--------------------------------------------------------------------------------
     Form 10-Q

     INVESTORS CAPITAL HOLDINGS LTD - ICH
     Filed: November 12, 2004 (period: September 30, 2004)

     Quarterly report which provides a continuing view of a company's financial
     position

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




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

                                Table of Contents


          PART I
          -------
--------------------------------------------------------------------------------
          FINANCIAL INFORMATION
          ITEM 1. FINANCIAL STATEMENTS
          ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
          ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          ITEM 4. CONTROLS AND PROCEDURES




          PART II
          -------
--------------------------------------------------------------------------------
          OTHER INFORMATION


          ITEM 1. LEGAL PROCEEDINGS
          SIGNATURES


          CERTIFICATION
          EX-32.1
          EX-32.2
--------------------------------------------------------------------------------
<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

          (Mark One)

          (X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2004

                                            OR

          ( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                       For the period from _______ to_________

                         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
                         Lynnfield, Massachusetts 01940
                    (Address of principal executive offices)

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

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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 November 8,
2004:
                                    5,739,844
<PAGE>

PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                                                      September 30,     March 31,
                                                                          2004             2004
                                                                     --------------   -------------

Assets

Current Assets

     Cash and cash equivalents ....................................  $   8,264,228    $  8,112,567
     Deposit with clearing organization, restricted ...............        175,000         175,000
     Accounts receivable ..........................................      2,249,889       3,785,423
     Investments in available-for-sale securities .................         56,528          56,339
     Marketable securities, at market value .......................         81,825          17,422
     Prepaid expenses .............................................        198,277         310,270
                                                                     --------------   -------------
                                                                        11,025,747      12,457,021


Property and equipment, net .......................................        544,220         503,316


Long-Term Investments
     Equity investments, at cost ..................................         40,000          40,000
     Investment in unconsolidated affiliate .......................         80,824          85,820
                                                                     --------------   -------------
                                                                           120,824         125,820
Other Assets
     Other assets .................................................         57,864          99,295
     Deferred tax asset, net ......................................         59,162          69,721
     Receivables from officers ....................................         46,441          64,400
     Loans receivable from registered representatives .............        227,901          69,306
                                                                     --------------   -------------
                                                                           391,368         302,722

          TOTAL ASSETS ............................................  $  12,082,159    $ 13,388,879
                                                                     ==============   =============

Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable .............................................  $     668,317    $    570,236
     Accrued expenses .............................................        256,704         435,067
     Notes payable ................................................         11,454          78,999
     NASD settlement payable (current portion) ....................         ------          54,375
     Commissions payable ..........................................      1,560,503       2,078,196
     Income taxes payable .........................................         77,773         582,721
     Securities sold, not yet purchased, at market value ..........         32,381          90,042
                                                                     --------------   -------------
                                                                         2,607,132       3,889,636

Long-Term Liabilities

     NASD settlement payable ......................................         ------          94,304
                                                                     --------------   -------------
                                                                            ------          94,304


          Total liabilities .......................................      2,607,132       3,983,940
                                                                     --------------   -------------
Commitments and contingencies
</TABLE>

                                       1
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>
Stockholders' Equity:

      Common stock, $.01 par value, 10,000,000
      shares authorized;  5,738,326 issued and 5,734,441 outstanding
      in September 30, 2004;   5,731,598 issued and 5,727,713 outstanding
      in March 31, 2004.                                                    57,383          57,316
     Additional paid-in capital ...................................      8,536,244       8,520,931
     Retained earnings ............................................        899,189         844,670
       Less: Treasury stock, 3,885 shares at cost .................        (30,135)        (30,135)
     Accumulated other comprehensive income (loss) ................         12,346          12,157
                                                                     --------------   -------------

            Total stockholders' equity ............................      9,475,027       9,404,939
                                                                     --------------   -------------

           TOTAL LIABILITIES AND STOCKHOLDERS'
                EQUITY ............................................  $  12,082,159    $ 13,388,879
                                                                     ==============   =============

            See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       2
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                                                                           Three Months Ended
                                                                              September 30,
                                                                     ------------------------------
                                                                          2004             2003
Revenues:                                                            --------------   -------------
Commission, advisory & other fee income                              $  12,197,810    $ 11,294,543
Marketing revenue, net                                                     150,172          75,538
Other income                                                                92,206          81,633
                                                                     --------------   -------------
Total Revenue                                                           12,440,188      11,451,714


Commission and advisory fees                                            10,316,581       9,044,889
                                                                     --------------   -------------
           Gross profit                                                  2,123,607       2,406,825
                                                                     --------------   -------------
Operating expenses:

   Advertising                                                             199,278         153,836
   Communications                                                          110,379         104,191
                                                                     --------------   -------------
Selling                                                                    309,657         258,027
                                                                     --------------   -------------

   Compensation and Benefits                                             1,305,775       1,009,354
   Regulatory, legal and professional                                      405,978         295,438
   Occupancy                                                               144,495         109,072
   Other administrative expenses                                           204,466         249,864
                                                                     --------------   -------------
Administrative                                                           2,060,714       1,663,728
                                                                     --------------   -------------
         Total Operating Expenses                                        2,370,371       1,921,755
                                                                     --------------   -------------
           Operating (loss) income                                        (246,764)        485,070
                                                                     --------------   -------------
Other expense:

   Interest expense                                                          7,716           4,001
                                                                     --------------   -------------
         Total other expense                                                 7,716           4,001
                                                                     --------------   -------------
(Loss) income before taxes                                                (254,480)        481,069
(Benefit) provision for income taxes                                      (104,983)        211,264
                                                                     --------------   -------------
           Net(loss)income                                           $    (149,497)   $    269,805
                                                                     ==============   =============

(Loss) earnings per common share
  Basic (loss) earnings per common share:                            $        (.03)   $        .05

  Diluted (loss) earnings per common share                           $        (.03)   $        .05
                                                                     ==============   =============

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                           5,732,226       5,717,380
Plus:  Incremental shares from assumed exercise of stock options           187,669         144,339
                                                                     --------------   -------------
   Weighted average shares used in diluted earnings per
     common share calculations                                           5,919,895       5,861,719
                                                                     ==============   =============


            See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                                                                            Six Months Ended
                                                                              September 30,
                                                                     ------------------------------
                                                                          2004             2003
Revenues:                                                            -------------    -------------
Commission, advisory & other fee income                              $ 26,116,509     $ 20,939,826
Marketing revenue, net                                                    454,951           67,816
Other income                                                              183,926          172,555
                                                                     -------------    -------------
Total Revenue                                                          26,755,386       21,180,197


Commission and advisory fees                                           21,888,699       17,139,830
                                                                     -------------    -------------
           Gross profit                                                 4,866,687        4,040,367
                                                                     -------------    -------------
Operating expenses:

   Advertising                                                            403,877          304,427
   Communications                                                         241,954          187,169
                                                                     -------------    -------------
Selling                                                                   645,831          491,596
                                                                     -------------    -------------

   Compensation and Benefits                                            2,630,382        1,974,140
   Regulatory, legal and professional                                     723,810          488,223
   Occupancy                                                              282,284          221,473
   Other administrative expenses                                          450,327          476,305
                                                                     -------------    -------------
Administrative                                                          4,086,803        3,160,141
                                                                     -------------    -------------
         Total Operating Expenses                                       4,732,634        3,651,737
                                                                     -------------    -------------
           Operating income                                               134,053          388,630
                                                                     -------------    -------------
Other expense:

   Interest expense                                                        23,873           10,030
                                                                     -------------    -------------
         Total other expense                                               23,873           10,030
                                                                     -------------    -------------
Income before taxes                                                       110,180          378,600
Provision for income taxes                                                 55,661          192,237
                                                                     -------------    -------------
           Net income                                                $     54,519     $    186,363
                                                                     =============    =============

Earnings per common share
   Basic earnings per common share:                                  $        .01     $        .03

  Diluted earnings per common share                                  $        .01     $        .03
                                                                     =============    =============

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                          5,731,903        5,717,380
Plus:  Incremental shares from assumed exercise of stock options          191,200          126,180
                                                                     -------------    ------------
   Weighted average shares used in diluted earnings per
     common share calculations                                          5,923,103        5,843,560
                                                                     =============    =============


            See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
<S>                                              <C>          <C>       <C>        <C>          <C>       <C>           <C>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                 THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                                   (UNAUDITED)

                                                                                                           Accumulated
                                                                        Additional   Retained              Other
                                                    Common      Stock   Paid-In      Earnings    Treasury  Comprehensive
                                                  ----------  --------- Capital      (Deficit)   Stock     Income (Loss)    Total
                                                    Shares      Amount
                                                  ----------------------------------------------------------------------------------


     Balance at July 1, 2003..................... 5,721,265    $57,213  $8,198,558    $(29,185)  $(30,135)       $3,358  $8,199,809

     Stock based compensation....................                           51,376                                           51,376

       Comprehensive income:

            Net income...........................                                      269,805

            Net unrealized gain on securities....                                                                 1,230

                 Comprehensive income............                                                                           271,035

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

     Balance at September 30, 2003............... 5,721,265    $57,213  $8,249,934    $240,620   $(30,135)       $4,588  $8,522,220
                                                  ==================================================================================

     Balance at July 1, 2004..................... 5,732,450    $57,325  $8,524,552  $1,048,686   $(30,135)      $12,726  $9,613,154

      Exercised options..........................     5,876         58      11,692                                           11,750

     Stock based compensation....................

     Comprehensive (loss):

            Net (loss) ..........................                                     (149,497)

            Net unrealized (loss) on securities..                                                                  (380)

                 Comprehensive (loss)............                                                                          (149,877)
                                                  ----------------------------------------------------------------------------------

    Balance at September 30, 2004................ 5,738,326    $57,383  $8,536,244    $899,189   $(30,135)      $12,346  $9,475,027
                                                  ==================================================================================


            See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
<S>                                              <C>          <C>      <C>          <C>         <C>       <C>           <C>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                                   (UNAUDITED)

                                                                                                           Accumulated
                                                                        Additional   Retained              Other
                                                   Common       Stock   Paid-In      Earnings    Treasury  Comprehensive
                                                  ----------  --------- Capital      (Deficit)   Stock     Income (Loss)    Total
                                                   Shares       Amount
                                                  ----------------------------------------------------------------------------------

     Balance at April 1, 2003.................... 5,721,265    $57,213  $8,169,292     $54,257   $(30,135)      ($1,987) $8,248,640

     Stock based compensation....................                           80,642                                           80,642

       Comprehensive income:

            Net income...........................                                      186,363

            Net unrealized gain on securities....                                                                 6,575

                 Comprehensive income............                                                                           192,938

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

     Balance at September 30, 2003............... 5,721,265    $57,213  $8,249,934    $240,620    (30,135)       $4,588  $8,522,220
                                                  ==================================================================================

     Balance at April 1, 2004.................... 5,731,598    $57,316  $8,520,931     844,670    (30,135)      $12,157  $9,404,939

         Exercised options ......................     6,728         67      13,359                                           13,426

     Stock based compensation...................                             1,954                                            1,954

     Comprehensive income:

            Net income.............................                                     54,519

            Net unrealized gain on securities...                                                                    189

                 Comprehensive income...........                                                                             54,708
                                                  ----------------------------------------------------------------------------------

     Balance at September 30, 2004............... 5,738,326    $57,383  $8,536,244    $899,189    (30,135)       12,346  $9,475,027
                                                  ==================================================================================


     See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                   <C>            <C>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                                                                           Six Months Ended
                                                                                             September 30,
                                                                                      --------------------------
                                                                                         2004           2003
                                                                                      -----------    -----------

Cash flows from operating activities:

     Net income....................................................................   $   54,519     $  186,363
     Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization.............................................       80,346         67,382
         Change in deferred taxes..................................................       10,559          3,416
         Stock option compensation.................................................        1,954         80,642

         Unrealized loss (gain) on investment in unconsolidated affiliates.........        4,996        (14,018)

 Changes in operating assets and liabilities:
         (Increase) decrease in marketable securities..............................     (122,064)       118,908
         Decrease (increase) in accounts receivable................................    1,535,534       (710,352)
         Decrease in receivables from officers, prepaid expenses and other assets..      171,383        159,024
         Increase in income taxes receivable.......................................            -         60,113
         (Decrease) increase in taxes payable......................................     (504,948)        53,458
         Increase in accounts payable and other liabilities........................       98,081        100,032
         (Decrease) increase in accrued expenses...................................     (178,364)        66,853
         (Decrease) increase in commissions payable................................     (517,693)       380,667
                                                                                      -----------    -----------

             Net cash provided by operating activities.............................      634,303        552,488
                                                                                      -----------    -----------

Cash flows from investing activities:
     Purchases of property and equipment...........................................     (121,250)       (60,139)
     (Increase) Decrease in loans receivable from registered representatives.......     (158,595)        52,581
                                                                                      -----------    -----------

             Net cash used in investing activities.................................     (279,845)        (7,558)
                                                                                      -----------    -----------

Cash flows from financing activities:

     Exercise of stock options.....................................................       13,427             --
     Payments on notes payable and NASD settlement.................................     (216,224)      (165,525)
                                                                                      -----------    -----------

             Net cash used in financing activities.................................     (202,797)      (165,525)
                                                                                      -----------    -----------

Net increase in cash and cash equivalents..........................................      151,661        379,405

Cash and cash equivalents, beginning of period.....................................    8,112,567      7,090,643
                                                                                      -----------    -----------

Cash and cash equivalents, end of period...........................................   $8,264,228     $7,470,048
                                                                                      ===========    ===========

Supplemental disclosures of cash flow information:
     Interest paid.................................................................   $   23,873     $   10,030
                                                                                      ===========    ===========
     Income taxes paid.............................................................   $  550,000     $   75,300
                                                                                      ===========    ===========

     See Notes to Condensed Consolidated Financial Statements.
</TABLE>

                                       7
<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004

                                   (UNAUDITED)



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 its three subsidiaries
(Investors Capital Corporation, Eastern Point Advisors, Inc. and ICC Insurance
Agency, Inc.) in two segments of the financial services industry. These two
segments provide for the offering of (1) services related to corporate equity
and debt securities, U.S. government securities, municipal securities, mutual
funds, variable annuities, variable life insurance, market information, Internet
online trading and portfolio tracking, and records management and (2) financial
planning services, investment advisory and asset management services, and the
management of our retail mutual funds. These products and services are offered
primarily through our network of independent registered representatives
throughout the United States.


Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
Investors Capital Holdings, Ltd. (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 period ending September 30, 2004 are not necessarily indicative of
the results that may be expected for the year ended March 31, 2005. The balance
sheet at March 31, 2004 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, 2004 filed with the Securities and
Exchange Commission.

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.

Reclassifications

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


                                       8
<PAGE>


2.   SEGMENT INFORMATION

          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). 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 asset management and
     portfolio design services to our mutual funds and a variety of investors.

          The segment data presented includes the allocation of all corporate
     overhead to each segment. Intersegment revenue and expense, and receivables
     and payables, are eliminated between segments. Currently it is impractical
     to report segment information using geographical concentration.


          For the year ended March 31, 2004, management changed its approach in
     identifying reportable segments. Management concluded that its reportable
     segments are to be shown on a stand alone basis, in accordance with SFAS
     No. 131, "Disclosures about Segments of an Enterprise and Related
     Information", ("SFAS 131"). Specifically, as ICH does not generate
     operating revenue, other than interest income, and does not meet the
     quantitative tests under SFAS 131, management concludes that ICH does not
     meet the definition of a reportable segment. Previously reported segment
     information has been restated to reflect the new presentation and to
     preserve comparability.


     Segment reporting is as follows:

                                                          Three Months Ended
                                                             September 30,
                                                     ---------------------------
                                                         2004           2003
                                                     ------------   ------------

     Non-interest revenues:

       ICC, investment services .................... $11,869 726    $10,733,599
       EPA, asset management services...............     478,256        636,482
       ICH, investments (loss) gain.................      (6,486)         2,311
                                                     ------------   ------------

            Total................................... $12,341,496    $11,372,392
                                                     ============   ============

     Revenues from transactions with other operating
     segments:
       ICC.......................................... $   222,310    $   193,822
       EPA..........................................      24,701         83,067
                                                     ------------   ------------

            Total................................... $   247,011    $   276,889
                                                     ============   ============

     Interest and dividend income:
       ICC.......................................... $    54,241    $    41,516
       ICH..........................................      44,451         37,806
                                                     ------------   ------------

            Total................................... $    98,692    $    79,322
                                                     ============   ============

     Depreciation and amortization expense:
       ICC...............................            $    39,564    $    32,019
       EPA...............................                  2,171          1,730
                                                     ------------   ------------

            Total........................            $    41,735    $    33,749
                                                     ============   ============

                                       9
<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004

                                   (UNAUDITED)


2. SEGMENT INFORMATION (Continued)


                                                          Three Months Ended
                                                             September 30,
                                                     ---------------------------
                                                         2004           2003
                                                     ------------   ------------

     Income tax provision (benefit):

       ICC...............................            $   (64,779)   $   244,195
       EPA...............................                (48,504)       (71,000)
       ICH...............................                  8,300         38,069
                                                     ------------   ------------

            Total........................            $  (104,983)    $  211,264
                                                     ============   ============


     Income (loss):
       ICC...............................            $  (107,050)    $  346,845
       EPA...............................                (72,111)       (79,520)
       ICH...............................                 29,664          2,480
                                                     ------------   ------------

            Total........................            $  (149,497)    $  269,805
                                                     ============   ============

     Period end total assets:
       ICC...............................            $ 7,879,330    $ 6,327,107
       EPA...............................                517,885        541,505
       ICH...............................              5,590,612      5,473,665
       Corporate items and eliminations               (1,905,668)      (970,690)
                                                     ------------   ------------

            Total........................            $12,082,159    $11,371,587
                                                     ============   ============

                                       10
<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004

                                   (UNAUDITED)


                                                          Six Months Ended
                                                            September 30,
                                                     ---------------------------
                                                         2004           2003
                                                     ------------   ------------

     Non-interest revenues:

       ICC, investment services .................... $25,606,461    $19,838,602
       EPA, asset management services...............     964,999      1,169,040
       ICH, investments (loss) gain ................      (4,995)        14,017
                                                     ------------   ------------

            Total................................... $26,566,465    $21,021,659
                                                     ============   ============

     Revenues from transactions with other operating
     segments:
       ICC.......................................... $   558,915    $   358,632
       EPA..........................................      62,102        153,700
                                                     ------------   ------------

            Total................................... $   621,017    $   512,332
                                                     ============   ============

     Interest and dividend income:
       ICC.......................................... $   106,536    $    83,529
       ICH..........................................      82,385         75,009
                                                     ------------   ------------

            Total................................... $   188,921    $   158,538
                                                     ============   ============

     Depreciation and amortization expense:
       ICC.......................................... $    76,273    $    63,921
       EPA..........................................       4,072          3,461
                                                     ------------   ------------

            Total................................... $    80,345    $    67,382
                                                     ============   ============

                                       11
<PAGE>

                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004

                                   (UNAUDITED)


2.   SEGMENT INFORMATION (Continued)

                                                          Six Months Ended
                                                            September 30,
                                                     ---------------------------
                                                         2004           2003
                                                     ------------   ------------

     Income tax provision (benefit):

       ICC...............................            $   130,271    $   240,081
       EPA...............................               (106,507)      (121,317)
       ICH...............................                 31,897         73,473
                                                     ------------   ------------

            Total........................            $    55,661    $   192,237
                                                     ============   ============


     Income (loss):
       ICC...............................            $   167,309    $   325,708
       EPA...............................               (158,283)      (154,899)
       ICH...............................                 45,493         15,554
                                                     ------------   ------------

            Total........................            $    54,519    $   186,363
                                                     ============   ============

     Period end total assets:
       ICC...............................            $ 7,879,330    $ 6,327,107
       EPA...............................                517,885        541,505
       ICH...............................              5,590,612      5,473,665
       Corporate items and eliminations               (1,905,668)      (970,690)
                                                     ------------   ------------

            Total........................            $12,082,159    $11,371,587
                                                     ============   ============

3.   LITIGATION

     The Company is involved with various judicial, regulatory, and arbitration
proceedings concerning matters arising in connection with the conduct of its
business. At September 30, 2004, the Company was the co-defendant in several
lawsuits with claims of approximately $3.4 million. 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 $152,000 for the period ended
September 30, 2004 related to legal fees incurred and estimated probable
settlement costs relating to the Company's defense in various lawsuits


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 option plans. During the first quarter of fiscal 2004, 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, had the Company adopted the fair
value-based method of accounting for stock-based employee compensation for all
periods presented.

                                       12
<PAGE>

<TABLE>
<CAPTION>
<S>                                                  <C>              <C>               <C>           <C>
                                                          Three Months Ended                Six Months Ended
                                                             September 30,                    September 30,

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

                                                        2004            2003              2004           2003
                                                     ----------       ---------         ---------      ---------


Net (loss) income, as reported                       $(149,497)       $269,805          $ 54,519       $186,363

Deduct:  Total stock-based employee
compensation expense determined
under fair value-based method for
all awards, net of related tax
effects                                                     --           2,212                --          3,136
                                                     ----------       ---------         ---------      ---------
Pro forma net (loss) income                          $(149,497)       $267,593          $ 54,519       $183,227
                                                     ==========       =========         =========      =========

Earnings (loss) per share:
    Basic- as reported                               $    (.03)       $    .05          $    .01       $    .03
    Diluted-as reported                                   (.03)            .05               .01            .03
    Basic   - pro forma                                   (.03)            .05               .01            .03
    Diluted - pro forma                                   (.03)            .05               .01            .03
</TABLE>


ITEM 2. Management's Discussion and Analysis

         Management's discussion and analysis reviews our consolidated financial
condition as of September 30, 2004 and March 31, 2004, the consolidated results
of operations for the three months and six months ended September 30, 2004 and
2003 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 the Form 10-Q.

Forward-Looking Statements

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

         These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) losses may be incurred if our
investment professionals fail to comply with regulatory requirements; (2) the
loss of either Theodore E. Charles or Timothy B. Murphy may adversely affect our
business and financial condition through the loss of significant business
contacts, which would have to be replaced; (3) customer fraud could harm our
earnings and profits by requiring us to expend time, money and incur actual
loss, exposing us to the potential for arbitration; (4) investment professional
and employee fraud and misconduct could harm our profits and earnings by causing
us to expend time, money and incur actual loss, with the latter exposing us to
the potential for litigation; (5) without implementation of adequate internal
controls and the maintenance thereof, our ability to make money could be
severely restricted by regulatory sanctions being applied against our
broker-dealer subsidiary, and could result in us paying substantial fines and
limit our ability to make money; (6) involvement in material legal proceedings
could have a significant impact on our earnings and profits if we are found
liable for such claims; (7) a change in our clearing firm could result in the
inability of our customers to transact business in a timely manner due to delays
and errors in the transfer of their accounts, which, on a temporary basis, could
affect our earnings and profits. Readers are also directed to other risks and
uncertainties discussed, as well as to further discussion of the risks described
above, in other documents filed by the Company with the United States Securities
and Exchange Commission. The Company specifically disclaims any obligation to
update or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.

                                       13
<PAGE>

Overview

     We are a financial services holding company that, through our subsidiaries,
provides 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 economic conditions, marketplace
liquidity and volatility, monetary policy, global and national political events,
regulatory developments, competition among other financial services
institutions, and investor preferences. Our revenues and net earnings may be
either enhanced or diminished from period to period by any one of or by a
multiple of these external factors.


Critical Accounting Policies

     The condensed consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States. The Company
believes that of its significant accounting policies, those described below
involve a high degree of judgment and complexity. These critical accounting
policies require estimates and assumptions that affect the amounts of assets,
liabilities, revenues and expenses reported in the consolidated financial
statements. Due to their nature, estimates involve judgment based upon available
information. Actual results or amounts could differ from estimates and the
difference could have a material effect on the condensed consolidated financial
statements. Therefore, understanding these policies is important in
understanding the reported results of operations and the financial position of
the Company.

Valuation of Securities and Other Assets

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

The Company's private equity investments have been reported at cost pursuant to
Accounting Principles Board No.18 "The Equity Method of Accounting for
Investments in Common Stock ("APB 18") as the Company does not exercise
significant influence over these investments.


Reserves

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

                                       14
<PAGE>

Results of Operations

Three Months Ended September 30, 2004 compared with Three Months Ended September
30, 2003

Total revenue of $12.4 million increased by $.9 million or 7.8% for the quarter
ended September 30, 2004, compared with total revenue of $11.5 million for the
quarter ended September 30, 2003. Consolidated commissions, advisory, and other
fee income of $12.2 million for the quarter ended September 30, 2004, increased
by $.9 million or 8.0%, compared with consolidated commissions, advisory, and
other fee income of $11.3 million for the quarter ended September 30, 2003. This
increase can be attributed primarily to a $1.1 million increase in revenues
provided by Investors Capital Corporation(ICC). Also, as a result of ICC
obtaining dual designation as a Registered Investment Advisor ICA (Investors
Capital Advisors). Eastern Point Advisors(EPA) transferred approximately 73% of
assets under management within the Pershing Securities Managed Asset Plan
Platform in March 2004. This also contributed to ICC's increase in commission
and advisory fee income for the quarter ended September 30, 2004. Offsetting
this increase was a $158 thousand decrease in advisory and other fee income from
EPA for the comparative periods. The overall increase was driven by commissions
generated from the brokerage business and other fees during the quarter ended
September 30,2004.


     Net marketing revenues of approximately $150 thousand increased by
approximately $74 thousand for the quarter ended September 30,2004, compared to
an approximate net marketing income of $76 thousand for the quarter ended
September 30,2003. This increase was mainly attributable to improved marketing
initiatives. Finally, other income increased by approximately $11 thousand for
the same quarter ended September 30, 2004 when compared to quarter ended
September 30, 2003. The reason for the increase was due to the increase in daily
average balance in our trading accounts.

     Consolidated commissions and advisory fees of $10.3 million for the quarter
ended September 30,2004, increased by $1.3 million or 14.4% compared to $ 9.0
million for the quarter ended September 30,2003. This change can be attributed
to an increase of $1.3 million in commission expenses incurred by ICC. The
increase in commission expense is the direct result of an improvement in gross
revenues as noted above. Cost of sales as a percentage basis of commissions,
advisory and other fee income increased to 84.6% in 2004 compared to 80.1% in
2003. This 4.5% increase in payout ratio can be attributed to top
representatives increasing their sales production when compared to their sales
output during the same period last year.

     The Company realized a consolidated operating loss of approximately $247
thousand for the quarter ended September 30,2004, compared with operating income
of approximately $485 thousand for the quarter ended September 30, 2003. This
150.9% decrease in consolidated operating income is primarily the result of a
reduction in our gross profit of approximately $283 thousand, while operating
expenses rose by more than $450 thousand. A breakdown of gross profit by product
type, depicting both the dollar and percentage increase or decrease, is
presented in the following table:

                                       15
<PAGE>

<TABLE>
<CAPTION>
<S>                        <C>                    <C>               <C>               <C>               <C>
                                                        % of
                               Gross Profit         Gross Profit        2004-2003      September 2004    September 2004
  Product Type             $ increase (decrease)   increase change  % Margin Change    $ Gross Profit    % Gross Profit
-----------------------------------------------------------------------------------------------------------------------

Commissions-mutual               $(88,464)               (31.2)%            (8.7)%          $924,678            43.5%
funds & variable
annuities
-----------------------------------------------------------------------------------------------------------------------
Commissions-trading              (487,973)              (172.3)%           (53.3)%           427,210            20.1%
-----------------------------------------------------------------------------------------------------------------------
Commissions -Insurance             98,066                 34.6%            623.3%            113,801             5.4%
Products
-----------------------------------------------------------------------------------------------------------------------
Commissions-                          600                   .2%            (97.5)%               600              --%
Underwriting
-----------------------------------------------------------------------------------------------------------------------
Advisory Services &                48,980                 17.3%             16.9%            338,247            15.9%
Administration Fees
-----------------------------------------------------------------------------------------------------------------------
Licensing Revenue                  60,364                 21.3%            369.7%             76,692             3.6%
-----------------------------------------------------------------------------------------------------------------------
Net Marketing Revenue              74,634                 26.4%             98.8%            150,172             7.1%
-----------------------------------------------------------------------------------------------------------------------
Other Income &                     10,575                  3.7%            12.95%             92,207             4.4%
Revenues
-----------------------------------------------------------------------------------------------------------------------
Total                          $ (283,218)               (100)%              N/A          $2,123,607             100%
-------------------------------===========---------------======-----------========--------===========-----------======-
</TABLE>

     As a percentage of the decrease in gross profit, mutual funds, variable
annuities, and trading activities represented 203.5 % of the total decrease.
Offsetting this decrease, net marketing revenues, insurance products, advisory
services, licensing revenue, underwriting fees, and other income comprised
103.5% of the gross profit change. A margin decrease of $88,464 or 8.7% was
realized from sales of mutual funds and variable annuity products. Trading
activities decreased on a marginal basis by $487,973 or 53.3% between quarters
ended September 30, 2004 and September 30, 2003.

     As a percentage of the September 30, 2004 gross profit, mutual funds and
variable annuity products constitute 43.5 % of the overall profit margin while
trading activity represents 20.1%. The remainder of the profit margin is
comprised of advisory services, 15.9%; net marketing revenues,7.1%; and
licensing, insurance products, underwriting and other income and revenues,13.4%.

     Consolidated administrative expenses of approximately $2.1 million for the
quarter ended September 30, 2004 increased by approximately $397 thousand or
23.3%, compared with expenses of approximately $1.7 million for quarter ended
September 30, 2003. This increase is a result of an approximate $296 thousand
increase in compensation and benefits based on the hiring of additional
personnel to accommodate growth. We invested in our management team by hiring
individuals with industry expertise in an effort to increase sales and
restructure the product mix. Regulatory, legal, and professional fees increased
by approximately $111 thousand or 37.4% due to added costs incurred for legal
representation in litigation as a result of increased volume in our business
over the last couple of years. Other administrative expenses decreased by
approximately $45 thousand or 18.2% primarily resulting from a bad debt
write-off of advisory fees due from Eastern Point Advisor's Twenty Fund during
quarter ended September 30,2003. There were no additional write offs during
quarter ended September 30, 2004. Finally, occupancy expenses increased by
approximately $35 thousand from occupying additional office and storage space,
and depreciation of our fixed assets.

     Another attribute for the decline in operating income was that the ratio of
administrative expenses to gross profit was 27.9 % higher during quarter ended
September 30, 2004 when compared to quarter ended September 30,2003. We did not
fully benefit this quarter from the investment we made toward our fixed
technology costs and web-based reporting.

     Consolidated selling expenses were approximately $310 thousand for the
quarter ended September 30, 2004, an amount that increased by approximately
$52 thousand or about 20.2% from $258 thousand for the quarter ended September
30, 2003. This increase can be attributed to a rise in advertising costs by over
$45 thousand and a rise in communication costs by over $6 thousand.

     The increase in advertising related expenses were primarily the result of
an increase in travel related expenses of over $50 thousand. The increase in
communication expenses came from an approximate $6 thousand increase in printing
costs to continue to market our business in brokerage and advisory services and
to promote our new mutual fund, the Eastern Point Advisors Rising Dividend
Growth Fund.

                                       16
<PAGE>

     ICC and EPA bear the administrative and selling expenses for ICH in the
form of management fees paid to ICH. These management fees, contained within the
following chart, have been eliminated during consolidation in the accompanying
financial statements. Based on a revised time study prepared by management, the
allocation of these expenses between subsidiaries has changed from a 30%
allocation to a new allocation percentage tested on a quarterly basis effective
April 1,2004. The September 30,2004 time study resulted in a 10% allocation.

                               September 2004           September 2003
--------------------------------------------------------------------------------
ICC                              $222,310                 $193,822
--------------------------------------------------------------------------------
EPA                                24,701                   83,067
--------------------------------------------------------------------------------
Total                            $247,011                 $276,889
---------------------------------========-----------------========--------------

     The Company recorded a consolidated income tax benefit of $105 thousand for
the quarter ended September 30, 2004 compared with consolidated income taxes of
$211 thousand for the quarter ended September 30, 2003. This decrease of $316
thousand or 149.8% can be attributed to the Company experiencing a less
profitable quarter ended September 30, 2004 than the quarter ended September 30,
2003.

The Company realized a consolidated net loss of $149 thousand for the quarter
ended September 30, 2004 compared with a consolidated net income of $270
thousand for the quarter ended September 30, 2003. This decrease of $419
thousand or 155.2% can be attributed to a drop in operating income over the same
period. This fluctuation in operating income led to a decline in income before
taxes of $736 thousand or 152.9% for the quarter ended September 30, 2004
compared to quarter ended September 30, 2003.

Profitability worsened between quarters ended September 30, 2003 and September
30, 2004 due to decreased gross profit retention from the product mix. The
growth of the business has required additional operating expenses, however the
gross profit has not expanded in a manner necessary to offset those expenses.


Six Months Ended September 30, 2004 compared with Six Months Ended September 30,
2003

Total revenue of $26.8 million increased by $5.6 million or 26.4 % for the six
months ended September 30, 2004, compared with total revenue of $21.2 million
for the six months ended September 30, 2003. Consolidated commissions, advisory,
and other fee income of $26.1 million for the six months ended September 30,
2004, increased by $5.2 million or 24.9%, compared with consolidated
commissions, advisory, and other fee income of $20.9 million for the six months
ended September 30, 2003. This increase can be attributed primarily to a $5.4
million increase in revenues provided by Investors Capital Corporation,(ICC).
Also, as a result of ICC obtaining dual designation as a Registered Investment
Advisor ICA (Investors Capital Advisors), Eastern Point Advisors (EPA)
transferred approximately 73% of assets under management within the Pershing
Securities Managed Asset Plan Platform in March 2004. This also contributed to
ICC's increase in commission and advisory fee income for the six months ended
September 30, 2004. Offsetting this increase was a $200 thousand decrease in
advisory and other fee income from EPA for the comparative periods. The overall
increase was driven by $2.3 million in commissions generated from the sale of
mutual funds and variable annuities during the six months ended September 30,
2004. In addition, $2.9 million of additional commissions was generated from the
brokerage business and other fees.

     Net marketing revenues of approximately $455 thousand increased by
approximately $387 thousand for the six months ended September 30, 2004,
compared to an approximate net marketing income of $68 thousand for the six
months ended September 30, 2003. This increase was mainly attributable to
improved marketing initiatives. In addition, net marketing revenues increased as
a result of management's reporting the profitability of its preferred marketing
programs on an individual event basis as compared to a consolidated event basis
during the same comparative reporting period. Finally, other income increased by
approximately $11 thousand for six months ended September 30, 2004 when compared
to six months ended September 30, 2003. The reason for the increase was due to
the increase in daily average balance in our trading accounts.

     The significant increase in sales volume can be attributed to enhanced
marketing efforts in recruiting and business development. The marketing
department continues to focus its attention on attracting a sophisticated
representative who can provide a more diversified and broader product base to
clients. Additionally, the marketing team assisted the representatives in taking
advantage of current market conditions through various workshops, regional and
national meetings, and seminar training programs.

     Consolidated commissions and advisory fees of $21.9 million for the six
months ended September 30,2004, increased by $4.8 million or 28.1 % compared to
$ 17.1 million for the six months ended September 30,2003. This change can be
attributed to an increase of $4.8 million in commission expenses incurred by
ICC. The increase in commission expense is the direct result of an improvement
in gross revenues as noted above. The cost of sales increase was also a result
of an increase in trading errors of over $431 thousand compared to last year
during the same time period. In addition, cost of sales increased with sales
from commission, advisory and other fee income on a percentage basis of 83.8% in
2004 compared to 81.9% in 2003. This 1.9% increase in payout ratio can be
attributed to top representatives increasing their sales production when
compared to their sales output during the same period last year.

                                       17
<PAGE>

     The Company realized consolidated operating income of approximately $134
thousand for the six months ended September 30, 2004, compared with operating
income of approximately $389 thousand for the six months ended September 30,
2003. This 65.6% decrease in consolidated operating income is primarily the
result of an increase in operating expenses of approximately $1.1 million offset
by an increase in gross profit of about $826 thousand. This stems from the fact
that there was greater sales volume in products that gave us less retention to
offset the operating expenses to accommodate that growth. A breakdown of gross
profit by product type, depicting both the dollar and percentage increase or
decrease, is presented in the following table:
<TABLE>
<CAPTION>
<S>                       <C>                     <C>              <C>              <C>               <C>
                                                       % of
                               Gross Profit         Gross Profit       2004-2003      September 2004    September 2004
  Product Type             $ increase (decrease)   increase change  % Margin Change  $ Gross Profit    % Gross Profit
-----------------------------------------------------------------------------------------------------------------------

Commissions-mutual
funds annuities                  $226,806               27.4%             11.9%        $2,141,258            44.0%
-----------------------------------------------------------------------------------------------------------------------
Commissions-trading              (344,987)             (41.7)%           (28.4)%          869,984            17.9%
-----------------------------------------------------------------------------------------------------------------------
Commissions -Insurance
Products                          155,382               18.8%            549.6%           183,653             3.8%
-----------------------------------------------------------------------------------------------------------------------
Commissions-
Underwriting                      (22,461)              (2.7)%           (94.9)%            1,200              --%
-----------------------------------------------------------------------------------------------------------------------
Advisory Services &
Administration Fees               158,581               19.2%             29.4%           697,447            14.3%
-----------------------------------------------------------------------------------------------------------------------
Licensing Revenue                 251,441               30.4%            320.0%           330,007             6.8%
-----------------------------------------------------------------------------------------------------------------------
Net Marketing Revenue             387,135               46.9%            570.9%           454,951             9.3%
-----------------------------------------------------------------------------------------------------------------------
Other Income &
Revenues                           14,423                1.7%              8.3%           188,187             3.9%
-----------------------------------------------------------------------------------------------------------------------
Total                            $826,320                100%              N/A         $4,866,687             100%
--------------------------------==========--------------======------------=====--------===========------------====-----
</TABLE>

     As a percentage of the increase in gross profit, contributions from mutual
funds and variable annuities represented 27.4% of the total increase while net
marketing revenues comprised 46.9% of the increase. Contributions from
licensing, insurance products, and advisory services made up 68.4% of the
increase while trading had a decrease to the margin of 41.7%. A margin increase
of $226,806 or 11.9 % was realized from sales of mutual funds and variable
annuity products as trading activities decreased on a marginal basis by $344,987
or 28.4% for comparative six months ended September 30, 2004 and September 30,
2003.

     As a percentage of the September 30, 2004 gross profit, mutual funds and
variable annuity products constitute 44.0% of the overall profit margin while
trading activity represents 17.9%. The remainder of the profit margin is
comprised of advisory services,14.3%; net marketing revenues, 9.3%; and
licensing, insurance products, underwriting and other income and revenues,
14.5%.

     Consolidated administrative expenses of $4.1 million for the six months
ended September 30, 2004 increased by $927 thousand or 29.3%, compared with
administrative expenses of $3.2 million for the six months ended September 30,
2003. This fluctuation is a result of the $656 thousand increase in compensation
and benefits expense based on the acquisition of additional personnel to
accommodate growth. We invested in our management team by hiring individuals
with industry expertise in an effort to increase sales and restructure the
product mix. Regulatory, legal and professional fees increased by $236 thousand
due to added costs incurred for legal representation in litigation resulting
from an expanding business volume over the last few years.

     The ratio of administrative expenses to gross profit has risen to 84.0% for
the six months ended September 30, 2004 from 78.2% for the six months ended
September 30, 2003. This is the result of lower profit margin retention that did
not accommodate the rise in fixed costs.

     Consolidated selling expenses were $646 thousand for the six months ended
September 30, 2004, an amount that increased by $154 thousand or 31.3% from $492
thousand for the six months ended September 30, 2003. This increase can be
attributed to a rise in advertising costs of $100 thousand and a rise in
communications costs of $55 thousand. The increase in advertising expenses was
primarily the result of an increase in travel expenses of $101 thousand. The
growth of communications expenses consists of a $20 thousand boost in telephone
expenses and a $35 thousand boost in printing expenses. Additional
communications and printing costs are necessary to continue to market the
business of brokerage and advisory services and to promote the Eastern Point
Advisors Rising Dividend Growth Fund.

                                       18
<PAGE>

     ICC and EPA bear the administrative and selling expenses for ICH in the
form of management fees paid to ICH. These management fees, contained within the
following chart, have been eliminated during consolidation in the accompanying
financial statements. Based on a revised time study prepared by management, the
allocation of these expenses between subsidiaries has changed from a 30%
allocation to a new allocation percentage tested on a quarterly basis effective
April 1,2004. The June 30,2004 test resulted in a 10% allocation and the
September 30, 2004 time study resulted in a 10% allocation.


                               September 2004           September 2003
--------------------------------------------------------------------------------
ICC                                $558,915                $358,632
--------------------------------------------------------------------------------
EPA                                  62,102                 153,700
--------------------------------------------------------------------------------
Total                              $621,017                $512,332
-----------------------------------========----------------========-------------


     The Company reported income taxes of about $56 thousand for the six months
ended September 30, 2004, compared with consolidated income taxes of about $192
thousand for the six months ended September 30, 2003. This decrease of about
$136 thousand in taxes or about 70.8% can be attributed to the Company's
decrease in profitability during the same period last year.

     The Company generated a consolidated net income of about $55 thousand for
the six months ended September 30, 2004, compared with net income of about $186
thousand for the quarter ended September 30, 2003. This decrease of over $131
thousand or about 70.4% in net income can be attributed to a decrease in the
overall margin retention from the sale of our products offset by the increase in
operating expenses to accommodate the increase in sales. Operating expenses
increased proportionately higher than its gross profit, resulting in net loss.

     Although the company's profitability for the six months ended September 30,
2004 was $131 thousand less than that for six months ended September 30, 2003,
management is staying the course with their commitment to grow the company.
Management is currently investing resources to help grow assets in their
advisory services sector. In addition, management has opened up a new investment
center in Portsmouth, New Hampshire where the company can offer financial
services directly to clients from our own financial advisors. Management will
further develop their insurance division, ICC Insurance Agency, to continue to
offer a diversified product range to their clients. Finally, the operational
model in the trading department makes substantial use of technology which
enables the Company to accommodate growth in revenue through increased
transaction processing without incurring incremental overhead.


Liquidity and Capital Resources

The Company believes that return on equity is primarily based on the use of
capital in an efficient manner. Historically, we have financed our operations
mostly through private equity and we have generated cash flow internally without
requiring debt service.

As of September 30, 2004, cash and cash equivalents totaled $8.3 million
compared to $8.1 million as of March 31, 2004. Working capital was $8.3 million
as of September 30, 2004 compared to $8.6 million as of March 31, 2004. The
ratio of current assets to current liabilities was 4.11 to 1 as of September 30,
2004 compared to 3.2 to 1 as of March 31, 2004.

     As of September 30, 2004, the net capital ratio for the broker-dealer was
2.41 to 1 as compared to a 2.38 to 1 for the fiscal year ended March 31, 2004.
The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that we maintain a net
capital of $100,000 and a ratio of aggregate indebtedness to net capital not to
exceed 15 to 1. This SEC requirement is also referred to as the "net capital
ratio" or the "net capital 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 the subordinated loans from being withdrawn or cash
dividends from being paid if our net capital ratio would exceed 10 to 1 if we
would have less than our minimum required net capital. As of September 30, 2004,
we had net capital of $1.5 million as compared to net capital of $1.8 million as
of March 31,2004. This resulted in excess net capital of $1.3 million and $1.5
million, respectively, for the applicable periods.

     Net cash provided by operating activities of $632 thousand for the six
months ended September 30, 2004 increased by $80 thousand compared to net cash
provided by operating activities of $552 thousand for the six months ended
September 30, 2003. The change resulted primarily from an increase in
collections of accounts receivable offset by payments to commissions payable and
income taxes payable.

Net cash used in investing activities increased by $272 thousand for the six
months ended September 30, 2004 compared to the six months ended September 30,
2003. The increase in cash used resulted from the purchase of fixed assets. A
decrease in cash collections from the loans outstanding to registered
representatives was realized in addition to the issuance of new loans to
registered representatives.

                                       19
<PAGE>

Net cash used in financing activities increased by $35 thousand for the six
months ended September 30, 2004 compared to the six months ended September 30,
2003. The increase in cash used resulted from final payment of the NASD note and
a reclassification of current liability to a note payable.

Risk Management

     Risks are an inherent part of the Company's business and activities.
Management of these risks is critical to the Company's financial strength and
profitability and requires communication, 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 their willingness to
spend, especially in the financial markets. It is this willingness to spend in
the financial markets that is key to our business. A shift in spending in this
area could negatively impact the Company. However, senior management is
constantly monitoring these economic trends in order to enhance our product line
to offset any potential negative impact.

Operational Risk

     Operational risk refers to the risk of loss resulting from the Company's
operations, including, but not limited to, improper or unauthorized execution
processing of transactions, deficiencies in the Company's technology or
financial 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 developed specific policies and procedures designed to identify and
manage operational risk. These policies and procedures are reviewed and updated
on a continuing basis to ensure that this risk is minimized.

Regulatory and Legal Risk

     Regulatory and legal risk includes non-compliance with applicable legal and
regulatory requirements and the risk of a large number of customer claims that
could result in adverse judgments against the Company. The Company is subject to
extensive regulation in all jurisdictions in which it operates. In this regard,
the Company has instituted comprehensive procedures to address issues such as
regulatory capital requirements, sales and trading practices, use of and
safekeeping of customer funds, credit granting, collection activities,
money-laundering and record keeping.

Effects of Inflation

     The Company's assets are primarily 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

     Our Chief Executive Officer and Chief Financial Officer have concluded,
based on their evaluation within 90 days of the filing date of this report, that
our disclosure controls and procedures are effective for gathering, analyzing
and disclosing the information we are required to disclose in our reports filed
under the Securities Exchange Act of 1934. There have been no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of the previously mentioned
evaluation.

                                       20
<PAGE>

PART II  OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

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

                                       21
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                INVESTORS CAPITAL HOLDINGS, LTD.

                                                By: /s/ Timothy B. Murphy
                                                    -----------------------
                                                    Chief Financial Officer


     Date: November 11, 2004

                                       22
<PAGE>

                                  CERTIFICATION
                                  -------------

I, Theodore E. Charles, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Investors Capital
     Holdings, Ltd.;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: November 11, 2004

By: /s/ THEODORE  E. CHARLES
----------------------------
Theodore E. Charles
Chief Executive Officer


                                       23
<PAGE>

                                  CERTIFICATION
                                  -------------

I, Timothy B. Murphy, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Investors Capital
     Holdings, Ltd.;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: November 11, 2004

By: /s/ TIMOTHY B. MURPHY
-------------------------
Timothy B. Murphy
Chief Financial Officer

                                       24