UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                   FORM 10-Q/A
                                 Amendment No. 1


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


                For the quarterly period ended December 31, 2005


                         Commission File Number: 1-16349


                        INVESTORS CAPITAL HOLDINGS, LTD.
             (Exact name of registrant as specified in its charter)


          MASSACHUSETTS                                           04-3284631
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                                 230 Broadway E.
                         Lynnfield, Massachusetts 01940
                    (Address of principal executive offices)

                                 (781) 593-8565
              (Registrant's telephone number, including area code)

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  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Number of shares outstanding of our only class of common stock as of February 9,
2006: 5,794,246



                                EXPLANATORY NOTE

     This amendment is filed to revise our report on Form 10-Q for the quarter
ended December 31, 2005 regarding: (i) disclosures concerning legal proceedings
in Part I, Item 1. "Financial Statements -- Note 3 to the Consolidated Financial
Statements" and Part II, Item 1. "Legal Proceedings"; (ii) financial schedules
in Part I, Item 2. "Management's Discussion And Analysis -- Results Of
Operations"; and (iii) certifications in Exhibits 31.1 and 31.2.

<PAGE>

                                    Contents


PART I   FINANCIAL INFORMATION.................................................3

ITEM 1.  Financial Statements..................................................3
ITEM 2.  Management's Discussion And Analysis Of Financial
         Condition And Results Of Operations .................................21

ITEM 3.  Quantitative and Qualitative Disclosures
         About Market Risk....................................................35

ITEM 4.  Controls and Procedures..............................................35

PART II  OTHER INFORMATION....................................................36

ITEM 1.  Legal Proceedings....................................................36
ITEM 6.  Exhibits.............................................................37

SIGNATURES

EX-31.1

EX-31.2

EX-32.1

EX-32.2



                                        2
<PAGE>

                          PART I FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS





                                        3

<PAGE>


INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
<S>                                                                            <C>         <C>
                                                                           December 31,  March 31,
                                                                              2005         2005
                                                                           -----------  -----------
Assets

Current Assets
     Cash and cash equivalents                                            $ 8,953,767  $ 8,618,261
     Deposit with clearing organization, restricted                           175,000      175,000
     Note receivable - sale of asset (current)                                  8,336
     Accounts receivable                                                    3,582,460    3,003,459
     Accounts receivable - asset held for sale                                      -      358,050
     Loans receivable from registered representatives (current)               376,562      173,875
     Prepaid income taxes                                                      94,089      100,889
     Marketable securities, at market value                                   109,625      330,380
     Prepaid expenses                                                         385,992      247,421
                                                                           -----------  -----------
                                                                           13,685,831   13,007,335

Property and Equipment, Net                                                   716,433      571,198

Long Term Investments
     Loans receivable from registered representatives                         230,196       77,270
     Note receivable - sale of asset                                          747,617
     Equity investments, at cost                                              190,000       40,000
     Investments                                                              146,429      142,816
     Cash surrender value life insurance policies                             163,278       91,882
                                                                           -----------  -----------
                                                                            1,477,520      351,968
Other Assets
     Other assets                                                              22,276       29,666
     Deferred tax asset, net                                                  129,451      149,471
                                                                           -----------  -----------
                                                                              151,727      179,137

          TOTAL ASSETS                                                    $16,031,511  $14,109,638
                                                                           ===========  ===========

Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable                                                     $ 1,500,235  $ 1,045,314
     Commissions payable                                                    2,209,740    1,885,340
     Accrued expenses                                                         104,610      552,088
     Notes payable                                                                  -        9,433
     Unearned revenues                                                      1,803,130      106,775
     Securities sold, not yet purchased, at market value                       36,098      327,905
                                                                           -----------  -----------
                                                                            5,653,813    3,926,855

          TOTAL LIABILITIES                                                 5,653,813    3,926,855
                                                                           ------------ -----------
Commitments and Contingencies

Stockholders' Equity:
     Common stock, $.01 par value, 10,000,000 shares authorized; 5,792,746
      issued and 5,788,861 outstanding in December 31,2005; 5,757,348
      issued and 5,753,463 outstanding in March 31, 2005                       57,927       57,573
     Additional paid-in capital                                             8,728,896    8,691,566
     Retained earnings                                                      1,614,024    1,463,779
       less: Treasury stock, 3,885 shares at cost                             (30,135)     (30,135)
     Accumulated Other Comprehensive Income                                     6,986
                                                                           ----------- ------------
          Total stockholders' equity                                       10,377,698   10,182,783

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $16,031,511  $14,109,638
                                                                           ===========  ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.



                                        4
<PAGE>


INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
<S>                                                                  <C>                 <C>
                                                                        Three Months Ended
                                                                           December 31,

                                                                     2005                2004
                                                                 ------------        ------------
                                       Revenues

   Commission                                                    $14,944,156         $11,965,568
   Advisory fees                                                   1,313,676             904,241
   Other fee income                                                  384,766             305,681
   Marketing revenue,net                                             202,639             153,453
   Other income                                                      159,179             251,918
                                                                 ------------        ------------
       Total Revenue                                              17,004,416          13,580,861

Commission and advisory fees expenses                             13,204,912          10,527,798
                                                                 ------------        ------------
           Gross profit                                            3,799,504           3,053,063

Operating expenses:

   Advertising                                                       201,912             179,561
   Communications                                                    159,127             137,802
                                                                  -----------         -----------

       Total Selling Expenses                                        361,039             317,363


   Compensation and benefits                                       1,537,058           1,435,213
   Regulatory, legal and professional                              1,137,663             325,244
   Occupancy                                                         168,328             151,606
   Other administrative expenses                                     270,890             208,880
                                                                  -----------         -----------
       Total Administrative Expenses                               3,113,939           2,120,943

       Total Operating Expenses                                    3,474,978           2,438,306
                                                                  -----------         -----------

           Operating  Income                                         324,526             614,757

Other expense and other income :
     Gain on sale of  asset                                           91,313                   -
                                                                  -----------         -----------
       Total other income                                             91,313                   -

   Interest expense                                                    8,992               8,218
                                                                  -----------         -----------
       Total other expense                                             8,992               8,218
                                                                 ------------        ------------
Income before taxes                                                  406,847             606,539

Provision for income taxes                                           205,363             251,316
                                                                  -----------         -----------

Net Income                                                       $   201,484         $   355,223
                                                                  ===========         ===========


Earnings per common share:

   Basic earnings per common share                               $      0.03         $      0.06

   Diluted earnings per common share                             $      0.03         $      0.06

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                     5,767,801           5,736,916

   Incremental shares from assumed exercise of stock options         134,836             171,466

   Weighted average shares used in diluted earnings per
     common share calculations                                     5,902,637           5,908,382
</TABLE>
See Notes to Condensed Consolidated Financial Statements.



                                        5

<PAGE>

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
<S>                                                                  <C>                  <C>
                                                                        Nine Months Ended
                                                                          December 31,

                                                                      2005                2004
                                                                  -----------         -----------
                                        Revenues

   Commission                                                    $42,671,689         $35,853,473
   Advisory fees                                                   3,769,457           2,711,173
   Other fee income                                                  586,644             727,353
   Marketing revenue,net                                             872,173             706,869
   Other income                                                      467,934             337,379
                                                                  -----------         -----------
       Total Revenue                                              48,367,897          40,336,247

Commission and advisory fees expenses                             38,495,624          32,416,497
                                                                 ------------        ------------
           Gross profit                                            9,872,273           7,919,750

Operating expenses:

   Advertising                                                       626,575             583,438
   Communications                                                    460,561             379,756
                                                                  -----------         -----------
       Total Selling Expenses                                      1,087,136             963,194

   Compensation and benefits                                       4,656,097           4,065,595
   Regulatory, legal and professional                              2,486,521           1,049,054
   Occupancy                                                         492,310             433,891
   Other administrative expenses                                     699,730             659,206
                                                                  -----------         -----------
       Total Administrative Expenses                               8,334,658           6,207,746

       Total Operating Expenses                                    9,421,794           7,170,940
                                                                 ------------        ------------
           Operating income                                          450,479             748,810

Other expense and Other income:

   Gain on sale of Asset                                              91,313                   -
                                                                  -----------         -----------
       Total other income                                             91,313                   -

   Interest expense                                                   27,843              32,091
                                                                  -----------         -----------
       Total other expense                                            27,843              32,091

Income before taxes                                                  513,949             716,719

Provision for income taxes                                           248,076             306,977
                                                                 ------------        ------------
           Net income                                            $   265,873         $   409,742
                                                                  ===========         ===========


Earnings per common share:

   Basic earnings per common share                               $      0.05         $      0.07

   Diluted earnings per common share                             $      0.04         $      0.07


Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                     5,759,003           5,732,367

   Incremental shares from assumed exercise of stock options         156,851             185,882

   Weighted average shares used in diluted earnings per
     common share calculations                                     5,915,854           5,918,249
</TABLE>
See Notes to Condensed Consolidated Financial Statements.



                                        6

<PAGE>

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
NINE MONTHS ENDED December 31, 2005



<TABLE>
<CAPTION>
<S>              <C>             <C>         <C>       <C>             <C>         <C>          <C>         <C>       <C>
                                    Common    Amount    Additional   Comprehensive    Retained   Treasury  Accumulated
                                    Stock                Paid-In        Income        Earnings    Stock       Other
                                    Shares               Capital                      (Deficit)           Comprehensive    Total
                                                                                                           Income (Loss)
---------------------------------------------------------------------------------------------------------------------------------

                                 ------------------------------------------------------------------------------------------------
Balance at April 1, 2004         5,731,598   $57,316   $8,520,931      $      0    $  844,670   $(30,135)   $ 12,157  $ 9,404,939
                                 ================================================================================================
Stock based compensation            10,700     107         74,803                                                          74,910

Comprehensive income:
   Net income                                                           409,742       409,742
Other Comprehensive Income:
  Unrealized gain on securities:
unrealized holding losses arising
during period no tax effect                                                (385)

Less: reclassification adjustment
for gain included in net income no tax
effect                                                                  (11,772)
                                                                    -------------
Other Comprehensive Income                                              (12,157)                             (12,157)
                                                                    -------------                         -----------
   Comprehensive Income                                                 397,585                                           397,585
                                                                    =============

                                 ------------------------------------------------------------------------------------------------
Balance at December 31, 2004     5,742,298  $57,423    $8,595,734      $      0    $1,254,412   $(30,135)   $      0  $ 9,877,434
                                 ================================================================================================

Balance at April 1, 2005         5,757,348  $57,573    $8,691,566                  $1,463,779   $(30,135)             $10,182,783

Stock based compensation            35,398      354        37,330                                                          37,684

Comprehensive income:
   Net income                                                           265,873       265,873

Other Comprehensive Income:
 Unrealized gain on securities:                                                                                    -
Unrealized holding gains arising
 during period no tax effect                                              6,986

no reclassification adjustment
 required                                                                     -
                                                                    -------------

Other Comprehensive Income                                                6,986                                6,986
                                                                    -------------                          -----------

   Comprehensive Income                                                 272,859                                           272,859
                                                                    =============

   Dividend payment to
    shareholders                                                                     (115,628)                           (115,628)
                                 ------------------------------------------------------------------------------------------------
Balance at December  31, 2005    5,792,746  $57,927    $8,728,896      $      0    $1,614,024   $(30,135)   $  6,986  $10,377,698
                                 ================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.




                                        7

<PAGE>

INVESTORS CAPITAL HOLDINGS, LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED

Cash Flows
<TABLE>
<CAPTION>
<S>                                                                      <C>       <C>
                                                                          Nine Months Ended
                                                                            December 31,

                                                                          2005        2004
                                                                     ----------- -----------
Cash flows from operating activities:

     Net income                                                      $  265,873  $  409,742
     Adjustments in operating activities:

         Depreciation and amortization                                  157,473     125,337
         Change in deferred taxes                                        20,021       5,458
         Issuance of unrestricted stock                                  19,263      45,640
         Issuance of  restricted stock                                    2,567           -
         Stock option compensation                                       11,614      11,899
         Change in marketable securities                                (71,052)     37,967
         Change in investments                                            3,373     (22,265)

Changes in operating assets and liabilities:

     (Increase)Decrease in accounts receivable                         (579,001)    386,752
     Decrease(Increase) in accounts receivable-asset held for sale     (397,903)   (111,314)
     (Increase)Decrease prepaid expenses and other assets              (131,181)    159,139
     Decrease in loans receivable from officers                               -      27,322
     Decrease(Increase)  in prepaid income taxes                          6,801           -
     Increase(decrease) in taxes payable                                      -    (482,874)
     (Decrease) increase in accounts payable                            454,921     183,996
     (Decrease) in accrued expenses                                    (447,478)   (343,007)
     Increase(Decrease) in commissions payable                          324,399    (558,641)
     Payments on notes payable and NASD settlement                            -    (148,679)
     Increase in unearned revenues                                    1,696,354   1,583,010
     (Increase) in Cash Surrender Value of Life Insurance Policies      (71,396)
                                                                     ----------- -----------
             Net cash (used in)provided by operating activities       1,264,648   1,309,482

Cash flows from investing activities:

     Purchases of property and equipment                               (302,708)   (195,480)
     Loans receivable from registered representatives                  (355,612)   (211,961)
     Investments                                                       (150,000)          -
                                                                     ----------- -----------
             Net cash used in investing activities                     (808,320)   (407,441)

Cash flows from financing activities:

     Proceeds from exercise of stock options                              4,240      17,372
     Principal payment notes payable                                     (9,433)    (62,624)
     Payment of cash dividends                                         (115,629)          -
                                                                     ----------- -----------
             Net cash used in financing activities                     (120,822)    (45,252)


Net (decrease)increase in cash and cash equivalents                     335,506     856,789

Cash and cash equivalents, beginning of period                        8,618,261   8,112,567
                                                                     -----------------------
Cash and cash equivalents, end of period                             $8,953,767  $8,969,356
                                                                     =======================
Supplemental disclosures of cash flow information:

     Interest paid                                                   $   27,843  $   32,091
     Income taxes paid                                               $  217,256  $  780,000

Non- Cash Transactions:
Financing Sale Accounts Receivable                                   $  747,617  $        -
</TABLE>
See Notes to Condensed Consolidated Financial Statements.

                                        8

<PAGE>

               INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE QUARTER ENDED DECEMBER 31, 2005
                                  (UNAUDITED)


NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
        ORGANIZATION

     Incorporated in July 1995,  Investors Capital  Holdings,  Ltd. ("ICH") is a
financial   services   holding  company  that  operates  through  three  of  its
subsidiaries,  Investors Capital  Corporation  ("ICC"),  Eastern Point Advisors,
Inc.  ("EPA") and ICC Insurance  Agency,  Inc., in two segments of the financial
services  industry.   These  two  segments  provide  for  the  offering  of  (1)
broker-dealer  services  in  support of  trading  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   on-line  trading,   portfolio   tracking  and  records
management,  and (2) investment  advisory and asset management  services.  These
products and services are offered throughout the United States primarily through
our network of independent registered representatives.

     Investors Capital Holdings Securities Corporation ("ICH Securities"), a new
subsidiary,  was formed in March 2005 to hold cash, cash  equivalents,  interest
income and dividend income for ICH. Additionally,  the Company ceased its mutual
fund  management  services,  which had been  provided  by EPA,  during the third
quarter of the  current  fiscal  year.  See "Note 5. Note  Receivable  - Sale of
Asset."

     On October 24, 2005 Eastern Point Advisors,  Inc.  ("EPA"),  a wholly-owned
subsidiary of Investors Capital Holdings,  Ltd. (the "Company"),  entered into a
definitive agreement (the "Transition Agreement") with Dividend Growth Advisors,
LLC ("DGA").  Pursuant to the Transition Agreement,  EPA 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 supercede  EPA as the Trust's  investment  advisor.  EPA 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 EPA. DGA entered into a new advisory  agreement  directly
with the Trust.

BASIS OF PRESENTATION

     The accompanying  unaudited condensed  consolidated financial statements of
Investors Capital Holdings,  Ltd. and its subsidiaries (the "Company") have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America (GAAP) for interim  financial  information and with the
instructions  to Form  10-Q.  In the  opinion  of  management,  these  financial
statements  contain all of the adjustments  necessary for a fair presentation of
the results of these interim  periods.  Certain  footnote  disclosures  normally
included in  financial  statements  prepared in  accordance  with GAAP have been
condensed or omitted,  although the Company  believes the  disclosures  in these
financial  statements  are  adequate  to  make  the  information  presented  not
misleading.  Operating results for the three-month and nine-month  periods ended
December  31, 2005 are not  necessarily  indicative  of the results  that may be
expected for the year ending March 31, 2006. The balance sheet at March 31, 2005
has been derived from the audited  financial  statements at that date,  but does
not include all of the information  and footnotes  required by GAAP for complete
financial   statements.   These  unaudited  condensed   consolidated   financial
statements  should be read in  conjunction  with the  Company's  annual  audited
financial  statements  included in the  Company's  Form 10-K for the fiscal year
ended March 31, 2005 filed with the Securities and Exchange Commission.



                                        9

<PAGE>

USE OF ESTIMATES

     The  preparation of financial  statements in conformity  with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets  and  liabilities  as of 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.












                                       10

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)


NOTE 1. ORGANIZATION,  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
        (continued)


RECLASSIFICATIONS

     Certain  amounts  in the prior  periods  have been  reclassified  to remain
consistent with the current fiscal year financial statement presentation.


SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

     The Company has established  revenue  recognition  policies for each of its
income items including Mutual Funds/Variable Annuities,  Trading, Advisory Fees,
Administration Fees on Errors and Omissions ("E&O") and Renewals,  and Marketing
Revenues on production  and for regional and national  events.  A description of
the revenue recognition process related to each category is presented below. The
revenue  recognition  policies the Company  maintains are in compliance with SEC
Staff  Accounting  Bulletin  ("SAB")  104  "Revenue   Recognition  in  Financial
Statements".


     Mutual Funds/Variable  Annuities. The Mutual Funds/Variable Annuity revenue
is recognized upon receipt of commissions  related to each sale, which generally
is settled on the trade date. The earnings process is substantially  complete at
the point that the fund company distributes payment to the 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 12b1 fees and  interest on account  balances.  The
earnings process is substantially  complete at trade date in accordance with the
rules  of the  National  Association  of  Securities  Dealers  ("NASD")  and the
Securities and Exchange Commissions ("SEC").


     The  Company  also  receives   credit   adjustments   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 advisor and the advisor's  client.
These  revenues  are  recorded  quarterly  as and when  billed,  and any portion
remaining  uncollected at the end of the subsequent  quarter are charged against
earnings at that time.



                                       11

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)


NOTE 1. ORGANIZATION,  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
        (continued)


     Advisory fees relating to the management of mutual funds have been based on
average daily net fund assets as specified in the Company's  advisory  agreement
and  disclosed  in the  funds'  prospectuses.  These  fees have been  recognized
monthly  based on the fund  Trustee's  administrative  fee report  detailing the
amounts  that were earned for the month.  The Company in the past has elected to
waive  certain  of these  fees to allow  for one of the  funds to  maintain  its
ceiling on administrative expenses. Per agreement with the trustee of the funds,
the waived fees have been subject to a three-year recovery period, at the end of
which any  uncollected  fees have been  permanently  waived  and,  consequently,
charged  against  earnings.  Effective  October 18, 2005, the Company ceased its
mutual funds advisory services,  and its successor as fund advisor has agreed to
pay to the Company  all such waived  amounts  with  interest.  See "Note 5. Note
Receivable - Sale of Asset."

     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.


Accounts Receivable - Allowance for Doubtful Accounts

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

     Loans  to  representatives.  In  accordance  with  SFAS No.  5, 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. As disclosed in the respective  mutual
funds'  prospectuses,  the Company has  attempted to recoup all waived  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, then the Company provided for an allowance in accordance with SFAS No.
5. Determinations  whether to write off such fees were made annually.  Effective
October 18, 2005,  the Company no longer  provides  advisory  services to mutual
funds and is entitled to payment of all previously  waived  advisory fees by its
successor as fund advisor. See "Note 5. Note Receivable - Sale of Asset."

     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.



                                       12

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)


NOTE 1. ORGANIZATION,  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
        (continued)

Income Taxes

     The Company  provides for income  taxes at the end of each  interim  period
based on the estimated  effective tax rate for the full fiscal year.  Cumulative
adjustments  to the tax provision are recorded in the interim  period in which a
change in the estimated annual effective rate is determined.


NOTE 2. SEGMENT INFORMATION

     The  accounting  policies of the segments  are  described in the summary of
significant  accounting  policies.  The Company  evaluates  performance based on
profit and loss from operations after income taxes.

     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
different technology and marketing strategies.

     The Company's  reportable  segments  include  investment  services  offered
through  Investors  Capital  Corporation  (ICC)  and asset  management  services
offered through Eastern Point Advisors,  Inc. (EPA).  Asset management  services
are also offered through ICC which, in addition to being a  broker-dealer,  is a
registered  investment  advisor  doing  business as Investors  Capital  Advisors
(ICA).

     This investment services segment includes 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 provides money management services to a variety of investors 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 2 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.



                                       13

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2. SEGMENT INFORMATION (CONTINUED)





                                                        Nine Months Ended
                                                          December 31,

                                                   2005                2004
                                              --------------      --------------
Inter-company eliminations                    $   2,521,036       $   2,322,622
Classification items (stand alone)                 (219,565)
Deferred income taxes                                64,962              45,727
Income Taxes                                        (94,089)                 -
                                              --------------      --------------

Total Corporate items and eliminations        $   2,272,344       $   2,368,349
                                              ==============      ==============








                                       14

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2. SEGMENT INFORMATION (CONTINUED)


     Segment reporting is as follows:




                                                       Three Months Ended
                                                          December 31,
                                                  ---------------------------
                                                      2005           2004
                                                  ------------   ------------
     Non-interest revenues:

       ICC, investment services ................. $15,484,657    $12,503,994
       EPA, ICA asset management services .......   1,365,579        943,414
       ICH investments (loss)gain ...............      (6,998)        27,211
                                                  ------------   ------------
            Total ............................... $16,843,239    $13,474,619
                                                  ============   ============

     Revenues from transactions with other
        operating segments:
       ICC ...................................... $   (41,411)   $   263,710
       EPA ......................................      35,843         29,301
                                                  ------------   ------------
            Total ............................... $    (5,568)   $   293,011
                                                  ============   ============

     Interest and dividend income, net:
       ICC ...................................... $   113,521    $    65,153
       EPA,ICA ..................................       8,851            300
       ICH ......................................         225         40,790
       ICH Securities ...........................      38,581            --
                                                  ------------   ------------
            Total ............................... $   161,178    $   106,243
                                                  ============   ============

     Depreciation and amortization expense:
       ICC ...................................... $    52,282    $    42,685
       EPA ......................................       1,095          2,306
                                                  ------------   ------------

            Total ............................... $    53,377    $    44,991
                                                  ============   ============



                                       15

<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)



                                                      Three Months Ended
                                                         December 31,
                                                 ---------------------------
                                                     2005           2004
                                                 ------------   ------------

     Income tax provision (benefit):

       ICC ......................................$   287,050    $   193,239
       EPA,ICA ..................................     86,027         33,189
       ICH ......................................   (167,714)        24,888
                                                 ------------   ------------
            Total ...............................$   205,363    $   251,316
                                                 ============   ============


     Income (loss):
       ICC ......................................$   281,592    $   273,184
       EPA,ICA ..................................     84,390         46,920
       ICH ......................................   (203,059)        35,119
       ICH Securities ...........................     38,561             --
                                                 ------------   ------------

            Total ...............................$   201,484    $   355,223
                                                 ============   ============

     Period end total assets:
       ICC ......................................$ 11,721,616   $ 10,145,055
       EPA,ICA ..................................   1,050,666        613,494
       ICH ......................................     664,532      5,684,044
       ICH Securities ...........................$  4,867,041             --
       Corporate items and eliminations .........  (2,272,344)    (2,368,349)
                                                 ------------   ------------

            Total ...............................$16,031,511    $14,074,244
                                                 ============   ============



                                       16

<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2. SEGMENT INFORMATION (CONTINUED)




                                                   Nine Months Ended
                                                      December 31,
                                              ---------------------------
                                                  2005           2004
                                              ------------   ------------

     Non-interest revenues:

       ICC, investment services ..............$ 44,147,259   $ 37,182,593
       EPA,ICA asset management services .....   3,912,215      2,836,276
       ICH investments (loss)gain ............      (4,135)        22,214
                                              ------------   ------------
            Total ............................ $48,055,339   $ 40,041,082
                                              ============   ============

     Revenues from transactions with other
     operating segments:
       ICC ...................................$    727,917   $    822,625
       EPA ...................................     121,324         91,403
                                              ------------   ------------

            Total ............................$    849,241   $    914,028
                                              ============   ============

     Interest and dividend income,net:
       ICC ...................................$    284,882   $    171,486
       EPA,ICA ...............................       9,381            504
       ICH ...................................       9,377        123,175
       ICH Securities ........................     113,428             --
                                              ------------   ------------
            Total ............................$    417,068   $    295,165
                                              ============   ============

     Depreciation and amortization expense:
       ICC ...................................$    151,259   $    118,958
       EPA ...................................       6,214          6,379
                                              ------------   ------------

            Total ............................$    157,473   $    125,337
                                              ============   ============

                                       17
<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)


                                                   Nine Months Ended
                                                      December 31,
                                              ---------------------------
                                                  2005           2004
                                              ------------   ------------

     Income tax provision (benefit):

       ICC ...................................$    152,009   $    162,214
       EPA,ICA ...............................     214,510         85,909
       ICH ...................................    (118,443)        58,854
                                              ------------   ------------

            Total ............................$    248,076   $    306,977
                                              ============   ============


     Income (loss):
       ICC ...................................$    162,905   $    216,527
       EPA,ICA ...............................     229,886        114,672
       ICH ...................................    (240,315)        78,543
       ICH Securities ........................     113,397             --
                                              ------------   ------------

            Total ............................$    265,873   $    409,742
                                              ===========    ===========

     Period end total assets:
       ICC ...................................$ 11,721,616   $ 10,145,055
       EPA,ICA ...............................   1,050,666        613,494
       ICH ...................................     664,532      5,684,044
       ICH Securities ........................$  4,867,041             --
       Corporate items and eliminations ......  (2,272,344)    (2,368,349)
                                              ------------   ------------

            Total ............................$ 16,031,511   $ 14,074,244
                                              ============   ============

                                       18
<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)


NOTE 3. LITIGATION

     The Company 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  against  Investors  Capital
Corporation  ("ICC")  alleging  violation of its supervisory  obligations  under
State securities laws in connection with 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.

     We are unable to reasonably  estimate any possible range of loss related to
these proceedings due to their uncertain  resolution.  However,  a conclusion of
these matters  favorable to the Division could have a material adverse effect on
our financial position and results of operations.


OTHER PROCEEDINGS

     At December 31, 2005,  the Company was the  co-defendant  in various  other
lawsuits.  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 has Errors and
Omissions  ("E&O")  insurance to protect  itself from  potential  damages and/or
legal costs associated with the aforementioned lawsuits 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.  In accordance
with Financial  Accounting Standards Board ("FASB") Statement No. 5, "Accounting
for Contingencies",  the Company had accrued expenses of approximately  $791,000
for the quarter  ended  December 31, 2005 of which  $390,000 is related to legal
defense fees  incurred as a result of the State  proceeding  as noted above.  In
addition,  this accrual includes estimated probable settlement costs relating to
the Company's defense in such lawsuits.

                                       19
<PAGE>


NOTE 4.  STOCK-BASED COMPENSATION

     The Company applies Accounting  Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
stock  incentive  plans.  During the first  quarter of fiscal 2005,  the Company
adopted the disclosure  provisions of SFAS No. 148,  "Accounting for Stock-Based
Compensation  -Transition and Disclosure".  The following table  illustrates the
effect on net  earnings and  earnings  per share of  activities  under its stock
incentive  plans  had  the  Company  adopted  the  fair  value-based  method  of
accounting for stock-based employee compensation for all periods presented.

<TABLE>
<CAPTION>
<S>                                  <C>            <C>               <C>            <C>
                                         Three Months Ended              Nine Months Ended
                                             December 31                     December 31
                                     ---------------------------      ---------------------------
                                        2005            2004              2005           2004
                                     ------------   ------------      ------------   ------------


Net income as reported               $    201,484   $    355,223      $    265,874   $    409,742

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(loss)           $    201,484   $    355,223      $    265,874   $    409,742
                                     ============   ============      ============   ============

Earnings per share:
    Basic- as reported               $        .03   $        .06      $        .05   $        .07
    Diluted-as reported              $        .03   $        .06      $        .04   $        .07

    Basic   - pro forma              $        .03   $        .06      $        .05   $        .07
    diluted - pro forma              $        .03   $        .06      $        .04   $        .07
</TABLE>


NOTE 5.  NOTE RECEIVABLE - SALE OF ASSET

     On October 24, 2005 Eastern Point Advisors,  Inc.  ("EPA"),  a wholly-owned
subsidiary of Investors Capital Holdings,  Ltd. (the "Company"),  entered into a
definitive agreement (the "Transition Agreement") with Dividend Growth Advisors,
LLC ("DGA").  Pursuant to the Transition Agreement,  EPA 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  advisor.  EPA 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 EPA. 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 EPA was  assigned  to DGA,  and DGA
agreed  to pay to EPA an  amount  equal to the  total  of all fees  that EPA had
waived or remitted to a fund in the Trust  through  October 18,  2005.  The note
provides  for a principle  amount of  $747,617,  quarterly  payments of interest
accruing  thereon at a 5.5% annual rate, and full payment of the principle on or
before October 31, 2010. Prepayments are permitted without penalty.
     In its  anticipated  capacity as the new investment  advisor for the Trust,
DGA also agreed  under the  Transition  Agreement  to pay to  Investors  Capital
Corporation,  the Company's  wholly-owned  securities  broker/dealer  subsidiary
("ICC"),  the full dealer re-allowance on further sales by ICC of Class A Shares
of the Trust's funds and, for a period of three years,  quarterly payments equal
to 0.10% of the then market value (which is approximately  $44 million) of Trust
shares sold by ICC as of the date of the Transition Agreement.
     The president of DGA, C. Troy Shavers,  Jr.,  resigned as a director of the
Company  effective  October  18, 2005 to avoid any  appearance  of a conflict of
interest.




                                       20
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

     Management's  discussion and analysis  reviews our  consolidated  financial
condition as of December 31, 2005 and March 31, 2005, the  consolidated  results
of operations  for the three months and nine months ended  December 31, 2005 and
2004  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-Q.
Unless context requires otherwise,  as used in this Management's  Discussion and
Analysis  (i) the  "current  period"  means the  fiscal  quarter  (or nine month
period,  when discussing year to date information) ended December 31, 2005, (ii)
the  "prior  period"  means the  fiscal  quarter  (or nine  month  period,  when
discussing year to date information) ended December 31, 2004, (iii) reference to
an increase or decrease  compares the current  period to the prior  period,  and
(iv) all non-comparative amounts refer to the current period.


     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 to, 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  and are  subject  to many risks and
uncertainties.  Our  actual  results  may  differ  materially  from the  results
anticipated in these forward-looking statements. Readers are advised to read and
consider 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. We specifically disclaim any obligation to update or revise
any forward-looking information,  whether as a result of new information, future
developments or otherwise.


OVERVIEW

     We are a financial services holding company that, through our subsidiaries,
provides securities trading, investment advisory, insurance,  financial planning
and related services.  We operate in a highly regulated and competitive industry
that is  influenced  by numerous  external  factors such as general and industry
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 any one or more of these external factors.




OUR BUSINESS

     A key  component  of  our  business  strategy  is to  recruit  and  provide
productive  support to independent  representatives  who generate  comparatively
large sales  volumes and are  motivated to  continually  grow their  business by
offering a wide  variety  of  services  and a  diversified  range of  investment
products to their  clients.  Consistent  with the Company's  marketing  theme of
being  "in the  business  of  building  your  business",  we focus on  providing
substantial  added  value  to our  representatives  to  enable  them  to be more
productive, particularly in high margin lines such as advisory services. Support
provided to assist  representatives in pursuing  consistent and profitable sales
growth takes many forms.  These forms include hi-tech trading systems,  targeted
financial  assistance  and a network  of  communication  links  with  investment
product  companies  including  regional  and national  conventions  that provide
forums for interaction to improve products, sales and client satisfaction.

                                       21
<PAGE>



RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
<S>                                        <C>            <C>               <C>      <C>        <C>
                                                                             Percent
                                                                            of Revenue
                                                   Quarter Ended           Quarter Ended     Percent
                                                    December 31,            December 31,      Change
                                           ----------------------------------------------------------
                                                                                              2005
                                               2005           2004         2005      2004    vs. 2004
                                           -----------    -----------    --------  ------------------

Revenues:

     Commission                            $14,944,156    $11,965,568       87.9%    88.1%      24.9%
     Advisory                                1,313,676        904,241        7.7%     6.7%      45.3%
     Other fee income                          384,766        305,681        2.3%     2.3%      25.9%
     Marketing revenue,net                     202,639        251,918        1.2%     1.8%     -19.6%
     Other income                              159,179        153,453        0.9%     1.1%       3.7%
                                           -----------    -----------

Total Revenue                               17,004,416     13,580,861      100.0%   100.0%      25.2%
                                           ===========    ===========

Commission and advisory expenses            13,204,912     10,527,798       77.7%    77.5%      25.4%

          Gross Profit                       3,799,504      3,053,063       22.3%    22.5%      24.4%

Operating Expenses:

     Advertising                               201,912        179,561        1.2%     1.3%      12.4%
     Communications                            159,127        137,802        0.9%     1.0%      15.5%
                                           -----------    -----------

Total Selling Expenses                         361,039        317,363        2.1%     2.3%      13.8%

     Compensation and benefits               1,537,058      1,435,213        9.0%    10.6%       7.1%
     Regulatory, legal and professional      1,137,663        325,244        6.7%     2.4%     249.8%
     Occupancy                                 168,328        151,606        1.0%     1.1%      11.0%
     Other administrative expenses             270,890        208,880        1.6%     1.5%      29.7%
                                           -----------    -----------

Total Administrative Expenses                3,113,939      2,120,943       18.3%    15.6%      46.8%

Total Operating Expenses                     3,474,978      2,438,306       20.4%    18.0%      42.5%
                                           ===========    ===========

          Operating Income                     324,526        614,757        1.9%     4.5%     -47.2%

Other (Income) and Expense:

    Gain on sale of asset                      (91,313)             -       -0.5%     0.0%       N/A
     Interest expense                            8,992          8,218        0.1%     0.1%       9.4%
                                           -----------    -----------

Total Other (Income) and Expenses              (82,321)         8,218       -0.5%     0.1%   -1101.7%
                                           -----------    -----------

Income before taxes                            406,847        606,539        2.4%     4.5%     -32.9%

Provision for income taxes                     205,363        251,316        1.2%     1.9%     -18.3%

                                           -----------    -----------
Net Income                                 $   201,484    $   355,223        1.2%     2.6%     -43.3%
                                           ===========    ===========
</TABLE>


                                       22
<PAGE>


Three Months Ended December 31, 2005 Compared with Three Months Ended December
31, 2004:


Revenues

     The  Company  continues  to  observe  revenue  growth  in  the  diversified
investment sector of the financial  services  industry.  Our revenues rose $3.42
million,  or 25.2%,  to $17.0  million  despite  the  effects on the  economy of
increases  in  interest  rates and  energy  prices.  Revenues  from  commissions
increased by $2.98 million or 24.9% for the current period compared to the prior
period.  Advisory  services  revenue also  increased  by $0.41  million or 45.3%
between the same comparative periods.

     Commissions.  Commissions  from mutual funds,  variable  annuities,  direct
participation  programs and other  programs  increased by $2.00 million or 24.4%
during  the  current  period  when  compared  to the  prior  period.  Of  these,
commissions from direct  participation  programs,  which  predominantly  include
REITs (Real Estate  Investment  Trusts),  increased  by $0.67  million or 55.0%.
Commissions from trading increased by $0.98 million or 26.1%.



<TABLE>
<CAPTION>
<S>                       <C>               <C>             <C>               <C>
                                     Three Months Ended December 31,      Change in %
                                                                 2005 vs    2005 vs
                               2005             2004              2004        2004

Product Type
Variable Annuities        $    5,244,835    $   4,244,214   $   1,000,621     23.58%
Trading                        4,740,136        3,757,629         982,507     26.15%
Mutual Funds                   2,826,759        2,345,164         481,595     20.54%
Direct Participation
 Programs                      1,884,861        1,216,407         668,454     54.95%
Other                            247,565          402,154        (154,589)   -38.44%

                          --------------    -------------   -------------
Total Commission
 Revenue                      14,944,156       11,965,568   $   2,978,588     24.89%
                          ==============    =============   =============
</TABLE>


     Although  commissions from mutual funds and variable annuities comprise the
largest  component of commission  revenue,  the company's  revenue base has been
shifting   toward  the  area  of  brokerage.   An   increasing   number  of  our
representatives  conduct  their  business in  brokerage  accounts  which in turn
improves our margins. This business includes listed and over-the-counter  stocks
as well as corporate and government bonds including high-yield issues. 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 consequence of the shift toward brokerage products,  the Company
enjoyed 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.
Reflecting  these  efforts,  the number of our  representatives  we have to sell
advisory  service  products  increased from 160  representatives on December 31,
2004 to 305  representatives  on December 31, 2005. 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.

                                       23
<PAGE>


     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 $0.25  million or 44.0% to
$0.82 million  compared to $0.57 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 $0.079  million or 32.3% 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  provided from third-party  investment
advisors, where investment services are provided by outside advisors,  decreased
slightly for the quarter ended December 31, 2005.EPA or ICA have been continuing
their  marketing  efforts  away from these third party  management  programs and
shifting toward their internal proprietary asset-managed models. EPA or ICA have
been providing sales,  marketing, a trading platform and other technical support
to our  representatives to enable them to deliver improved  investment  advisory
services.  A key to our  strategy  is to  encourage  sales  volume  growth  over
maintaining or increasing scheduled investor fee levels.

     Finally, revenues from advisory services provided to mutual funds decreased
by $0.07 million when compared to the prior period.  During the current quarter,
the Company  terminated the management  agreement  pursuant to which it had been
providing such advisory services to mutual funds. Going forward, the fall off in
revenue from this component  should be minimal as advisory  service revenue from
our mutual funds  constituted  only $0.07 million or 7.9% of the total  advisory
services revenue category for the quarter ended December 31, 2004.

     Other Fee Income.  Other fee income  increased by $0.079  million or 25.9%,
resulting mostly from administrative  fees for providing  regulatory services to
our representatives in connection with annual renewals of their NASD licenses.

     Marketing  Revenue.  Net marketing  revenues  decreased by $0.05 million or
19.6%, reflecting an increase in the cost to host our annual national convention
which was held in Boston in October 2005.

     Other Income. Other income,  consisting primarily of interest and dividends
and gains or losses on  investments,  was  relatively  flat for the  comparative
periods.


Gross Margins

     Gross  margin  rose by $0.75  million  or 24.4%  to $3.80  million  for the
current  period  primarily  due to a $0.60  million or 78.8%  increase  in gross
margin  derived  from  brokerage  over the prior  period.  The increase in gross
margin  from  brokerage  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.

Supporting this analysis was a $0.105 million dollar increase to the margin from
our money market and trails on account  balances.  We had a $0.5 million  dollar
increase to the margin as a result of increased  trade revenue from lower payout
producing  representatives.  This  increased  our payout  retention in brokerage
services  from  24% in the  prior  period  to 38% in the  current  period.  This
retention  increase  improved our gross margin  retention in brokerage  services
from 20.4% in the prior period to 29.0% in the current period.  Refer to Gross
Margin Table below.

Finally,  in the prior period we had received a  settlement  from our  insurance
company for a trade  error that  incurred in April of  2004.This  increased  our
margin from trading by $0.147 million in the prior period.

                                       24
<PAGE>


In addition,  investments  in personnel and technology to expand and upgrade the
capabilities  of our trading and operations  department  have 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 (see "--Commissions", above).

     Advisory  services  profit  margins  decreased  slightly  as  a  result  of
terminating  the  management  agreement  associated  with the mutual  funds (see
condensed  footnote 5 to our consolidated  financial  statements).  In addition,
advisory fees 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.

     The  above-discussed  increase in advisory  services  rendered by our third
party money managers  resulted in less margin retention than if the services had
been performed by EPA or ICA.  Although  profit  margins from advisory  services
marginally   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.

     The  majority  of the profit  margin in  advisory  services  stems from our
rep-directed  asset-managed  programs that makes it possible for representatives
managing  client  accounts to trade  directly  online for clients  utilizing our
automated trading platform.  Resulting increases in the representative's trading
volume  effectively boost the Company's  commission  revenues and gross margins.
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.

     Profit  margins  from mutual fund sales,  variable  annuity  sales,  direct
participation  programs and other check and  application  distribution  programs
contributed  $1.26 million or 33.3% of the total gross margin  compared to $1.05
million or 34.5% during the prior period.  As presented in the  following  gross
margin table,  margin from trading constituted the largest percentage (36.1%) of
the overall gross profit during the current period.


Gross Margin:



<TABLE>
<CAPTION>
<S>                          <C>           <C>            <C>       <C>      <C>       <C>         <C>
                                                         Gross Margin       % of Total
                                  Gross Margin            Retention        Gross Margin
                                  Quarter Ended         Quarter Ended      Quarter Ended   Gross Margin
                                  December 31,           December 31,       December 31,  Percent Change
                             ------------------------   ----------------   ------------------------------
                                                                                                2005
                                2005          2004       2005      2004     2005     2004     vs. 2004
                             ----------    ----------   ------    ------   ------   -------   ---------

Comm - Mutual Funds,
 Variable Annuities          $1,264,551    $1,052,193     12.5%     13.0%    33.3%     34.5%       20.2%

Commission - Trading          1,372,402       767,774     29.0%     20.4%    36.1%     25.1%       78.8%

Commission - Insurance
 Products                        31,157        82,774     73.5%     99.0%     0.8%      2.7%      -62.4%

Commission - Underwriting         2,900         4,432     10.0%     14.5%     0.1%      0.2%      -34.6%

Advisory Services               463,307       474,011     33.8%     50.2%    12.2%     15.5%       -2.3%

Licensing                       326,052       266,509    100.0%    100.0%     8.6%      8.7%       22.3%
                                                   -
Marketing                       202,639       251,918      n/a       n/a      5.3%      8.3%      -19.6%

Other income                    136,496       153,453      n/a       n/a      3.6%      5.0%      -11.1%
                             ----------    ----------

Total Gross Margin           $3,799,504    $3,053,064      n/a       n/a    100.0%    100.0%       24.4%
                             ==========    ==========
</TABLE>


                                       25
<PAGE>


Commission Expenses

     Commission payouts to our independent  representatives decreased from 79.9%
to 79.3%  of  commissioned  revenues.  This  improvement  reflects  progress  in
management's  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 $1.04 million or 42.5% increase,
are discussed in detail below:

     Compensation  and benefits.  The largest  component of operating  expenses,
compensation and benefits,  increased by $0.1 million or 7.1% during the current
period,  which is substantially  below the absolute and percentage  growth rates
achieved  in revenues  and gross  margins.  This change  includes an increase in
general  salaries of $0.17 million  offset by a decrease in officer's  salary of
$0.067  million as a result of the  resignation  of EPA's  president  during our
fiscal  quarter  ended June 30, 2005.  The overall  increase  also  reflects pay
increases  to  members  of our  management  team and staff and to the  hiring of
additional personnel.

     Regulatory,  legal and  professional.  Regulatory,  legal and  professional
expenses grew by $0.81 million or 249.8%. The largest component of this increase
was a $0.63 million or 1496% increase in non-in house legal fees,  $0.39 million
of which was incurred in connection with the Massachusetts Proceedings described
in detail in Part II, Item 1 "Legal Proceedings". An additional $0.13 million of
this increase arose from other actions that management believes,  with advice of
counsel,  are  atypical of the  exposures  likely to be presented by our ongoing
operations.  One of these atypical actions also contributed $0.15 million of the
$0.18 million increase in lawsuit settlement expenses.  It was deemed prudent to
increase our accruals  for legal  expenses  from $0.15 per quarter for the prior
period to $0.79 million per quarter for the current period.  Refer to Footnote 2
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.

     We  experienced  a  $0.01  million  increase  in  non-in  house  accounting
expenses,  primarily  audit-related,  while regulatory and professional expenses
remained essentially flat at $0.12 million for the comparative periods.

     Advertising.  Advertising  expenses  increased overall by $0.022 million or
12.4%  due to a $0.01  million  decrease  in  advertisements,  a  $0.02  million
increase in meals and entertainment, and a $.015 million increase in travel. The
increases  are a result of  officers  of the  Company  continuing  to market our
services throughout the country.

     Communications.  Communications  expenses  increased  by $0.021  million or
15.5% primarily due to increases in printing and website expenses  approximating
$0.015  million and $0.01  million,  respectively.  These costs are  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,  conferences,  and telephone, have
historically been positively correlated with the overall growth of our business.

     Occupancy.   Occupancy  expenses  increased  by  $0.016  million  or  11.0%
primarily  as  a  result  of  added  costs  for  rent,   condominium   fees  and
depreciation.  In the  current  period  we  added  a new  investment  center  in
Braintree,  Massachusetts  and acquired  additional  fixed assets for technology
enhancement  for  the  registered   representatives.   Utilities,   storage  and
repairs/maintenance  costs  contributed  the  remaining  increase  to  occupancy
expenses.

     Other administrative.  Other administrative expenses, which include various
insurance,  postage, office, and computer-related expenses,  increased by $0.062
million or 29.7%.  This  increase is mainly due to  additional  bank  charges of
$0.047  million   resulting  from  increased   usage  of  credit  cards  by  our
representatives  to pay fees relating to NASD  licensing  renewals.  The Company
also observed a $0.027 million increase in office expenses related  primarily to
the opening of new recruitment  offices.  Offsetting those  increases,  computer
maintenance services declined by $0.017 million reflecting a greater reliance on
in-house staff to service our computer systems.

                                       26
<PAGE>


Operating Income

     Operating  income  decreased  by  $0.29  million  or  47.2%  due to a 42.5%
increase  in  operating  expenses  that was  offset  by a rise of 24.4% in gross
margin.  Had the company not incurred the $0.39  million of atypical  legal fees
from the  Massachusetts  Proceedings  mentioned  above,  the Company  would have
reported an increase in operating income of $0.10 million.

     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.

Net Income

     Net income decreased by  approximately  $0.15 million or 43.3%, or $.03 per
basic and diluted  share,  due to a decrease in  operating  income that was only
partially  offset by a related  decline in the provision  for income taxes.  The
decrease is a result of  incurring  more  operating  expenses,  primarily  legal
expenses,  proportionate to the increase in revenues and profit margins compared
to the three months ended December 31, 2004. In addition, we experienced a $0.09
million gain on the sale of an asset during the current  period.  See  condensed
footnote 5 to our Consolidated  Financial Statements.  There was no such gain in
the prior period.

                                       27
<PAGE>


<TABLE>
<CAPTION>
<S>                                       <C>            <C>             <C>      <C>       <C>

                                                                       Percent of Revenue
                                               Nine Months Ended       Nine Months Ended    Percent
                                                  December 31,         December 31, 2005     Change
                                          ---------------------------------------------------------
                                                                                             2005
                                              2005           2004        2005     2004     vs. 2004
                                          -----------    -----------    ------   ------    --------
Revenues:
     Commission                           $42,671,689    $35,853,473     88.2%    88.9%     19.0%
     Advisory                               3,769,457      2,711,173      7.8%     6.7%     39.0%
     Other fee income                         586,644        727,353      1.2%     1.8%    -19.3%
     Marketing revenue,net                    872,173        706,869      1.8%     1.8%     23.4%
     Other income                             467,934        337,379      1.0%     0.8%     38.7%
                                          -----------    -----------

Total Revenue                              48,367,897     40,336,247    100.0%   100.0%     19.9%
                                          ===========    ===========

Commission and advisory expenses           38,495,624     32,416,497     79.6%    80.4%     18.8%

          Gross Profit                      9,872,273      7,919,750     20.4%    19.6%     24.7%

Operating Expenses:

     Advertising                              626,575        583,438      1.3%     1.4%      7.4%
     Communications                           460,561        379,756      1.0%     0.9%     21.3%
                                          -----------    -----------

Total Selling Expenses                      1,087,136        963,194      2.2%     2.4%     12.9%

     Compensation and benefits              4,656,097      4,065,595      9.6%    10.1%     14.5%
     Regulatory, legal and professional     2,486,521      1,049,054      5.1%     2.6%    137.0%
     Occupancy                                492,310        433,891      1.0%     1.1%     13.5%
     Other administrative expenses            699,730        659,206      1.4%     1.6%      6.1%
                                          -----------    -----------

Total Administrative Expenses               8,334,658      6,207,746     17.2%    15.4%     34.3%

Total Operating Expenses                    9,421,794      7,170,940     19.5%    17.8%     31.4%
                                          ===========    ===========

          Operating Income                    450,479        748,810      0.9%     1.9%    -39.8%

Other (Income) and Expenses:

    Gain on sale of asset                     (91,313)             -
     Interest expense                          27,843         32,091      0.1%     0.1%    -13.2%
                                          -----------    -----------

Total Other (Income) and Expenses             (63,470)        32,091     -0.1%     0.1%   -297.8%
                                          -----------    -----------

Income before taxes                           513,950        716,719      1.1%     1.8%    -28.3%

Provision for income taxes                    248,076        306,977      0.5%     0.8%    -19.2%

                                          -----------    -----------
Net Income                                $   265,874    $   409,742      0.5%     1.0%    -35.1%
                                          ===========    ===========
</TABLE>


                                       28
<PAGE>

Nine Months Ended December 31, 2005 Compared with Nine Months Ended December 31,
--------------------------------------------------------------------------------
2004:
-----

Results  reported for the current  nine-month  period compared to the prior nine
month period are discussed below. Explanations for comparative variances in year
to date  results  may differ from the  explanations  for  comparative  quarterly
results discussed above. If no significant  differences in explaining  variances
in the year to date results are mentioned  below,  please refer to the quarterly
results analysis for an explanation of such variances.


Revenues

     Revenues for nine months ended December 31, 2005 increased by $8.03 million
or 19.9% compared to revenues for nine months ended December 31, 2004.  Revenues
from  commissions  increased  by $6.82  million or 19.0% and fees from  advisory
services increased by $1.06 million or 39.0% for the same comparative periods.

     Revenue  growth  continues  to be  supported  by our efforts in  recruiting
sophisticated and experienced representatives. Revenues from new recruits during
the current  period were $2.18  million  compared to $1.22  million in the prior
period.  $0.64  million or 66% of this $0.96  million  increase,  and 53% of all
current period revenues from recruits,  were derived from relatively high margin
trading services.  Our progress in recruiting  representatives who are qualified
and  likely to engage  in  brokerage  services  is  further  borne out by a 123%
increase  for nine months ended 2005  compared to nine months ended 2004.  Total
revenues from recruiting was up 79% for the comparative periods.

<TABLE>
<CAPTION>
<S>                                              <C>             <C>        <C>                <C>

Recruiting Statistics
                                                                                          Percent
                                                                              Change       Change
                                                    Nine Months Ended          2005         2005
                                                       December 31,             vs.          vs.
                                                   2005          2004          2004         2004
Product Type
------------
Mutual Funds,Variable Annuities,Direct
 Participation Programs,Other                   $  830,072    $  555,697    $  274,375          49%
Trading Services                                 1,152,605       516,537    $  636,068         123%
Advisory Services                                  198,230       144,741    $   53,489          37%
                                                ----------    ----------    ----------   ----------

Total                                           $2,180,907    $1,216,975    $  963,932          79%
                                                ==========    ==========    ==========   ==========

Representatives Recruited                              179           158
</TABLE>


     Commissions.  Compared to the prior period,  trading revenues  increased by
$2.31  million or 21.6%.  Commissions  from mutual  funds,  variable  annuities,
direct participation  programs, and other programs increased by $4.51 million or
17.9%.  Direct  Participation  program  revenues  increased by $1.05  million or
25.3%.

                                       29
<PAGE>


<TABLE>
<CAPTION>
<S>                          <C>              <C>            <C>                   <C>
                                         Commission Revenue

                                     Nine Months Ended December 31,              Change in %
                                    2005            2004       2005 vs 2004     2005 vs 2004
Product Type
Variable Annuities           $   14,946,320   $  13,234,330  $    1,711,990        12.94%
Trading                          12,968,013      10,662,154       2,305,859        21.63%
Mutual Funds                      8,461,624       6,751,752       1,709,872        25.32%
Direct Participation
 Programs                         5,183,149       4,135,820       1,047,329        25.32%
Other                             1,112,583       1,069,417          43,166         4.04%

                             --------------   -------------  --------------
Total Commission Revenue         42,671,689      35,853,473  $    6,818,216        19.02%
                             ==============   =============  ==============
</TABLE>


     Advisory Fees.  Increases in fees from advisory  services  mainly came from
our rep-directed  asset-managed  program where a $.73 million or 47.4% growth in
advisory  fees was  achieved.  Revenues  from our  fund-managed  and  separately
managed  allocation  models  increased by $.22 million or 32.6%.  Revenues  from
asset managed programs provided from third-party  investment  advisors increased
by $.09  million or 15.0%.  Fees from  advisory  services  in our  mutual  funds
remained  relatively  flat due to the  termination of the  management  agreement
associated with the two mutual funds in October 2005.

     Other Fee Income.  Other fee income for the current period when compared to
the prior period  decreased by $0.14  million or 19.3%.  This  resulted from the
additional  collection  of revenue to cover the  increase in  insurance  premium
costs during nine months  ended  December  31,  2004.  There were no  additional
collections during the nine months ended December 31, 2005.

Gross Margins

     Our gross margin increased by $1.95 million or 24.7%, of which trading made
up $1.25 million of the increase and fees from advisory services comprised $0.39
million.  It is important to note that in the prior period we had  experienced a
trading error that reduced our margin in trading by $0.21 million.

                                       30
<PAGE>



<TABLE>
<CAPTION>
<S>                              <C>          <C>             <C>     <C>     <C>     <C>             <C>
                                                              Gross Margin     % of Total Gross     Gross
                                       Gross Margin            Retention            Margin         Margin
                                     Nine Months Ended      Nine Months Ended  Nine Months Ended   Percent
                                       December 31,           December 31,         December 31,    Change
                                 ------------------------    --------------  -----------------------------
                                                                                                   2005
                                    2005         2004         2005    2004    2005    2004       vs. 2004
                                 -----------  -----------    ------  ------  ------  ------     ----------

Revenue Source
--------------

Commission - Mutual Funds and
 Variable Annuities              $ 3,497,355  $ 3,193,451     11.9%   12.7%   35.4%   40.3%           9.5%

Commission - Trading               2,883,151    1,637,757     22.2%   15.4%   29.2%   20.7%          76.0%

Commission - Insurance Products      224,761      266,427     94.8%   99.1%    2.3%    3.4%         -15.6%

Commission - Underwriting              4,407        5,632     10.0%   13.2%    0.0%    0.1%         -21.8%

Advisory Services                  1,557,622    1,171,458     39.7%   44.7%   15.8%   14.8%          33.0%

Licensing                            414,479      596,515    100.0%  100.0%    4.2%    7.5%         -30.5%

Marketing                            872,173      706,869      n/a     n/a     8.8%    8.9%          23.4%

Other income                         418,325      341,641      n/a     n/a     4.2%    4.3%          22.4%
                                 -----------  -----------

Total Gross Margin               $ 9,872,273  $ 7,919,750      n/a     n/a   100.0%  100.0%          24.7%
                                 ===========  ===========
</TABLE>


Commission Expenses

     The  commission  payout  decreased   marginally  from  82.5%  to  81.9%  of
commissioned revenues.

Operating Expenses

     Operating  expenses  increased  by $2.25  million or 31.4% for the  current
period when compared to the prior period.

     Compensation and benefits  increased by $0.6 million or 14.5 %. The company
has invested resources toward acquiring  additional  personnel in its marketing,
trading/operations,  and advisory services departments to increase overall sales
and improve services,  with an emphasis on revenue growth within the trading and
advisory services sectors.

     Regulatory,  legal and professional expenses grew by $1.44 million or 137%.
The largest  component of this increase was an $0.88 million or 367% increase in
non-in house legal fees,  $0.39 million of which was incurred in connection with
the  Massachusetts  Proceedings  described  in detail in Part II,  Item 1 "Legal
Proceedings". An additional $.38 million of this increase arose from three other
actions that management  believes,  with advice of counsel,  are atypical of the
exposures  likely  to be  presented  by our  ongoing  operations.  Two of  these
atypical  actions also  contributed  $0.51  million of the $0.54 million or 154%
increase in lawsuit settlement expenses.

     We  experienced  a  $0.04  million  increase  in  non-in  house  accounting
expenses,  primarily  audit-related,  while regulatory and professional expenses
remained essentially flat at $0.33 million.

     Occupancy   expenses   increased  by  $0.06  million  or  13.5%  and  other
administrative expenses went up by $0.04 million or 6.1%.

                                       31
<PAGE>


Operating Income

     Operating  income  decreased  by  $0.30  million  or  40%  compared  to the
nine-month  period ended December 31, 2004.  Operating  income decreased for the
nine month comparative period resulting  primarily from a 31.4% or $2.25 million
increase in operating  expenses offset by a 24.7% or $1.95 million increase from
our gross profit.  If we exclude the $0.77 million in legal expenses we incurred
from cases that were  uncharacteristic,  we would have  realized a $0.47 million
dollar increase to operating income.


Net Income

     Net  income  decreased  by $0.14  million  compared  to the  prior  period.
Offsetting  this decrease were a $0.06 million  decrease in provision for income
taxes and a $0.09  million  net gain from the sale of an  asset.  See  Condensed
Footnote 5 to the Consolidated Financial Statements.


                         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 have  historically  come mainly from the  profitability of the
Company's  core services and  investment  products.  For the last several years,
profitability  has  typically  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, uncertainty in the 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,  if not  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 members,  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 December 31, 2005, cash and cash equivalents  totaled $9.0 million as
compared to $8.6  million as of March 31, 2005.  Working  capital as of December
31, 2005 was $8.0 million as compared to $9.1 million as of March 31, 2005.  The
ratio of current assets to current  liabilities was 2.42 to 1 as of December 31,
2005 as compared to 3.31 to 1 as of March 31, 2005.

     Operations  provided  $1.3 million for nine months ended  December 31, 2005
and for nine months ended December 31, 2004, respectively.

     Cash outflows from investing  activities  for the current period  comprised
$0.8  million in which $0.3  million  was for  purchasing  equipment  as well as
technology and leasehold  improvements.  $0.4 million was used to grant loans to
registered  representatives  to help grow their businesses.  Also, we had a $.15
million cash outflow for an investment through a private placement.

                                       32
<PAGE>


     Finally,  a $0.1  million  cash  dividend  was  paid  on May  16,  2005  to
shareholders of record as of May 2, 2005.

     Cash  disbursements  contributing  significantly  to current  quarter  cash
outflows  included $0.176 million for legal related matters,  $0.129 million for
compensation  and  benefits,  $0.14  million for upcoming  marketing  events and
programs,  and $0.045  million for computer  equipment and software.  Management
anticipates  that the current  period net cash outflows are not  indicative of a
future cash outflow trend but, rather,  reflected payment on an atypical lawsuit
that was not  covered by our  insurance  policy.  However,  those  disbursements
during the current quarter did have a significant 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 December 31, 2005, ICC had net capital of $0.5 million (i.e., an
excess of $0.04  million) and a 13.93 to 1 net capital  ratio as compared to net
capital of  approximately  $1.7 million (i.e.,  an excess of $1.4 million) and a
2.43 to 1 net capital ratio as of March 31, 2005.

     The company's  legal accrual  increased to $0.79 million from $0.40 million
primarily  as a result of the  Massachusetts  proceedings  against the  Company.
During the current period the increase in our legal accrual had impacted our net
capital ratio and excess net capital for ICC. 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  condensed  footnote  3 to our  Condensed
Consolidated Financial Statements.

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

     In its role as investment advisor to the Eastern Point Advisors Funds Trust
family of mutual funds,  the Company's  disbursements  to pay fund expenses that
exceed their  respective  ceiling caps have  averaged  $0.08 million per quarter
during the  duration of this current  fiscal  year.  As  previously  noted,  the
Company  agreed  to  terminate  its  management  contract  with the  Trust  and,
accordingly, the Company received a relative cash flow infusion of $0.09 million
for the quarter ended  December 31, 2005 versus the quarter  ended  December 31,
2004.  See  condensed  footnote  5  to  our  Condensed   Consolidated  Financial
Statements.

     By comparison,  for the nine months ended  December 31, 2004,  cash inflows
primarily  came from the  collection of $0.4 million of accounts  receivable and
$1.6 million in  collections  for  regulatory  and  licensing  activities.  Cash
outflows included $0.5 million for payment of taxes, $0.6 million for payment of
commissions,  $0.3 million in accrued  expenses,  $0.2 million for equipment and
technology and $0.15 million to the NASD to pay in full a note.

     ICC made a business decision in fiscal year ending 2003 to conclude an NASD
investigation into supervisory procedures relating to the period of January 2000
through July of 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.

                                       33
<PAGE>



<TABLE>
<CAPTION>
<S>                       <C>                   <C>             <C>               <C>             <C>
Contractual Obligations                Payments Due by period
---------------------------------------------------------------------------------------------------------
                                                                                            After 5 years
Fiscal Years                Total          Less than 1 year     1-3 years     4-5 years        2012 and
                                                 2006           2007-2009      2010-2011      thereafter
---------------------------------------------------------------------------------------------------------

Operating leases:         763,023               105,391          657,632           0               0

                     ------------------------------------------------------------------------------------
Total Contractual
 Obligations             $763,023              $105,391         $657,632           0               0
                     ------------------------------------------------------------------------------------
</TABLE>



                          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 years 2006 and 2009.  Options to renew
for additional terms are included under the lease agreements. During the current
period  we  entered  into a lease  agreement  for our new  investment  center in
Braintree,  Massachusetts.  The total minimum rental due in future periods under
these existing agreements is as follows as of December 31, 2005:

      Year ending March 31, 2006         $ 105,391
      Year ending March 31, 2007           345,254
      Year ending March 31, 2008           263,581
      Year ending March 31, 2009            48,797
                                         ---------
      Total minimum lease payments       $ 763,023
                                         =========


     Certain  leases  contain  provisions  for minimum  lease  payments that are
contingent upon increases in real estate taxes. Total lease expenses amounted to
$0.1  million for the quarter  ended  December 31, 2005 and $0.1 million for the
quarter ended December 31, 2004.  Related party leases amounted to $0.06 million
for the Arlsburg Trust and Investors Realty,  LLC for the quarter ended December
31,  2005.  Lease  expenses  were $0.3 million for the  nine-month  period ended
December 31, 2005 versus $0.3 million for the  nine-month  period ended December
31,  2004.  Related  party leases  amounted to $0.18  million for the nine month
period ended December 31, 2005.

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  sentiment.  Consumer  and  producer  sentiment is critical to our
business.  The level of consumer confidence determines an investor's 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 the Company.  However,  senior  management is
constantly monitoring these economic trends in order to enhance the product line
to offset any potential negative impact.

                                       34
<PAGE>


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  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 financial  loss to the Company.  To mitigate  these risks,
the Company has  developed  and  implemented  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  and
safekeeping of customer funds,  credit granting,  collection  activities,  money
laundering, and record-keeping.


EFFECTS OF INFLATION

     The  Company's   assets   primarily  are  liquid  in  nature  and  are  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.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  information  required  by this  item  is  contained  in  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations" under
the caption "Market Risk" of this Form 10-Q.


ITEM 4. 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 reasonably  effective  controls and procedures were
in place as of the end of the  period  covered  by this  report to  ensure  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.


                                       35
<PAGE>


PART II OTHER INFORMATION


ITEM 1. 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  against  Investors  Capital
Corporation  ("ICC")  alleging  violation of its supervisory  obligations  under
State securities laws in connection with 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.

     ICC  filed an answer  to the  administrative  complaint  that  asserts  its
defenses,  including that it did not recommend,  encourage,  assist, receive any
remuneration  from,  or have any  contemporaneous  knowledge of these  allegedly
unsuitable  sales  identified in the  administrative  complaint.  Equity-indexed
annuities are regulated by the State's Insurance Department,  which has approved
the sale of  upwards  of 200  versions  of this type of  insurance  product by a
number of insurance companies.

     Based upon statutory  provisions and precedent,  ICC asserted its position,
as argued in our briefs,  that these insurance products are not considered to be
securities  under State and federal laws and regulation or National  Association
of Securities  Dealers  (NASD) rules,  and that the Division is not empowered to
require ICC to supervise the sale of these insurance  products by its associated
persons.  Nonetheless, ICC since the summer of 2005 has been in the forefront of
a gathering industry trend, based upon recent NASD guidance, towards voluntarily
implementing  procedures to supervise the sales of  equity-indexed  annuities by
associated persons.

     An action was commenced by ICC on December 14, 2005 in the State's  Suffolk
County  Superior  Court  to,  among  other  things,  enjoin  the  administrative
proceeding  brought by the  Division.  On January 18,  2006,  the court denied a
motion  by ICC  for a  preliminary  injunction  to  enjoin  said  administrative
proceeding, citing the need for ICC to exhaust administrative remedies, in other
words, seek similar underlying relief in the administrative proceeding itself.


     We are unable to reasonably  estimate any possible range of loss related to
these proceedings due to their uncertain  resolution.  However,  a conclusion of
these matters  favorable to the Division could have a material adverse effect on
our financial position and results of operations.

     Items 2-5 not applicable.


                                   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. Murphy
                                           -------------------------------------
                                            Chief Financial Officer

                                       Date:  February 27, 2006

                                       36
<PAGE>


ITEM 6.EXHIBITS



                                  EXHIBIT INDEX
                                  -------------

             (Exhibits being initially filed with this Form 10-Q/A)




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

                                       37