future periods under these existing agreements is as follows as of
March 31, 2007:

|Year ending
      March 31, 2008   |  | $
      601,533  
|---------------------------------- |  | -----------------
|Year ending
      March 31, 2009   |  | 482,394          
|Year ending
      March 31, 2010   |  | 379,544          
|Year ending
      March 31, 2011   |  | 340,568          
|Year ending
      March 31, 2012   |  | 324,112          
|                                   |  |                  
|Total minimum
      lease payments |  | $
      2,128,151

Certain leases contain provisions for escalation of minimum lease
payments contingent upon increases in real estate taxes.

Total lease expense approximated to $630,000, $440,000 and $380,000 for
fiscal years ended March 31, 2007, 2006 and 2005, respectively, of which
approximately $360,000, $250,000 and $230,000 , respectively, was incurred with
respect to leases with Arlsburg Trust and Investors Realty, LLC.



|NOTE 15 -
      LITIGATION
|--------------------------

The Company typically is involved with various judicial, regulatory and
arbitration proceedings concerning matters arising in connection with the
conduct of its business.



| | MASSACHUSETTS PROCEEDINGS
| | -------------------------

By administrative complaint dated November 16, 2005, the Securities
Division (the "Division") of the Secretary of the Commonwealth of Massachusetts
(the "State") brought an adjudicatory proceeding (the Massachusetts
Proceedings) against ICC alleging violation of ICCs supervisory obligations
under State securities laws in connection with certain past sales of
equity-indexed annuities. The complaint alleges, among other things, that ICC
failed to properly supervise associated persons, thereby allowing allegedly
unsuitable sales of these insurance products. The complaint, which seeks an
order instructing ICC to cease such violations and to pay an unspecified
administrative fine, also requests that ICC's registration as a securities
broker-dealer in Massachusetts be suspended or revoked, that the firm be
censured, and that it be ordered to fairly compensate purchasers of the
insurance products for any losses attributable to wrongdoing by ICC.

On December 19, 2006 ICH and ICC entered into an agreement with the
Division settling the Massachusetts Proceedings and a concurrent investigation
into relationships between ICH and its subsidiaries, Investors Marketing
Services, Inc. (IMS), and IMS Insurance Agency, Inc. (IMS Insurance), which
are owned by Ted Charles, ICHs Chairman and CEO, and/or his spouse.



| | In settling these proceedings, ICC
agreed:
| | ------------------------------------------

- to cease
  and desist from violations of State securities laws,
- to pay a
  $500,000 administrative fine,
- to offer
  to reimburse losses and costs incurred by Massachusetts persons aged 75 or
  older in connection with the surrender, no later than December 31, 2007, of any equity-indexed
  annuities purchased through ICC or its representatives
  during 2004 or 2005, and to offer an additional payment to ensure that no
  amount invested in a surrendered EIA
  yielded less than 3%;
- to pay
  an additional administrative fine equal to the extent, if any, that ICCs
  surrender-related payments total less than $500,000, and
- to be
  censured by the Division.

In addition, ICC and ICH agreed to retain and act upon the advice of an
independent consultant who would review and make recommendations with respect to
ICC and ICH policies and procedures that are related to the various violations
and failures alleged by the Division in these matters.

ICC and ICH will not be permitted to utilize proceeds from insurance
policies to cover payments that will be made pursuant to the settlement.



| | OTHER
      PROCEEDINGS
| | -----------------------

At March 31, 2007, the Company was the defendant or co-defendant in
various legal proceedings other than the Massachusetts Proceedings. Management
believes, based on currently available information, that the results of such
proceedings, in the aggregate, will not have a material adverse effect on the
firm's financial condition. The Company maintains Errors and Omissions
("E&O") insurance to protect itself from potential damages and/or legal
costs associated with certain law suits and

Page 66

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

arbitration proceedings and, as a result, in the majority of cases the
Companys exposure is limited to between $75,000 and $100,000 per case, subject
to policy limitations and exclusions.



| | ACCRUALS
| | --------

The Company had accrued expenses of $1,104,487 as of March 31, 2007 of
which $475,176 is related to legal defense fees incurred as a result of the
Massachusetts Proceeding noted above. In addition, this accrual includes
estimated probable settlement costs relating to the Company's defense in such
legal proceedings. This accrual will be assessed quarterly and modified if
necessary to reflect the material change in accrual in accordance with generally
accepted accounting principles.

As of March 31, 2006 the Company had accrued expenses of approximately
$434,000.



|NOTE 16 -
      BENEFIT PLANS
|-----------------------------

Equity
Incentive Plans. As of September 1,
1994, the Company adopted a stock option plan (the "1994 Plan") that provided
for the granting of options to Timothy Murphy, the Companys CFO, to purchase
shares of the common stock of the Company for $1.00 per share. Following a three
for two stock split in 1997, a maximum of 150,000 shares of common stock were
issuable under the 1994 Plan. The number of options and grant date were
determined at the discretion of the Company's Board of Directors (the "Board").
Options outstanding under the 1994 Plan are fully exercisable and have no stated
expiration.

As of October 1, 1997, the Board of Directors adopted the 1996 Incentive
Stock Option Plan (the "1996 Plan"). Key employees, directors and the Company's
registered representatives are eligible to receive options and the aggregate
number of shares to be delivered under the 1996 Plan cannot exceed 300,000. Each
grant of options, the number of options granted and the vesting schedules of
such options subject thereto are determined by the Board. The stock options
outstanding are fully vested after two years from grant date, are exercisable
for an additional three years after vesting and, unless exercised, are forfeited
thirty days after termination.

As of March 12, 2001, the Board of Directors adopted the 2001 Equity
Incentive Plan (the "2001 Plan"). Key employees, directors and the Company's
registered representatives are eligible to receive stock grants and/or stock
options to purchase shares of the common stock of the Company. The aggregate
number of shares issuable under the 2001 Plan cannot exceed 250,000. The number
of shares subject to each stock grant or stock option and any vesting
requirements are determined by the Board. To date, only options have been
awarded under the 2001 Plan. The stock options outstanding fully vest two years
after grant, are exercisable for an additional three years after vesting and are
forfeited ninety days after termination of employment with the Company.

The Investors Capital Holdings, Ltd. 2005 Equity Incentive Plan (the
2005 Plan) was adopted by the Board on May 17, 2005, and was approved by vote
of the Companys stockholders at a September 21, 2005 meeting. The purpose of
the 2005 Plan is (i) to attract and retain employees, directors, officers,
representatives and other individuals upon whom the responsibilities of the
successful administration, management, planning and/or organization of the
Company may rest, and whose present and potential contributions to the welfare
of the Company, a parent corporation or a subsidiary are of importance (Key
Contributors), and (ii) to motivate Key Contributors with a view toward
enhancing profitable growth of the Company over the long term. Under the 2005
Plan, the Company is authorized to award options to purchase common stock, and
shares of common stock, to employees, independent representatives and others who
have contributed to or are expected to contribute to the Company, its businesses
and prospects. Under the plan, stock options and restricted stock customarily
are granted by the Company in connection with initial employment or under
various retention plans. Options may, but need not, be designated as incentive
stock options (ISOs) within the meaning of Section 422 of the Internal Revenue
Code of 1986. The Company has not granted any options under the plan and has no
current plans to do so. Restricted shares of stock granted under the plan
typically vest over a three year period, and unvested shares are forfeitable in
the event of termination of the grantees relationship with the Company, other
than for death or disability. The compensation cost associated with restricted
stock grants is recognized over the vesting period of the shares and is
calculated as the market value of the shares on the date of grant.

A summary of the companys shares issued under the 2005 Plan as of March
31, 2007 is presented below. This plan was not adopted or approved for the
fiscal year ended March 31, 2005.

Page 67

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|                                                        |  |                        |  |         |  |                          |  | Price
      at |  | Remaining          
|------------------------------------------------------- |  | ---------------------- |  | ------- |  | ------------------------ |  | -------------- |  | -------------------
|                                                        |  | Date of
      Issuance |  | Shares  |  | Date of
      grant      |  | grant          |  | vested
      period
|                                                       
|Stock awards
      to a registered representative       |  | October 14,
      2005 |  | 2,700   |  | September 21,
      2005 |  | $4.03          |  | fully
      vested 
|Stock awards
      to a consultant                      |  | October 14,
      2005 |  | 580     |  | September 21,
      2005 |  | $4.03          |  | fully
      vested 
|Stock awards
      to registered representatives        |  | December 2,
      2005 |  | 29,998  |  | December 2,
      2005   |  | $3.08          |  | 20
      months    
|Stock awards
      to a consultant                      |  | January 12,
      2005 |  | 1,500   |  | September 21,
      2005 |  | $4.03          |  | fully
      vested 
|Stock Awards
      issued to employees                  |  | June
      13,2006     |  | 168,750 |  | June
      12,2006       |  | $3.65          |  | 50.5
      months  
|Stock Awards
      issued to employees                  |  | June
      13,2006     |  | 151,250 |  | June
      12,2006       |  | $3.65          |  | fully
      vested 
|Stock Awards
      issued to Directors                  |  | June
      13,2006     |  | 12,000  |  | June
      12,2006       |  | $3.65          |  | fully
      vested 
|Stock awards
      to a consultant                      |  | June
      13,2006     |  | 4,200   |  | June
      12,2006       |  | $3.65          |  | fully
      vested 
|Stock Awards
      issued to registered representatives |  | February
      14,2007 |  | 2,659   |  | November
      14,2006   |  | $5.90          |  | 31.5
      months  
|Stock Awards
      issued to registered representatives |  | February
      27,2007 |  | 29,998  |  | November
      14,2006   |  | $5.90          |  | 31.5
      months  

Stock compensation for the years ended March 31, 2007 and 2006 for shares
issued under this plan was $759,568 and $29,529, respectively. There was no
issuance expense under this plan for the fiscal year ended March 31,
2005.



|Restricted Stock Grants
|-----------------------

Under the Companys 2005 Equity Incentive Plan (the 2005 Plan), the
Company is authorized to award options to purchase common stock, and shares of
common stock, to employees, independent representatives and others who have
contributed to or are expected to contribute to the Company, its businesses and
prospects. Under the 2005 Plan, stock options and restricted stock customarily
are granted by the Company in connection with initial employment or under
various retention plans. The Company has not granted any options under the 2005
Plan and has no current plans to do so. Restricted shares of stock granted under
the 2005 Plan typically vest over a three year period, and unvested shares are
forfeitable in the event of termination of the grantees relationship with the
Company, other than for death or disability. The compensation cost associated
with restricted stock grants is recognized over the vesting period of the shares
and is calculated as the market value of the shares on the date of grant. The
following activity under the 2005 Plan occurred during the fiscal year ended
March 31, 2007:

|              |  | Shares  |  | Weighted Ave
      Stock Price |  | Weighted
      Average Vested Life |  | Fair Value
      $
|------------- |  | ------- |  | ------------------------------ |  | ---------------------------------- |  | ------------------
|              |  |         |  |                                |  |                                    |  |                   
|Non-vested at |  |         |  |                                |  |                                    |  |                   
|4/1/2006      |  | 26,785  |  | $3.08                          |  |                                    |  | $82,498           
|              |  |         |  |                                |  |                                    |  |                   
|Granted       |  | 368,857 |  | $3.85                          |  |                                    |  | $1,420,099        
|Vested        |  | 208,048 |  | $3.67                          |  |                                    |  | $763,536          
|Canceled      |  | (5,865) |  | $3.61                          |  |                                    |  | -$21,173          
|Non-vested at |  |         |  |                                |  |                                    |  |                   
|3/1/2007      |  | 181,729 |  | $3.95                          |  | 3.8
      yrs                      |  | $717,830          
|              |  |         |  |                                |  |                                    |  |                   

The Company's net
loss for the fiscal year ended March 31, 2007 includes $649,587 of compensation
costs related to restricted stock grants to employees and $109,981of restricted
stock grants to directors, consultants and independent representatives, under
the 2005 Plan.

As of March 31, 2007, there was $717,830 of unrecognized compensation
cost related to grants under the 2005 Plan. These costs are expected to be
recognized over a weighted average period of approximately 3.80 years. The total
fair value of shares vested under this plan during the fiscal year ended March
31, 2007 was $763,536.

A summary of the
status of the Company's employee, representative and Directors' fixed stock
options as of March 31, 2007, 2006 and 2005 and changes during the years ending
on those dates is presented below:

Page 68

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|Employee                             |  | 2007             |  | 2006             |  | 2005            
|------------------------------------ |  | ---------------- |  | ---------------- |  | ----------------
|Fixed Options                        |  | Weighted-Average |  | Weighted-Average |  | Weighted-Average
|                                     |  | Shares           |  | Exercise Price   |  | Shares          
|                                    
|Outstanding at beginning of
    year |  | 153,332          |  | $1.02            |  | 198,934         
|                                    
|Granted                              |  | -                |  |                  |  | -               
|Forfeited                            |  | -                |  |                  |  | (40,256)        
|Exercised                            |  | -                |  |                  |  | -               
|Reclassified(non-employee)           |  | -                |  | __________       |  | (5,346)         
|                                     |  |                  |  |                  |  |                 
|                                    
|Outstanding at year end              |  | 153,332          |  | $1.02            |  | 153,332         
|                                    
|Options exercisable at
    year-end  |  | 152,666          |  |                  |  | 151,999         
|                                    
|Weighted-average fair value
    of   |  |                  |  |                  |  |                 
|options granted during the
    year  |  | -                |  |                  |  | -               

The fair value of options granted to employees in the fiscal years ended
March 31, 2007, 2006 and 2005 is estimated on the date of grant using the
Black-Scholes option-pricing model based on the following
assumptions:

|                            |  | 2007  |  | 2006  |  | 2005 
|--------------------------- |  | ----- |  | ----- |  | -----
|                           
|Dividend                    |  | 0.18% |  | 0.16% |  | 0.10%
|Volatility                  |  | 42%   |  | 47%   |  | 41%  
|Risk-free interest
    rate |  | 5.04% |  | 4.85% |  | 3.86%
|Expected Life in
years      |  | 0.75  |  | 1.75  |  | 2.75 

The following table summarizes information about employee and Directors'
fixed stock options outstanding as of March 31, 2007:

|Options
      Outstanding |  |             |  | Options Exercisable
|------------------------- |  | ----------- |  | -------------------
|                          |  |             |  | Weighted-Average   
|Range Of                  |  | Number      |  | Remaining          
|Exercise Prices           |  | Outstanding |  | Contractual Life   
|$1.00                     |  | 150,000     |  | No Stated Maturity 
|$1.91                     |  | 3,332       |  | 0.75               
|                          |  | 153,332     |  | .75(1)             



| | (1) Includes only stock options with stated
  maturity
| | ------------------------------------------------------

The following table summarizes information about ex-directors' fixed
stock options outstanding as of March 31, 2007:

Page 69

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|Ex-directors                         |  | 2007    |  | 2006             |  | 2005  
|------------------------------------ |  | ------- |  | ---------------- |  | ------
|                                     |  |         |  |                  |  |       
|Fixed Options                        |  |         |  | Weighted-Average |  |       
|                                     |  | Shares  |  | Exercise Price   |  | Shares
|                                    
|outstanding at beginning of
    year |  | 5,346   |  | $1.91            |  | -     
|                                     |  |         |  |                  |  |       
|Granted                              |  | -       |  |                  |  | -     
|Forfeited                            |  | -       |  |                  |  | -     
|Exercised                            |  | (1,001) |  |                  |  | -     
|Reclassified(Non-Employee)           |  | -       |  |                  |  | 5,346 
|                                     |  |         |  |                  |  |       
|outstanding at end of year           |  | 4,345   |  | $1.91            |  | 5,346 

|                |  |             |  | Weighted-Average |  |                |  |             |  |                 
|--------------- |  | ----------- |  | ---------------- |  | -------------- |  | ----------- |  | ----------------
|Range Of        |  | Number      |  | Remaining        |  |                |  | Number      |  | Weighted-Average
|Exercise Prices |  | Outstanding |  | Contractual Life |  | Exercise Price |  | Exercisable |  | Exercise Price  
|               
|$1.91           |  | 4,345       |  | 0.75             |  | $1.91          |  | 3,346       |  | $1.91           

Stock-based compensation for option grants to Ex-Directors amounted to
$9,560, $8,258 and $0 for the fiscal years ended March 31, 2007, 2006 and 2005,
respectively. This compensation was calculated using the Black-Scholes
option-pricing during fiscal year ended March 31, 2007 during a five year graded
vesting period. The fair value per share was $3.62 per the January 02, 2003 lot.
The following assumptions were applied at March 31, 2007 to grants for the years
ending March 31:

|                              |  | 2007  |  | 2006  |  | 2005 
|----------------------------- |  | ----- |  | ----- |  | -----
|                             
|Dividend                      |  | 0.18% |  | 0.16% |  | 0.10%
|Volatility                    |  | 42%   |  | 47%   |  | 41%  
|Risk-free
      interest rate |  | 5.04% |  | 4.85% |  | 3.86%
|Expected Life
      in years  |  | 0.75  |  | 1.75  |  | 2.75 

A summary of the status of the Company's independent registered
representatives' fixed stock options as of March 31, 2007, 2006 and 2005 and
changes during the years ending on those dates is presented below:

Page 70

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|Independent
    Representatives         |  |          |  |                |  |           |  |                |  |          |  |               
|--------------------------------------- |  | -------- |  | -------------- |  | --------- |  | -------------- |  | -------- |  | --------------
|                                        |  | 2007     |  | 2006           |  | 2005     
|                                        |  |          |  |                |  |           |  |                |  |          |  |               
|Fixed Options                           |  |          |  | Weighted-Aver. |  |           |  | Weighted-Aver. |  |          |  | Weighted-Aver.
|                                        |  | Shares   |  | Exercise Price |  | Shares    |  | Exercise Price |  | Shares   |  | Exercise Price
|                                       
|Outstanding at                          |  |          |  |                |  |           |  |                |  |          |  |               
|beginning of year                       |  | 185,081  |  | $3.35          |  | 372,142   |  | $5.42          |  | 352,895  |  | $5.43         
|                                       
|Granted                                 |  | -        |  |                |  | -         |  | $0.00          |  | 49,509   |  | $4.55         
|Forfeited                               |  | (25,452) |  | $3.61          |  | (184,941) |  | $6.66          |  | (17,501) |  | $6.46         
|Exercised                               |  | (45,317) |  | $2.81          |  | (2,120)   |  | $2.00          |  | (12,761) |  | $2.00         
|                                       
|Outstanding at year end                 |  | 114,312  |  |                |  | 185,081   |  | $3.35          |  | 372,142  |  | $5.42         
|Options exercisable at year-end 114,312 |  |          |  | $3.51          |  | 240,125   |  |                |  | 186,595  |  |               



|
|

Stock-based compensation for option grants to registered representatives
amounted to $86,540, $7,556 and $97,841 for the fiscal years ended March 31,
2007, 2006 and 2005, respectively. This compensation was calculated using the
Black-Scholes option-pricing during fiscal year ended March 31, 2007 during a
two year vesting period. The fair value per share was $2.06 per the November 01,
2004 lot. The following assumptions were applied at March 31, 2007 to grants for
the years ending March 31:

|                                  |  |           |  | 2007     |  |          |  |           |  | 2006     |  |          |  |           |  | 2005     |  |         
|--------------------------------- |  | --------- |  | -------- |  | -------- |  | --------- |  | -------- |  | -------- |  | --------- |  | -------- |  | --------
|                                 
|                                  |  | July 2002 |  | Aug 2003 |  | Nov 2004 |  | July 2002 |  | Aug 2003 |  | Nov 2004 |  | July 2002 |  | Aug 2003 |  | Nov 2004
|Dividend                          |  | 0.18%     |  | 0.18%    |  | 0.18%    |  | 0.16%     |  | 0.16%    |  | 0.16%    |  | 0.10%     |  | 0.10%    |  | 0.10%   
|Volatility                        |  | 42%       |  | 42%      |  | 42%      |  | 47%       |  | 47%      |  | 47%      |  | 41%       |  | 41%      |  | 41%     
|Risk-free
      interest          |  | 5.06%     |  | 4.78%    |  | 4.55%    |  | 4.88%     |  | 4.84%    |  | 4.86%    |  | 3.73%     |  | 3.90%    |  | 4.05%   
|Expected Life
      in years 0.25 |  | 1.38      |  | 2.58     |  | 1.25     |  | 2.38      |  | 3.58     |  | 2.25     |  | 3.38      |  | 4.58    

The following table summarizes information about independent registered
representatives' fixed stock options outstanding as of March 31,
2007:

|Range Of            |  | Number      |  | Remaining            |  |                    |  | Number      |  | Weighted-Average  
|------------------- |  | ----------- |  | -------------------- |  | ------------------ |  | ----------- |  | ------------------
|Exercise
    Prices |  | Outstanding |  | Contractual
    Life |  | Exercise
    Price |  | Exercisable |  | Exercise
    Price
|                   
|$8.00               |  | -           |  | -                    |  | $8.00              |  | -           |  | -                 
|$3.90               |  | -           |  | -                    |  | $3.90              |  | -           |  | -                 
|$2.00               |  | 25,263      |  | .25                  |  | $2.00              |  | 25,263      |  | $0.44             
|$3.50               |  | 52,197      |  | 1.38                 |  | $3.50              |  | 52,197      |  | $1.60             
|$4.55               |  | 36,852      |  | 2.58                 |  | $4.55              |  | 36,852      |  | $1.47             
|                   
|                    |  | 114,312     |  | 1.52                 |  | $3.51              |  | 114,312     |  | $3.51             

Page 71

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Retirement Plans:
The Company has a 401(k) retirement plan that allows participation by all
employees with at least three months of service. Individuals employed on the
plan's effective date did not have to satisfy the service requirement. The
Company's contribution was based on matching 100% of the first 3% of the amount
of elected salary deferral elected by each eligible employee. Effective May 29,
2001 the Company's contribution was increased to matching 100% of the first 6%
of the amount of elected salary deferral, with matching dollars to be in the
form of the Company's common stock. The Company's contribution expense for the
years ended March 31, 2007, 2006 and 2005 were $239,573, $144,740 and $109,641,
respectively.

There were no deferred compensation plans established for the fiscal
years ended March 31, 2007, 2006 or 2005.



|NOTE 17 -
      EMPLOYMENT AGREEMENTS
|-------------------------------------

The Company entered into separate employment agreements with its
President and Chief Financial Officer. The employment agreements provide for
continued payments of specified compensation and benefits for specified
benefits. The employment agreements also provide for severance benefits if the
President or Chief Financial Officer resign for just cause, as defined in the
employment agreements, just cause including a significant decrease by the Board
of Directors of their duty or authority. Severance benefits include, among other
things, sixty months of base salary for the President and thirty-six months of
base salary for the Chief Financial Officer.



|NOTE 18 -
      EARNINGS PER COMMON SHARE
|-----------------------------------------

Basic earnings per share represent income available to common
stockholders divided by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share reflect additional common shares
that would have been outstanding if dilutive potential common shares had been
issued, as well as any adjustment to income that would result from the assumed
issuance.

Potential common shares that may be issued by the Company relate solely
to outstanding stock options, and are determined using the treasury stock
method. Options to purchase common stock totaling 0, 55,724 and 207,632 at March
31, 2007, 2006 and 2005, respectively, were not included in the computation of
diluted earnings per share as their effect would have been
antidilutive.

NOTE 19 - UNAUDITED QUARTERLY RESULTS OF OPERATIONS



| | The unaudited quarterly amounts may differ due to the
      reclassifications.Refer to Note
      2 -- Summary of Significant Accountin&
Policies.
| | --------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  | June 30, 2006      |  | September 30, 2006 |  | December 31, 2006  |  | March 31, 2007    
|------------------------------------- |  | ------------------ |  | ------------------ |  | ------------------ |  | ------------------
|                                     
|Revenues                              |  | $
      19,602,172 |  | $
      17,255,919 |  | $
      20,913,626 |  | $
      22,281,311
|Expenses                              |  | 20,199,794         |  | 17,425,754         |  | 21,234,555         |  | 22,276,991        
|Gross Profit                          |  | 3,786,952          |  | 3,115,594          |  | 4,415,189          |  | 3,808,509         
|Net Income (Loss)                     |  | (597,622)          |  | (169,835)          |  | (320,929)          |  | 4,320             
|Basic Earnings (Loss) per
Share       |  | -$0.10             |  | -$0.03             |  | -$0.05             |  | $0.00             
|Diluted Earnings (Loss) per
    Share |  | -$0.10             |  | -$0.03             |  | -$0.05             |  | $0.00             
|                                     
|                                      |  | June 30, 2005      |  | September 30, 2005 |  | December 31, 2005  |  | March 31, 2006    
|                                     
|Revenues                              |  | $
      15,193,236 |  | $
      16,170,245 |  | $
      17,004,416 |  | $
      19,610,971
|Expenses                              |  | 15,086,010         |  | 16,213,081         |  | 16,802,932         |  | 19,427,207        
|Gross Profit                          |  | 3,210,954          |  | 2,861,815          |  | 3,799,504          |  | 3,520,559         
|Net Income (Loss)                     |  | 107,226            |  | -42,836            |  | 201,484            |  | 183,764           
|Basic Earnings (Loss) per
Share       |  | $0.02              |  | -$0.01             |  | $0.03              |  | $0.04             
|Diluted Earnings (Loss) per
    Share |  | $0.02              |  | -$0.01             |  | $0.03              |  | $0.04             



|NOTE 20 -
      TRADING ERROR
|-----------------------------

In the financial statements for the year ended March 31, 2004, the
Company disclosed a trading error as a subsequent event. This error was the
result of a trade initiated by a registered representative during the normal
course of business on April 20, 2004. The potential impact disclosed was
estimated to be a $530,000 decrease to the statement of income. The Company
pursued all remedies, including insurance, recourse from the clearing firm and
recovery from the registered representative. The outcome of such remedies was
$315,010. Therefore, the net loss realized from the trade error was $214,337
which is included in cost of sales for the year ended March 31, 2005. There was
no trading error that had material effect on the financial statements for the
fiscal years ended March 31, 2007 and 2006.

Page 72

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
DISCLOSURE.



| | None.
| | -----

ITEM 9A. CONTROLS AND
PROCEDURES.

Based on an
evaluation by our management in which they or persons performing similar
functions participated, our principal executive and financial officers have
concluded that controls and procedures in place as of the end of the period
covered by this report were effective for the purpose of ensuring that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission.



|ITEM 9B. OTHER
      INFORMATION.
|---------------------------------



| | None.
| | -----



|PART
      III
|--------------



|INCORPORATION BY REFERENCE
|--------------------------

Item 10 
Directors, Executive Officers and Corporate Governance, Item 11 -- "Executive
Compensation", Item 12 -- "Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters", Item 13 -- "Certain Relationships
and Related Transactions, and Director Independence" and Item 14  Principal
Accountant Fees and Services are incorporated herein by this reference to the
Company's definitive proxy statement for its 2007 annual meeting of
stockholders, which definitive proxy statement is expected to be filed with the
Commission not later than 120 days after the end of the fiscal year to which
this report relates.

|PART
      IV                                             
|----------------------------------------------------------
|ITEM 15.
      EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|Documents
      Filed as a Part of this Report:           
|Page                                                      
|1.                                                        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          

Page 73

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

No financial
schedules are listed since they are not applicable or are not required, or
because the required information is included in the consolidated financial
statements or notes thereto.

|3.Exhibits: |  |                                                                               |  |                     
|----------- |  | ----------------------------------------------------------------------------- |  | --------------------
|Exhibit     |  |                                                                               |  |                     
|Number      |  | Description                                                                   |  |                     
|3.1         |  | Articles of
      Organization, as amended                                    |  |                     
|3.2         |  | By-Laws                                                                       |  |                     
|4.1         |  | Form of Stock
      Certificate                                               |  |                     
|10.1        |  | Employment
      Agreement with Theodore E. Charles (3)                       |  | (2)(Exh.
      10.1)
|10.2        |  | Employment
      Agreement with Timothy B. Murphy (3)                         |  | (2)(Exh.
      10.2)
|10.3        |  | The 1994 Stock
      Option Plan                                              |  |                     
|10.4        |  | The 2005
      Equity Incentive Plan                                          |  |                     
|14.1        |  | Code of
      Ethics                                                          |  |                     
|21.1        |  | Subsidiaries
      of Investors Capital Holdings, Ltd. as of March 31, 2007.  |  | (1)                 
|23.1        |  | Consent of UHY
      LLP                                                      |  |                     
|23.2        |  | Consent of Brown &
      Brown, LLP                                           |  |                     
|31.1        |  | Certification
      of Theodore E. Charles pursuant to Rule 13a-14(a)         |  | (1)                 
|31.2        |  | Certification
      of Timothy B. Murphy pursuant to Rule 13a-14(a)           |  | (1)                 
|32.1        |  | Certification
      of Theodore E. Charles pursuant to 18 U.S.C. Section 1350 |  | (1)                 
|32.2        |  | Certification
      of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350   |  | (1)                 

|(1) | Filed
      herewith.                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated
      by reference to the indicated exhibit to the Registrant's Registration
      Statement on Form SB-2 (File No. 333-05327) filed August 14, 2000.
|   
|(3) | A management
      contract or compensatory plan or arrangement required to be filed as an
      exhibit pursuant to Item 15(b) of this report.                   
|   
|(4) | Incorporated
      by reference to the indicated exhibit to the Registrants Annual Report on
      Form 10-K filed June 30, 2005.                                
|   
|(5) | Incorporated
      by reference to the indicated exhibit to the Registrants Registration
      Statement on Form S-8 (File No. 333-43664) filed June 9, 2006.    
|   

Page 74

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

Any exhibit not
included with this Form 10-K when furnished to any shareholder of record will be
furnished to such shareholder upon written request and payment of up to $.25 per
page plus postage. Such requests should be directed to Investors Capital
Holdings, Ltd., 230 Broadway East, Lynnfield, MA 01940-2320.

Page 75

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|SIGNATURES
|----------

Pursuant to the
requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| | INVESTORS CAPITAL HOLDINGS, LTD. By: /s/
      Timothy B.
      MurphyChief Financial Officer
| | ---------------------------------------------------------------------------------------------



|Date: June 29, 2007
|-------------------

Pursuant to the
requirements of the Securities Act of 1933, this Annual Report on Form 10-K has
been signed by the following persons in the capacities and as of the dates
indicated.

|Signature                                 |  | Capacity(ies)                                    |  | Date               
|----------------------------------------- |  | ------------------------------------------------ |  | -------------------
|                                         
|                                         
|/s/
      Theodore E. Charles             |  | Principal
      Executive Officer                |  | June 29,
      2007
|Theodore E.
      Charles                 |  |                                                  |  |                    
|                                         
|/s/
      Timothy B. Murphy               |  | Principal
      Financial and Accounting Officer |  | June 29,
      2007
|Timothy B.
      Murphy                   |  |                                                  |  |                    
|                                         
|/s/
      Arthur J. Stickney              |  | Director                                         |  | June 29,
      2007
|Arthur J.
      Stickney                  |  |                                                  |  |                    
|                                         
|/s/
      William Atherton                |  | Director                                         |  | June 29,
      2007
|William
      Atherton                    |  |                                                  |  |                    
|                                         
|/s/ Robert
      Martin          
      . |  | Director                                         |  | June 29,
      2007
|Robert
      Martin                       |  |                                                  |  |                    

Page 76

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|EXHIBIT
      INDEX(Exhibits
      being initially filed with this Form 10-K)
|-----------------------------------------------------------------------------

|21.1 | Subsidiaries
      of Investors Capital Holdings, Ltd. as of March 31, 2007  
|---- | -----------------------------------------------------------------------------
|    
|23.1 | Consent of UHY LLP                                                           
|    
|23.2 | Consent of
      Brown & Brown, LLP                                          
|    
|31.1 | Certification
      of Theodore E. Charles pursuant to Rule 13a-14(a)        
|    
|31.2 | Certification
      of Timothy B. Murphy pursuant to Rule 13a-14(a)          
|    
|32.1 | Certification
      of Theodore E. Charles pursuant to 18 U.S.C. Section 1350
|    
|32.2 | Certification
      of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350  
|    

Page 77

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------

|Exhibit
      21.1                                          
|------------------------------------------------------------
|Subsidiaries of
      Investors Capital Holdings,
      Ltd.
|Subsidiary                                                  
|Investors
      Capital Corporation                         
|Eastern Point
      Advisors, Inc.                          
|ICC Insurance
      Agency, Inc.                            
|Investors
      Capital Holdings Securities Corporation     

All subsidiaries are wholly-owned by Investors Capital Holdings,
Ltd.

Page 78

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|Exhibit
      23.1
|------------------

CONSENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration
Statement of Investors Capital Holdings, Ltd. and Subsidiaries on Form S-8 (No.
333-117808 and No. 333-134885), of our report dated June 29, 2007, pertaining to
the consolidated financial statements and schedules of Investors Capital
Holdings, Ltd. and Subsidiaries which appears in the Annual Report on Form 10-K
of Investors Capital Holdings, Ltd. and Subsidiaries for the year ended March
31, 2007.



|/s/ UHY LLPBoston,
      MassachusettsJune 29,
      2007
|---------------------------------------------------------



Page 79

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|Exhibit
      23.2
|------------------

CONSENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration
Statement of Investors Capital Holdings, Ltd. and Subsidiaries on Form S-8 (No.
333-134885 and No. 333-117807) of our report dated May 17, 2006, pertaining to
the consolidated financial statements and schedules of Investors Capital
Holdings, Ltd. and Subsidiaries which appears in the Annual Report on Form 10-K
of Investors Capital Holdings, Ltd. and subsidiaries for the year end March 31,
2006 and 2005.



|/s/
      Brown & Brown, LLPBoston,
      MassachusettsJune 29,
      2007
|--------------------------------------------------------------------------

Page 80

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|INVESTORS CAPITAL HOLDINGS LTD -
10-K
|-------------------------------------



|Fiscal
      Year Ended March 31, 2007
|--------------------------------------



|Exhibit
      31.1CERTIFICATION
|-------------------------------



|I, Theodore E. Charles, certify
that:
|-------------------------------------

|1. | I have
      reviewed this annual report on Form 10-K of Investors Capital Holdings,
      Ltd.;                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Based on my
      knowledge, this report does not contain any untrue statement of a material
      fact or omit to state a material fact necessary to make the statements
      made, in light of the circumstances under which such statements were made,
      not misleading with respect to the period covered by this report;
|  
|3. | Based on my
      knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in said report;                   
|  
|4. | The
      registrant's other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant
      and have:                                                                             
|  
|   | a)                                                                                                                                                                                                                                                                                                                                
|  
|   | b)                                                                                                                                                                                                                                                                                                                                
|  
|   | c)                                                                                                                                                                                                                                                                                                                                
|  
|   | d)                                                                                                                                                                                                                                                                                                                                
|  
|5. | The
      registrant's other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent
      functions):  
|  
|   | a)                                                                                                                                                                                                                                                                                                                                
|  
|   | b)                                                                                                                                                                                                                                                                                                                                
|  



|Date: June 29, 2007By: /s/
      Theodore E. CharlesTheodore E.
      Charles, Chairman,Chief
      Executive Officer and Director(principal
      executive officer)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Page 81

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|INVESTORS CAPITAL HOLDINGS LTD - 10-K
|-------------------------------------



|Fiscal Year Ended March 31, 2007
|--------------------------------



|Exhibit 31.2CERTIFICATION
|-------------------------



|I, Timothy B. Murphy, certify that:
|-----------------------------------

|1. | I have reviewed this annual report on Form 10-K of Investors Capital Holdings, Ltd.;                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|  
|3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in said report;                   
|  
|4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:                                                                             
|  
|   | a)                                                                                                                                                                                                                                                                                                        
|  
|   | b)                                                                                                                                                                                                                                                                                                        
|  
|   | c)                                                                                                                                                                                                                                                                                                        
|  
|   | d)                                                                                                                                                                                                                                                                                                        
|  
|5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):        
|  
|   | a)                                                                                                                                                                                                                                                                                                        
|  
|   | b)                                                                                                                                                                                                                                                                                                        
|  



|Date: June 29, 2007By: /s/ Timothy B. MurphyTimothy B. Murphy, President,Treasurer, Chief Financial Officer and Director(principal financial officer)
|-----------------------------------------------------------------------------------------------------------------------------------------------------

Page 82

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|INVESTORS CAPITAL HOLDINGS LTD - 10-K
|-------------------------------------



|Fiscal Year Ended March 31, 2007
|--------------------------------



|Exhibit 32.1CERTIFICATION
|-------------------------

I, Theodore E. Charles, certify that this report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Investors Capital Holdings, Ltd.



|Date: June 29, 2007By: /s/ Theodore E. CharlesTheodore E. Charles, Chairman,Chief Executive Officer and Director(principal executive officer)
|---------------------------------------------------------------------------------------------------------------------------------------------

Page 83

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|INVESTORS CAPITAL HOLDINGS LTD - 10-K
|-------------------------------------



|Fiscal Year Ended March 31, 2007
|--------------------------------



|Exhibit 32.2CERTIFICATION
|-------------------------

I, Timothy B. Murphy, certify that this report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Investors Capital Holdings, Ltd.



|Date: June 29, 2007By: /s/ Timothy B. MurphyTimothy B. Murphy, President,Treasurer, Chief Financial Officer and Director(principal financial officer)
|-----------------------------------------------------------------------------------------------------------------------------------------------------

Page 84

---