|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------



|UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
|---------------------------------------------------------------------



|FORM 10-Q
|---------

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



|For the quarterly period ended September 30, 2007
|-------------------------------------------------



|Commission File Number: 1-16349
|-------------------------------



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







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




|
|



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



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

Number of shares outstanding of our only class of common stock as of November 09, 2007:



|6,285,715
|---------

Page 1

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------



|--------------------------------------------------------------------------------
|--------------------------------------------------------------------------------



| | 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 INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 6. EXHIBITSSIGNATURES
|--------------------------------------------------------------------



|--------------------------------------------------------------------------------
|--------------------------------------------------------------------------------

Page 2

---



|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|        |  |                      |  | **                   
|------- |  | -------------------- |  | ---------------------
|        |  |                      |  |                      
|        |  | PART I               |  | FINANCIAL INFORMATION
|       
|ITEM 1. |  | FINANCIAL STATEMENTS |  |                      

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

|                                                                                        |  | September 30, |  | March 31,   
|--------------------------------------------------------------------------------------- |  | ------------- |  | ------------
|                                                                                        |  | 2007          |  | 2007        
|                                                                                        |  |               |  |             
|Assets:                                                                                 |  |               |  |             
|                                                                                       
|Current Assets                                                                          |  |               |  |             
|                                                                                       
|Cash and cash equivalents                                                               |  | $ 5,145,922   |  | $ 5,498,259 
|Deposit with clearing organization, restricted                                          |  | 175,000       |  | 175,000     
|Accounts receivable                                                                     |  | 4,288,752     |  | 4,336,234   
|Note receivable (current)                                                               |  | 8,618         |  | 8,561       
|Loans receivable from registered representatives (current)                              |  | 656,999       |  | 470,492     
|Prepaid income taxes                                                                    |  | 288,037       |  | 35,078      
|Marketable securities, at market value                                                  |  | 129,055       |  | 206,530     
|Investments (short term)                                                                |  | 1,437,237     |  | 745,315     
|Prepaid expenses                                                                        |  | 376,555       |  | 482,882     
|                                                                                        |  |               |  |             
|Total Current Assets                                                                    |  | 12,506,175    |  | 11,958,351  
|                                                                                       
|Property and equipment, net                                                             |  | 1,328,026     |  | 1,396,793   
|                                                                                       
|Long Term Investments                                                                   |  |               |  |             
|Loans receivable from registered representatives                                        |  | 148,405       |  | 191,305     
|Note receivable                                                                         |  | 747,617       |  | 747,617     
|Equity investments, at cost                                                             |  | 190,000       |  | 190,000     
|Investments                                                                             |  | 246,005       |  | 1,169,606   
|Cash surrender value life insurance policies                                            |  | 312,943       |  | 275,201     
|                                                                                        |  |               |  |             
|                                                                                        |  | 1,644,970     |  | 2,573,729   
|Other Assets                                                                            |  |               |  |             
|Other assets                                                                            |  | 64,545        |  | 72,199      
|Deferred tax asset, net                                                                 |  | 865,082       |  | 889,128     
|                                                                                        |  |               |  |             
|                                                                                        |  | 929,627       |  | 961,327     
|                                                                                       
|Total Assets                                                                            |  | $ 16,408,798  |  | $ 16,890,200
|                                                                                        |  |               |  |             
|                                                                                       
|Liabilities and Stockholders' Equity:                                                   |  |               |  |             
|                                                                                       
|Current Liabilities                                                                     |  |               |  |             
|                                                                                       
|Accounts payable                                                                        |  | $ 769,512     |  | $ 773,636   
|Accrued expenses                                                                        |  | 957,339       |  | 1,871,694   
|Notes payable                                                                           |  | 13,342        |  | 838,358     
|Unearned revenues                                                                       |  | 115,350       |  | 100,363     
|Commissions payable                                                                     |  | 3,346,001     |  | 3,049,900   
|Securities sold, not yet purchased, at market value                                     |  | 782           |  | 711         
|                                                                                        |  |               |  |             
|                                                                                        |  | 5,202,326     |  | 6,634,662   
|Total Liabilities                                                                       |  | $ 5,202,326   |  | $ 6,634,662 
|                                                                                        |  |               |  |             
|                                                                                       
|                                                                                       
|                                                                                       
|Stockholders' Equity:                                                                   |  |               |  |             
|                                                                                       
|Common stock, $.01 par value, 10,000,000 shares authorized;                             |  |               |  |             
|6,287,766 issued and 6,283,881 outstanding at September 30,2007;                        |  |               |  |             
|6,209,421 issued and 6,205,536 outstanding at March 31, 2007 .                          |  | 62,878        |  | 62,094      
|Additional paid-in capital                                                              |  | 9,936,116     |  | 9,721,749   
|Retained earnings                                                                       |  | 1,194,122     |  | 468,506     
|less: Treasury stock, 3,885 shares at cost                                              |  | (30,135)      |  | (30,135)    
|Accumulated other comprehensive income                                                  |  | 43,491        |  | 33,324      
|                                                                                        |  |               |  |             
|                                                                                       
|                                                                                       
|Total Stockholders' Equity                                                              |  | 11,206,472    |  | 10,255,538  
|                                                                                       
|Total Liabilities and Stockholders'                                                     |  |               |  |             
|Equity                                                                                  |  | $ 16,408,798  |  | $ 16,890,200
|                                                                                        |  |               |  |             
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements. |  |               |  |             

Page 3

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

|                                                          | Three Months Ended
|--------------------------------------------------------- | ------------------
|                                                          | September 30,     
|                                                          | 2007              
|                                                          |                   
|Revenues                                                  |                   
|                                                         
|Commission                                                | $ 19,967,862      
|Advisory fees                                             | 2,518,253         
|Other fee income                                          | 143,141           
|Marketing revenue                                         | 234,806           
|Other income                                              | 221,143           
|                                                          |                   
|Total Revenue                                             | 23,085,205        
|Commission and advisory fees expenses                     | 18,827,534        
|                                                          |                   
|Gross Profit                                              | 4,257,671         
|                                                          |                   
|Operating Expenses:                                       |                   
|Advertising                                               | 428,201           
|Communications                                            | 336,024           
|                                                          |                   
|Total Selling Expenses                                    | 764,225           
|                                                          |                   
|                                                         
|Compensation and benefits                                 | 2,076,612         
|Regulatory, legal and professional                        | 320,589           
|Occupancy                                                 | 290,276           
|Other administrative expenses                             | 323,071           
|Interest expense                                          | 8,572             
|                                                          |                   
|Total Administrative Expenses                             | 3,019,120         
|                                                          |                   
|Total Operating Expenses                                  | 3,783,345         
|                                                          |                   
|Operating Income (Loss)                                   | 474,326           
|                                                          |                   
|                                                         
|Income (loss) before taxes                                | 474,326           
|Provision for income taxes                                | 215,277           
|                                                          |                   
|Net Income (Loss)                                         | $ 259,049         
|                                                          |                   
|                                                         
|Earnings Per Common Share:                                |                   
|Basic earnings per common share                           | $0.04             
|Diluted earnings per common share                         | $0.04             
|                                                          |                   
|                                                         
|Share Data:                                               |                   
|Weighted average shares used in basic earnings per        |                   
|common share calculations                                 | 6,064,200         
|Incremental shares from assumed exercise of stock options | 394,110           
|                                                          |                   
|Weighted average shares used in diluted earnings per      |                   
|common share calculations                                 | 6,458,310         
|                                                          |                   
|See Notes to Condensed Consolidated Financial Statements. |                   

Page 4

---



|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006



|(UNAUDITED)
|-----------

|                                                          | Six Months Ended
|--------------------------------------------------------- | ----------------
|                                                          | September 30,   
|                                                          | 2007            
|                                                          |                 
|Revenues                                                  |                 
|                                                         
|Commission                                                | $ 39,675,975    
|Advisory fees                                             | 4,706,537       
|Other fee income                                          | 272,960         
|Marketing revenue                                         | 729,365         
|Other income                                              | 449,164         
|                                                          |                 
|Total Revenue                                             | 45,834,001      
|Commission and advisory fees expenses                     | 37,152,948      
|                                                          |                 
|Gross Profit                                              | 8,681,053       
|                                                          |                 
|Operating Expenses:                                       |                 
|Advertising                                               | 695,694         
|Communications                                            | 515,027         
|                                                          |                 
|Total Selling Expenses                                    | 1,210,721       
|                                                          |                 
|                                                         
|Compensation and benefits                                 | 4,057,203       
|Regulatory, legal and professional                        | 926,893         
|Occupancy                                                 | 595,387         
|Other administrative expenses                             | 574,683         
|Interest expense                                          | 34,216          
|                                                          |                 
|Total Administrative Expenses                             | 6,188,382       
|                                                          |                 
|Total Operating Expenses                                  | 7,399,103       
|                                                          |                 
|Operating Income (Loss)                                   | 1,281,950       
|                                                          |                 
|                                                         
|Income (loss) before taxes                                | 1,281,950       
|Provision (Benefit) for income taxes                      | 556,334         
|                                                          |                 
|Net Income (Loss)                                         | $ 725,616       
|                                                          |                 
|                                                         
|Earnings Per Common Share:                                |                 
|Basic earnings per common share                           | $0.12           
|Diluted earnings per common share                         | $0.11           
|                                                          |                 
|                                                         
|Share Data:                                               |                 
|Weighted average shares used in basic earnings per        |                 
|common share calculations                                 | 6,059,619       
|Incremental shares from assumed exercise of stock options | 400,675         
|                                                          |                 
|Weighted average shares used in diluted earnings per      |                 
|common share calculations                                 | 6,460,294       
|                                                          |                 
|See Notes to Condensed Consolidated Financial Statements. |                 

Page 5

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY



|SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
|--------------------------------------------



|(UNAUDITED)
|-----------

|                                                          |  | Common    |  | Amount   |  | Additional  |  | Comprehensive |  | Retained    |  | Treasury   |  | Accumulated   |  |             
|--------------------------------------------------------- |  | --------- |  | -------- |  | ----------- |  | ------------- |  | ----------- |  | ---------- |  | ------------- |  | ------------
|                                                          |  | Stock     |  |          |  | Paid-In     |  | Income        |  | Earnings    |  | Stock      |  | Other         |  |             
|                                                          |  | Shares    |  |          |  | Capital     |  |               |  | (Deficit)   |  |            |  | Comprehensive |  | Total       
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  | Income (Loss) |  |             
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Balance at April 01, 2006                                 |  | 5,794,246 |  | $ 57,942 |  | $ 8,740,780 |  | -             |  | $ 1,797,789 |  | $ (30,135) |  | $ 19,707      |  | $ 10,586,083
|Stock based compensation                                  |  | 345,439   |  | 3,455    |  | 756,376     |  |               |  |             |  |            |  |               |  | 759,831     
|Comprehensive income:                                     |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Net (loss)                                                |  |           |  |          |  |             |  | (767,457)     |  | (767,457)   |  |            |  |               |  |             
|Other Comprehensive Income:                               |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Unrealized gain on securities:                            |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Unrealized holding gains arising                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|during period no tax effect                               |  |           |  |          |  |             |  | 2,761         |  |             |  |            |  |               |  |             
|No reclassification adjustment required                   |  |           |  |          |  |             |  | -             |  |             |  |            |  |               |  |             
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Other Comprehensive Income                                |  |           |  |          |  |             |  | 2,761         |  |             |  |            |  | 2,761         |  |             
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Comprehensive Income                                      |  |           |  |          |  |             |  | (764,696)     |  |             |  |            |  |               |  | (764,696)   
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Dividend payment to shareholders                          |  |           |  |          |  |             |  |               |  | (245,218)   |  |            |  |               |  | (245,218)   
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Balance at September 30,2006                              |  | 6,139,685 |  | $ 61,397 |  | $ 9,497,156 |  | -             |  | $ 785,114   |  | $ (30,135) |  | $ 22,468      |  | $ 10,336,000
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Balance at April 01, 2007                                 |  | 6,209,421 |  | $ 62,094 |  | $ 9,721,749 |  | -             |  | $ 468,506   |  | $ (30,135) |  | $ 33,324      |  | $ 10,255,538
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Stock based compensation                                  |  | 78,345    |  | 784      |  | 214,367     |  |               |  |             |  |            |  |               |  | 215,151     
|Comprehensive income:                                     |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Net income                                                |  |           |  |          |  |             |  | 725,616       |  | 725,616     |  |            |  |               |  |             
|Other Comprehensive Income:                               |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Unrealized gain on securities:                            |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Unrealized holding gains arising                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|during period no tax effect                               |  |           |  |          |  |             |  | 10,167        |  |             |  |            |  |               |  |             
|No reclassification adjustment required                   |  |           |  |          |  |             |  | -             |  |             |  |            |  |               |  |             
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Other Comprehensive Income                                |  |           |  |          |  |             |  | 10,167        |  |             |  |            |  | 10,167        |  |             
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Comprehensive Income                                      |  |           |  |          |  |             |  | 735,783       |  |             |  |            |  |               |  | 735,783     
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|Balance at September 30,2007                              |  | 6,287,766 |  | $ 62,878 |  | $ 9,936,116 |  | -             |  | $ 1,194,122 |  | $ (30,135) |  | $ 43,491      |  | $ 11,206,472
|                                                          |  |           |  |          |  |             |  |               |  |             |  |            |  |               |  |             
|See Notes to Condensed Consolidated Financial Statements. |  |           |  |          |  |             |  |               |  |             |  |            |  |              

Page 6

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

|                                                             |  | Six Months Ended September 30,
|------------------------------------------------------------ |  | ------------------------------
|                                                             |  | 2007                          
|                                                             |  |                               
|Cash flows from operating activities:                        |  |                               
|                                                            
|Net income (loss)                                            |  | $ 725,616                     
|Adjustments to reconcile net income (loss) to net cash       |  |                               
|Provided by (used in) operating activities:                  |  |                               
|Depreciation and amortization                                |  | 187,167                       
|Amortization U.S. Treasury Bills                             |  | (2,866)                       
|Change in deferred taxes                                     |  | 24,046                        
|Share-Based Compensation                                     |  | 170,064                       
|Market adjustment Cash surrender value life insurance policy |  | (1,299)                       
|Stock-option compensation                                    |  | -                             
|Change in marketable securities                              |  | 77,546                        
|Gain on investment                                           |  | (5,288)                       
|                                                            
|Change in operating assets and liabilities:                  |  |                               
|                                                            
|Accounts receivable                                          |  | 47,482                        
|Prepaid expenses and other assets                            |  | 113,981                       
|Prepaid income taxes and payable                             |  | (252,959)                     
|Loans receivable from registered representatives             |  | (143,607)                     
|Accounts payable                                             |  | (4,124)                       
|Accrued expenses                                             |  | (914,355)                     
|Commissions payable                                          |  | 296,101                       
|Unearned revenues                                            |  | 14,987                        
|                                                             |  |                               
|Net cash provided by (used in) operating activities          |  | 332,492                       
|                                                            
|Cash flows from investing activities:                        |  |                               
|                                                            
|Purchases of property and equipment                          |  | (118,400)                     
|(Payments) Cash Surrender Value life insurance policy        |  | (36,443)                      
|Investments in U.S.Treasury Notes, Bills                     |  | 250,000                       
|Changes in Note Receivable                                   |  | (57)                          
|                                                             |  |                               
|                                                            
|Net cash provided by (used in) investing activities          |  | 95,100                        

Page 7

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (CONTINUED)



|(UNAUDITED)
|-----------

|                                                          |  | Six Months Ended September 30,
|--------------------------------------------------------- |  | ------------------------------
|                                                          |  | 2007                          
|                                                          |  |                               
|Cash flows from financing activities:                     |  |                               
|Payment of Note Payable                                   |  | $ (825,016)                   
|Payment of dividends                                      |  | -                             
|Exercise of stock options                                 |  | 45,087                        
|                                                          |  |                               
|Net cash used in financing activities                     |  | (779,929)                     
|Net Decrease in cash and cash equivalents                 |  | (352,337)                     
|Cash and cash equivalents, at the beginning of the period |  | 5,498,259                     
|                                                          |  |                               
|Cash and cash equivalents, at the end of the period       |  | $ 5,145,922                   
|                                                          |  |                               
|                                                         
|Supplemental disclosures of cash flow information:        |  |                               
|Interest paid                                             |  | $ 34,216                      
|Income taxes paid                                         |  | $ 780,025                     



| | See Notes to Condensed Consolidated Financial Statements.
| | ---------------------------------------------------------

Page 8

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

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



|FOR THE QUARTER ENDED SEPTEMBER 30, 2007
|----------------------------------------



|(UNAUDITED)
|-----------

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

ORGANIZATION:

Incorporated in July 1995, Investors Capital Holdings, Ltd. ("ICH") is a financial services holding company that operates in two segments of the
financial services industry through its subsidiaries, Investors Capital Corporation (ICC) (doing business as Investors Capital Advisors, ICA, as a registered investment advisor), Eastern Point Advisors, Inc.
(EPA), ICC Insurance Agency, Inc. and Investors Capital Holdings Securities Corporation (ICH Securities). These two segments comprise (1) broker-dealer services in support of Brokerage in securities, including provision of
market information, internet on-line Brokerage, portfolio tracking and records management, and (2) investment advisory services including asset management. These products and services are offered throughout the United States primarily through our
network of independent registered representatives. ICH Securities was formed in March 2005 to hold cash, cash equivalents, interest income and dividend income for ICH.

BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements of Investors Capital Holdings, Ltd. and its subsidiaries (the Company)
have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q. In the opinion of management, these financial statements
contain all of the adjustments necessary for a fair presentation of the results of these interim periods. Certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted,
although the Company believes the disclosures in these financial statements are adequate to make the information presented not misleading. Operating results for the three-month period ended September 30, 2007 are not necessarily indicative of the
results that may be expected for the year ending March 31, 2008. The balance sheet at March 31, 2007 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 report on Form 10-K for the fiscal year ended
March 31, 2007 filed with the Securities and Exchange Commission (the SEC).

USE OF ESTIMATES AND ASSUMPTIONS:

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.

SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

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

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

Page 9

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

Brokerage.The Company earns commissions through stock purchase and sale transactions, mutual fund purchases, government and corporate bonds transactions, fee-based managed accounts and ticket charges. The Company also earns revenue in the form of 12b-1 fees and interest on account balances. The earnings process is substantially complete at trade date in accordance with the rules of the Financial Industry Regulatory Authority (FINRA) and the SEC.

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

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

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

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

Administration Fees.Administration fees for services rendered to the Companys representatives respecting annual FINRA license renewals and E&O insurance are recognized as revenue upon registration of the representative with FINRA and listing of the registered representative with the E&O insurance carrier. The funds received from the registered representative are initially recorded as unearned revenue. The amounts, if any, collected in excess of the E&O insurance premium and/or fees due FINRA are recognized as revenue. Fees collected to maintain books and records are deferred and recognized ratably throughout the year.

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

Accounts Receivable  Allowance for Doubtful Accounts

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

Loans to representatives. We perform periodic credit evaluations and provide allowance based on our assessment of specifically identified unsecured receivables and other factors, including the representative's payment history. Once it is determined that it is both probable that a loan has been impaired and the amount of loss can reasonably be estimated, the portion of the loan balance estimated to be uncollectible is so classified and written off. See Note 6. Loans to Representatives.

Advisory fees from mutual funds.Effective October 18, 2005, the Company no longer provides advisory services to mutual funds. Prior thereto, as disclosed in the respective mutual funds' prospectuses, the Company attempted to recoup waived advisory service fees within a three-year period. If management believed that the likelihood of collecting such a receivable within the three-year period was doubtful, the Company provided for an allowance. Determinations whether to write off such fees were made annually. By agreement, the Company is entitled to payment of all uncollected waived advisory fees by the successor fund adviser.

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



Page 10

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

Income Taxes

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

The Company adopted FIN 48 during the fiscal quarter ended June 30, 2006. After analysis conducted by management and consultants as to the financial impact FIN 48 will have on the Companys financials, the Company has concluded that FIN 48 will not have a material impact on its financials.

RECENTLY ISSUED ACCOUNTING STANDARDS:

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

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

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

NOTE 2. SEGMENT INFORMATION

The Company makes disclosures about products and services, geographic areas, and major customers in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Company evaluates performance based on profit and loss from operations after income taxes.

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

The Company's reportable segments include broker/dealer and related services offered through ICC and asset management (investment advisory) services offered through ICA and EPA. ICC earns commissions as a broker for its customers in the purchase and sale of securities on major exchanges and other public markets. Asset management services generate recurring annual revenue from fees received on the management of customer accounts.

EPA provided asset management and portfolio design services to two mutual funds until October 18, 2005, and provided money management services to a variety of investors through March 2006. ICAs primary mission is to offer clients investment advisory and asset management procedures grounded on sound investment principles of asset allocation,

Page 11

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

performance monitoring and portfolio rebalancing. To improve efficiency, EPA transitioned the bulk of its advisory services business to ICA over the 2 1⁄2 year period ended March 31, 2006. Subsequent EPA operations have been limited to providing third-party advisory services and easing the conversion of representatives to ICAs investment advisory programs.

Under the guidelines of FAS No. 131 Disclosures about Segments of an Enterprise and Related Information, commencing with the quarter ended December 31, 2005, management reports its segments on a management approach whereby our business is presented in segments reflecting the way we make operating decisions and assess performance. Accordingly, ICA is now reported as part of the asset management services segment. Segments are currently reported based upon the services provided, whereas they were previously segmented according to legal entity.

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

Assets are allocated among ICH and its subsidiaries based upon legal ownership and the services provided. Total period-end assets are presented in this Note 2 on a stand-alone basis, i.e., without inter-company eliminations. Corporate items and eliminations are presented in the following table for the purpose of reconciling the stand-alone asset amounts to total consolidated assets.

|                                       | September 30,
|-------------------------------------- | -------------
|                                       | 2007         
|                                       |              
|Inter-company eliminations             | $ (842,381)  
|Deferred income taxes                  | (3,200)      
|Income Taxes                           | (512,697)    
|                                       |              
|                                      
|Total Corporate items and eliminations | $ (1,358,278)
|                                       |              

Page 12

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|Segment reporting is as follows:                          |                             |  |             
|--------------------------------------------------------- | --------------------------- |  | ------------
|                                                         
|                                                          | Quarter Ended September 30,
|                                                          | 2007                        |  | 2006        
|                                                          |                             |  |             
|Non-interest revenues:                                    |                             |  |             
|ICC brokerage services                                    | $ 20,268,719                |  | $ 15,604,117
|EPA, ICA asset management services                        | 2,598,044                   |  | 1,463,557   
|                                                         
|Total                                                     | $ 22,866,763                |  | $ 17,067,674
|                                                          |                             |  |             
|                                                         
|Revenues from transactions with other operating segments: |                             |  |             
|ICC brokerage services                                    | $ 401,339                   |  | $ 335,128   
|EPA, ICA asset management services                        | 50,727                      |  | 34,686      
|                                                          |                             |  |             
|                                                         
|Total                                                     | $ 452,066                   |  | $ 369,814   
|                                                          |                             |  |             
|                                                         
|Interest and dividend income,net:                         |                             |  |             
|ICC brokerage services                                    | $ 180,159                   |  | $ 141,382   
|EPA, ICA asset management services                        | 15,091                      |  | 14,522      
|ICH                                                       | 1,407                       |  | 229         
|ICH Securities                                            | 21,785                      |  | 32,112      
|                                                          |                             |  |             
|                                                         
|Total                                                     | $ 218,442                   |  | $ 188,245   
|                                                          |                             |  |             
|                                                         
|Depreciation and amortization expenses:                   |                             |  |             
|ICC brokerage services                                    | $ 93,406                    |  | $ 74,017    
|EPA, ICA asset management services                        | 690                         |  | 690         
|                                                          |                             |  |             
|                                                         
|Total                                                     | $ 94,096                    |  | $ 74,707    
|                                                          |                             |  |             
|                                                         
|Income tax provision:                                     |                             |  |             
|ICC brokerage services                                    | $ 6,142                     |  | $ 130,458   
|EPA, ICA asset management services                        | 199,071                     |  | (56,120)    
|ICH                                                       | 10,064                      |  | 8,018       
|                                                          |                             |  |             
|                                                         
|Total                                                     | $ 215,277                   |  | $ 82,356    
|                                                          |                             |  |             
|                                                         
|Income (loss) :                                           |                             |  |             
|ICC brokerage services                                    | $ 5,974                     |  | $ (330,169) 
|EPA, ICA asset management services                        | 239,507                     |  | 154,690     
|ICH                                                       | (8217)                      |  | (26,468)    
|ICH Securities                                            | 21,785                      |  | 32,112      
|                                                          |                             |  |             
|                                                         
|Total                                                     | $ 259,049                   |  | $ (169,835) 
|                                                          |                             |  |             
|                                                         
|Period end total assets:                                  |                             |  |             
|ICC brokerage services                                    | $ 11,976,116                |  | $ 9,278,448 
|EPA, ICA asset management services                        | 1,389,455                   |  | 1,401,080   
|ICH                                                       | 2,405,523                   |  | 1,934,821   
|ICH Securities                                            | 1,995,982                   |  | 3,144,628   
|Corporate items and eliminations                          | (1,358,278)                 |  | (1,161,114) 
|                                                          |                             |  |             
|                                                         
|Total                                                     | $ 16,408,798                |  | $ 14,597,863
|                                                          |                             |  |             

Page 13

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|                                                          |  | Six Months Ended September 30,
|--------------------------------------------------------- |  | ------------------------------
|                                                          |  | 2007                          
|                                                          |  |                               
|Non-interest revenues:                                    |  |                               
|ICC brokerage services                                    |  | $ 40,536,393                  
|EPA, ICA asset management services                        |  | 4,851,145                     
|                                                         
|Total                                                     |  | $ 45,387,538                  
|                                                          |  |                               
|                                                         
|Revenues from transactions with other operating segments: |  |                               
|ICC brokerage services                                    |  | $ 707,892                     
|EPA, ICA asset management services                        |  | 84,788                        
|                                                          |  |                               
|                                                         
|Total                                                     |  | $ 792,680                     
|                                                          |  |                               
|                                                         
|Interest and dividend income,net:                         |  |                               
|ICC brokerage services                                    |  | $ 372,603                     
|EPA, ICA asset management services                        |  | 28,686                        
|ICH                                                       |  | 1,841                         
|ICH Securities                                            |  | 43,333                        
|                                                          |  |                               
|                                                         
|Total                                                     |  | $ 446,463                     
|                                                          |  |                               
|                                                         
|Depreciation and amortization expenses:                   |  |                               
|ICC brokerage services                                    |  | $ 185,786                     
|EPA, ICA asset management services                        |  | 1,381                         
|                                                          |  |                               
|                                                         
|Total                                                     |  | $ 187,167                     
|                                                          |  |                               
|                                                         
|Income tax provision (benefit):                           |  |                               
|ICC brokerage services                                    |  | $ 223,905                     
|EPA, ICA asset management services                        |  | 338,397                       
|ICH                                                       |  | (5,968)                       
|                                                          |  |                               
|                                                         
|Total                                                     |  | $ 556,334                     
|                                                          |  |                               
|                                                         
|Income (loss) :                                           |  |                               
|ICC brokerage services                                    |  | $ 303,875                     
|EPA, ICA asset management services                        |  | 430,104                       
|ICH                                                       |  | (51,696)                      
|ICH Securities                                            |  | 43,333                        
|                                                          |  |                               
|                                                         
|Total                                                     |  | $ 725,616                     
|                                                          |  |                               
|                                                         
|Period end total assets:                                  |  |                               
|ICC brokerage services                                    |  | $ 11,976,116                  
|EPA, ICA asset management services                        |  | 1,389,455                     
|ICH                                                       |  | 2,405,523                     
|ICH Securities                                            |  | 1,995,982                     
|Corporate items and eliminations                          |  | (1,358,278)                   
|                                                          |  |                               
|                                                         
|Total                                                     |  | $ 16,408,798                  
|                                                          |  |                               

NOTE 3. LITIGATION

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

Massachusetts Proceedings

By administrative complaint dated November 16, 2005, the Securities Division of the Secretary of the Commonwealth of Massachusetts brought an adjudicatory proceeding against the Company alleging violation of supervisory obligations under state securities laws in connection with certain past sales of equity-indexed annuities by a few independent representatives. In settling these proceedings on December 19, 2006, the Company agreed, among other things:

- to pay a $0.5 million administrative fine,
- to offer to reimburse losses and costs incurred by Massachusetts persons aged 75 or older in connection with the surrender, no later than December 31, 2007, of any equity-indexed annuities purchased through ICC or its representatives during 2004 or 2005, and to offer an additional payment to ensure that no amount invested in a surrendered EIA yielded less than 3%; and
- to pay an additional administrative fine equal to the extent, if any, that ICCs surrender-related payments total less than $0.5 million.

Page 14

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

The Company does not anticipate, although there can be no assurances, that the total of said payments will exceed $1 million, of which $0.77 million had been expended as of September 30, 2007.

Other Proceedings

At September 30, 2007, the Company was a co-defendant in various legal proceedings other than the Massachusetts Proceedings. Management believes, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on the firm's financial condition. The Company has Errors and Omissions ("E&O") insurance to protect itself from potential damages and/or legal costs associated with the majority of 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 FASB Statement No. 5, "Accounting for Contingencies", the Company had accrued expenses of approximately $0.68 million for the quarter ended September 30, 2007 related to legal fees and estimated probable settlement costs relating to the Company's defense in various lawsuits.

NOTE 4. STOCK BASED COMPENSATION

On April 1, 2006, the Company adopted SFAS No. 123(R),Share-Based Payment, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair value over the requisite service period. The adoption of this statement did not have a material impact on the Companys consolidated financial statements for prior periods because the Company adopted the fair value recognition provisions of SFAS No. 123 effective September 28, 2002 using the modified prospective application transition method within the provisions of SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure.

Stock Options

Prior to the adoption of SFAS 123(R), the Company had granted options and had reported as a footnote disclosure thepro formaeffect if we had reported an expense under the guidelines of SFAS No. 123. There was no stock option expense for the quarters ended September 30, 2007 and 2006. The pro forma expense calculated using the Black-Scholes option pricing model did not exceed the cumulative expense previously disclosed in the Companys report on Form 10-K for the fiscal year ended March 31, 2005.

The following is a summary of the status of the Company's employee and director fixed stock options as of September 30, 2007 and 2006:

|                                  
|----------------------------------
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|                                  
|Outstanding at beginning of year  
|                                  
|Granted                           
|Forfeited                         
|Exercised                         
|Reclassified(non-employee)        
|                                  
|                                  
|Outstanding at quarter end        
|                                  
|Options exercisable at quarter-end
|                                  
|Weighted-average fair value of    
|options granted during the year   

Page 15

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

The following assumptions were applied to employee options for the quarters ended September 30, 2007 and September 30, 2006.

|                        |  | 2007  |  | 2006 
|----------------------- |  | ----- |  | -----
|                        |  |       |  |      
|                       
|Dividend                |  | 0.00% |  | 0.19%
|Volatility              |  | 23%   |  | 48%  
|Risk-free interest rate |  | 3.81% |  | 4.84%
|Expected Life in years  |  | 0.25  |  | 1.25 

The following table summarizes information about employee and directors' fixed stock options outstanding as of September 30, 2007:

|Options Outstanding |  |             |  |                    |  | Options Exercisable |  |             |  |                 
|------------------- |  | ----------- |  | ------------------ |  | ------------------- |  | ----------- |  | ----------------
|                    |  |            
|                    |  |             |  | Weighted-Average   |  |                     |  |             |  |                 
|Range Of            |  | Number      |  | Remaining          |  |                     |  | Number      |  | Weighted-Average
|Exercise Prices     |  | Outstanding |  |                    |  | Exercise Price      |  | Exercisable |  | Exercise Price  
|                    |  |            
|                   
|$1.00               |  | 150,000     |  | No Stated Maturity |  | $1.00               |  | 150,000     |  | $1.00           
|$1.91               |  | 3,332       |  | 0.25               |  | $1.91               |  | 3,166       |  | $1.91           
|                    |  |             |  |                   
|                    |  | 153,332     |  | 0.25               |  | $1.02               |  | 153,166     |  | $1.02           

Restricted Stock

Under the 2005 Equity Incentive Plan (the Plan) the Company is authorized to grant shares of ICH common stock to employees, directors, officers, representatives and other key individuals. Grants under the Plan may be made in connection with initial employment or under various retention plans and, to date, have subjected unvested options and shares to forfeiture in the event of termination other than for death, disability or retirement. The compensation cost associated with these stock grants is recognized over the vesting period of the shares and is calculated as the market value of the shares on the date of grant. The following activity occurred during the three and six months period ended September 30, 2007:

|                   |  | THREE MONTHS ENDED SEPTEMBER 30, 2007 |  |                                                                       |  |                             
|------------------ |  | ------------------------------------- |  | --------------------------------------------------------------------- |  | ----------------------------
|                   |  | Shares                                |  | Weighted Ave Stock Price                                              |  | Weighted Average Vested Life
|                   |  |                                       |  |                                                                       |  |                             
|                  
|Non-vested at      |  |                                       |  |                                                                       |  |                             
|July 1, 2007       |  | 194,594                               |  | $4.04                                                                 |  | 3.49 yrs.                   
|                   |  |                                       |  |                                                                       |  |                             
|Granted            |  | 27,200                                |  | $4.90                                                                 |  |                             
|Vested             |  | 25,673                                |  | $4.43                                                                 |  |                             
|Canceled           |  | (1,133)                               |  | $4.90                                                                 |  |                             
|Non-vested at      |  |                                       |  |                                                                       |  |                             
|September 30, 2007 |  | 194,988                               |  | $4.11                                                                 |  | 3.03 yrs.                   
|                   |  |                                       |  |                                                                       |  |                             
|                  
|                   |  | SIX MONTHS ENDED SEPTEMBER 30, 2007   |  |                                                                       |  |                             
|                   |  | Shares                                |  | Weighted Ave Stock Price                                              |  | Weighted Average Vested Life
|                   |  |                                       |  |                                                                       |  |                             
|Non-vested at      |  |                                       |  |                                                                       |  |                             
|April 1, 2007      |  | 181,729                               |  | $3.95                                                        3.8 yrs. |  |                             
|                   |  |                                       |  |                                                                       |  |                             
|Granted            |  | 57,200                                |  | $4.80                                                                 |  |                             
|Vested             |  | 40,120                                |  | $4.30                                                                 |  |                             
|Canceled           |  | (3,821)                               |  | $4.81                                                                 |  |                             
|Non-vested at      |  |                                       |  | 3.03 yrs.                                                             |  |                             
|September 30, 2007 |  | 194,988                               |  | $4.04                                                                 |  |                             
|                   |  |                                       |  |                                                                       |  |                             

The Companys net income for the three months ended September 30, 2007 includes $78,696 of compensation costs related to the Companys grants of restricted stock to employees, and $31,422 for grants to independent representatives, under the Plan.

Page 16

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

The Companys net loss for the three months ended September 30, 2006 includes $30,797 of compensation costs related to the Companys grants of restricted stock to employees, and $7,322 for grants to independent representatives, under the Plan.

For the six months ended September 30, 2007 the compensation costs related to this plan includes $109,493 to employees and $60,571 for grants to independent representatives, under the Plan.

For the six months ended September 30, 2006 the compensation costs related to this plan includes $587,992 to employees and $74,122 for grants to directors, consultants and independent representatives.

As of September 30, 2007, there was $801,401 of total unrecognized compensation cost related to grants under the Plan. These costs are expected to be recognized over a weighted average period of approximately 3.03 years. The total fair value of shares vested under this plan during the three months ended September 30, 2007 was $113,731.

As of September 30, 2006, there was $644,921 of total unrecognized compensation cost related to grants under the Companys Equity Incentive Plan. These costs are expected to be recognized over a weighted average period of approximately 4.40 years. The total fair value of shares vested under this plan during the three months ended September 30, 2006 was $662,515.

NOTE 5 - NOTE RECEIVABLE

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

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

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

NOTE 6  LOANS TO REGISTERED REPRESENTATIVES

ICC has granted loans to certain registered representatives with the stipulation that the loans will be forgiven if the representatives remain licensed with the Company for an agreed upon period of time, generally one to five years, and/or meet specified performance goals. Upon forgiveness, the loans are charged to commission expense for financial reporting purposes. There were no loans charged to commission expense for the quarters ended September 30, 2007 and 2006.

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

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

The Company writes off any loans that are deemed uncollectible after performing periodic credit evaluations. There were no loans written off to commission expense for the quarters ended September 30, 2007 and 2006.

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

Page 17

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|                  |  | September 30, |  | March 31,
|----------------- |  | ------------- |  | ---------
|                  |  | 2007          |  | 2007     
|                  |  |               |  |          
|Forgiveable Loans |  | $ 439,817     |  | $ 331,023
|Other Loans       |  | 365,587       |  | 330,774  
|                  |  |               |  |          
|Total Loans       |  | $ 805,404     |  | $ 661,797
|                  |  |               |  |          

NOTE 7 - INVESTMENTS

Securities that are not readily marketable include investment securities (a) for which there is no market on a securities exchange or no independent publicly quoted market, (b) that cannot be publicly offered or sold unless registration has been effected under the Securities Act of 1933, or (c) that cannot be offered or sold because of other arrangements, restrictions, or conditions applicable to the securities or to the Company. The Company has not exercised significant influence over these equity investments; accordingly, these investments were recorded as of September 30, 2007 and March 31, 2007 at the Companys cost of $190,000 pursuant to Accounting Principles Board No. 18 "The Equity Method of Accounting for Investments in Common Stock" (APB No. 18).

As of September 30, 2007, the Company had investments in U.S. Treasury Notes being held to maturity in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. These investments are presented at an amortized value as follows:

|              |  |                |  | SEPTEMBER 30, 2007                                  |  |             |  |                |  |               
|------------- |  | -------------- |  | --------------------------------------------------- |  | ----------- |  | -------------- |  | --------------
|Purchase Date |  | Purchase Price |  | Interest Rate /Maturity Date /Coupon Date           |  | Face Value  |  | Amortized Cost |  | Interest Date 
|              |  |                |  |                                                     |  |             |  |                |  |               
|             
|7/12/2006     |  | $ 242,745      |  | US TREAS NOTES 3.000% 11/15/07 B/E DTD 11/15/02 N/C |  | $ 250,000   |  | $ 249,389      |  | May 15, Nov 15
|7/12/2006     |  | 248,525        |  | US TREAS NOTES 4.875% 04/30/08 B/E DTD 04/30/06 N/C |  | 250,000     |  | 249,516        |  | Apr 30, Oct 31
|7/12/2006     |  | 249,727        |  | US TREAS NOTES 5.125% 06/30/08 B/E DTD 06/30/06 N/C |  | 250,000     |  | 249,952        |  | Jun 30, Dec 30
|9/28/2006     |  | 250,732        |  | US TREAS NOTES 4.875% 08/31/08 B/E DTD 08/31/06 N/C |  | 250,000     |  | 250,341        |  | Feb 28, Aug 28
|11/3/2006     |  | 242,461        |  | US TREAS NOTES 3.125% 10/15/08 B/E DTD 10/15/03 N/C |  | 250,000     |  | 246,005        |  | Apr 15, Oct 15
|              |  |                |  |                                                     |  |             |  |                |  |               
|              |  | $ 1,234,189    |  | Balance at September 30, 2007                       |  | $ 1,250,000 |  | $ 1,245,203    |  |               
|              |  |                |  |                                                     |  |             |  |                |  |               

|              |  | MARCH 31, 2007 |  |                                                     |  |            |  |               
|------------- |  | -------------- |  | --------------------------------------------------- |  | ---------- |  | --------------
|Purchase Date |  | Purchase Price |  | Interest Rate /Maturity Date /Coupon Date           |  | Face Value |  | Amortized Cost
|              |  |                |  |                                                     |  |            |  |               
|7/12/2006     |  | $ 242,745      |  | US TREAS NOTES 3.000% 11/15/07 B/E DTD 11/15/02 N/C |  | $ 250,000  |  | $ 246,594     
|7/12/2006     |  | 246,650        |  | US TREAS NOTES 3.625% 04/30/07 B/E DTD 04/30/05 N/C |  | 250,000    |  | 249,695       
|7/12/2006     |  | 246,035        |  | US TREAS NOTES 3.625% 06/30/07 B/E DTD 06/30/05 N/C |  | 250,000    |  | 249,025       
|7/12/2006     |  | 248,525        |  | US TREAS NOTES 4.875% 04/30/08 B/E DTD 04/30/06 N/C |  | 250,000    |  | 249,088       
|7/12/2006     |  | 249,727        |  | US TREAS NOTES 5.125% 06/30/08 B/E DTD 06/30/06 N/C |  | 250,000    |  | 249,865       
|9/28/2006     |  | 250,732        |  | US TREAS NOTES 4.875% 08/31/08 B/E DTD 08/31/06 N/C |  | 250,000    |  | 250,520       
|11/3/2006     |  | 242,461        |  | US TREAS NOTES 3.125% 10/15/08 B/E DTD 10/15/03 N/C |  | 250,000    |  | 244,055       
|              |  |                |  |                                                     |  |            |  |               
|              |  | $ 1,726,875    |  | Balance at March 31, 2007                           |  | $1,750,000 |  | $ 1,738,842   
|              |  |                |  |                                                     |  |            |  |               

On September 08, 2006, The Eastern Point Advisors Capital Appreciation Fund merged with The Eastern Point Advisors Rising Dividend Fund to become The Rising Dividend Growth Fund. As of September 30, 2007 the Company held a 0.24% ownership interest in The Rising Dividend Growth Fund, which had a fair market value of $188,039. At March 31, 2007 this investment had a fair market value of $176,079 which represented a 0.30% ownership interest.

The Company has invested in a $250,000 face amount Certificate of Deposit with a stated date of maturity as of November 16, 2007 with a coupon rate of 5.25% . The Company is holding this investment to maturity. The Company had not invested in this Certificate of Deposit until after March 31, 2007.

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|Quarter Ended 09/30/07
|----------------------

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

Management's discussion and analysis reviews our consolidated financial condition as of September 30, 2007 and March 31, 2007, the consolidated results of operations for the 3 and 6 months ended September 30, 2007 and 2006 and, where appropriate, factors that may affect future financial performance. The discussion should be read in conjunction with the consolidated financial statements and related notes, included elsewhere in this Form 10-Q. Unless context requires otherwise, as used in this Managements Discussion and Analysis (i) the current period means the 3 or 6 months ended September 30, 2007, (ii) the prior period means the 3 or 6 months ended September 30, 2006, (iii) an increase and decrease compares the current period to the prior period, and (iv) all non-comparative amounts refer to the current period.

FORWARD-LOOKING STATEMENTS

The statements, analysis, and other information contained herein relating to trends in our operations and financial results, the markets for our products, the future development of our business, and the contingencies and uncertainties to which we may be subject, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," and other similar expressions, are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Such statements are made based upon management's current expectations and beliefs concerning future events and their effects on the Company and are subject to many risks and uncertainties. Our actual results may differ materially from the results anticipated in these forward-looking statements. Readers are directed to discussions of risks and uncertainties that may be found in this report and other documents filed by the Company with the United States Securities and Exchange Commission. We specifically disclaim any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.

OVERVIEW

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

OUR BUSINESS

The Company operates primarily through its subsidiary ICC in the broker-dealer segment and, doing business as ICA, the investment advisory segment of the financial services industry.

Broker-Dealer Services

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

Investment Advisory Services

The Company provides investment advisory services, including asset allocation and portfolio rebalancing, for its representatives customers. In the past, investment advisory services were performed by both ICC and EPA. To avoid the duplication of effort involved in supporting two advisory services entities, the Company has consolidated substantially all of its investment advisor services in ICC doing business as ICA. Since March 31, 2006, EPA operations have been limited to providing third-party advisory services and easing the conversion of representatives to ICAs investment advisory programs.

Recruitment and Support of Representatives

A key component of our business strategy is to recruit well-established, productive representatives who generate revenues in high margin services and products. Additionally, we assist our existing representatives in developing and expanding their business by providing a variety of support services and a diversified range of investment products for their clients. The Company focuses on providing substantial added value to our representatives practices, enabling them to be more productive, particularly in high margin lines such as advisory services and brokerage.

Support provided to assist representatives in pursuing consistent and profitable sales growth takes many forms, including: hi-tech brokerage systems, targeted financial assistance and a network of communication links with investment product

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|Quarter Ended 09/30/07
|----------------------

companies. Regional and national conventions provide forums for interaction to improve product knowledge, sales and client satisfaction. In addition, a dedicated business development unit focuses on providing representatives with programs and tools to grow their businesses both through new client acquisition and advancement of existing client relationships. These programs enhance our ability to attract and retain productive representatives.

OUR PROCESS

Check and Application

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

Online Trading

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

Bond Trading

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

Asset Allocation

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

OFF-BALANCE SHEET RISK

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

CRITICAL ACCOUNTING POLICIES

In General

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Company believes that of its significant accounting policies (see Footnote 1 to the Companys condensed consolidated financials statements contained herein), those dealing with valuation of securities and other assets, revenue recognition and allowance for doubtful accounts receivable involve a particularly high degree of judgment and complexity. Our accounting policies require estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the condensed consolidated financial statements. Due to their nature, estimates involve judgment based upon available information. Actual results or amounts can and do differ from estimates and the differences can have a material effect on the condensed consolidated financial statements. Therefore, understanding these policies is important to understanding the reported results of operations and the financial position of the Company.

Reserves

The Company records reserves related to legal proceedings in accrued expenses in the condensed consolidated balance sheet. The determination of these reserve amounts requires significant judgment on the part of management. Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the clients account;the basis and validity of the claim; the possibility of wrongdoing on the part of an employee or representative of the

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|Quarter Ended 09/30/07
|----------------------

Company; previous results in similar cases; and legal precedents. Each legal proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the consolidated financial statements and is recognized as a charge/credit to earnings in that period. The assumptions made by management in determining the estimates of reserves may be incorrect and the actual costs upon disposition of a legal proceeding may be greater or less than the reserved amount.

KEY INDICATORS OF FINANCIAL PERFORMANCE

Management periodically reviews and analyzes our financial performance across a number of measurable factors considered to be particularly useful in understanding and managing our business. Key metrics in this process include average production per representative, top line commission and advisory services revenues, gross margins, operating expenses, legal costs, and earnings per share.

COMPARISON OF THE FISCAL QUARTERS ENDED SEPTEMBER 30, 2007 AND 2006

|RESULTS OF OPERATIONS                |  |                             |  |               |  |                    |  |         |  |         
|------------------------------------ |  | --------------------------- |  | ------------- |  | ------------------ |  | ------- |  | --------
|                                    
|                                     |  |                             |  |               |  | Percent of Revenue |  |        
|                                     |  |                             |  |               |  | Quarter Ended      |  | Percent
|                                     |  | Quarter Ended September 30, |  | September 30, |  | Change            
|                                     |  |                             |  |               |  |                   
|                                     |  |                             |  |               |  |                    |  |         |  | 2007    
|                                     |  | 2007                        |  | 2006          |  | 2007               |  | 2006    |  | vs. 2006
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Revenues:                            |  |                             |  |               |  |                    |  |         |  |         
|Commission                           |  | $ 19,967,862                |  | $ 15,289,438  |  | 86.5%              |  | 88.6%   |  | 30.6%   
|Advisory fees                        |  | 2,518,253                   |  | 1,444,068     |  | 10.9%              |  | 8.4%    |  | 74.4%   
|Other fee income                     |  | 143,141                     |  | 129,635       |  | 0.6%               |  | 0.7%    |  | 10.4%   
|Marketing revenue                    |  | 234,806                     |  | 204,533       |  | 1.0%               |  | 1.2%    |  | 14.8%   
|Other income                         |  | 221,143                     |  | 188,245       |  | 1.0%               |  | 1.1%    |  | 17.5%   
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Total Revenue                        |  | 23,085,205                  |  | 17,255,919    |  | 100.0%             |  | 100.0%  |  | 33.8%   
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Commission and advisory fee expenses |  | 18,827,534                  |  | 14,140,325    |  | 81.6%              |  | 81.9%   |  | 33.1%   
|Gross Profit                         |  | 4,257,671                   |  | 3,115,594     |  | 18.4%              |  | 18.1%   |  | 36.7%   
|Operating Expenses:                  |  |                             |  |               |  |                    |  |         |  |         
|Advertising                          |  | 428,201                     |  | 231,797       |  | 1.9%               |  | 1.3%    |  | 84.7%   
|Communications                       |  | 336,024                     |  | 134,633       |  | 1.5%               |  | 0.8%    |  | 149.6%  
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Total Selling Expenses               |  | 764,225                     |  | 366,430       |  | 3.3%               |  | 2.1%    |  | 108.6%  
|Compensation and benefits            |  | 2,076,612                   |  | 1,710,572     |  | 9.0%               |  | 9.9%    |  | 21.4%   
|Regulatory, legal and professional   |  | 320,589                     |  | 730,702       |  | 1.4%               |  | 4.2%    |  | -56.1%  
|Occupancy                            |  | 290,276                     |  | 231,503       |  | 1.3%               |  | 1.3%    |  | 25.4%   
|Other administrative expenses        |  | 323,071                     |  | 156,296       |  | 1.4%               |  | 0.9%    |  | 106.7%  
|Interest expense                     |  | 8,572                       |  | 7,570         |  | 0.0%               |  | 0.0%    |  | 13.2%   
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Total Administrative Expenses        |  | 3,019,120                   |  | 2,836,643     |  | 13.1%              |  | 16.4%   |  | 6.4%    
|Total Operating Expenses             |  | 3,783,345                   |  | 3,203,073     |  | 16.4%              |  | 18.6%   |  | 18.1%   
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Operating Income (Loss)              |  | 474,326                     |  | (87,479)      |  | 2.1%               |  | -0.5%   |  | -642.2% 
|                                    
|Income before taxes                  |  | 474,326                     |  | (87,479)      |  | 2.1%               |  | -0.5%   |  | -642.2% 
|Provision (benefit) for income taxes |  | 215,277                     |  | (82,356)      |  | 0.9%               |  | -0.5%   |  | -361.4% 
|                                     |  |                             |  |               |  |                    |  |         |  |         
|Net Income (Loss)                    |  | $ 259,049                   |  | $ (169,835)   |  | 1.1%               |  | -1.0%   |  | -252.5% 
|                                     |  |                             |  |               |  |                    |  |         |  |         

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

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|Quarter Ended 09/30/07
|----------------------

- recruiting high quality new representatives,
- terminating low quality representatives, and
- assisting representatives to improve their skills and practices.

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

Average production per representative increased by 45.2%, reflecting managements continuing emphasis on recruiting and retaining established, successful representatives who value the high level of service and support provided by ICC/ICA.

AVERAGE PRODUCTION PER REPRESENTATIVE

|                           |  |                    |  | Quarter Ended      |  |                  
|-------------------------- |  | ------------------ |  | ------------------ |  | -----------------
|                           |  | September 30, 2007 |  | September 30, 2006 |  | Percentage Change
|                          
|Commission                 |  | $ 19,967,862       |  | $ 15,289,438       |  | 30.6%            
|Advisory                   |  | 2,518,253          |  | 1,444,068          |  | 74.4%            
|Other fee income           |  | 143,141            |  | 129,635            |  | 10.4%            
|                           |  |                    |  |                    |  |                  
|                           |  | $ 22,629,256       |  | $ 16,863,141       |  | 34.2%            
|                          
|Number of representatives  |  | 696                |  | 753                |  | -7.6%            
|                          
|Average Production Per Rep |  | $ 32,513           |  | $ 22,395           |  | 45.2%            

REVENUES

Revenues rose $5.82 million, or 33.8 %, to $23.08 million, led by a $4.68 million or 30.6% increase in commissions and a $1.07 million or 74.4% increase in advisory services revenue. Robust growth in revenue from high margin lines, such as brokerage and advisory services, continues to be complimented by expanding revenues from other commission sources such as mutual funds, variable annuities and direct participation programs. Management looks to a diversified revenue stream to provide a degree of protection from market risk.

Commissions

Commissions from variable annuities, which continued to comprise the largest component of both commission revenue and commission revenue growth, increased 31.6% over the year ago period. Brokerage, which maintained its position as the second largest component of commission revenue, experienced an even higher percentage revenue increase of 39.3%. Commission revenues from mutual funds and direct participation programs also grew strongly.



|Commission RevenueQuarters Ended September 30,
|----------------------------------------------

|                                                                                                                      |  |              |  |              |  |              |  | Percent of total |  | Percentage increase
|--------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ------------ |  | ------------ |  | ---------------- |  | -------------------
|Product Type1:                                                                                                        |  | 2007         |  | 2006         |  | 2007 vs 2006 |  | Increase         |  | 2007 vs 2006       
|Variable Annuities                                                                                                    |  | $ 7,870,474  |  | $ 5,982,628  |  | $ 1,887,846  |  | 40.4%            |  | 31.6%              
|Brokerage                                                                                                             |  | 6,385,468    |  | 4,582,422    |  | 1,803,046    |  | 38.5%            |  | 39.3%              
|Mutual Funds                                                                                                          |  | 3,059,665    |  | 2,358,286    |  | 701,379      |  | 15.0%            |  | 29.7%              
|Direct Participation Programs                                                                                         |  | 2,581,668    |  | 2,217,661    |  | 364,007      |  | 7.8%             |  | 16.4%              
|Other                                                                                                                 |  | 70,587       |  | 148,441      |  | (77,855)     |  | -1.7%            |  | -52.4%             
|                                                                                                                      |  |              |  |              |  |              |  |                  |  |                    
|                                                                                                                     
|Total Commission Revenue                                                                                              |  | $ 19,967,862 |  | $ 15,289,438 |  | $ 4,678,422  |  | 100.0%           |  | 30.6%              
|                                                                                                                      |  |              |  |              |  |              |  |                  |  |                    
|                                                                                                                     
|1. Revenue designated as brokerage includes revenue from mutual funds sold through our trading platform. Revenue from |  |             
|direct check and application sales of mutual funds are listed above under "Mutual Funds".                             |  |              |  |              |  |             

We continue to emphasize recruitment and retention of representatives who generate transactional (brokerage) business, particularly through utilization of our clearing firms electronic brokerage platform which enables us to more efficiently conduct brokerage business despite increasing volume. As discussed below, the recent trend of higher revenue growth from

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|Quarter Ended 09/30/07
|----------------------

fee-based advisory services, compared to commission-based services, reflects parallel efforts by management to grow revenues in the high margin investment advisory services area.

Advisory Fees

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

Fees from our advisor-directed managed asset program, A-MAP, where investment advisory services are provided directly by our independent representatives, continue to be the leading source of advisory services revenue. Revenues from this program, which have been contributing an increasing proportion of advisory services revenue, grew by $0.65 million or 61.0% to $1.72 million compared to $1.07 million for the prior period. Supported by our Net Exchange Pro and Pershing direct on-line mainframe brokerage platforms, A-MAP is popular with our representatives because of the opportunities it provides to potentially deliver superior asset management services and overall investment performance at a lower cost. Resulting transactional cost savings have been passed on to our representatives clients in the form of lower fees for improved service.

Other Fee Income

Other fee income, which includes licensing and financial planning fees, increased modestly primarily due to increases in financial planning fees.

Marketing Revenue

Marketing revenues rose somewhat reflecting an increase in marketing support revenue resulting from product sales.

Other Income

Other income increased by 17.5% or $0.03 million reflecting an increase in interest earned on brokerage account balances due to higher average daily account balances.

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|Quarter Ended 09/30/07
|----------------------

|                     
|---------------------
|GROSS MARGINS        
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|Commissions:         
|Check and Application
|Brokerage            
|Fixed Insurance      
|Underwriting         
|                     
|Total                
|                     
|Advisory Services:   
|A-MAP                
|Other                
|                     
|Total                
|                     
|Licensing            
|Marketing            
|Other Income         
|                     
|Total Gross Margin   
|                     

1. Due to account composition, profit margin retention for these products is not deemed a useful indicator of performance.

Gross margin rose by $1.14 million or 36.7% to $4.26 million for the current period. This increase was due primarily to a $0.38 million or 28.0% increase in gross margin derived from our check and application programs and a $0.59 million or 66.7% increase from Brokerage. We also experienced a $0.23 million increase from our advisory service programs that in recent periods have been undergoing steady growth, primarily from our representative-directed A-MAP program.

Check and Application

Check and application distribution programs generated $1.76 million in gross margins compared to $1.37 million during the prior period. This increase in large part reflected a $2.59 million rise in commissions from sales of variable annuity and mutual funds that contributed approximately $0.34 million to our profit margin. However, gross margin from check and application programs, as a percentage of total gross margin, decreased from 44.1% to 41.3% principally due to an even greater increase in gross margins generated by more profitable brokerage and advisory services.

Brokerage Services

Brokerage services profit margin increased by $0.59 million or 66.7% principally due to a $0.43 million increase in gross margins from brokerage activities that required a commission payout, including $0.10 million in discounts on clearing fees. These latter fees, as well as a $0.16 million increase in the margin from non-commissionable fees on account balances, contributed to a 3.8% decrease in payouts to representatives as a percentage of total brokerage revenue. However, payouts, as a percentage of commissionable brokerage, remained relatively flat.

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|Quarter Ended 09/30/07
|----------------------

Our overall margin retention on commissionable services increased from 19.3% in the prior period to 23.0% in the current period as brokerage services represented the leading component of revenue contributing to our growth in gross margin.

Advisory Services

Gross margin from our A-MAP rep-directed managed assets program grew by $0.12 million or 50.2% . The improvement resulted directly from growth in assets under management in the program that, in managements opinion, is due primarily to lower fees, improved services and increased awareness of this program.

The Company also experienced a $0.11 million or 113.8% rise in profit margin from non-AMAP programs, including third-party and, perhaps more importantly, ICA-directed investment advisory programs. The Company is continuing its efforts to bring on additional proprietary investment advisory products that emphasize improved service at lower fee levels and are designed to attract representatives with substantial amounts of client assets under management.

Commission and Advisory Fees Expenses / Retention

Payouts to our independent representatives, when combined with other advisory and brokerage services costs, decreased to 79.8% of representative-generated revenue, compared to 83.9% for the prior period. The corresponding increase in our overall retention rate from 16.1% to 20.2% reflects a transitioning of our direct business (check and application) to our high margin brokerage and advisory services.

Management is continuing their efforts to improve margin contribution by recruiting and retaining sophisticated representatives who are duly licensed to offer a variety of brokerage and advisory products and services that generate higher commission retention rates than those obtained from check and application products. Margins from brokerage were boosted by ticket charges and fees pertaining to increases in account balances that flow entirely to the profit margin. Fees received on asset account balances under our investment advisory programs also flow directly to the firm.

OPERATING EXPENSES

Operating expenses, which experienced a $0.58 million or 18.1% increase, are discussed in detail below.

Compensation and Benefits

The largest component of operating expenses is compensation and benefits, which increased by $0.37 million or 21.4% . This stems mostly from a $0.24 million increase in general salaries incurred primarily in hiring additional IT, recruitment and accounting personnel. In addition there was a $0.07 million increase in stock compensation for restricted stock awards issued to representatives and employees. Other forms of compensation and benefits, including dental, health, and life insurance, increased by $0.06 million.

Regulatory, Legal and Professional

Regulatory, legal and professional expenses decreased by $0.41 million or 56.1% . The largest component of this decrease was a $0.65 million decrease in legal fees and settlement costs of which $0.28 million was associated with the settlement of the Massachusetts Proceedings. In addition, the Company received $0.24 million in insurance proceeds reimbursing previously-recorded costs pertaining to a prior period settlement.

Management believes, although there can be no assurances, that the Massachusetts Proceedings will prove to be atypical, in terms of financial impact, of legal proceedings that will be generated in the future in connection with our on-going operations.

Legal fees and settlement costs, other than those associated with the Massachusetts Proceedings, decreased by $0.08 million. Management believes this result is directly attributable to the Companys risk-based management approach that seeks to minimize risk by improving the quality of its associated registered representatives while committing resources to educate and train our sales force, efficiently and accurately process their business, and appropriately supervise their business activities.

The Company's legal accrual decreased by $0.10 million to $0.56 million as of September 30, 2007, compared to $0.66 million as of September 30, 2006, primarily as a result of the settlement of the Massachusetts Proceedings. As we operate in an increasingly litigious industry embedded with regulation, we will continue to invest significant resources to reduce the likelihood of future litigation exposure by promoting accuracy, ensuring sound operational techniques and applying appropriate compliance measures.



Page 25

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

Advertising

Advertising, including related marketing expenses, increased by $0.20 million or 84.7% . Management has been aggressively placing advertisements in financial services trade publications to communicate to potential representative recruits.

Communications

Communications expenses increased by $0.20 million or 149.6% primarily due to an increase in conferences and meetings costs from the hosting of our Pinnacle Conference, which focused on furthering the business development of our top producing representatives. Communication efforts and related expenses, which also include investor/public relations, conference and telephone, have historically been positively correlated with the overall growth of our business. Our website and newsletter, "The Capitalist", have become effective media to communicate to qualified representative recruitment prospects.

Occupancy

Occupancy expenses increased by $0.06 million or 25.4% primarily as a result of opening Investment Centers in Braintree, MA, Manhattan, NY, and Bedford, NH, and a new Business Center in Miami, FL. The Company also experienced an increase in depreciation due to acquiring additional fixed assets in the form of new computers for additional staff, leasehold improvements and additional furniture and fixtures for the home office in Lynnfield, MA to accommodate the increased number of employees.

Other Administrative

Other administrative expenses, which include various insurance, postage, office and computer-related expenses, increased by $0.17 million or 106.7% primarily reflecting a FINRA fine resulting from email-related deficiencies. Increased expenses were incurred for employee training and seminars geared to educating our staff on the importance of achieving excellence in providing quality customer service. Finally, the Company paid additional taxes stemming from a use tax audit. Management continues to mount a concerted effort to curtail unnecessary office expenses.

NET INCOME

Net income totaled $0.26 million, or $.04 per basic and diluted share, compared to a $0.17 million, or $.03 per basic and diluted share, loss for the prior period. The improvement in after-tax results was due to a favorable $0.56 million swing in operating income (loss) partially offset by a countervailing $0.30 million swing in provision (benefit) for income tax. The turnaround in operating income (loss) reflects both substantial increases in revenues and substantial reductions in operating expenses, particularly, regulatory/legal expenses.

COMPARISON OF THE SIX MONTH PERIODS ENDED SEPTEMBER 30, 2007 AND 2006

Results reported for the current six-month period compared to the year ago six-month period are discussed below to the extent that explanations for comparative variances in year to date results differ from the explanations for comparative quarterly results discussed above. Please refer to the comparative quarterly results analysis for a general explanation of variances concerning the current six-month period that are not discussed below.

Page 26

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|RESULTS OF OPERATIONS                |                                |  |               |  |                    |  |         |  |         
|------------------------------------ | ------------------------------ |  | ------------- |  | ------------------ |  | ------- |  | --------
|                                    
|                                     |                                |  |               |  | Percent of Revenue |  |        
|                                     |                                |  |               |  | Six Months Ended   |  | Percent
|                                     | Six Months Ended September 30, |  | September 30, |  | Change            
|                                     |                                |  |               |  |                   
|                                     |                                |  |               |  |                    |  |         |  | 2007    
|                                     | 2007                           |  | 2006          |  | 2007               |  | 2006    |  | vs. 2006
|                                     |                                |  |               |  |                    |  |         |  |         
|Revenues:                            |                                |  |               |  |                    |  |         |  |         
|Commission                           | $ 39,675,975                   |  | $ 32,748,340  |  | 86.5%              |  | 88.9%   |  | 21.2%   
|Advisory fees                        | 4,706,537                      |  | 3,012,497     |  | 10.3%              |  | 8.2%    |  | 56.2%   
|Other fee income                     | 272,960                        |  | 196,032       |  | 0.6%               |  | 0.5%    |  | 39.2%   
|Marketing revenue                    | 729,365                        |  | 528,947       |  | 1.6%               |  | 1.4%    |  | 37.9%   
|Other income                         | 449,164                        |  | 372,275       |  | 1.0%               |  | 1.0%    |  | 20.7%   
|                                     |                                |  |               |  |                    |  |         |  |         
|Total Revenue                        | 45,834,001                     |  | 36,858,091    |  | 100.0%             |  | 100.0%  |  | 24.4%   
|                                     |                                |  |               |  |                    |  |         |  |         
|Commission and advisory expenses     | 37,152,948                     |  | 29,955,545    |  | 81.1%              |  | 81.3%   |  | 24.0%   
|Gross Profit                         | 8,681,053                      |  | 6,902,546     |  | 18.9%              |  | 18.7%   |  | 25.8%   
|Operating Expenses:                  |                                |  |               |  |                    |  |         |  |         
|Advertising                          | 695,694                        |  | 501,424       |  | 1.5%               |  | 1.4%    |  | 38.7%   
|Communications                       | 515,027                        |  | 200,401       |  | 1.1%               |  | 0.5%    |  | 157.0%  
|                                     |                                |  |               |  |                    |  |         |  |         
|Total Selling Expenses               | 1,210,721                      |  | 701,825       |  | 2.6%               |  | 1.9%    |  | 72.5%   
|Compensation and benefits            | 4,057,203                      |  | 4,426,597     |  | 8.9%               |  | 12.0%   |  | -8.3%   
|Regulatory, legal and professional   | 926,893                        |  | 1,933,042     |  | 2.0%               |  | 5.2%    |  | -52.1%  
|Occupancy                            | 595,387                        |  | 465,509       |  | 1.3%               |  | 1.3%    |  | 27.9%   
|Other administrative expenses        | 574,683                        |  | 488,899       |  | 1.3%               |  | 1.3%    |  | 17.5%   
|Interest expense                     | 34,216                         |  | 15,602        |  | 0.1%               |  | 0.0%    |  | 119.3%  
|                                     |                                |  |               |  |                    |  |         |  |         
|Total Administrative Expenses        | 6,188,382                      |  | 7,329,649     |  | 13.5%              |  | 19.9%   |  | -15.6%  
|Total Operating Expenses             | 7,399,103                      |  | 8,031,474     |  | 16.1%              |  | 21.8%   |  | -7.9%   
|                                     |                                |  |               |  |                    |  |         |  |         
|Operating Income (Loss)              | 1,281,950                      |  | (1,128,928)   |  | 2.8%               |  | -3.1%   |  | -213.6% 
|                                    
|Income before taxes                  | 1,281,950                      |  | (1,128,928)   |  | 2.8%               |  | -3.1%   |  | -213.6% 
|Provision (benefit) for income taxes | 556,334                        |  | (361,471)     |  | 1.2%               |  | -1.0%   |  | -253.9% 
|                                     |                                |  |               |  |                    |  |         |  |         
|Net Income (Loss)                    | $ 725,616                      |  | $ (767,457)   |  | 1.6%               |  | -2.1%   |  | -194.5% 
|                                     |                                |  |               |  |                    |  |         |  |         

|AVERAGE PRODUCTION PER REPRESENTATIVE |  |                    |  |                   
|------------------------------------- |  | ------------------ |  | ------------------
|                                     
|                                      |  |                    |  | Six Months Ended  
|                                      |  | September 30, 2007 |  | September 30, 2006
|                                     
|Commission                            |  | $ 39,675,975       |  | $ 32,748,340      
|Advisory                              |  | 4,706,537          |  | 3,012,497         
|Other fee income                      |  | 272,960            |  | 196,032           
|                                      |  |                    |  |                   
|                                      |  | $ 44,655,472       |  | $ 35,956,869      
|                                      |  |                    |  |                   
|                                     
|Actual number of representatives      |  | 696                |  | 753               
|                                     
|Average Revenue Per Rep               |  | $ 64,160           |  | $ 47,751          

REVENUES

Revenues increased by $9.0 million or 24.4% for the six-month comparative period as top line revenue grew 21.2 % in commissions and 56.2% in advisory fees over the same time frame a year ago.



Page 27

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------



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

|                                                                                                                                |  | Commission Revenue                          |  |              |  |             
|------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- |  | ------------ |  | ------------
|                                                                                                                                |  | Six Months Ended September 30, 2007 and2006 |  |              |  |             
|                                                                                                                                |  |                                             |  |              |  |             
|                                                                                                                                |  |                                             |  |              |  |             
|Product Type1:                                                                                                                  |  | 2007                                        |  | 2006         |  | 2007 vs 2006
|                                                                                                                                |  |                                             |  |              |  |             
|Variable Annuities                                                                                                              |  | $ 15,720,150                                |  | $ 13,146,136 |  | $ 2,574,014 
|Brokerage                                                                                                                       |  | 12,204,871                                  |  | 9,828,921    |  | 2,375,950   
|Mutual Funds                                                                                                                    |  | 5,895,229                                   |  | 4,851,186    |  | 1,044,043   
|Direct Participation Programs                                                                                                   |  | 5,716,058                                   |  | 4,609,637    |  | 1,106,421   
|Other                                                                                                                           |  | 139,667                                     |  | 312,460      |  | (172,794)   
|                                                                                                                                |  |                                             |  |              |  |             
|                                                                                                                               
|Total Commission Revenue                                                                                                        |  | $ 39,675,975                                |  | $ 32,748,340 |  | $ 6,927,633 
|                                                                                                                                |  |                                             |  |              |  |             
|                                                                                                                               
|1. Revenue designated as Brokerage (Trading) includes revenue from mutual funds sold through our trading platform. Revenue from |  |                                            
|direct check and application sales of mutual funds are listed above under "Mutual Funds".                                       |  |                                             |  |              |  |             

Brokerage revenue experienced the largest percentage growth while commissions from variable annuity sales continued to be the leading revenue component. This current growth trend in Brokerage is indicative of our refined business model of attracting highly sophisticated representatives who can potentially flow through a well diversified book of business.

Advisory Fees

Advisory fees grew by 56.2% during the current period versus the prior period, primarily in the A-MAP program. A-MAP grew 55.0% or by $1.13 million as we continue to strive to service and improve a quality product at reduced fees.

Other Fee Income

Other fee income increased by 39.2% or $0.08 million compared to the year ago period. The growth in other fee income reflects mostly an increase in planning fees as more of our qualified representatives are providing consulting services to better assist clients in managing their portfolios.

Marketing Revenue

Marketing revenues grew by 37.9 % or $0.20 million over the prior period. This growth is primarily due to the increase in marketing support revenue resulting from product sales.

Other Income

Other Income grew by 20.7% or $0.08 million over the year ago period reflecting increased interest income on account balances from our trading accounts.

Page 28

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|GROSS MARGINS                                                                                                              |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | --------------------------- |  | ----------------------- |  | -------- |  | ------ |  | ------ |  | --------
|                                                                                                                           |  | Amount              |  | % of Sales (Retention Rate) |  | % of Total Gross Margin |  |         
|                                                                                                                           |  | Six Months          |  | Six Months Ended            |  | Six Months Ended        |  |         
|                                                                                                                           |  | Ended September 30, |  | September 30,               |  | September 30,           |  | % Change
|                                                                                                                           |  |                     |  |                             |  |                         |  |         
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  | 2007    
|                                                                                                                           |  | 2007                |  | 2006                        |  | 2007                    |  | 2006     |  | 2007   |  | 2006   |  | vs. 2006
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Commissions:                                                                                                               |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Check & Application                                                                                                        |  | $ 3,553,086         |  | $ 2,889,507                 |  | 13.0%                   |  | 12.6%    |  | 40.9%  |  | 41.8%  |  | 23.0%   
|Brokerage                                                                                                                  |  | 2,833,363           |  | 2,064,156                   |  | 23.2%                   |  | 22.5%    |  | 32.6%  |  | 29.9%  |  | 37.3%   
|Fixed Insurance                                                                                                            |  | 85,480              |  | 129,753                     |  | 100.0%                  |  | 99.5%    |  | 1.0%   |  | 1.9%   |  | -34.1%  
|Underwriting                                                                                                               |  | 5,419               |  | 18,238                      |  | 10.0%                   |  | 10.0%    |  | 0.1%   |  | 0.3%   |  | -70.3%  
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Total                                                                                                                      |  | 6,477,348           |  | 5,101,654                   |  |                         |  |          |  | 74.6%  |  | 73.9%  |  | 27.0%   
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Advisory Services:                                                                                                         |  | -                   |  | -                           |  |                         |  |          |  |        |  |        |  |         
|A-MAP                                                                                                                      |  | 694,215             |  | 458,625                     |  | 21.8%                   |  | 22.3%    |  | 8.0%   |  | 6.6%   |  | 51.4%   
|Other                                                                                                                      |  | 338,682             |  | 360,732                     |  | n/a1                    |  | n/a1     |  | 3.9%   |  | 5.2%   |  | -6.1%   
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Total                                                                                                                      |  | 1,032,897           |  | 819,357                     |  | 21.3%                   |  | 23.0%    |  | 11.9%  |  | 11.8%  |  | 26.1%   
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Licensing                                                                                                                  |  | 129,068             |  | 136,624                     |  | n/a1                    |  | n/a1     |  | 1.5%   |  | 2.0%   |  | -5.5%   
|Marketing                                                                                                                  |  | 729,364             |  | 528,947                     |  | n/a1                    |  | n/a1     |  | 8.4%   |  | 7.7%   |  | 37.9%   
|Other income                                                                                                               |  | 312,376             |  | 315,964                     |  | n/a1                    |  | n/a1     |  | 3.6%   |  | 4.6%   |  | -1.1%   
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|Total Gross Margin                                                                                                         |  | 8,681,053           |  | 6,902,546                   |  | 19.4%                   |  | 18.7%    |  | 100.0% |  | 100.0% |  | 25.8%   
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         
|1. Due to account composition, profit margin retention for these products is not deemed a useful indicator of performance. |  |                     |  |                            
|                                                                                                                           |  |                     |  |                             |  |                         |  |          |  |        |  |        |  |         

Check and Application

Gross profit from our direct business (check and application) continues to comprise the largest contribution to the margin; however, as a percentage of total gross margin, it decreased from 41.8% to 40.9% .

Brokerage Services

Brokerage services profit margin grew by 37.3% or $0.77 million as non-commissionable money market revenue increased by $0.24 million. In addition we experienced a $0.53 million increase in margin from commissionable brokerage activities including a $0.10 million in clearing discounts.

The growth in margin from brokerage is due in part to a revised fee structure with our clearing firm. Other commissions in the form of 12b-1 trails, ticket charges and sales commissions, and interest earned on money market balances, have made a considerable contribution to our profit margin as brokerage volume increases.

Advisory Services

Advisory services profit margin grew by 26.1% or $0.21 million reflecting a 51.4% or $0.24 million rise in gross margin generated by our A-MAP rep-directed managed assets program.

Commission and Advisory Fees Expenses

Commission and advisory fees expenses during the current six-month period were $37.2 million versus $30.0 million in the prior period. As a percentage of revenue generated by representatives (i.e., commissions, advisory fees and other fees) commission and advisory expenses decreased slightly from 83.3% to 83.2% . These expenses include commissions to representatives, clearing costs and other direct costs that are necessary to produce revenue. Management continuously monitors these costs as they have a substantial effect on our profit margin.

Page 29

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

OPERATING EXPENSES

Operating expenses decreased by 7.9% primarily due to a decrease in regulatory, legal and professional services.

Compensation and Benefits

Compensation and benefits decreased by 8.3% due primarily to non-repetition of prior period restricted stock awards to key management and staff.

Regulatory, Legal and Professional

The decrease in this expense category stems principally from a decrease in legal fees compared to those incurred in our defense in the Massachusetts Proceedings during the prior period. In addition the Company received insurance proceeds reimbursing certain prior period arbitration settlement costs.

Advertising

The Companys advertising expenses increased by 38.74 % over the prior period as management has been committing more resources towards placing advertisements in financial service periodicals to enhance recruitment of independent representatives.

Communications

Communication expenses rose by 157% principally due to commitment of resources to two conferences for representatives held in the current period to stimulate revenue growth in advisory services and from our top producers.

Occupancy

Occupancy expenses increased by 27.9 % in the current period versus the year ago six-month period reflecting the opening of new investment centers.

Other Administrative

Other administrative expenses increased in the current period by 17.5 % versus the prior period primarily due to a FINRA fine regarding our email domain.

NET INCOME

The Company experienced a profit turnaround for the six-month period in comparison to the prior period. We continued to grow top line revenues in the high margin areas while reducing operating expenses, primarily in legal expenses. Management believes that the $1.49 million profit increase in the current period compared to the prior period demonstrates the viability of our current business model, which stresses recruitment of high-producing representatives and reduction of regulatory risk that has negatively impacted the firm in the past.



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

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

Cash inflows typically have come primarily from the Companys core broker-dealer and investment advisory services. Our business operations historically have proven profitable on a yearly basis. An exception was the fiscal year ended March 31, 2007, during which $2.20 million of costs were incurred in connection with the Massachusetts Proceedings. With the settlement of these proceedings in December 2006, management believes, although there can be no assurances, that the profits and positive cash flows achieved in the last two fiscal quarters mark the return of long-term, sustainable profitability and positive cash flow.

Our historic profitability typically has followed an annual cycle of relatively average profitability during the first and third fiscal quarters, relatively low profitability (or even a loss) during the second fiscal quarter (when many representatives and their clients are on summer vacation), and relatively high profitability during the fourth fiscal quarter (when many representatives and their clients start a new business and investment year).

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

Page 30

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

The Company takes a proactive approach to minimizing the occurrence and impact of other events that may lead to unexpected cash outflows, including legal
proceedings, trade errors, and fines and other sanctions imposed by regulatory agencies such as FINRA, the SEC and state securities regulators. Accordingly, the Company has been allocating increasing resources to stay current with the many rules and
regulations applicable to our business and to provide up-to-date education and training to our staff and independent representatives. A key to this approach is ensuring that adequate controls over our operations and those of our representatives are
implemented and periodically updated. As part of this effort, substantial resources have been committed to enhancing the capabilities of our compliance team, whose tasks include assuring that our representatives give proper weight to the
circumstances and interests of their clients when recommending investment options.

As of September 30, 2007, cash and cash equivalents totaled $5.15 million compared to $5.50 million as of March 31, 2007. Working capital as of
September 30, 2007 was $7.30 million compared to $5.32 million as of March 31, 2007. The ratio of current assets to current liabilities was 2.40 to 1 as of September 30, 2007 compared to 1.80 to 1 as of March 31, 2007.

Operations provided cash flow of $0.33 million for the six months ended September 30, 2007 compared to $0.20 million in cash used for the six
months ended September 30, 2006. Cash flow from operations, in comparing the current period to the prior period, generated an increase to cash flow of $0.53 million as a result of several factors. We experienced a $1.49 million increase in
cash flow from net income as the Company reported a $0.73 million profit in the current period versus a $0.77 million loss in the prior period. Offsetting this increase was a $1.19 million decrease in cash flow from the payment of
accrued expenses, primarily related to preferred marketing events and litigation in the current period versus an increase in accrued expenses in the prior period pertaining to the Massachusetts Proceedings.

Cash inflows from investing activities for the current period totaled $0.10 million, as a treasury note matured on July 1, 2007 in the amount of
$0.25 million offset by purchases in property and equipment of $0.12 million. Finally we experienced a $0.83 million decrease in cash flow during the current period pertaining to a short-term obligation for insurance premiums.

By comparison, for the six months ended September 30, 2006, cash used in operations was $0.20 million. Cash outflows for the prior period included
$0.40 million for purchasing equipment, software and leasehold improvements. In addition, the Company had invested $1.98 million in U.S Treasury bills and notes. Finally, from financing activities we paid a $0.25 million cash dividend on
June 29, 2006 to shareholders of record as of June 15, 2006.

Cash disbursements contributing to period ended September 30, 2006 cash flow included $0.58 million for legal-related matters, of which $0.41
million was for legal fees pertaining to the Massachusetts Proceedings.

Cash disbursements contributing significantly to cash outflows during our most recent quarter included $0.21 million for legal-related matters, of
which $0.08 million was for payments made to the eligible purchasers as part of the settlement of the Massachusetts Proceedings. In addition, the Company paid out $0.32 million toward short-term financing of insurance premiums
along with $0.55 million for two of our preferred conferences, the Diamond Achiever and the West Coast National Convention, as well as our Pinnacle Conference. Finally we paid out $0.22 million to FINRA. Cash
disbursements had reduced an allowable asset, cash, or our net capital during the quarter ended September 30, 2007.

The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that ICC, our broker-dealer subsidiary, maintain net capital of $100,000 and a ratio of
aggregate indebtedness to net capital (a net capital ratio) not to exceed 15 to 1. Under the rule, indebtedness generally includes all money owed by ICC, and net capital includes ICC cash and assets that are easily converted into cash.
SEC rules also prohibit "equity capital" (which, under the net capital rule, includes subordinated loans) from being withdrawn, cash dividends from being paid and other specified actions of similar effect from being taken, if, among other specified
contingencies, ICCs net capital ratio would exceed 10 to 1 or if ICC would have less than 120% of its minimum required net capital. As of September 30, 2007 ICC had net capital of $2.0 million (i.e., an excess of $1.59 million) and a
3.07 to 1 net capital ratio as compared to net capital of $1.05 million (i.e., an excess of $0.52 million) and a 7.59 to 1 net capital ratio as of March 31, 2007.

The Companys legal accrual decreased to $0.56 million from $0.66 million as a result of payments of accrued expenses incurred in the prior
period pertaining to the Massachusetts Proceedings and various arbitrations filed against the Company. The Company will continue to assess its legal accrual as it pertains to the settlement of the Massachusetts Proceedings and its impact on
ICCs net capital ratio and excess net capital. The Company will record additional accruals as needed in the future if, when and to the extent that it becomes likely that total Massachusetts Proceedings settlement costs will exceed
$1,000,000. The Company believes that it currently has ample cash to cover additional accruals and disbursements resulting from these and other arbitrations and proceedings.

Page 31

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|CONTRACTUAL OBLIGATIONS             
|------------------------------------
|                                    
|Contractual Obligations             
|                                    
|Period                              
|                                    
|Fiscal Years Ended March 31,        
|                                    
|Short- term loans and notes payable:
|short- term borrowings              
|Operating leases:                   
|                                    
|Total Contractual Obligations       
|                                    



|NOTES PAYABLE
|-------------

At September 30, 2007 notes payable consisted of debt to finance insurance premiums. These notes are referenced in the table below:

|September 30, |  | Lender                         |  | Premium                                          |  | Principal |  | Interest Rate
|------------- |  | ------------------------------ |  | ------------------------------------------------ |  | --------- |  | -------------
|              |  |                                |  |                                                  |  |           |  |              
|2007          |  | First insurance Funding, Corp. |  | Directors and Officers, Liability, Fidelity Bond |  | $ 13,342  |  | 7.19%        
|              |  |                                |  |                                                  |  |           |  |              



|COMMITMENTS AND CONTINGENCIES
|-----------------------------

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

|Year ending March 31, 2008   |  | $ 296,330  
|---------------------------- |  | -----------
|Year ending March 31, 2009   |  | 489,973    
|Year ending March 31, 2010   |  | 379,544    
|Year ending March 31, 2011   |  | 340,567    
|Year ending March 31, 2012   |  | 324,112    
|                             |  |            
|                            
|Total minimum lease payments |  | $ 1,830,526
|                             |  |            

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

Total lease expense amounted to $178,024, and $152,928 for quarters ended September 30, 2007 and 2006, and for the six months ended September 30, 2007 and 2006 total lease expense was $354,141 and $300,201, respectively.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

As of September 30, 2007, we held U.S. Treasury bonds with an amortized value totaling $1,245,203. Although we intend to hold these bonds to maturity, if we determined to liquidate our position in these bonds prior to maturity the proceeds from their sale would depend on fluctuations in their market value that reflect, among other things, fluctuations in prevailing interest rates.

We own an equity position in the Rising Dividend Fund with a market value of $188,039 as of September 30, 2007. The value of this position fluctuates daily.

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|Investors Capital Holdings, Ltd. report on form 10-Q
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|Quarter Ended 09/30/07
|----------------------

Market risk is present in our normal business activity as a result of our involvement as principal in the execution of brokerage activity and delivery of fixed and variable investment products. Securities inventories are exposed to risk of loss in the event of unfavorable price movements. Securities positions are marked to market on a daily basis. Market making activities are client driven, with the objective of meeting client needs while earning a positive spread. As of September 30, 2007, we held in inventory for brokerage purposes securities valued at $129,837. We conduct our business as a brokerage and advisory firm clearing through another broker dealer on a fully disclosed basis to minimize our market risk. In our view, exposure to market risk, trading volatility and illiquidity of securities held from time to time in the firms inventory accounts could potentially have a material adverse effect on our financial position.

ITEM 4. CONTROLS AND PROCEDURES

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



|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 uncertainty routine in these matters. For the majority of pending claims, the Company's errors and omissions (E&O) policy limits the maximum exposure in any one case to between $75,000 and $100,000 and, in certain of these cases, the Company has the contractual right to seek indemnity from related parties. Management, in consultation with counsel, believes that resolution of pending litigation will not have a material adverse effect on the consolidated financial results of the Company.



|ITEMS 1A  3.None.
|------------------

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

The Company held its annual meeting of stockholders on August 23, 2007. Three proposals were acted upon.

Election of directors to one-year terms. All nominees were elected as follows:

|Director Nominees   |  | For       |  | Against |  | Withheld |  | Abstain |  | Broker Non-votes
|------------------- |  | --------- |  | ------- |  | -------- |  | ------- |  | ----------------
|                   
|Theodore E. Charles |  | 4,684,522 |  | -       |  | 42,369   |  | -       |  | -               
|Timothy B. Murphy   |  | 4,683,674 |  | -       |  | 43,217   |  | -       |  | -               
|Arthur Stickney     |  | 4,684,469 |  | -       |  | 42,422   |  | -       |  | -               
|William Atherton    |  | 4,684,522 |  | -       |  | 42,369   |  | -       |  | -               
|Robert Martin       |  | 4,684,469 |  | -       |  | 42,422   |  | -       |  | -               

Ratification of UHY, LLP as the Companys auditors for the fiscal year ending March 31, 2008. Ratified as follows:

|For       |  | Against |  | Withheld |  | Abstain |  | Broker Non-votes
|--------- |  | ------- |  | -------- |  | ------- |  | ----------------
|4,735,164 |  | 1,077   |  | -        |  | 1,700   |  | -               

|Approval of plan of domestication of the Company as a Delaware corporation. Approved as follows:
|------------------------------------------------------------------------------------------------
|For                                                                                             
|                                                                                                
|4,697,110                                                                                       

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

ITEM 5. OTHER INFORMATION

None.

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------

|ITEM 6. EXHIBITS |  |                                                                        
|---------------- |  | -----------------------------------------------------------------------
|Exhibit          |  |                                                                        
|Number           |  | Description                                                            
|3.1              |  | Certificate of Incorporation                                           
|3.2              |  | By-Laws                                                                
|4.1              |  | Form of Stock Certificate                                              
|10.1             |  | Employment Agreement with Theodore E. Charles                          
|10.2             |  | Employment Agreement with Timothy B. Murphy                            
|10.3             |  | The 1994 Stock Option Plan                                             
|10.4             |  | The 2005 Equity Incentive Plan                                         
|31.1             |  | Certification of Theodore E. Charles pursuant to Rule 13a-14(a)        
|31.2             |  | Certification of Timothy B. Murphy pursuant to Rule 13a-14(a)          
|32.1             |  | Certification of Theodore E. Charles pursuant to 18 U.S.C. Section 1350
|32.2             |  | Certification of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350  

|(1) | Filed herewith.                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to the indicated exhibit to the Registrants Registration Statement on Form SB-2 (File No. 333-05327) filed August 14, 2000.
|   
|(3) | Incorporated by reference to the indicated exhibit to the Registrants Annual Report on Form 10-K for the year ended March 31, 2005.                  
|   
|(4) | Incorporated by reference to the indicated exhibit to the Registrants Registration Statement on Form S-8 (File No. 333-43664) filed June 9, 2006     
|   

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

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|Investors Capital Holdings, Ltd. report on form 10-Q
|----------------------------------------------------



|Quarter Ended 09/30/07
|----------------------



|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. MurphyChief Financial Officer

|Date: November 14, 2007
|-----------------------

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