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












Form 10-Q

INVESTORS CAPITAL HOLDINGS LTD - ICH
Filed: February 14, 2005 (period: December 31, 2004)

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





<PAGE>


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

     INVESTORS CAPITAL HOLDINGS LTD - ICH
     Filed: February 14, 2005 (period: December 31, 2004)

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

--------------------------------------------------------------------------------
                               Table of Contents




          PART I
          -------
--------------------------------------------------------------------------------
          FINANCIAL INFORMATION


          ITEM 1. FINANCIAL STATEMENTS


          ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS


          ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


          ITEM 4. CONTROLS AND PROCEDURES






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




          ITEM 1. LEGAL PROCEEDINGS


          SIGNATURES




          CERTIFICATION

          EX-31.1
          EX-31.2
          EX-32.1
          EX-32.2
--------------------------------------------------------------------------------



<PAGE>





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


                                    FORM 10-Q

          (Mark One)

          (X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 2004

                                       OR

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



                         Commission File Number: 1-16349


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




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



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



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

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

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

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

Number of shares outstanding of our only class of common stock as of
February 7, 2005:
                                    5,742,432




<PAGE>







PART I  FINANCIAL INFORMATION






ITEM 1. FINANCIAL STATEMENTS




                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                      December 31,      March 31,
                                                                          2004            2004
                                                                     -------------    ------------
Assets

Current Assets

<S>                                                                  <C>              <C>
     Cash and cash equivalents ....................................  $   8,969,356    $  8,112,567
     Deposit with clearing organization, restricted ...............        175,000         175,000
     Accounts receivable ..........................................      3,509,985       3,785,423
     Investments in available-for-sale securities .................        -------          56,339
     Marketable securities, at market value .......................         21,143          17,422
     Prepaid expenses .............................................        195,865         310,270
                                                                     -------------    -------------
                                                                        12,871,349      12,457,021


Property and equipment, net .......................................        573,459         503,316


Long-Term Investments
     Equity investments, at cost ..................................         40,000          40,000
     Investment in unconsolidated affiliate .......................        152,267          85,820
                                                                     -------------    -------------
                                                                           192,267         125,820
Other Assets
     Other assets .................................................         54,560          99,295
     Deferred tax asset, net ......................................         64,263          69,721
     Receivables from officers ....................................         37,079          64,400
     Loans receivable from registered representatives .............        281,267          69,306
                                                                     -------------    -------------
                                                                           437,169         302,722

          TOTAL ASSETS ............................................  $  14,074,244    $ 13,388,879
                                                                     =============    =============

Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable .............................................  $     754,232    $    570,236
     Accrued expenses .............................................         92,060         435,067
     Unearned revenue..............................................      1,583,010          ------
     Notes payable ................................................         16,375          78,999
     NASD settlement payable (current portion) ....................         ------          54,375
     Commissions payable ..........................................      1,519,555       2,078,196
     Income taxes payable .........................................         99,847         582,721
     Securities sold, not yet purchased, at market value ..........        131,731          90,042
                                                                     -------------    -------------
                                                                         4,196,810       3,889,636

Long-Term Liabilities

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


          Total liabilities .......................................      4,196,810       3,983,940
                                                                     -------------    ------------
</TABLE>

                                       1

<PAGE>




                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      December 31,      March 31,
                                                                          2004            2004
                                                                     -------------    ------------
Commitments and contingencies
Stockholders' Equity:
<S>                                                                  <C>              <C>
     Common stock, $.01 par value, 10,000,000 shares authorized;
      5,742,298 issued and 5,738,413 outstanding at
      December 31, 2004; 5,731,598 issued and 5,727,713
      outstanding at March 31, 2004.                                        57,423          57,316
     Additional paid-in capital ...................................      8,595,734       8,520,931
     Retained earnings ............................................      1,254,412         844,670
       Less: Treasury stock, 3,885 shares at cost .................        (30,135)        (30,135)
     Accumulated other comprehensive income .......................         ------          12,157
                                                                      ------------    ------------

            Total stockholders' equity ............................      9,877,434       9,404,939
                                                                      ------------    ------------

           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............   $ 14,074,244    $ 13,388,879
                                                                      ============    ============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                        2



<PAGE>







                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                              December 31,
                                                                     -----------------------------
                                                                          2004             2003
Revenues:                                                            -------------    ------------
<S>                                                                  <C>              <C>
Commission, advisory & other fee income                              $  13,175,490    $ 13,010,336
Marketing revenue, net                                                     251,918         425,095
Other income                                                               153,453          83,738
                                                                     -------------    ------------
Total revenue                                                           13,580,861      13,519,169


Commission and advisory fees                                            10,527,798      10,799,273
                                                                     -------------    ------------
           Gross profit                                                  3,053,063       2,719,896
                                                                     -------------    ------------
Operating expenses:

   Advertising                                                             179,561         135,260
   Communications                                                          137,802         114,765
                                                                     -------------    ------------
Selling                                                                    317,363         250,025
                                                                     -------------    ------------

   Compensation and benefits                                             1,435,213       1,277,317
   Regulatory, legal and professional                                      325,244         334,816
   Occupancy                                                               151,606         115,384
   Other administrative expenses                                           208,880         230,614
                                                                     -------------    ------------
Administrative                                                           2,120,943       1,958,131
                                                                     -------------    ------------
         Total operating expenses                                        2,438,306       2,208,156
                                                                     -------------    ------------
           Operating income                                                614,757         511,740
                                                                     -------------    ------------
Other expense:

   Interest expense                                                          8,218           7,842
                                                                     -------------    ------------
         Total other expense                                                 8,218           7,842
                                                                     -------------    ------------
 Income before taxes                                                       606,539         503,898
 Provision for income taxes                                                251,316         197,268
                                                                     --------------   -------------
           Net income                                                $     355,223    $    306,630
                                                                     =============    ============

  Earnings per common share:
  Basic earnings per common share                                    $         .06    $        .05
                                                                     =============    ============

  Diluted earnings per common share                                  $         .06    $        .05
                                                                     =============    ============

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                           5,736,916       5,721,185
Plus: Incremental shares from assumed exercise of stock options            171,466         193,964
                                                                     -------------    ------------
   Weighted average shares used in diluted earnings per
     common share calculations                                           5,908,382       5,915,149
                                                                     =============    ============
</TABLE>


            See Notes to Condensed Consolidated Financial Statements.

                                        3



<PAGE>







                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                              December 31,
                                                                    ------------------------------
                                                                          2004             2003
Revenues:                                                           -------------     ------------
<S>                                                                 <C>               <C>
Commission, advisory & other fee income                             $  39,291,999     $ 33,950,162
Marketing revenue, net                                                    706,869          492,912
Other income                                                              337,379          256,293
                                                                    -------------     ------------
Total revenue                                                          40,336,247       34,699,367


Commission and advisory fees                                           32,416,497       27,939,103
                                                                    -------------     ------------
           Gross profit                                                 7,919,750        6,760,264
                                                                    -------------     ------------
Operating expenses:

   Advertising                                                            583,438          439,687
   Communications                                                         379,756          301,934
                                                                    -------------     ------------
Selling                                                                   963,194          741,621
                                                                    -------------     ------------

   Compensation and benefits                                            4,065,595        3,245,979
   Regulatory, legal and professional                                   1,049,054          823,039
   Occupancy                                                              433,891          336,857
   Other administrative expenses                                          659,206          712,398
                                                                    -------------     ------------
Administrative                                                          6,207,746        5,118,273
                                                                    -------------     ------------
         Total operating expenses                                       7,170,940        5,859,894
                                                                    -------------     ------------
           Operating income                                               748,810          900,370
                                                                    -------------     ------------
Other expense:

   Interest expense                                                        32,091           17,872
                                                                    -------------     ------------
         Total other expense                                               32,091           17,872
                                                                    -------------     ------------
Income before taxes                                                       716,719          882,498
Provision for income taxes                                                306,977          389,505
                                                                    -------------     ------------
           Net income                                               $     409,742     $    492,993
                                                                    =============     ============

Earnings per common share:
   Basic earnings per common share                                  $         .07     $        .08
                                                                    =============     ============

   Diluted earnings per common share                                $         .07     $        .08
                                                                    =============     ============

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                          5,732,367        5,718,653
Plus:  Incremental shares from assumed exercise of stock options          185,882          145,504
                                                                    -------------     ------------
   Weighted average shares used in diluted earnings per
     common share calculations                                          5,918,249        5,864,157
                                                                    =============     ============

</TABLE>


            See Notes to Condensed Consolidated Financial Statements.

                                        4



<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                 THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                         ACCUMULATED
                                                   COMMON      STOCK   ADDITIONAL  RETAINED              OTHER
                                                  ---------   -------  PAID-IN     EARNINGS    TREASURY  COMPREHENSIVE
                                                   SHARES      AMOUNT  CAPITAL                 STOCK     INCOME (LOSS)     TOTAL
                                                  ------------------------------------------------------------------------------
<S>                                               <C>         <C>      <C>        <C>          <C>         <C>        <C>
     Balance at October 1, 2003.................. 5,721,265   $57,213  $8,249,934 $  240,620   $(30,135)   $4,588     $8,522,220

     Stock based compensation....................                         190,173                                        190,173
     Stock issued (employees)....................    10,000       100        (100)

       Comprehensive income:

            Net income...........................                                    306,630

            Net unrealized gain on securities....                                                           5,346

                 Comprehensive income............                                                                        311,976
                                                  ------------------------------------------------------------------------------
     Balance at December 31, 2003................ 5,731,265   $57,313  $8,440,007 $  547,250   $(30,135   $ 9,934     $9,024,369
                                                  ==============================================================================
     Balance at October 1, 2004.................. 5,738,326   $57,383  $8,536,244 $  899,189   $(30,135)  $12,346     $9,475,027

     Exercised options...........................     1,972        20       3,925                                          3,945
     Stock based compensation....................                           9,945                                          9,945
     Stock issued to directors and employees.....     2,000        20      45,620                                         45,640

       Comprehensive income:

            Net income ..........................                                    355,223

            Sale of investment securities........                                                         (12,346)

                 Comprehensive income............                                                                        342,877
                                                  ------------------------------------------------------------------------------
     Balance at December 31, 2004................ 5,742,298   $57,423  $8,595,734 $1,254,412   $(30,135)   ------     $9,877,434
                                                  ==============================================================================
</TABLE>


            See Notes to Condensed Consolidated Financial Statements.

                                        5



<PAGE>







                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  NINE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                   (UNAUDITED)




<TABLE>
<CAPTION>

                                                                                                         ACCUMULATED
                                                   COMMON      STOCK   ADDITIONAL  RETAINED              OTHER
                                                  ---------   -------  PAID-IN     EARNINGS    TREASURY  COMPREHENSIVE
                                                   SHARES      AMOUNT  CAPITAL                 STOCK     INCOME (LOSS)     TOTAL
                                                  ------------------------------------------------------------------------------
<S>                                               <C>         <C>      <C>        <C>          <C>         <C>        <C>
     Balance at April 1, 2003.................... 5,721,265   $57,213  $8,169,292 $   54,257   $(30,135)  $(1,987)    $8,248,640

     Stock based compensation....................                         270,815                                        270,815
     Stock Issued (employees)....................    10,000       100        (100)

       Comprehensive income:

            Net income...........................                                    492,993

            Net unrealized gain on securities....                                                          11,921

                 Comprehensive income............
                                                  ------------------------------------------------------------------------------
     Balance at December 31, 2003................ 5,731,265   $57,313  $8,440,007 $  547,250   $(30,135)  $ 9,934     $9,024,369
                                                  ==============================================================================
     Balance at April 1, 2004.................... 5,731,598   $57,316  $8,520,931 $  844,670   $(30,135)  $12,157     $9,404,939

         Exercised options ......................     8,700        87      17,284                                         17,371

     Stock based compensation....................                          11,899                                         11,899
     Stock Issued (employees)....................     2,000        20      45,620                                         45,640

     Comprehensive income:

            Net income...........................                                    409,742

            Sale of investment securities........                                                         (12,157)

                 Comprehensive income............                                                                        397,585
                                                  ------------------------------------------------------------------------------

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


     See Notes to Condensed Consolidated Financial Statements.

                                        6



<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                             December 31,
                                                                                      -------------------------
                                                                                         2004           2003
                                                                                      ----------     ----------

Cash flows from operating activities:
<S>                                                                                   <C>            <C>
     Net income....................................................................   $  409,742     $  492,993
     Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization.............................................      125,337        102,705
         Issuance of employee stock................................................       45,640        -------
         Change in deferred taxes..................................................        5,458        (90,272)
         Stock option compensation.................................................       11,899        270,815
                   Gain on sale of investment securities...........................       44,182        -------
         Unrealized (gain) on investment in unconsolidated affiliates..............      (66,447)       (19,311)

 Changes in operating assets and liabilities:
         Decrease (increase) in marketable securities..............................       37,967        (13,877)
         Decrease (increase) in accounts receivable................................      275,438     (1,478,010)
         Decrease in receivables from officers, prepaid expenses and other assets..      186,461        132,532
         Decrease in income taxes receivable.......................................      -------         60,113
         (Decrease) increase in taxes payable......................................     (482,874)       298,164
         Increase in accounts payable and other liabilities........................      183,996        286,505
         Increase in accrued expenses and unearned revenue.........................    1,240,003        714,618
         (Decrease) increase in commissions payable................................     (558,641)       284,727
                                                                                      ----------     ----------
             Net cash provided by operating activities.............................    1,458,161      1,041,702
                                                                                      ----------     ----------
Cash flows from investing activities:

     Purchases of property and equipment...........................................     (195,480)       (89,681)
     (Increase) Decrease in loans receivable from registered representatives.......     (211,961)        14,977
                                                                                      ----------     ----------
             Net cash used in investing activities.................................     (407,441)       (74,704)
                                                                                      ----------     ----------
Cash flows from financing activities:
     Exercise of stock options.....................................................       17,372         ------
     Payments on notes payable and NASD settlement.................................     (211,303)      (185,539)
                                                                                      ----------     ----------

             Net cash used in financing activities.................................     (193,931)      (185,539)
                                                                                      ----------     ----------

Net increase in cash and cash equivalents..........................................      856,789        781,459

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

Cash and cash equivalents, end of period...........................................   $8,969,356     $7,872,102
                                                                                      ==========     ==========

Supplemental disclosures of cash flow information:
     Interest paid.................................................................   $   32,091     $   10,030
                                                                                      ==========     ==========
     Income taxes paid.............................................................   $  780,000     $   75,300
                                                                                      ==========     ==========

</TABLE>

     See Notes to Condensed Consolidated Financial Statements.

                                        7



<PAGE>





                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     FOR THE QUARTER ENDED DECEMBER 31, 2004

                                   (UNAUDITED)




1. ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

     Incorporated in July 1995, Investors Capital Holdings, Ltd. ("ICH") is a
financial services holding company that operates through its three subsidiaries
(Investors Capital Corporation, Eastern Point Advisors, Inc. and ICC Insurance
Agency, Inc.) in two segments of the financial services industry. These two
segments provide for the offering of (1) services related to corporate equity
and debt securities, U.S. government securities, municipal securities, mutual
funds, variable annuities, variable life insurance, market information, Internet
online trading and portfolio tracking, and records management and (2) financial
planning services, investment advisory and asset management services, and the
management of our retail mutual funds. These products and services are offered
primarily through our network of independent registered representatives
throughout the United States.


Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements of
Investors Capital Holdings, Ltd. (the Company) have been prepared in accordance
with accounting principles generally accepted in the United States of America
(GAAP) for interim financial information and with the instructions to Form 10-Q.
In the opinion of management, these financial statements contain all of the
adjustments necessary for a fair presentation of the results of these interim
periods. Certain footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, although the
Company believes the disclosures in these financial statements are adequate to
make the information presented not misleading. Operating results for the
nine-month period ending December 31, 2004 are not necessarily indicative of the
results that may be expected for the year ended March 31, 2005. These unaudited
condensed consolidated financial statements should be read in conjunction with
the Company's annual audited financial statements included in the Company's Form
10-K for the fiscal year ended March 31, 2004 filed with the Securities and
Exchange Commission.

Use of Estimates

     The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Reclassifications

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


                                        8



<PAGE>






2. SEGMENT INFORMATION

          The Company's reportable segments include investment services offered
     through Investors Capital Corporation (ICC) and asset management services
     offered through Eastern Point Advisors, Inc. (EPA). This investment
     services segment includes securities, insurance, financial planning and
     related services. ICC earns commissions as a broker for its customers in
     the purchase and sale of securities on major exchanges. Asset management
     services generate recurring annual revenue from fees received on the
     management of customer accounts. EPA provides asset management and
     portfolio design services to our mutual funds and a variety of investors.

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


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


     Segment reporting is as follows:

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                            December 31,
                                                     --------------------------
                                                         2004           2003
                                                     -----------    -----------
     Non-interest revenues:
<S>                                                  <C>            <C>
       ICC, investment services .................... $12,949,927    $12,774,202
       EPA, asset management services...............     497,481        661,229
       ICH, investments gain........................      27,211          5,294
                                                     -----------    -----------

            Total................................... $13,474,619    $13,440,725
                                                     ===========    ===========

     Revenues from transactions with other
            operating segments:
       ICC.......................................... $   263,710    $   319,964
       EPA..........................................      29,301        137,127
                                                     -----------    -----------

            Total................................... $   293,011    $   457,091
                                                     ===========    ===========

     Interest and dividend income:
       ICC.......................................... $    65,453    $    48,359
       ICH..........................................      40,790         30,085
                                                     -----------    -----------

            Total................................... $   106,243    $    78,444
                                                     ===========    ===========

     Depreciation and amortization expense:
       ICC...............................            $    42,685    $    33,593
       EPA...............................                  2,306          1,731
                                                     -----------    -----------

            Total........................            $    44,991    $    35,324
                                                     ===========    ===========

</TABLE>

                                        9



<PAGE>






                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     FOR THE QUARTER ENDED DECEMBER 31, 2004

                                   (UNAUDITED)


2. SEGMENT INFORMATION (Continued)


<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                             December 31,
                                                     --------------------------
                                                         2004           2003
                                                     -----------    -----------
     Income tax provision (benefit):
<S>                                                  <C>            <C>
       ICC.......................................... $   287,198    $   294,555
       EPA..........................................     (60,955)       (86,396)
       ICH..........................................      25,073        (10,891)
                                                     ------------   ------------

            Total................................... $   251,316    $   197,268
                                                     ===========    ============

     Income (loss):
       ICC.......................................... $   412,441    $   388,559
       EPA..........................................     (92,151)      (128,198)
       ICH..........................................      34,934         46,269
                                                     -----------    ------------

            Total................................... $   355,224    $   306,630
                                                     ===========    ============

     Period end total assets:
       ICC.......................................... $10,176,382    $ 7,578,161
       EPA..........................................     582,167        598,484
       ICH..........................................   5,684,044      5,759,529
       Corporate items and eliminations.............  (2,368,349)    (1,254,335)
                                                     -----------    -----------

            Total................................... $14,074,244    $12,681,839
                                                     ===========    ===========
</TABLE>

                                       10



<PAGE>


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     FOR THE QUARTER ENDED DECEMBER 31, 2004

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                          Nine Months Ended
                                                            December 31,
                                                     --------------------------
                                                         2004           2003
                                                     -----------    -----------
     Non-interest revenues:
<S>                                                  <C>            <C>
       ICC, investment services .................... $38,556,388    $32,612,804
       EPA, asset management services...............   1,462,480      1,830,270
       ICH, investments (loss) gain ................      22,214         19,311
                                                     -----------    -----------

            Total................................... $40,041,082    $34,462,385
                                                     ===========    ===========

     Revenues from transactions with other
            operating segments:
       ICC.......................................... $   822,625    $   678,596
       EPA..........................................      91,403        290,827
                                                     -----------    -----------

            Total................................... $   914,028    $   969,423
                                                     ===========    ===========

     Interest and dividend income:
       ICC.......................................... $   171,990    $   131,889
       ICH..........................................     123,175        105,093
                                                     -----------    -----------

            Total................................... $   295,165    $   236,982
                                                     ===========    ===========

     Depreciation and amortization expense:
       ICC.......................................... $   118,958    $    97,513
       EPA..........................................       6,379          5,192
                                                     -----------    -----------

            Total................................... $   125,337    $   102,705
                                                     ===========    ===========

</TABLE>

                                       11



<PAGE>





                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     FOR THE QUARTER ENDED DECEMBER 31, 2004

                                   (UNAUDITED)


2. SEGMENT INFORMATION (Continued)


<TABLE>
<CAPTION>

                                                          Nine Months Ended
                                                            December 31,
                                                     ---------------------------
                                                         2004           2003
                                                     ------------   ------------
     Income tax provision (benefit):
<S>                                                  <C>            <C>
       ICC.........................................  $   417,469    $   534,636
       EPA.........................................     (167,462)      (207,713)
       ICH.........................................       56,970         62,582
                                                     -----------    -----------

            Total..................................  $   306,977    $   389,505
                                                     ===========    ===========


     Income (loss):
       ICC.........................................  $   579,749    $   714,268
       EPA.........................................     (250,434)      (283,097)
       ICH.........................................       80,427         61,822
                                                     -----------    -----------

            Total..................................  $   409,742    $   492,993
                                                     ===========    ===========

     Period end total assets:
       ICC.........................................  $10,176,382    $ 7,578,161
       EPA.........................................      582,167        598,484
       ICH.........................................    5,684,044      5,759,529
       Corporate items and eliminations............   (2,368,349)    (1,254,335)
                                                     -----------    -----------

            Total..................................  $14,074,244    $12,681,839
                                                     ===========    ===========
</TABLE>

3. LITIGATION

     The Company is involved with various judicial, regulatory, and arbitration
proceedings concerning matters arising in connection with the conduct of its
business. At December 31, 2004, the Company was the co-defendant in several
lawsuits with claims of approximately $2.9 million. Management believes, based
on currently available information, that the results of such proceedings, in the
aggregate, will not have a material, adverse effect on the firm's financial
condition. The Company has Errors and Omissions ("E&O") insurance to protect
itself from potential damages and/or legal costs associated with the
aforementioned lawsuits, and as a result, in the majority of cases, the
Company`s exposure is limited to between $75,000 and $100,000 per case, subject
to policy limitations and exclusions. In accordance with Financial Accounting
Standards Board ("FASB") Statement No. 5, "Accounting for Contingencies", the
Company had accrued expenses of approximately $176,000 for the three months
ended December 31, 2004 related to legal fees incurred and estimated probable
settlement costs relating to the Company's defense in various lawsuits


4. STOCK BASED COMPENSATION

     The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
stock option plans. During the first quarter of fiscal 2004, the Company adopted
the disclosure provisions of SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure. The following table illustrates the
effect on net earnings and earnings per share, had the Company adopted the fair
value-based method of accounting for stock-based employee compensation for all
periods presented.

                                       12



<PAGE>




                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     FOR THE QUARTER ENDED DECEMBER 31, 2004

                                   (UNAUDITED)



4. STOCK BASED COMPENSATION (Continued)

<TABLE>
<CAPTION>
                                                          Three Months Ended                Nine Months Ended
                                                             December 31,                    December 31,
                                                     --------------------------         ------------------------

                                                        2004            2003              2004           2003
                                                     ----------       ---------         ---------      ---------
<S>                                                  <C>              <C>               <C>            <C>
Net income, as reported                              $ 355,223        $306,630          $409,742       $492,993

Deduct:  Total stock-based employee
compensation expense determined
under fair value-based method for
all awards, net of related tax
effects                                                     --           5,063                --          8,553
                                                     ----------       ---------         ---------      ---------
Pro forma net income                                 $ 355,223        $301,567          $409,742       $484,440
                                                     ==========       =========         =========      =========
Earnings per share:
    Basic   - as reported                            $     .06        $    .05          $    .07       $    .08
    Diluted - as reported                                  .06             .05               .07            .08
    Basic   - pro forma                                    .06             .05               .07            .08
    Diluted - pro forma                                    .06             .05               .07            .08
</TABLE>





ITEM 2. Management's Discussion and Analysis

         Management's discussion and analysis reviews our consolidated financial
condition as of December 31, 2004 and March 31, 2004, the consolidated results
of operations for the three months and nine months ended December 31, 2004 and
2003 and, where appropriate, factors that may affect future financial
performance. The discussion should be read in conjunction with the consolidated
financial statements and related notes, included elsewhere in the Form 10-Q.

Forward-Looking Statements

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

         These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) losses may be incurred if our
investment professionals fail to comply with regulatory requirements; (2) the
loss of either Theodore E. Charles or Timothy B. Murphy may adversely affect our
business and financial condition through the loss of significant business
contacts, which would have to be replaced; (3) customer fraud could harm our
earnings and profits by requiring us to expend time, money and incur actual
loss, exposing us to the potential for arbitration; (4) investment professional
and employee fraud and misconduct could harm our profits and earnings by causing
us to expend time, money and incur actual loss, with the latter exposing us to
the potential for litigation; (5) without implementation of adequate internal
controls and the maintenance thereof, our ability to make money could be
severely restricted by regulatory sanctions being applied against our
broker-dealer subsidiary, and could result in us paying substantial fines and


                                       13
<PAGE>


limit our ability to make money; (6) involvement in material legal proceedings
could have a significant impact on our earnings and profits if we are found
liable for such claims; (7) a change in our clearing firm could result in the
inability of our customers to transact business in a timely manner due to delays
and errors in the transfer of their accounts, which, on a temporary basis, could
affect our earnings and profits. Readers are also directed to other risks and
uncertainties discussed, as well as to further discussion of the risks described
above, in other documents filed by the Company with the United States Securities
and Exchange Commission. The Company specifically disclaims any obligation to
update or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.

Overview

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


Critical Accounting Policies

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

Valuation of Securities and Other Assets

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

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


Reserves

     The Company records reserves related to legal proceedings in "accrued
expenses". The determination of these reserve amounts requires significant
judgment on the part of management. Management considers many factors including,
but not limited to: the amount of the claim; the amount of the loss in the
client's account; the basis and validity of the claim; the possibility of
wrongdoing on the part of an employee or a representative of the Company;
previous results in similar cases; and legal precedents and case law. Each legal
proceeding is reviewed with counsel in each accounting period and the reserve is
adjusted as deemed appropriate by management. Any change in the reserve amount

                                       14

<PAGE>

is recorded in the consolidated financial statements and is recognized as a
charge/credit to earnings in that period. The assumptions of management in
determining the estimates of reserves may be incorrect and the actual
disposition of a legal proceeding could be greater or less than the reserve
amount.

Results of Operations

Three Months Ended December 31, 2004 compared with Three Months
Ended December 31, 2003

         Total consolidated revenue of $13.6 million for the quarter ended
December 31, 2004 was relatively consistent compared with total consolidated
revenue of $13.5 million for the quarter ended December 31, 2003. The
consistency in revenue is primarily due to general market conditions in the
first half of the quarter ended December 31, 2004. Consolidated commissions,
advisory, and other fee income of $13.2 million for the quarter ended December
31, 2004, increased by $.2 million or 1.3%, compared with consolidated
commissions, advisory, and other fee income of $13.0 million for the quarter
ended December 31, 2003. This consolidated comparative increase is attributed
primarily to a $.4 million increase in revenue provided by Investors Capital
Corporation (ICC). The increase in ICC product sales is derived from the $.5
million increase in advisory services which are the result of ICC's dual
designation as a Registered Investment Advisor, Investors Capital Advisors
(ICA). Other factors contributing to the overall increase in sales volume
include the $.3 million decrease in corporate bonds; the $.5 million increase in
government bonds; the $1.0 million decrease in mutual funds and variable annuity
products; the $.3 million increase in listed stock trades; the $.3 million
increase in Over The Counter stock trades; and $.1 million increase in all other
ICC products.

         Offsetting the consolidated comparative increase derived from
consolidated commissions, advisory, and other fee income from ICC was a $.2
million decrease in advisory and other fee income from EPA. This was a result of
the transfer of assets under management over to ICA from EPA. Therefore, the
overall increase was driven by income generated by the ICC brokerage business.

         Net marketing revenues of approximately $.3 million decreased by
approximately $.1 million for the quarter ended December 31,2004, compared to
net marketing income of approximately $.4 million for the quarter ended December
31,2003. This decrease was mainly attributable to the reporting the Company's
preferred marketing programs on an individual event basis as compared to a
consolidated event basis during the same comparative reporting period.

         Finally, other income increased by approximately $.1 million for the
same quarter ended December 31, 2004 when compared to quarter ended December 31,
2003. Other income increased as a result of an increase in the average daily
balance in the Company's trading accounts. Additionally, the Company realized a
gain from the sale of investment securities as well as income from the sale of
subscriptions.

         Consolidated commissions and advisory fees of $10.5 million for the
quarter ended December 31,2004, decreased by $.3 million or 2.5% compared to $
10.8 million for the quarter ended December 31,2003. This change can be
attributed to a decrease of $.2 million in commission expenses incurred by ICC.
The decrease in commission expense is the direct result of insurance proceeds
from our errors and omissions policy of approximately $.2 million. Excluding
this error reimbursement, cost of sales as a percentage basis of commissions,
advisory and other fee income was 81.0% in 2004 compared to 83.0% in 2003.

         The Company reported consolidated operating income of approximately $.6
million for the quarter ended December 31,2004, compared with operating income
of approximately $.5 million for the quarter ended December 31, 2003. This 20.1%
increase in consolidated operating income is primarily the result of an increase
in gross profit of approximately $.3 million offset by a rise in operating
expenses of approximately $.2 million.


                                       15



<PAGE>



Gross profit by product type, illustrating both the dollar and percentage
increase or decrease, is presented in the following table:

<TABLE>
<CAPTION>
                                                        % of                            Qtr. Ended          Qtr. Ended
                               Gross Profit         Gross Profit      2004-2003        December 2004       December 2004
  Product Type             $ increase (decrease)   increase change  % Margin Change    $ Gross Profit     % Gross Profit
------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                      <C>               <C>            <C>                   <C>
Commissions-Mutual              $(149,712)               (44.9)%           (12.5)%        $1,052,193            34.5%
Funds & Variable
Annuities
------------------------------------------------------------------------------------------------------------------------
Commissions-Trading               408,594                122.6 %           113.8 %           767,774            25.1%
------------------------------------------------------------------------------------------------------------------------
Commissions-Insurance              10,103                  3.0 %            13.9 %            82,774             2.8%
Products
------------------------------------------------------------------------------------------------------------------------
Commissions-Underwriting           (3,768)                (1.1)%           (46.0)%             4,432             ---%
------------------------------------------------------------------------------------------------------------------------
Advisory Services &                69,387                 20.8 %            17.2 %           474,011            15.5%
Administration Fees
------------------------------------------------------------------------------------------------------------------------
Licensing Revenue                 102,026                 30.7 %            62.0 %           266,509             8.7%
------------------------------------------------------------------------------------------------------------------------
Net Marketing Revenue            (173,178)               (52.0)%           (40.7)%           251,918             8.3%
------------------------------------------------------------------------------------------------------------------------
Other Income &                     69,715                 20.9 %            83.3 %           153,453             5.1%
Revenues
------------------------------------------------------------------------------------------------------------------------
Total                          $  333,167                100.0 %             N/A          $3,053,064           100.0%
-------------------------------===========---------------======-----------========--------===========----------======---
</TABLE>

     Mutual fund, variable annuity, and trading activities represented 77.7% of
the total increase in gross profit margin. Net marketing revenues, insurance
products, advisory services, licensing revenue, underwriting fees, and other
income comprised 22.3% of the gross profit change. A margin decrease of $.3
million or 12.5% was realized from sales of mutual funds and variable annuity
products. Trading activities increased on a marginal basis by $.4 million or
113.8% between quarters ended December 31, 2004 and December 31, 2003.

     As a percentage of the December 31, 2004 total gross profit, mutual funds
and variable annuity products constitute 34.5% of the overall profit margin
while trading activity represents 25.1%. The remainder of the profit margin is
comprised of advisory services, 15.5%; net marketing revenues, 8.3%; and
licensing, insurance products, underwriting and other income and revenues,
16.6%. At December 31, 2004, unearned licensing revenue of over $1.5 million was
collected for insurance premiums and other deferred revenue items.

     Consolidated administrative expenses of approximately $2.1 million for the
quarter ended December 31, 2004 increased by approximately $.2 million or 8.31%,
compared with expenses of approximately $1.96 million for quarter ended December
31, 2003. This increase is a result of an approximate $.2 million increase in
compensation and benefits based on the hiring of additional personnel to
accommodate growth. We invested in the Company's management team by hiring
individuals with industry expertise in an effort to increase sales and
restructure the product mix. Regulatory, legal, and professional fees were
consistent for the comparative periods. Other administrative expenses decreased
by approximately $.02 million or 9.4% primarily from reduced postage and reduced
administration from one of our programs. Finally, occupancy expenses increased
by approximately $.03 million from occupying additional office and storage
space, and depreciation of our fixed assets.

     Consolidated selling expenses were approximately $.3 million for the
quarter ended December 31, 2004, an amount that increased by approximately $.07
million or about 26.9% from $.3 million for the quarter ended December 31, 2003.
This increase can be attributed to a rise in advertising costs by over $.04
million and a rise in communication costs by over $.03 million.

     The increase in advertising related expenses were primarily the result of
an increase in travel related expenses of over approximately $14 thousand, a $12
thousand increase in meals & entertainment, and a $18 thousand increase in
general advertising and marketing. The increase in communication expenses came
from increases in telephone, website consulting, and printing.

     ICC and EPA bear the administrative and selling expenses for ICH in the
form of management fees paid to ICH. These management fees, contained within the
following chart, have been eliminated during consolidation in the accompanying
financial statements. Based on a revised time study prepared by management, the
allocation of these expenses between subsidiaries has changed from a 30%
allocation to a new allocation percentage tested on a quarterly basis effective
April 1,2004. The December 31,2004 time study resulted in a 10% allocation.

                            December 2004            December 2003
--------------------------------------------------------------------------------
ICC                              $263,710                 $319,964
--------------------------------------------------------------------------------
EPA                                29,301                  137,127
--------------------------------------------------------------------------------
Total                            $293,011                 $457,091
---------------------------------========-----------------========--------------



                                       16

<PAGE>

         The Company recorded a consolidated income tax provision of $.3 million
for the quarter ended December 31, 2004 compared with consolidated income taxes
of $.2 million for the quarter ended December 31, 2003. This increase of
approximately $.1 million or 27.4% can be attributed to the Company experiencing
a more profitable quarter ended December 31, 2004 than the quarter ended
December 31,2003.

         The Company's consolidated net income was $.4 million for the quarter
ended December 31, 2004 compared with consolidated net income of $.3 million for
the quarter ended December 31, 2003. This increase of approximately $.1 million
or 15.8% can be attributed to an increase in operating income over the same
period. This fluctuation in operating income led to a rise in income before
taxes of approximately $.1 million or 20.4% for the quarter ended December 31,
2004 compared to quarter ended December 31, 2003.



Nine Months Ended December 31, 2004 compared with Nine Months
Ended December 31, 2003

     Total consolidated revenue of $40.3 million for the nine months ended
December 31, 2004 increased by $5.6 million or 16.1% compared with total
consolidated revenue of $34.7 million for the nine months ended December 31,
2003. Consolidated commissions, advisory, and other fee income of $39.3 million
for the nine months ended December 31, 2004, increased by $5.3 million or 15.7%,
compared with consolidated commissions, advisory, and other fee income of $34.0
million for the nine months ended December 31, 2003. The $5.7 million increase
was driven by commissions generated from the ICC's brokerage business and other
fees during the nine months ended December 31, 2004. Specifically, this increase
is as follows: $1.18 million increase from advisory services, which is a direct
result of obtaining dual designation as a Registered Investment Advisor ICA
(Investors Capital Advisors). Other factors contributing to this increase in
sales volume is a $.2 million decrease in corporate bonds; a $1.4 million
increase in government bonds; a $1.4 million decrease in mutual funds and
variable annuity products; a $.7 million increase in listed stock trades; a $.4
million increase in Over The Counter stock trades; and a $.7 million increase in
all other ICC products. Offsetting those increases was a $.4 million decrease in
advisory and other fee income from EPA for the comparative periods as a result
the noted transfer of assets under management.


     Consolidated net marketing revenues of approximately $707 thousand
increased by approximately $214 thousand or 43.4% for the nine months ended
December 31, 2004, compared to consolidated net marketing revenue of $493
thousand for the nine months ended December 31, 2003. This growth is the result
of improved marketing initiatives as well as the expansion in the "Partnership
for Wealth Program" which benefited the liaison between the fund company and
corresponding representatives. Finally, other income increased by approximately
$81 thousand for nine months ended December 31, 2004 when compared to nine
months ended December 31, 2003 due to the increase in the daily average balance
in our trading accounts.

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

     Consolidated commissions and advisory fees of $32.4 million for the nine
months ended December 31, 2004 increased by $4.5 million or 16.0% compared to
$27.9 million for the nine months ended December 31, 2003. This change is
attributed largely to an increase of $4.6 million in commission expenses
incurred by ICC. Generally, the increase in commission expense is the direct
result of an increase in gross revenues, as noted above. The increase in
average representative payout for comparative periods increased proportionately
to revenues from commission, advisory and other fee income on a direct
correlation of 1 to 1. The average payout, on a percentage basis for the
comparative periods mentioned above, was 82.5% for 2004 and 82.3% for 2003.

     The Company's consolidated operating income of approximately $749 thousand
for the nine months ended December 31, 2004, compared with operating income of
approximately $900 thousand for the nine months ended December 31,
2003. This 16.8% decrease is primarily the result of additional operating
expenses of approximately $1.3 million offset by an increase in gross profit of
about $1.2 million. Due to the increased sales volume in products a larger
commission was paid out to our registered representative.


                                       17

<PAGE>




Gross profit by product type, illustrating both the dollar and percentage
change, is presented in the following table:



<TABLE>
<CAPTION>
                                                       % of                         9 Months Ended    9 Months Ended
                               Gross Profit         Gross Profit       2004-2003    December 2004    December 2004
  Product Type             $ increase (decrease)   increase change  % Margin Change $ Gross Profit  % Gross Profit
-----------------------------------------------------------------------------------------------------------------------
<S>                        <C>                     <C>              <C>             <C>            <C>
Commissions-Mutual
Funds & Variable
Annuities                        $ 77,094               6.7 %              2.5 %      $3,193,451            40.3%
-----------------------------------------------------------------------------------------------------------------------
Commissions-Trading                63,607               5.5 %              4.0 %       1,637,757            20.7%
-----------------------------------------------------------------------------------------------------------------------
Commissions-Insurance
Products                          165,486              14.3 %            163.9 %         266,427             3.4%
-----------------------------------------------------------------------------------------------------------------------
Commissions-Underwriting          (26,229)             (2.3)%            (82.3)%           5,632             ---%
-----------------------------------------------------------------------------------------------------------------------
Advisory Services &
Administration Fees               227,967              19.7 %             24.2 %       1,171,458            14.8%
-----------------------------------------------------------------------------------------------------------------------
Licensing Revenue                 353,465              30.4 %            145.4 %         596,515             7.6%
-----------------------------------------------------------------------------------------------------------------------
Net Marketing Revenue             213,958              18.5 %             43.4 %         706,869             8.9%
-----------------------------------------------------------------------------------------------------------------------
Other Income &
Revenues                           84,138               7.2 %             32.7 %         341,641             4.3%
-----------------------------------------------------------------------------------------------------------------------
Total                          $1,159,486             100.0 %              N/A         $7,919,750            100%
-------------------------------==========-------------======-------------=====--------===========------------====-----
</TABLE>

     As a percentage of the increase in gross profit, contributions from mutual
funds and variable annuities represented 6.7% of the total increase while net
marketing revenues comprised 18.5% of the increase. Contributions from
licensing, insurance products, and advisory services made up 64.4% of the
increase while trading had an increase to the margin of 5.5%. A margin increase
of $77,094 or 2.5% was realized from sales of mutual funds and variable annuity
products and trading activities increased on a marginal basis by $63,607 or 4.0%
for comparative nine months ended December 31, 2004 and December 31, 2003.

     As a percentage of the nine months ended December 31, 2004 gross profit,
mutual funds and variable annuity products constitute 40.3% of the overall
profit margin while trading activity represents 20.7%. The remainder of the
profit margin is comprised of advisory services,14.8%; net marketing revenues,
8.9%; and licensing, insurance products, underwriting and other income and
revenues, 15.3%. At December 31, 2004, unearned licensing revenue of over $1.5
million was collected for insurance premiums and other deferred revenue items.

     Consolidated administrative expenses of $6.2 million for the nine months
ended December 31, 2004 increased by $1.1 million or 21.3%, compared with
administrative expenses of $5.1 million for the nine months ended December 31,
2003. This fluctuation is a result of the $820 thousand increase in compensation
and benefits expense based on the acquisition of additional personnel to
accommodate growth. We invested in our management team by hiring individuals
with industry expertise in an effort to increase sales and restructure the
product mix. Regulatory, legal and professional fees increased by $226 thousand
due to added costs incurred for legal representation for litigation.

     The ratio of administrative expenses to gross profit has risen to 78.4% for
the nine months ended December 31, 2004 from 75.7% for the nine months ended
December 31, 2003. This is the result of lower profit margin retention that did
not accommodate the rise in fixed costs.

     Consolidated selling expenses were $963 thousand for the nine months ended
December 31, 2004, an increase of $221 thousand or 29.9% from $742 thousand for
the nine months ended December 31, 2003. This increase is attributed to a rise
in advertising costs of $144 thousand and a rise in communications costs of $78
thousand. The increase in advertising costs is the result of an increase in
travel expenses of $115 thousand. The increase in communications relates to
additional telephone and printing expenses for marketing the business of
brokerage and advisory services, as well as to promote the Eastern Point
Advisors Rising Dividend Growth Fund.



                                       18
<PAGE>


     ICC and EPA bear the administrative and selling expenses for ICH in the
form of management fees paid to ICH. These management fees, contained within the
following chart, have been eliminated during consolidation in the accompanying
financial statements. Based on a recent time study prepared by management, the
allocation of these expenses between subsidiaries has changed from a 30%
allocation to a new allocation percentage tested on a quarterly basis effective
April 1, 2004. A June 30, 2004, September 30, 2004 and December 31, 2004 time
study resulted in a 10% allocation.


                                December 2004            December 2003
--------------------------------------------------------------------------------
ICC                                $822,625                $678,596
--------------------------------------------------------------------------------
EPA                                  91,403                 290,827
--------------------------------------------------------------------------------
Total                              $914,028                $969,423
-----------------------------------========----------------========-------------

     The Company reported consolidated income taxes of about $307 thousand for
the nine months ended December 31, 2004, compared with consolidated income taxes
of about $390 thousand for the nine months ended December 31, 2003. This
decrease of approximately $83 thousand or 21.2% can be attributed to the
Company's decrease in profitability during the same period last year.

     The Company generated a consolidated net income of about $410 thousand for
the nine months ended December 31, 2004, compared with net income of about $493
thousand for the nine months ended December 31, 2003. This decrease of $83
thousand or about 16.9% in consolidated net income can be attributed to
additional operating expenses to accommodate the increase in sales. Operating
expenses increased proportionately higher than its gross profit, resulting in a
decrease in net income for the comparative nine month period.

     Although the Company's profitability for the nine months ended December 31,
2004 was $83 thousand less than that for nine months ended December 31, 2003,
management is committed to grow the company. Management is currently investing
resources to grow assets in their advisory services sector. In addition, a new
investment center in Portsmouth, New Hampshire has opened where the company can
offer financial services directly to clients from our own financial advisors.
Recruiting centers were opened in Los Angeles and Philadelphia. Management
continues to develop their insurance business by offering a diversified product
range and insurance services to financial representatives. Finally, the
operational model in the trading department makes substantial use of technology
which enables the Company to accommodate growth in revenue through increased
transaction processing without incurring incremental overhead.


Liquidity and Capital Resources

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

     As of December 31, 2004, cash and cash equivalents totaled $8.9 million
compared to $8.1 million as of March 31, 2004. Working capital was $8.7 million
as of December 31, 2004 compared to $8.6 million as of March 31, 2004. The ratio
of current assets to current liabilities was 3.1 to 1 as of December 31, 2004
compared to 3.2 to 1 as of March 31, 2004.

     As of December 31, 2004, the net capital ratio for the broker-dealer was
5.11 to 1 as compared to a 2.38 to 1 for the fiscal year ended March 31, 2004.
The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that we maintain a net
capital of $100,000 and a ratio of aggregate indebtedness to net capital not to
exceed 15 to 1. This SEC requirement is also referred to as the "net capital
ratio" or the "net capital rule." Indebtedness generally includes all money owed
by a company, and net capital includes cash and assets that are easily converted
into cash. SEC rules also prohibit "equity capital," which, under the net
capital rule, includes the subordinated loans from being withdrawn or cash
dividends from being paid if our net capital ratio would exceed 10 to 1 if we
would have less than our minimum required net capital. As of December 31, 2004,
we had net capital of $1.1 million as compared to net capital of $1.8 million as
of March 31,2004. This resulted in excess net capital of $.7 million and $1.5
million, respectively, for the applicable periods.

     Net cash provided by operating activities of $1.5 million for the nine
months ended December 31, 2004 increased by $.5 million compared to net cash
provided by operating activities of over $1 million for the nine months ended
December 31, 2003. The change resulted primarily from an increase in collections
of accounts receivable offset by payments to commissions payable and income
taxes payable. In addition, this increase in cash provided by operating
activities came from an increase in collection of license fee renewals. Also,
over $1.5 million was collected for unearned licensing revenue for insurance
premiums and other deferred revenue items.


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     Net cash used in investing activities increased by $333 thousand for the
nine months ended December 31, 2004 compared to the nine months ended December
31, 2003. The increase in cash used resulted from the purchase of fixed assets
in addition to the issuance of new loans to registered representatives.

     Net cash used in financing activities increased by $8 thousand for the nine
months ended December 31, 2004 compared to the nine months ended December 31,
2003. The increase in cash used resulted from final payment of the NASD note and
a reclassification of current liability to a note payable offset by cash
received from the exercise of stock options.

Risk Management

     Risks are an inherent part of the Company's business and activities.
Management of these risks is critical to the Company's financial strength and
profitability and requires communication, judgment and knowledge of financial
trends and the economy as a whole. Senior management takes an active role in the
risk management process. The principal risks involved in the Company's business
activities are market, operational, regulatory and legal.

Market Risk

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

Operational Risk

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

Regulatory and Legal Risk

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

Effects of Inflation

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




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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




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ITEM 4. CONTROLS AND PROCEDURES

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




PART II  OTHER INFORMATION






ITEM 1. LEGAL PROCEEDINGS

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

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                                   SIGNATURES

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


                                                INVESTORS CAPITAL HOLDINGS, LTD.

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


     Date: February 11, 2005

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